EXHIBIT B-1
STOCK PURCHASE AGREEMENT
among
AMEREN CORPORATION,
ILLINOVA CORPORATION,
ILLINOVA GENERATING COMPANY
and
DYNEGY INC.
Dated as of February 2, 2004
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms..........................................1
Section 1.2 Other Defined Terms...........................................12
Section 1.3 Other Definitional and Interpretative Provisions..............13
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase and Sale of Shares...................................15
Section 2.2 Purchase Price................................................15
Section 2.3 Purchase Price Adjustments....................................16
Section 2.4 Closing.......................................................17
Section 2.5 Closing Deliveries by Seller..................................17
Section 2.6 Closing Deliveries by Purchaser...............................19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND DYNEGY
Section 3.1 Organization and Qualification................................20
Section 3.2 Capitalization................................................20
Section 3.3 Authority.....................................................21
Section 3.4 Consents and Approvals; No Violation..........................22
Section 3.5 IPC Reports...................................................22
Section 3.6 IPC Financial Statements......................................23
Section 3.7 Absence of Certain Changes; Absence of Undisclosed
Liabilities...................................................23
Section 3.8 Taxes.........................................................24
Section 3.9 Litigation....................................................26
Section 3.10 Employee Benefit Plans........................................27
Section 3.11 Environmental Matters.........................................29
Section 3.12 Compliance with Applicable Laws...............................30
Section 3.13 Labor Matters; Employees......................................31
Section 3.14 Material Contracts............................................32
Section 3.15 Intellectual Property.........................................32
Section 3.16 Real Property.................................................33
Section 3.17 Brokers.......................................................35
Section 3.18 Personal Property.............................................35
Section 3.19 Availability of Assets; Affiliate Transactions................35
Section 3.20 Title to Property.............................................35
Section 3.21 Bank Accounts; Powers of Attorney; Minute Books...............35
Section 3.22 Regulation as a Utility.......................................36
Section 3.23 Regulatory Proceedings........................................36
Section 3.24 Hedging.......................................................36
Section 3.25 Responsibility for Compliance with ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.........36
Section 3.26 Insurance.....................................................36
Section 3.27 Clinton Nuclear Power Station.................................37
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.1 Organization and Qualification................................37
Section 4.2 Authority.....................................................38
Section 4.3 Conflicts.....................................................38
Section 4.4 Securities Matters............................................39
Section 4.5 Litigation....................................................39
Section 4.6 Availability of Funds.........................................39
Section 4.7 Brokers.......................................................39
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Conduct of Business Prior to the Closing......................39
Section 5.2 Access to Information.........................................42
Section 5.3 Governmental Permits and Approvals............................43
Section 5.4 Notice of Developments........................................45
Section 5.5 Insurance; Risk of Loss.......................................45
Section 5.6 Confidentiality...............................................47
Section 5.7 Intercompany Arrangements.....................................47
Section 5.8 Use of Dynegy and Seller's Names..............................47
Section 5.9 Change of Control Offer.......................................48
Section 5.10 Further Assurances............................................48
Section 5.11 No Public Announcement........................................48
Section 5.12 Access to Records.............................................48
Section 5.13 No Solicitation...............................................49
Section 5.14 Terminated Employees..........................................49
Section 5.15 Intercompany Note.............................................49
Section 5.16 Covenant Not to ▇▇▇...........................................49
Section 5.17 IPC Property..................................................50
Section 5.18 Remediation of Excluded Environmental Matters.................50
Section 5.19 Consent Solicitation..........................................52
Section 5.20 Generation Asset Transfers....................................53
Section 5.21 Certain Additional Agreements.................................53
Section 5.22 Status Meetings...............................................56
Section 5.23 PPA Modification Right........................................56
Section 5.24 Compliance with ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act............................57
Section 5.25 Litigation and Clinton Nuclear Power Station Updates..........57
ii
ARTICLE VI
EMPLOYEES AND EMPLOYEE MATTERS
Section 6.1 Employment of Transferred Employees...........................58
Section 6.2 Transferred Employee Benefit Matters..........................60
Section 6.3 Miscellaneous Benefits........................................69
Section 6.4 Employee Rights...............................................69
Section 6.5 WARN Act Requirements.........................................70
Section 6.6 Retention of Certain Liabilities by Dynegy....................70
ARTICLE VII
TAX MATTERS AND INDEMNIFICATION
Section 7.1 Preparation and Filing of Tax Returns.........................70
Section 7.2 Cooperation...................................................71
Section 7.3 Transfer Taxes................................................72
Section 7.4 FIRPTA Certificate............................................72
Section 7.5 Tax Sharing Agreements........................................72
Section 7.6 Tax Refunds...................................................72
Section 7.7 Section 338(h)(10) Election...................................73
Section 7.8 Tax Indemnification...........................................74
Section 7.9 Survival and Coordination.....................................75
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1 Conditions to Obligations of Seller...........................75
Section 8.2 Conditions to Obligation of Purchaser.........................77
Section 8.3 Effect of Certain Waivers of Closing Conditions...............78
ARTICLE IX
INDEMNIFICATION
Section 9.1 Obligations of Dynegy.........................................79
Section 9.2 Obligations of Purchaser......................................80
Section 9.3 Procedures....................................................80
Section 9.4 Survival......................................................83
Section 9.5 Limitations on Indemnification................................84
Section 9.6 Mitigation....................................................85
Section 9.7 Remedies Exclusive............................................85
Section 9.8 Tax Indemnification Matters...................................85
Section 9.9 Qualification as to Materiality...............................85
ARTICLE X
TERMINATION AND WAIVER
Section 10.1 Termination...................................................86
Section 10.2 Effect of Termination.........................................86
iii
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Expenses......................................................87
Section 11.2 No Additional Representations.................................87
Section 11.3 Materiality...................................................89
Section 11.4 Disclosure Schedules..........................................89
Section 11.5 Limitation on Damages.........................................89
Section 11.6 Notices.......................................................89
Section 11.7 Headings......................................................90
Section 11.8 Severability..................................................90
Section 11.9 Entire Agreement..............................................91
Section 11.10 Assignment....................................................91
Section 11.11 No Third Party Beneficiaries..................................91
Section 11.12 Amendment.....................................................91
Section 11.13 Waiver........................................................91
Section 11.14 Governing Law.................................................92
Section 11.15 WAIVER OF JURY TRIAL..........................................92
Section 11.16 Specific Performance; Remedies................................92
Section 11.17 Counterparts..................................................92
Section 11.18 Representation by Counsel; Interpretation.....................92
Section 11.19 Commercially Reasonable Efforts to Consummate.................93
iv
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of February 2, 2004, is entered
into by and among Ameren Corporation, a Missouri corporation ("Purchaser"),
Illinova Corporation, an Illinois corporation ("Seller"), Illinova Generating
Company, an Illinois corporation ("IGC"), and Dynegy Inc., an Illinois
corporation ("Dynegy"). Dynegy, IGC and Seller are referred to herein as the
"Dynegy Parties".
W I T N E S S E T H:
WHEREAS, Seller owns (a) 62,892,213 shares (the "Common Shares") of common
stock, without par value, of Illinois Power Company, an Illinois corporation
("IPC"), constituting all of the outstanding common stock of IPC and (b) 662,924
shares (the "Preferred Shares") of preferred stock, $50 par value per share, of
IPC, constituting approximately 73% of the issued and outstanding preferred
stock of IPC, and IGC owns 12,400 shares of common stock, $100 par value per
share, of Electric Energy, Inc. ("EEI"), an Illinois corporation (the "EEI
Shares", and together with the Common Shares and the Preferred Shares, the
"Shares");
WHEREAS, Dynegy has agreed, as an inducement to Purchaser, to enter into
this Agreement;
WHEREAS, Seller, IGC, and IPC are wholly-owned subsidiaries of Dynegy
(other than with respect to the outstanding shares of preferred stock of IPC
that are not Preferred Shares);
WHEREAS, Seller and IGC desire to sell, and Purchaser desires to purchase,
the Shares upon the terms and subject to the conditions set forth in this
Agreement, and Dynegy and Purchaser desire to make an election under Section
338(h)(10) of the Code (as defined below) with respect to the purchase and sale
of the Common Shares and the Preferred Shares; and
NOW, THEREFORE, in consideration of the premises and the mutual terms,
conditions and agreements set forth herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Accounting Firm" shall mean a nationally recognized accounting firm
mutually acceptable to Seller and Purchaser.
"Action" shall mean any claim, order, demand, action, suit, arbitration,
mediation, inquiry, proceeding or investigation by or before any Governmental
Authority.
"Actual IP Contributions" shall mean the amount by which any cash
contributions made by Dynegy or any of its Affiliates after the date hereof and
prior to the Closing to any of the Seller Pension Plans or Seller's VEBAs with
respect to the 2004 plan year results in an increase in the aggregate amounts
transferred to the Purchaser Pension Plans and the Purchaser's VEBAs over what
would have been transferred to the Purchaser Pension Plans and the Purchaser's
VEBAs pursuant to this Agreement had such contributions not been made prior to
the Closing.
"Adjusted Working Capital" shall have the meaning set forth on Exhibit A.
"Affiliate" shall mean, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such specified
Person.
"Agreement" shall mean this Purchase Agreement, dated as of the date
hereof, among Purchaser, Seller, IGC and Dynegy (including the Exhibits and
Schedules hereto), as amended, modified or supplemented from time to time.
"AmerGen Power Supply Agreement" shall mean the power purchase agreement
dated June 30, 1999 by and between Illinois Power Company and AmerGen Energy
Company, L.L.C ("AmerGen").
"Ancillary Agreements" shall mean the PPA, the Transition Services
Agreement (if applicable), the Tier 2 Memorandum, the Escrow Agreement, the
Blackstart Agreement, the Easement and Facilities Agreement, the Generation
Agreement and the Termination Agreements.
"Applicable Rate" shall mean 2% plus the rate of interest per annum
publicly announced from time to time by JPMorgan Chase Bank as its prime rate in
effect at its principal office in New York City. Each change in such prime rate
shall be effective from and including the date such change is publicly announced
as being effective.
"Asset Transfer Agreements" shall mean (a) the Asset Transfer Agreement,
dated as of October 1, 1999, between IPC and Seller, (b) the ▇▇▇▇ of Sale and
Assignment, effective as of August 31, 2001, between IPC and Seller and (c) the
Assignment and ▇▇▇▇ of Sale effective as of December 31, 2001, between IPC and
Dynegy Midwest Generation, Inc.("DMG").
"Audit" shall mean any action, suit, audit, assessment or reassessment of
Taxes, other examination by any Taxing Authority, or proceeding or appeal of
such proceeding relating to Taxes.
"Blackstart Agreement" shall mean the agreement the form of which is set
forth on Exhibit F.
"Business" shall mean the business conducted by the IPC Companies,
including the transmission, distribution and sale of electric energy, which
business is regulated as a public utility under PUHCA, and the distribution,
transportation and sale of natural gas in the State of Illinois.
"Business Day" shall mean any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by Law to be closed in The City of
New York.
2
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Section 9601 et seq.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended.
"Company Group" shall mean any "affiliated group" (as defined in
Section 1504(a) of the Code without regard to the limitations contained in
Section 1504(b) of the Code) that, at any time on or before the Closing Date,
includes or has included Seller or any IPC Company or any predecessor of or
successor to Seller or any IPC Company (or another such predecessor or
successor), or any other group of corporations that, with respect to any period
on or before the Closing Date, files, has filed or will file Tax Returns on a
combined, consolidated or unitary basis with Seller or any IPC Company or any
predecessor of or successor to Seller or any IPC Company (or another such
predecessor or successor).
"Confidentiality Agreement" shall mean the Confidentiality and Sales
Process Agreement, dated July 23, 2003, between Dynegy and Purchaser.
"Contract" shall mean any contract, lease, sublease, license, indenture,
instrument, agreement, commitment or other legally binding arrangement.
"Control" (including the terms "controlled by" and "under common control
with"), with respect to the relationship between or among two or more Persons,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the affairs or management of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Controlled Group Liability" means any and all liabilities (i) under
Title IV of ERISA, (ii) under Section 302 of ERISA, (iii) under Sections 412 and
4971 of the Code, (iv) as a result of a failure to comply with the continuation
coverage requirements of Section 601 et seq. of ERISA and Section 4980B of the
Code, and (v) under corresponding or similar provisions of foreign laws or
regulations, in each case with respect to or arising under or out of any
"employee benefit plan," as defined in Section 3(3) of ERISA, maintained or
otherwise contributed to by Dynegy, any Seller, or any of their subsidiaries at
any time.
"DHI" shall mean Dynegy Holdings Inc., a Delaware corporation.
"Disclosure Schedules" shall mean the Schedules that qualify any
representation or warranty contained in Article III and Schedule 1.1(b).
"Dynegy Group" shall mean the "affiliated group" (as defined in
Section 1504(a) of the Code) of which Dynegy is the common parent, or any other
group of corporations that files, has filed or will file Tax Returns on a
combined, consolidated or unitary basis with Dynegy (and, in each case, any
predecessor or successor to such group).
"Enforceable" shall mean, with respect to a Contract, such Contract being
"enforceable" if it is the legal, valid and binding obligation of the applicable
Person enforceable against such Person in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights of
creditors and general principles of equity.
3
"Environmental Laws" shall mean United States federal, state, and local
environmental protection, health and safety or similar Laws imposing liability
or establishing standards of conduct for protection of the environment or human
health and safety (not to include state or federal workplace safety issues),
including the federal Clean Water Act, Safe Drinking Water Act, Resource
Conservation and Recovery Act, Clean Air Act, Toxic Substances Control Act,
CERCLA and Emergency Planning and Community Right to Know Act, and similar state
and local laws, each as amended and in effect on the date hereof.
"Equity Interest" shall mean any capital stock or other equity securities
of any Person, any securities convertible into or exercisable or exchangeable
for capital stock or other equity securities of such Person.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Excluded Environmental Matters" shall mean (a) any actual or alleged,
known or unknown, violation of Environmental Law at any time prior to the
Closing Date in connection with the Business or any of the IPC Assets, or (b)
the actual or alleged, known or unknown, presence or Release of any Hazardous
Substances at any time prior to the Closing Date in soil, sediment, surface
water, groundwater, air or any structure at any IPC Asset or any site formerly
owned or operated by the Business (including the sites in items 10, 11 and 13 on
Schedule 3.11), including any migration of those Hazardous Substances from any
IPC Asset or foregoing site to an off-site location; or (c) any Hazardous
Substances generated by the Business prior to the Closing Date and sent to an
offsite location for treatment, storage, disposal or recycling, or (d) all
matters listed on Schedule 3.11; provided that (i) Excluded Environmental
Matters shall not include the matters set forth on Schedule 1.1(c), (ii)
Excluded Environmental Matters shall not include any molecules of Hazardous
Substances that were not actually and physically present in the soil, sediment,
surface water, groundwater, air or any structure at any IPC Asset (or the
off-site location to which such molecules of Hazardous Substances had migrated)
prior to the Closing Date.
"Existing IPC Obligations" shall mean an amount equal to the sum of:
(a) the unpaid principal amount of all short-term and long-term indebtedness
(including current portion) for borrowed money of each of the IPC Companies; (b)
the liquidation preference of the outstanding shares of preferred stock, $50 par
value per share, of IPC, not owned by Seller; (c) any accrued and unpaid
dividends on the shares of preferred stock, $50 par value per share, of IPC, not
owned by Seller, that are in arrears as a result of the failure of IPC to pay
such dividends on the relevant dividend payment date; and (d) all outstanding
capital lease obligations of each of the IPC Companies, if any, in each instance
as of the Closing Date. For purposes of calculating the amount of the Existing
IPC Obligations, the amount of indebtedness attributable to the Transitional
Funding Trust Notes shall be reduced by an amount equal to the lesser of
(a) $240,000 multiplied by the number of days, from and including the first day
following the most recent date on which a portion of the Transitional Funding
Trust Notes were repaid, through and including the Closing Date, and (b) the
amount of restricted cash held by IPC on the Closing Date dedicated to the
4
retirement of such indebtedness. Existing IPC Obligations as of September 30,
2003 are set forth on Schedule 1.1(d). For the avoidance of doubt, Existing IPC
Obligations shall not include the capital lease related to the ▇▇▇▇▇▇ Assets if
such assets are transferred to DMG prior to or at the Closing.
"FERC" shall mean the Federal Energy Regulatory Commission, or any
successor thereto.
"Final Determination" shall mean the final resolution of liability for any
Tax: (a) by IRS Form 870 or 870-AD (or any successor forms thereto), on the date
of acceptance by or on behalf of the taxpayer, or by a form having the same
effect under the laws of other jurisdictions, except that a Form 870 or 870-AD
or comparable form that reserves (whether by its terms or by operation of law)
the right of the taxpayer to file a claim for refund and/or the right of the
Taxing Authority to assert a further deficiency shall not constitute a Final
Determination; (b) by a Governmental Order of a court of competent jurisdiction
which has become final and unappealable; (c) by a closing agreement or accepted
offer in compromise under Section 7121 or 7122 of the Code, or agreements having
the same effect under the laws of other jurisdictions; (d) by any allowance of a
refund or credit in respect of an overpayment of Tax; or (e) by any other final
disposition, including by reason of the expiration of the applicable statute of
limitations or by mutual agreement of the parties.
"Final Order" shall mean any Governmental Order which has not been
reversed, stayed, enjoined, set aside, annulled or suspended, with respect to
which any waiting period prescribed by Law before the transactions contemplated
thereby may be consummated has expired (but without the requirement for the
expiration of any applicable rehearing or appeal period), and as to which all
conditions to the consummation of such transactions prescribed by Law have been
satisfied.
"FPA" shall mean the Federal Power Act, as amended, including any
regulations promulgated thereunder and any successor statutes thereto.
"GAAP" shall mean United States generally accepted accounting principles
and practices as in effect from time to time.
"Generation Agreement" shall mean the agreement in the form of Exhibit B.
"Generation Assets" shall mean (a) the "Purchased Assets" described in the
Asset Transfer Agreements, including the assets set forth on Schedule 1.1(e) and
(b) any fossil-fuel fired electric generating stations owned, used or operated
at any time by any of the IPC Companies, including those assets identified by
the parties pursuant to clause (ii) of Section 5.20(a) that are to be
transferred to DMG by IPC pursuant to the Generation Agreement, but excluding
those assets identified by the parties pursuant to clause (i) of Section 5.20(a)
that are to be transferred to IPC by DMG pursuant to the Generation Agreement.
"Generation Liabilities" shall mean any and all rights, costs, damages,
disbursements, expenses, losses, fines, penalties, settlements, payments,
judgments, awards, deficiencies, charges, commitments, encumbrances, liens,
rights of others, demands, actions, claims, liabilities, obligations, debts,
causes of action, or lawsuits of any kind or nature whether known or unknown,
5
arising from or relating to the Generation Assets or related Excluded
Environmental Matters, including: (a) items 1 and 2 listed on Schedule 3.11;
(b) actual or alleged failure of any Generation Assets or their owner or
operator to have complied at any time with any Law (including Environmental
Laws); (c) actual or alleged presence or Release of any Hazardous Substance in
soil, sediment, surface water, groundwater, air or any structure at any
Generation Assets at any time, including in connection with ash ponds at any
Generation Asset or any migration of Hazardous Substances from a Generation
Asset to an off-site location; (d) any Hazardous Substance from a Generating
Asset that was sent to an off-site location for treatment, storage, disposal or
recycling; (e) closure, shutdown, decommissioning, monitoring, investigation,
cleanup, containment, remediation, removal, mitigation, response or restoration
work at, on, beneath, to, from or in any Generation Assets (including any
equipment) at any time; (f) claims for workers' compensation benefits payable on
account of injuries, illness or other conditions; (g) any claims for any
personal injury (including wrongful death) or property damage (real or personal)
relating to the Generating Assets; or (h) any liabilities of IPC under the
Generation Agreement or the Asset Transfer Agreements; provided that Generation
Liabilities will not include the matters set forth on Schedule 1.1(c).
"Governmental Authority" shall mean any United States federal, state or
local or any foreign government, supranational, governmental, regulatory or
administrative authority, instrumentality, agency or commission, political
subdivision, self-regulatory organization or any court, tribunal or judicial or
arbitral body or mediator.
"Governmental Order" shall mean any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"Hazardous Substances" shall mean any chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances, mixed hazardous waste
substances, petroleum, petroleum products, radioactive material or any substance
as defined by and which is prohibited, limited, or regulated under or defined in
any Environmental Law.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"ICC" shall mean the Illinois Commerce Commission.
"Income Tax Returns" shall mean Tax Returns relating to Income Taxes.
"Income Taxes" shall mean any Taxes imposed on or determined by reference
to net income, together with any interest or penalty, addition to tax or
additional amount imposed by any Taxing Authority on account of such Taxes.
"Indemnifiable Claim" shall mean any claim of an Indemnifiable Loss for or
against which any party is entitled to indemnification under this Agreement.
"Indemnifiable Loss" shall mean any cost, damage, disbursement, expense,
liability, loss, fine, penalty or settlement, payment or judgment of any kind or
nature, including court filing fees, court costs, arbitration fees or costs and
reasonable fees and disbursements of legal counsel and other professionals fees
6
and amounts paid in settlement that are actually imposed on, or otherwise
actually incurred or suffered by the specified Person.
"Indemnified Party" shall mean the party entitled to indemnification
hereunder.
"Indemnifying Party" shall mean the party obligated to provide
indemnification hereunder.
"Intellectual Property" shall mean: (a) any United States and foreign
invention, patent application, patent, patent disclosure, including all
reissues, reexaminations, divisions, continuations and extensions thereof
(whether or not patentable or reduced to patent) and improvements thereto; (b)
any United States and foreign trademark, trademark registration, trademark
application, service ▇▇▇▇, internet domain name, trade name, trade dress, logo,
business names (including all assumed or fictitious names under which any IPC
Company is conducting business or has within the last three years conducted
business), whether registered or unregistered, and pending applications to
register the foregoing; (c) any United States and foreign copyright, copyright
registration, copyrightable works, whether registered or unregistered, and
pending applications to register the same; and (d) any design, design
registration, and trade secret (including confidential information, know-how,
formulae, processes, procedures, research records, records of inventions, test
information, market surveys and marketing know-how), and, in each case, any
right to any of the foregoing.
"Intercompany Note" means the promissory note in the original principal
amount of $2,725,721,995.00 (as adjusted) issued by Seller to IPC on October 1,
1999.
"IPC Assets" shall mean assets owned or leased by the IPC Companies as of
the time of the Closing, after giving effect to asset transfers contemplated by
this Agreement.
"IPC Companies" shall mean IPC and the Persons listed on Schedule 3.2.
"IPC Other Real Property" shall mean easements, licenses, rights-of-way,
option, rights-of-first refusal, rights-of-first offer or similar rights or
interests in any parcel of real property, which rights or interest are held or
used by any of the IPC Companies.
"IPC Owned Real Property" shall mean each parcel of real property owned in
fee simple by any of the IPC Companies.
"IPC Properties" shall mean the IPC Owned Real Property, Leased Real
Property and IPC Other Real Property.
"IRS" means the United States Internal Revenue Service.
"Knowledge" shall mean (a) with respect to Purchaser, the actual knowledge
(after reasonable inquiry) of the persons listed on Schedule 1.1(f), and
(b) with respect to any of the Dynegy Parties, the actual knowledge (after
reasonable inquiry) of the persons listed on Schedule 1.1(f).
7
"Law" shall mean any United States federal, state or local statute, law,
ordinance, regulation, rule, code, order or other requirement or rule of law
enacted, adopted, issued or promulgated by any Governmental Authority.
"Leased Real Property" shall mean each lease or similar contract under
which an IPC Company is a lessee of, or holds, uses or operates, any real
property owned by third Persons.
"Lien" shall mean any lien (statutory or otherwise), mortgage, deed of
trust, pledge, security interest, option, covenant, restriction, easement or
other encumbrance of any kind or any similar right of any kind.
"Material Adverse Effect" shall mean any condition, circumstance, change,
event, occurrence or state of facts that is (a) materially adverse to the IPC
Assets, the Business, financial condition or results of operations of the
business of the IPC Companies, taken as a whole; or (b) materially adverse to
the ability of Dynegy, any of the IPC Companies or any of their respective
Affiliates to perform their obligations under this Agreement or any Ancillary
Agreement, including the financial obligations of Dynegy hereunder or
thereunder, other than, with respect to clause (a) above, any condition,
circumstance, change, event, occurrence or state of facts (i) relating to or
resulting from economic conditions in general that are not disproportionately
adverse to the IPC Companies or the Business; (ii) resulting from the execution
or announcement of this Agreement; (iii) resulting from a material breach by
Purchaser of this Agreement; (iv) relating to or resulting from changes or
developments generally in the electric or gas utility industry that are not
disproportionately adverse to the IPC Companies or the Business; or (v)
resulting from compliance by Dynegy or any IPC Company with the terms of this
Agreement or any Ancillary Agreement.
"Natural Gas Act" shall mean the Natural Gas Act, as amended, including any
regulations promulgated thereunder and any successor statutes thereto.
"Non-Income Tax Returns" shall mean Tax Returns relating to Non-Income
Taxes.
"Non-Income Taxes" shall mean all Taxes other than Income Taxes.
"NPL" shall mean the National Priorities List pursuant to CERCLA.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permit" shall mean any permit, franchise, consent, approval, license,
certificate of occupancy, certificate of public convenience and necessity,
privilege or similar authorization.
"Permitted Liens" shall mean (a) leases, subleases, licenses and similar
use and occupancy agreements that do not materially interfere with the present
use of the relevant asset or property; (b) Liens for Taxes, assessments and
governmental charges or levies not delinquent or that may be paid without
interest or penalty that do not materially interfere with the present use of the
relevant assets or property; (c) Liens imposed by Law (other than any Lien
arising under Section 412 of the Code or Section 302 of ERISA) that do not
materially interfere with the present use of the relevant assets or property;
(d) pledges or deposits to secure obligations under workers' compensations laws
or similar legislation or to secure public or statutory obligations that do not
8
materially interfere with the present use of the relevant assets or property;
(e) mechanics', carriers', workmen's, repairmen's or other like Liens arising or
incurred in the ordinary course (excluding any such lien securing or evidencing
a claim in excess of $400,000 that the holder thereof has taken affirmative
steps to enforce other than customary notice, perfection or protective filings),
and Liens arising under original purchase price conditional sales contracts and
equipment leases with third parties entered into in the ordinary course, in each
case that do not materially interfere with the present use of the relevant
assets or property; (f) Liens listed on Schedule 1.1(b); (g) recorded and
unrecorded easements, covenants, rights of way and other similar restrictions
that do not materially detract from the value and do not materially interfere
with the present use of the relevant assets or property; (h) as to any Leased
Real Property, Liens affecting the interest of the lessor thereof that do not
materially interfere with the present use of the relevant assets or property;
(i) all matters created by or on behalf of Purchaser, including any documents or
instruments to be recorded as part of any financing for the acquisition of the
Shares by Purchaser; (j) Liens created by this Agreement or in connection with
the transactions contemplated hereby; and (k) any other Liens that do not
materially adversely affect title to, or interfere with the present use of, the
relevant assets or property.
"Person" shall mean any individual, partnership, firm, corporation,
association, trust, unincorporated organization, joint venture, limited
liability company or other entity.
"Post-Closing Tax Period" shall mean any taxable period beginning after the
Closing Date (and, in the case of a Straddle Period, the portion of such taxable
period beginning on the day after the Closing Date).
"PPA" shall mean the agreement by and between Dynegy Power Marketing, Inc.
("DYPM") and IPC in the form of Exhibit D, with such changes as may be required
by Governmental Authorities as a condition to approving the transactions or any
portion thereof contemplated by this Agreement and the Ancillary Agreements that
are required to be accepted by Seller or by Purchaser, pursuant to the
provisions of Section 5.3 or 5.23 or are otherwise accepted by Seller and by
Purchaser.
"Pre-Closing Tax Period" shall mean any taxable period ending on or before
the Closing Date (and, in the case of a Straddle Period, the portion of such
taxable period ending at the close of the Closing Date).
"PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
amended, including any regulations promulgated thereunder or any successor
statutes thereto.
"Purchaser Group Member" shall mean the IPC Companies, Purchaser, each of
their respective Affiliates and each of their respective directors, officers,
employees, agents, successors and assigns.
"Reference Balance Sheet" shall mean the unaudited consolidated balance
sheet of IPC as of the Reference Balance Sheet Date attached as Schedule 1.1(a).
"Reference Balance Sheet Date" shall mean September 30, 2003.
9
"Release" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, empty, dump, pour, emit, ▇▇▇▇▇, discharge,
dispersal, leaking or migration or allowing to escape into or through the
environment.
"Remediation" shall mean any or all of the following activities in
connection with and to the extent they relate to or arise from the presence or
Release of a Hazardous Substance into or on air, land, water or groundwater:
(a) monitoring, investigation, sampling, analysis, cleanup, containment,
control, remediation, removal, mitigation, response, recovery, corrective action
or restoration work as these terms are defined individually or collectively
under any Environmental Law or court decision (collectively, "Work"); (b)
obtaining any Permits from any Governmental Authority necessary to conduct any
of the Work; (c) preparing and implementing any plans or studies necessary for
implementation or completion of the Work; (d) where required or desired,
obtaining a written notice from a Governmental Authority that no material
additional work is required by such Governmental Authority; and (e) any other
activities reasonably necessary or appropriate or required under Environmental
Laws to address the presence or Release of Hazardous Substances.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SEC" shall mean the United States Securities and Exchange Commission.
"Seller Group Member" shall mean Seller and Dynegy and each of their
Affiliates (other than the IPC Companies after the Closing) and each of their
respective directors, officers, employees agents, successors and assigns.
"Seller Indemnitors" shall mean Dynegy and Seller.
"Software" shall mean computer software programs and software systems,
including all databases, compilations, tool sets, compilers, higher level or
"proprietary" languages, related documentation and materials, whether in source
code, object code or human readable form.
"Straddle Period" shall mean any taxable period that begins on or before
and ends after the Closing Date.
"Subsidiaries" shall mean, with respect to any Person, any and all
corporations, partnerships, limited liability companies and other entities with
respect to which such Person, directly or indirectly, owns securities having the
power to elect a majority of the board of directors or similar body governing
the affairs of such entity.
"Target Fully Adjusted Working Capital" shall have the meaning set
forth on Exhibit A.
"Tax" shall mean: (a) any federal, state, local or foreign net income,
gross income, gross receipts, windfall profit, severance, property, production,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or add-on minimum, ad valorem, value-added, transfer, stamp, or
environmental tax (including taxes under Code Section 59A), or any other tax,
custom, duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, addition to tax or additional
10
amount imposed by any Governmental Authority; and (b) any liability for the
payment of amounts with respect to payments of a type described in clause (a)
above as a result of being a member of an affiliated, consolidated, combined or
unitary group, or as a result of any obligation under any Tax Sharing
Arrangement, Tax indemnity agreement or arrangement or similar agreement or
arrangement.
"Tax Refund" shall mean a refund of Taxes either in the form of cash,
credit memos or any similar item as the result of a Final Determination.
"Tax Return" shall mean any return, filing, report, questionnaire,
information statement or other document required to be filed, including any
amendments that may be filed with respect thereto, for any taxable period with
any Taxing Authority.
"Tax Sharing Arrangement" shall mean any written or unwritten agreement or
arrangement for the allocation or payment of Tax liabilities or payment for Tax
benefits with respect to a consolidated, combined or unitary Tax Return which
Tax Return includes or included any IPC Company.
"Taxing Authority" shall mean any Governmental Authority exercising any
authority to impose, regulate or administer the imposition of Taxes.
"Termination Agreement" shall mean each of the agreements in the forms of
Exhibit C-1 and Exhibit C-2.
"Tier 2 Memorandum" shall mean the agreement the form of which is set forth
in Exhibit H.
"▇▇▇▇▇▇ Assets" shall mean all rights and obligations of any of the IPC
Companies pursuant to and arising from (a) the Lease, dated as of September 10,
1999, between IPC, as the lessee, and ABN Amro Bank N.V., not individually but
solely as agent lessor (as amended and restated as of October 30, 2002 (the
"▇▇▇▇▇▇ Lease"), (b) the Lease Agreement, dated as of October 29, 1998, between
IPC, as tenant, and Danville Industrial, L.L.C., an Illinois limited liability
company as landlord and all directly related rights and obligations held or owed
by any IPC Company (the "▇▇▇▇▇▇ Ground Lease"), and (c) the Sublease, dated as
of October 1, 1999, between IPC, as sublessor, and DMG, as sublessee, in
accordance with Section 6.2 of the ▇▇▇▇▇▇ Lease, and all rights, interests,
assets, liabilities and obligations of the IPC Companies that are primarily
related to the foregoing project.
"Transitional Funding Trust Notes" shall mean the Transitional Funding
Trust Notes, Series 1998-1, in the original principal amount of $864,000,000,
issued by Illinois Power Special Purpose Trust, under the Indenture dated as of
December 1, 1998, between Illinois Power Special Purpose Trust, as note issuer,
and ▇▇▇▇▇▇ Trust and Savings Bank, as trustee.
"Triggering Event" shall mean the occurrence of any of the "events" set
forth in Paragraph 5 of the Escrow Agreement, the form of which is set forth in
Exhibit G (the "Escrow Agreement"), requiring payment in full or in part, as the
case may be, to Seller of the Escrow Funds (as defined in the Escrow Agreement).
▇▇
"▇▇▇▇ ▇▇▇" shall mean the Worker Adjustment and Retraining Notification Act
of 1988, as amended, including any regulations promulgated thereunder and any
successor statutes thereto.
Section 1.2 Other Defined Terms. The following terms shall have the
meanings defined for such terms in the Sections set forth below:
Term Section
---- -------
Accrued Liability 6.2(a)(iv)(A)
Active Employees 6.1(a)
Actual IP Contribution Amount 2.2(a)(ii)
Affiliate Employees 6.1(g)
Allocation 7.6(a)
▇▇▇▇▇▇▇▇▇▇▇ Contract 6.1(c)
AmerGen 1.1
Base Energy Contracts 5.21(c)
BACT 5.18(c)
Benefit Payments 6.2(a)(iv)(B)
Blackstart Agreement 5.21(c)
CERCLIS 3.11(g)
Closing 2.4
Closing Date 2.4
Common Shares Recitals
Compensation Arrangements 3.10(a)
Correction Amount 6.2(b)(iv)(D)
Date of Spinoff 6.2(a)(iv)(A)
DMG 1.1
DOJ 5.3(a)
DYPM 1.1
Dynegy Recitals
Dynegy Parties Recitals
Easement and Facilities Agreement 5.21(b)
EEI Recitals
EEI Shares Recitals
Employee Benefit Plans 3.10(a)
Employees 3.10(a)
Escrow Agreement 2.2
FIRPTA 3.8(b)
FSA 6.2(d)(vii)
FTC 5.3(a)
Historic Insurance Policies 5.5(b)
IGC Recitals
Initial Transfer Amount 6.2(a)(iv)(B)
Initial Transfer Date 6.2(a)(iv)(B)
IPC Recitals
IPC SEC Reports 3.5
Mandate 5.18(c)
12
Term Section
---- -------
Material Contracts 3.14
Material Permits 3.12
Non-Union Transferred Employees 6.1(a)
Other Plan Participant 6.2(a)(i)
PGA 9.1(g)
Pollution Control Certification 2.5(x)
Potential Transaction 5.13
Pre-Closing Covenants 9.4
Preferred Shares Recitals
Proposed Allocation 7.6(a)
Purchase Price 2.2(a)
Purchaser Recitals
Purchaser Includable Claims 9.5(b)
Purchaser Pension Plan(s) 6.2(a)(ii)
Purchaser Savings Plan(s) 6.2(b)(ii)
Purchaser Welfare Plans 6.2(d)(i)
Purchaser's VEBA 6.2(c)(i)
Retiree(s) 6.2(c)(i)
SEC Reports 3.5
Section 338(h)(10) Election 7.7(a)
Section 338(h)(10) Forms 7.7(b)
Section 4044 Amount 6.2(a)(iv)(A)
Seller Recitals
Seller Bonus Plans 6.1(e)
Seller Includable Claims 9.5(a)
Seller Pension Plan(s) 6.2(a)(i)
Seller Savings Plans 6.2(b)(i)
Seller Welfare Plans 6.2(d)(i)
Seller's VEBA(s) 6.2(c)(i)
Shares Recitals
Solvency Opinion 8.1(f)
Tax Controversy 7.8(c)
Termination Date 10.1(b)
▇▇▇▇▇▇ Lease 1.1
▇▇▇▇▇▇ Ground Lease 1.1
Transferred Employee 6.1(a)
Transition Services Agreement 5.21(a)
True-Up Date 6.2(a)(iv)(B)
VEBA Transfer Date 6.2(c)(ii)
Work 1.1
Section 1.3 Other Definitional and Interpretative Provisions.
------------------------------------------------
(a) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
13
not to any particular provision of this Agreement, and Section, Exhibit and
Schedule references are to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
(c) All Exhibits and Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise
defined therein, shall have the meaning as defined in this Agreement.
(d) The phrase "made available" in this Agreement shall mean, with respect
to any document, that (i) a document containing the information referred to has
actually been provided to the party (or its representative) to whom such
information is asserted as having been "made available", (ii) the party
asserting that a document has been made available can show by clear and
convincing evidence that the party (or its representative) was provided access
to such document or (iii) such document was included in the electronic data room
established by Dynegy to which Purchaser (and its representatives) had access
prior to the execution of this Agreement.
(e) Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The meaning of general words herein shall not be limited by
specific examples introduced by "such as" or "for example" or other similar
expressions unless otherwise specified.
(f) References to "the date of this Agreement" or "the date hereof" shall
mean February 2, 2004, and the terms "currently" and "presently" shall mean as
of February 2, 2004.
(g) References to a Person include its successors and permitted assigns.
References to a "party" or the "parties" shall refer, respectively, to a party
or the parties to this Agreement, unless the context otherwise requires or this
Agreement otherwise specifies.
(h) The phrase "in the ordinary course" shall mean in the ordinary course
of the Business.
(i) Without limiting the rights of the Purchaser Group Members to
indemnification pursuant to Sections 9.1(c) through (i) no representation or
warranty in Article III is made whatsoever with respect to any of the matters
for which indemnification is provided to Purchaser pursuant to Sections 9.1(c)
through (i).
(j) References to a specified number of days prior to the Closing shall
mean such specified number of days prior to the Closing Date as determined in
the reasonable good faith judgment of Purchaser and Dynegy.
14
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase and Sale of Shares. Upon the terms and subject to the
conditions of this Agreement, at the Closing, Seller and IGC shall sell to
Purchaser, and Purchaser shall purchase from Seller and IGC, the Shares.
Section 2.2 Purchase Price.
--------------
(a) The aggregate purchase price for the Shares shall be $2,300,000,000
(i) less an amount equal to the Existing IPC Obligations;
(ii) plus an amount equal to the amount by which the Actual IP
Contributions exceed $17,500,000 or minus an amount equal to the
amount by which the Actual IP Contributions are less than $17,500,000,
as applicable (the "Actual IP Contributions Amount");
(iii) plus the amount by which the Final Adjusted Working Capital is
greater than the Target Fully Adjusted Working Capital (if the Final
Adjusted Working Capital is greater than the Target Fully Adjusted
Working Capital); and
(iv) minus the amount by which the Target Fully Adjusted Working
Capital is greater than the Final Adjusted Working Capital (if the
Target Fully Adjusted Working Capital is greater than the Final
Adjusted Working Capital)
(such aggregate amount, the "Purchase Price"). No later than seven Business Days
prior to the Closing, Seller shall deliver to Purchaser a certificate executed
on behalf of Seller by the President, Executive Vice President or any Senior
Vice President of Seller, dated the date of its delivery, setting forth Seller's
calculation of the amount of the Existing IPC Obligations setting forth in
reasonable detail the basis for such calculation. The Purchase Price will be
payable as set forth in paragraphs (b) and (c) of this Section 2.2.
(b) At the Closing, Purchaser will pay $2,300,000,000 in cash minus the
sum of (i) an amount equal to the Existing IPC Obligations, and
(ii) $100,000,000 (representing the amount of the Escrow Funds that are to be
delivered at Closing by Purchaser to an Escrow Agent (as defined in the Escrow
Agreement), mutually acceptable to Purchaser and Dynegy under the Escrow
Agreement; provided, with respect to the reduction set forth in clause (ii) of
this paragraph (b), that (A) in the event that a Triggering Event has occurred
that would result in a payment to Seller in part of the Escrow Funds had the
Escrow Agreement been entered into prior to the occurrence of such Triggering
Event, such $100,000,000 amount shall be reduced by the amount that would have
been so paid in such event and (B) in the event that a Triggering Event has
occurred that would result in a payment to Seller in full of the Escrow Funds
had the Escrow Agreement been entered into prior to the occurrence of such
Triggering Event, such $100,000,000 amount shall be reduced to zero.
15
(c) After the Closing the Purchase Price shall be adjusted to reflect the
difference between the Target Fully Adjusted Working Capital and the Final
Adjusted Working Capital as provided in Section 2.3 and the Actual IP
Contributions Amount as of the True-Up Date.
Section 2.3 Purchase Price Adjustments.
--------------------------
(a) Promptly following the Closing Date, but in no event later than 60
days after the Closing Date, Purchaser shall provide to Seller a certificate
executed on behalf of Purchaser by the President, Executive Vice President or
any Senior Vice President of Purchaser, dated the date of its delivery, setting
forth Purchaser's (i) proposed Adjusted Working Capital as of the Closing Date
(the "Proposed Final Adjusted Working Capital") and (ii) Purchaser's reasonably
detailed calculation thereof (the "Closing Date Statement"). The Closing Date
Statement shall be prepared in accordance with GAAP (except as noted on Exhibit
A) and in a manner consistent with the policies and principles used in
connection with the preparation of the Reference Balance Sheet (provided,
however, that in preparing the Closing Date Statement, the inclusions,
exclusions, adjustments and terms set forth on Exhibit A shall be given effect).
(b) Purchaser shall provide reasonable cooperation to, and shall cause the
IPC Companies and their respective employees and agents to provide reasonable
cooperation to, Seller and its employees and representatives in their review of
the Closing Date Statement and shall provide Seller and its employees and
representatives reasonable access to the applicable personnel, properties, books
and records of Purchaser and the IPC Companies for such purpose. In the event
Seller disputes the correctness of the Proposed Final Adjusted Working Capital
proposed by Purchaser, Seller shall notify Purchaser in writing of its
objections within 30 days after receipt of the Closing Date Statement and shall
set forth, in writing and in reasonable detail, the reasons for Seller's
objections. If Seller fails to deliver its notice of objections within 30 days
after receipt of the Closing Date Statement, Seller shall be deemed to have
accepted Purchaser's calculation. Seller and Purchaser shall endeavor in good
faith to resolve any disputed matters within 15 days after receipt of Seller's
notice of objections. If Seller and Purchaser are unable to resolve the disputed
matters, Seller and Purchaser shall promptly refer the disputed matters to the
Accounting Firm. The Accounting Firm shall offer Seller and Purchaser (and their
respective employees and representatives) the opportunity to provide written
submissions regarding their positions on the disputed matters, which opportunity
shall not extend more than 15 days after the submission of the disputed matters
to the Accounting Firm. The Accounting Firm shall deliver a written report
resolving all disputed matters and setting forth the basis for such resolution
within 30 days after Seller and Purchaser have submitted in writing (or have had
the opportunity to submit in writing but have not submitted) their positions as
to the disputed items. The determination of the Accounting Firm in respect of
the correctness of each matter remaining in dispute shall be conclusive and
binding on Seller and Purchaser. The determination of the Accounting Firm shall
be based solely on the written submissions by Seller and Purchaser and shall not
be by independent review (it being understood that the Accounting Firm need not
accept in its entirety the submission of either one party or the other). The
Adjusted Working Capital as of the Closing Date, as finally determined pursuant
to this Section 2.3(b) (whether by failure of Seller to deliver a timely notice
of objection, by agreement of Seller and Purchaser or by determination of the
16
Accounting Firm), are referred to herein as the "Final Adjusted Working
Capital".
(c) Promptly (but in no event later than five Business Days) after the
determination of the Final Adjusted Working Capital, (i) if the Final Adjusted
Working Capital is greater than the Target Fully Adjusted Working Capital,
Purchaser shall pay to Seller the amount of such difference, with simple
interest thereon from the Closing Date to the date of payment at a fixed rate
per annum equal to the Applicable Rate, and (ii) if the Final Adjusted Working
Capital is less than the Target Fully Adjusted Working Capital, Dynegy or Seller
shall pay to Purchaser the amount of such difference, with simple interest
thereon from the Closing Date to the date of payment at a fixed rate per annum
equal to the Applicable Rate.
(d) The fees and expenses, if any, of the Accounting Firm retained in
accordance with this Section 2.3 to resolve any dispute shall be paid one-half
by Purchaser and one-half by Seller.
(e) Within 10 days after the Closing or as soon as practicable thereafter,
Dynegy (after consultation with Purchaser) shall provide Purchaser with its good
faith estimate of the Actual IP Contributions. Within 5 days after the receipt
of such estimate, (i) Purchaser shall pay to Dynegy an amount equal to the
amount by which such estimated Actual IP Contributions exceed $17,500,000 or
(ii) Dynegy or Seller shall pay to Purchaser an amount equal to the amount by
which such estimated Actual IP Contributions are less than $17,500,000, as
applicable. The determination of the Actual IP Contributions (as opposed to the
estimate) shall be made at the same time as the "true up" is being conducted
under Section 6.2(a)(iv)(B) and shall be subject to the dispute resolution
procedures set forth in Section 6.2(a)(iv)(C) and the correction procedures set
forth in Section 6.2(a)(iv)(D).
(f) In the event the Accounting Firm is requested to resolve any dispute
pursuant to this Section 2.3, any meetings or proceedings involving the
Accounting Firm in connection with such dispute resolution shall be held in New
York, New York.
Section 2.4 Closing. Upon the terms and subject to the conditions of this
Agreement, the sale and purchase of the Shares contemplated by this Agreement
shall take place at a closing (the "Closing") to be held at the offices of
O'Melveny & ▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 a.m.,
New York City time, within 10 Business Days after the day on which all
conditions to the obligations of the parties set forth in Article VIII (except
for such conditions which by their nature are satisfied on the Closing Date) are
satisfied or waived, or at such other place or at such other time or on such
other date as Seller and Purchaser may mutually agree upon in writing (the day
on which the Closing takes place being the "Closing Date"). For all purposes of
this Agreement, including all provisions relating to Taxes and accounting
matters, the Closing shall be deemed to have occurred at 11:59 p.m., Chicago,
Illinois time, on the Closing Date.
Section 2.5 Closing Deliveries by Seller. Subject to the fulfillment or
waiver of the conditions set forth in Section 8.1, at the Closing, Seller shall
deliver to Purchaser:
17
(a) stock certificates evidencing the Common Shares registered in the name
of Purchaser or its nominee, stock certificates evidencing the Preferred Shares
registered in the name of Purchaser or its nominee, and stock certificates
evidencing the EEI Shares registered in the name of Ameren Energy Resources
Company or its nominee, in form reasonably satisfactory to Purchaser;
(b) a receipt for the portion of the Purchase Price payable at the Closing
pursuant to Section 2.2 hereunder;
(c) the certificate required to be delivered pursuant to Section 8.2(a);
(d) the stock or unit books, stock or unit ledgers, minute books and
corporate or similar seals of the IPC Companies; provided, however, that any of
the foregoing items shall be deemed to have been delivered pursuant to this
Section 2.5(d) if such item has been delivered to, or is otherwise located at,
the offices of an IPC Company;
(e) copies of the articles of incorporation of Seller and Dynegy certified
as of a recent date by the Secretary of State of the State of Illinois;
(f) copies of the articles of incorporation or other organizational
documents of each of the IPC Companies certified as of a recent date by the
Secretary of State of the state of its organization;
(g) certificate of good standing of Seller and Dynegy issued as of a recent
date by the Secretary of State of the State of Illinois;
(h) certificate of good standing of each of the IPC Companies certified as
of a recent date by the Secretary of State of the state of its organization;
(i) certificate of the Secretary of Seller, dated the Closing Date, as to
(i) no amendments to the articles of incorporation of Seller since a specified
date; (ii) the by-laws of Seller; (iii) the resolutions of the board of
directors of Seller and of IPC authorizing the execution, delivery and
performance of this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby; and (iv) the incumbency and signatures of the
officers of Seller and of IPC executing this Agreement and the Ancillary
Agreements;
(j) certificate of the Secretary or Assistant Secretary of Dynegy, dated
the Closing Date, as to (i) no amendments to the articles of incorporation of
Dynegy since a specified date; (ii) the by-laws of Dynegy; (iii) the resolutions
of the board of directors of Dynegy authorizing the execution, delivery and
performance of this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby; and (iv) the incumbency and signatures of the
officers of Dynegy executing this Agreement and the Ancillary Agreements;
(k) all consents and Permits, including those described in Section 8.2(e),
that are received by the Dynegy Parties in connection with this Agreement on or
prior to the Closing Date; provided, however, that any of the foregoing items
shall be deemed to have been delivered pursuant to this Section 2.5(k) if such
18
item has been made available to Purchaser prior to the Closing, remains in full
force in effect, and is located at the offices of any IPC Company;
(l) a signed resignation by each of the directors of each of the IPC
Companies;
(m) the certificate required to be delivered pursuant to Section 7.4;
(n) to the extent applicable, transfer tax declarations, duly executed by
the applicable Dynegy Party or Affiliate thereof;
(o) the Base Energy Contracts referred to in Section 5.21(c), duly
executed by IPC;
(p) a written certification by Dynegy ("Pollution Control Certification")
stating that, to the Knowledge of Dynegy, AmerGen Energy Company, L.L.C is in
compliance in all material respects with the requirements of Article 6.8(e) of
the Asset Purchase Agreement between Illinois Power Company, as Seller, and
AmerGen Energy Company, L.L.C, as Buyer, dated June 30, 1999; and
(q) in the event a Triggering Event (that would have the effect of
requiring the full payment of the Escrow Funds had the Escrow Agreement been
entered into prior to such Triggering Event) has not occurred prior to the
Closing Date, the Escrow Agreement, duly executed by Seller.
Section 2.6 Closing Deliveries by Purchaser. Subject to the fulfillment or
waiver of the conditions set forth in Section 8.2, at the Closing, Purchaser
shall deliver, or cause to be delivered to Seller:
(a) by wire transfer in immediately available funds to a bank account or
bank accounts of Seller designated by written notice to Purchaser at least two
Business Days before the Closing, an amount in U.S. dollars equal to the cash
portion of the Purchase Price payable at the Closing pursuant to Section 2.2
hereunder (without reduction or setoff of any kind);
(b) a receipt for the Shares;
(c) the certificate required to be delivered pursuant to Section 8.1(a);
(d) copies of the certificate of incorporation of Purchaser certified as
of a recent date by the Secretary of State of the State of Missouri;
(e) certificate of good standing of Purchaser issued as of a recent date by
the Secretary of State of the State of Missouri;
(f) certificate of the Secretary or Assistant Secretary of Purchaser, dated
the Closing Date, as to (i) no amendments to the certificate of incorporation of
Purchaser since a specified date; (ii) the by-laws of Purchaser; (iii) the
resolutions of the board of directors of Purchaser authorizing the execution,
delivery and performance of this Agreement and the transactions contemplated
19
hereby and thereby; and (iv) the incumbency and signatures of the officers of
Purchaser executing this Agreement; and
(g) in the event a Triggering Event (that would have the effect of
requiring the full payment of the Escrow Funds had the Escrow Agreement been
entered into prior to such Triggering Event) has not occurred prior to the
Closing Date, the Escrow Agreement, duly executed by Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND DYNEGY
As an inducement to Purchaser to enter into this Agreement, to the
execution of the Ancillary Agreements and to consummate the transactions
contemplated hereby and by the Ancillary Agreements, except as set forth in the
SEC Reports filed prior to the date hereof (it being understood that, in order
for this exception to apply, the relevance of any disclosure in the SEC Reports
to a particular representation below must be reasonably apparent from the
disclosure itself), Seller and Dynegy jointly and severally hereby represent and
warrant to Purchaser as follows:
Section 3.1 Organization and Qualification.
------------------------------
(a) Each Dynegy Party is a corporation duly organized, validly existing
and in good standing under the Laws of the State of Illinois. Each Dynegy Party
has the requisite corporate power and authority to own, use or lease and to
operate its properties and to carry on its business as it is now conducted. Each
Dynegy Party is not in default in the performance, observation or fulfillment of
any provision of its articles of incorporation or by-laws.
(b) Each of the IPC Companies is duly organized, validly existing and in
good standing under the Laws of its jurisdiction of incorporation or
organization, is duly qualified to do business as a foreign corporation or other
entity and is in good standing in each jurisdiction in which the character of
its properties or the nature of its business makes such qualification necessary,
except in jurisdictions, if any, where the failure to be so qualified would not
individually or in the aggregate reasonably be expected to result in a Material
Adverse Effect. Each of the IPC Companies has the requisite corporate or other
similar power and authority to own, use or lease and to operate its properties
and to carry on its business as it is now conducted. Seller has made available
to Purchaser a complete and correct copy of the articles of incorporation and
by-laws and other constituent documents of each of the IPC Companies, each as
amended to date, and such articles of incorporation, by-laws and other
constituent documents as so made available are in full force and effect. None of
the IPC Companies is in default in the performance, observation or fulfillment
of any provision of its articles of incorporation or by-laws or other
constituent documents.
Section 3.2 Capitalization.
--------------
(a) The authorized capital stock of IPC consists of (i)100,000,000 shares
of common stock, no par value, of which 75,643,937 shares are issued and
62,892,213 shares are outstanding and (ii) 15,000,000 total shares of preferred
stock, of which (A) 5,000,000 are Serial Preferred Stock, $50 par value, of
which 912,675 shares are issued and outstanding, (B) 5,000,000 are Serial
20
Preferred Stock, no par value, none of which are issued and outstanding and
(C) 5,000,000 are Preference Stock, no par value, none of which are issued and
outstanding. All outstanding shares of IPC are duly authorized, validly issued,
fully paid and nonassessable, and free of preemptive rights. Except as set forth
above, and other than this Agreement, there are no outstanding subscriptions,
options, rights, warrants, convertible securities, stock appreciation rights,
phantom equity, or other Contracts obligating IPC to issue, transfer, sell,
redeem, repurchase or otherwise acquire any shares of its capital stock of any
class.
(b) Except for 249,751 shares of preferred stock held by third parties,
Seller is the record or beneficial owner of all of the outstanding Equity
Interests of IPC, there are no irrevocable proxies with respect to any such
Equity Interests, and no Equity Interests of IPC are or may become required to
be issued because of any options, warrants, rights to subscribe to, calls or
commitments relating to, or securities or rights convertible into or
exchangeable or exercisable for, Equity Interests of IPC, and there are no
Contracts by which Seller or IPC is bound to issue additional Equity Interests
of IPC or securities convertible into or exchangeable or exercisable for any
such Equity Interests. All of such Equity Interests are duly authorized, validly
issued, fully paid and nonassessable and, except for 249,751 shares of preferred
stock held by third parties, are owned by Seller free and clear of all Liens.
(c) IGC is the record or beneficial owner of the EEI Shares, which are
duly authorized, validly issued, fully paid and nonassessable, and free of
preemptive rights, and are owned by IGC free and clear of all Liens.
(d) Schedule 3.2 sets forth with respect to each Subsidiary of IPC, the
number of authorized, issued and outstanding shares of capital stock of each
class, the number of issued shares of capital stock held as treasury shares and
the number of shares of capital stock unissued and not reserved for any purpose.
IPC, either directly or indirectly, owns 100% of all issued and outstanding
shares of capital stock, limited liability company interests or other Equity
Interests of such Subsidiaries, and owns no capital stock, other securities, or
rights or obligations to acquire the same, of any other Person. All of the
outstanding shares of capital stock or other Equity Interests of each Subsidiary
of IPC are duly authorized, validly issued, fully paid and nonassessable and
free of preemptive rights. There are no subscriptions, options, rights warrants,
calls, convertible securities, stock appreciation rights, phantom equity, or
other Contracts relating to or obligating IPC or any of its Affiliates
(including such Subsidiary) to issue, sell, redeem, repurchase or otherwise
acquire any shares of capital stock or Equity Interests of any Subsidiary of
IPC.
Section 3.3 Authority. Each Dynegy Party has full corporate power and
authority to execute and deliver this Agreement and any Ancillary Agreements to
be executed by it and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement and the
Ancillary Agreements to be executed by such Dynegy Party and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by the board of directors of such Dynegy Party, and do not require
any other authorization or consent of any Dynegy Party, any of its Affiliates or
its stockholders. This Agreement has been, and upon its execution and delivery,
each Ancillary Agreement to be executed by any Dynegy Party will have been, duly
21
and validly authorized, executed and delivered by such Dynegy Party and is or
will be upon its execution Enforceable against such Dynegy Party.
Section 3.4 Consents and Approvals; No Violation. The execution and
delivery of this Agreement, the Ancillary Agreements, the Base Energy Contracts,
the consummation of the transactions contemplated hereby and thereby, and the
performance by Dynegy, Seller, IGC and the IPC Companies of their obligations
hereunder and under the Ancillary Agreements and Base Energy Contracts, to the
extent applicable, do not and will not:
(a) except as listed in Schedule 3.4(a), require any writ, waiver,
consent, judgment, decree, approval, order, act or Permit of, or registration,
filing with or notification to any Governmental Authority, except for municipal
and county franchises and Permits that are ministerial in nature and are
customarily obtained from Governmental Authorities after closings in connection
with transactions of the same nature as are contemplated hereby;
(b) except as listed in Schedule 3.4(b), conflict with, result in any
violation of or breach of or constitute a default (with notice or lapse of time
or both) under, or give rise to any right of termination, purchase, first
refusal, cancellation, modification or acceleration or guaranteed payments or a
loss of rights under (i) any provision of the articles of incorporation or
by-laws of Seller or the articles of incorporation or by-laws (or other similar
organizational documents) of any of its Affiliates; or (ii) any provisions of
any Contract to which any IPC Company, Seller, IGC or Dynegy is a party or may
be subject or bound or by which any IPC Assets or the Business may be subject or
bound;
(c) upon receipt of the approvals and consents listed on Schedule 3.4(a),
violate the provisions of any Law or Governmental Order, or result in the
termination or lapse of any Permit, applicable to Dynegy, Seller, IGC, any IPC
Company, any IPC Assets or the Business; or
(d) result in the creation of any Lien other than Permitted Liens upon any
IPC Asset or properties or assets of any IPC Company, Purchaser or any of its
Affiliates or on any Equity Interests of any IPC Company, Purchaser or any of
its Affiliates under any applicable Law or under any Contract to which any IPC
Company, Seller, or Dynegy is a party or by which any IPC Company, Seller,
Dynegy, the IPC Assets or the Business or any of their properties may be subject
bound;
except, with respect to any of Sections 3.4(a), 3.4(b)(ii) and 3.4(c), to the
extent any such writ, waiver, consent, judgment, decree, approval, order, act,
Permit, registration, filing or notice requirement, conflict, violation, breach,
default, right of termination, purchase, first refusal, cancellation,
modification or acceleration or guaranteed payment or loss of right, violation
of Law or Governmental Order or Lien would not reasonably be expected,
individually or in the aggregate, (A) to result in a Material Adverse Effect or
(B) to prevent the consummation of any transactions contemplated hereby or by
any Ancillary Agreement.
Section 3.5 IPC Reports. The filings required to be made by IPC since
January 1, 2003, under PUHCA, applicable Illinois Laws, the FPA and the Natural
Gas Act have been timely filed with the appropriate Governmental Authority and,
22
as of the date of such filings, complied in all material respects with all
applicable requirements of each such Law. Copies of such filings have been made
available to Purchaser. IPC has filed with, or furnished to, the SEC, as the
case may be, each form, registration statement, report, schedule, proxy or
information statement and other document (including exhibits and amendments
thereto) required to be filed or furnished to the SEC since January 1, 2003
under the Securities Act or the Exchange Act, as applicable (collectively, the
"IPC SEC Reports"). Dynegy has filed with, or furnished to, the SEC, as the case
may be, and made available to Purchaser, copies of each form, registration
statement, report, schedule, proxy or information statement and other document
(including exhibits and amendments thereto) required to be filed with or
furnished to the SEC since January 1, 2003 under the Securities Act or the
Exchange Act (together with the IPC SEC Reports, the "SEC Reports"). As of the
respective dates that the IPC SEC Reports were filed, or furnished, as the case
may be, each IPC SEC Report, including any financial statements or schedules
included therein, (a) complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act; and (b) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not materially
misleading. No event has occurred between the date of the most recent IPC SEC
Report and the date hereof that would require the filing of a Current Report on
Form 8-K by IPC or Dynegy.
Section 3.6 IPC Financial Statements. Each of the audited consolidated
financial statements and unaudited consolidated interim financial statements of
IPC (including any related notes and schedules) included (or incorporated by
reference) in its Annual Reports on Form 10-K for each of the two fiscal years
ended December 31, 2001 and 2002 (the "IPC Financial Statements"), and any
subsequent IPC SEC Report, has been prepared from, and is in accordance with,
the books and records of IPC, complies in all material respects with applicable
accounting requirements and with the SEC's published rules and regulations, has
been prepared in accordance with GAAP (except in the case of unaudited
statements, as permitted under Form 10-Q under the Exchange Act) applied on a
consistent basis (except as may be indicated in the notes thereto) and fairly
presents in all material respects in conformity with GAAP applied on a
consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of IPC as of the date thereof and the
consolidated results of operations and cash flows (and changes in financial
position, if any) of IPC for the periods presented therein (subject to normal
year-end adjustments and the absence of financial footnotes in the case of any
unaudited interim financial statements).
Section 3.7 Absence of Certain Changes; Absence of Undisclosed
Liabilities.
--------------------------------------------------
(a) Except as listed in Schedule 3.7 or as permitted by this Agreement or
the Ancillary Agreements, since September 30, 2003: (i) the Business has been
conducted in all material respects in the ordinary course; (ii) through the date
hereof there has not been any Material Adverse Effect; (iii) except for
declarations, set asides and payments of dividends with respect to regular
quarterly cash dividends with respect to the preferred stock of IPC in
accordance with its terms, there has not been any declaration, setting aside or
payment of any dividend or other distribution with respect to any shares of
capital stock of any IPC Company or any repurchase, redemption or other
acquisition by IPC of any outstanding shares of capital stock or other
securities of, or other ownership interests in, any IPC Company; (iv) there has
23
not been any amendment or modification of any term of any outstanding security
of any IPC Company; (v) there has not been any change in any method of
accounting or accounting principles, practices or policies by any IPC Company,
except for any such change required because of a concurrent change in GAAP or
the applicable rules and regulations of the SEC; (vi) except as required by
applicable Law, no Tax Return has been prepared or filed by or with respect to
Seller, the Business, any IPC Asset or any IPC Company that is inconsistent with
past practice, no position has been taken, election made, or method adopted by
or with respect to Seller or any IPC Company that is inconsistent with positions
taken, elections made or methods used in preparing or filing similar Tax Returns
with respect to Seller or such IPC Company in prior periods, no Tax Sharing
Arrangement, Tax indemnity Contract or similar Contract or arrangement affecting
Seller or any IPC Company has been entered into, amended or modified by Seller
or any IPC Company, and no payments under any Tax Sharing Arrangement, Tax
indemnity Contract or similar Contract have been made that are outside the
ordinary course of business, inconsistent with past practice or inconsistent
with the terms thereof; and (vii) there has not been any damage, destruction or
other casualty loss with respect to any IPC Assets or the Business that has a
value of at least $5,000,000 or is material in the aggregate to the IPC
Companies, the Business or the IPC Assets which is not covered by insurance.
(b) None of the IPC Companies has any liabilities or obligations (whether
known or unknown, accrued, absolute, contingent or otherwise) of any nature,
except those which: (i) are accrued or reserved against in the most recent
audited consolidated financial statements of IPC or reflected in the notes
thereto; (ii) were incurred in the ordinary course; (iii) have been discharged
or paid in full; or (iv) are not required to be reflected in the consolidated
financial statements or the notes thereto of IPC prepared in accordance with
GAAP consistently applied.
Section 3.8 Taxes.
-----
(a) Except as listed in Schedule 3.8:
(i) Each IPC Company has timely filed or will timely file or cause to
be timely filed (taking into account all extensions of due dates) all material
Tax Returns required by applicable Law to be filed prior to or as of the Closing
Date. All such material Tax Returns are or will be true, complete and correct
and disclose all Taxes required to be paid for the periods covered thereby.
(ii) Each IPC Company has timely paid, whether or not shown on any
Tax Return, all Taxes imposed on it or for which it may otherwise be liable or,
with respect to Non-Income Taxes, where payment is not yet due, will have
established as a liability or reserve taken into account in determining Final
Adjusted Working Capital an adequate accrual, determined in accordance with GAAP
(as described in paragraph 1 of Exhibit A), for the payment of, all such
Non-Income Taxes imposed on it or for which it may otherwise be liable.
(iii) All deficiencies asserted in writing or assessments made as a
result of any Audit of the Tax Returns referred to in clause (i) have been paid
in full.
24
(iv) No Audit is pending or, to the Knowledge of Seller, threatened
with respect to any Tax Returns filed by or with respect to, or Taxes due from
or with respect to, any IPC Company. To the Knowledge of Seller, with respect to
Taxes for all taxable periods beginning on or after January 1, 2000, no
deficiency or adjustment for any Taxes has been threatened, proposed, asserted
or assessed against any IPC Company that remains outstanding. There are no Liens
for Taxes upon the assets of any IPC Company, except Permitted Liens.
(v) No IPC Company has given or been requested to give any waiver of
statutes of limitations relating to the payment of Taxes or has executed powers
of attorney with respect to Tax matters that will be outstanding as of the
Closing Date. No IPC Company is the beneficiary of any extension of time within
which to file any Tax Return.
(vi) No IPC Company (or any Affiliate thereof) has received any Tax
rulings, made any request that is still pending for rulings, or entered into any
closing agreements relating to any IPC Company that would reasonably be expected
to affect any Tax liability relating to any IPC Company for any period after the
Closing Date.
(vii) All Taxes that any IPC Company is required by Law to withhold
or to collect for payment have been duly withheld and collected and have been
timely paid to the appropriate Taxing Authority or, to the extent due after the
Closing Date, will be reflected as a liability or reserve, determined in
accordance with GAAP (as described in paragraph 1 of Exhibit A), taken into
account in determining Final Adjusted Working Capital.
(viii) All Tax sharing, Tax indemnity or similar Contracts relating
to any IPC Company (other than this Agreement) will terminate prior to the
Closing and neither Purchaser nor any IPC Company will have any liability
thereunder on or after the Closing Date, except to the extent of Non-Income Tax
liabilities included in the calculation of Final Adjusted Working Capital.
(ix) Each IPC Company (other than IPC and IP Gas Supply Company)
(A) is disregarded for federal income tax purposes as an entity separate from
IPC, (B) was formed through a contribution of assets from IPC or another IPC
Company, (C) is not a successor to any entity and (D) has no liability for Taxes
of IPC, any member of any Company Group or any other Person.
(x) Dynegy has filed a consolidated Federal income Tax Return with
IPC for the taxable year that was two years preceding the current taxable year
and as of the Closing Date will be eligible to make a Section 338(h)(10)
Election with respect to the Common Shares and the Preferred Shares.
(xi) No IPC Company has any liability for the Taxes of any other
person (other than any IPC Company) under Treasury Regulation Section 1.1502-6
or any comparable provision of state, local or foreign law, by contract or
otherwise.
(xii) Each Dynegy Group has filed all material Tax Returns that it
was required to file for each taxable period during which any IPC Company was a
25
member of such Dynegy Group. All such Tax Returns are or will be true, correct
and complete in all material respects. All material Income Taxes owed by any
Dynegy Group have been paid for each taxable period during which any IPC Company
was a member of such group. No Audit is pending or, to the Knowledge of Dynegy
or Seller, threatened with respect to any Tax Returns filed by or with respect
to, or Taxes due from or with respect to, any Dynegy Group for any taxable
period during which any IPC Company was a member of such Dynegy Group. To the
Knowledge of Dynegy or Seller, no Taxing Authority has requested any information
related to Tax matters from, or with respect to, any Company Group for any
taxable period during which any IPC Company was a member of such Company Group.
No material deficiency or adjustment for any Taxes has been threatened,
proposed, asserted or assessed against any Company Group that remains
outstanding for any taxable period during which any IPC Company was a member of
such Company Group.
(xiii) No IPC Company will be required to include any material item
of income in, or exclude a material item of deduction from, taxable income for
any Post-Closing Tax Period as a result of any (A) change in method of
accounting for a Pre-Closing Tax Period under Code Section 481(c) (or any
corresponding or similar provision under state, local or foreign Income Tax
law), (B) written and legally binding agreement with a Taxing Authority relating
to Taxes, (C) installment sale or open transaction disposition or intercompany
transaction made on or prior to the Closing Date, (D) prepaid amount received on
or prior to the Closing Date, or (E) deferred intercompany gain or excess loss
account described in Treasury regulations promulgated under Section 1502 of the
Code (or any corresponding or similar provision under state, local or foreign
Income Tax law).
(b) No transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Code (relating to "FIRPTA").
(c) Except as listed in Schedule 3.8, no payment or other benefit, and no
acceleration of the vesting of any options, payments or other benefits, will be,
as a result of the transactions contemplated by this Agreement, an "excess
parachute payment" to a "disqualified individual" as those terms are defined in
Section 280G of the Code and the Treasury regulations thereunder.
Section 3.9 Litigation. As of the date hereof, except as disclosed in
Schedule 3.9: (a) there are no outstanding Governmental Orders or Actions
pending or, to the Knowledge of Seller, threatened against or affecting any IPC
Company or any of their present or former directors or officers, any IPC Assets
or the Business that would individually reasonably be expected to exceed
$500,000, or that would in the aggregate reasonably be expected to exceed
$1,000,000, as the case may be, in costs, expenses, disbursements, losses,
obligations, liabilities, settlement payments, awards, judgments, fines
penalties and damages, which determination of exposure shall be made consistent
with IPC policies for establishing reserves in accordance with GAAP; (b) no IPC
Company is permanently or temporarily enjoined by any Governmental Order from
engaging in or continuing any conduct or practice in connection with the
Business or the IPC Assets, nor, to the Knowledge of Seller, is any
investigation pending by any Governmental Authority with respect to any of the
IPC Companies, the Business or any of the IPC Assets; and (c) there is no
Governmental Order enjoining any IPC Company from taking or requiring any IPC
26
Company to take any action of any kind with respect to the Business or any of
the IPC Assets. Notwithstanding the foregoing, no representation or warranty in
this Section 3.9 is made with respect to ERISA matters, environmental matters,
labor and employee matters and intellectual property matters.
Section 3.10 Employee Benefit Plans.
----------------------
(a) Schedule 3.10 lists each written "employee benefit plan," as defined
in Section 3(3) of ERISA, each stock option, stock purchase, stock ownership,
deferred compensation, severance, performance, bonus, incentive, vacation or
holiday pay plan, policy, understanding or arrangement and each other employee
benefit plan or arrangement (including fringe benefit plans or arrangements)
that is maintained on the date hereof or otherwise contributed to by any Dynegy,
Seller or any of their subsidiaries for the benefit of Employees ("Employee
Benefit Plans"). There are no Employee Benefit Plans that are sponsored solely
for the benefit of Employees. There are no Employee Benefit Plans that are
sponsored solely by one or more of the IPC Companies. In addition, Schedule 3.10
lists each material written employment, compensation, and consulting agreement
or arrangement, and any agreement or arrangement associated with a change in
ownership or the sale of substantially all the assets of any IPC Company or
Dynegy or any of their respective Affiliates, in each case, entered into with
any Employee ("Compensation Arrangements"). There are no plans or arrangements
that are "pension plans" within the meaning of Section 3(2) of ERISA but are not
intended to be qualified under Section 401(a) of the Code pursuant to which any
Employee is entitled to benefits. The term "Employees" shall mean all Active
Employees, Other Plan Participants and Retirees, as those terms are used in
Article VI. Seller has made available to Purchaser copies of (i) each Employee
Benefit Plan and each Compensation Arrangement (or, in the case of any material
unwritten Employee Benefit Plans or Compensation Arrangements, descriptions
thereof); (ii) the most recent annual report on Form 5500 filed with the
applicable Governmental Authority with respect to each Employee Benefit Plan (if
any such report was required by applicable Law); (iii) the most recent summary
plan description for each Employee Benefit Plan for which such a summary plan
description is required by applicable Law; (iv) each trust agreement or annuity
contract relating to any Seller Pension Plan or Seller VEBA; and (v) the most
recent actuarial report for any Seller Pension Plan. Each report described in
clause (v) of the preceding sentence accurately describes the funded status of
the plan to which it relates as of the date indicated in such report and there
has been no material change in the investment strategy of such plan since such
date. To the knowledge of Dynegy and Seller and except as set forth on Schedule
3.10, no IPC Company maintains any material oral Employee Benefit Plan or
Compensation Arrangement. For purposes of the preceding sentence, the term
"knowledge" means the actual knowledge of the Director Human Resources of IPC.
(b) Except for matters that are listed in Schedule 3.10 or would not
result in a material liability to Purchaser: (i) each Employee Benefit Plan has
been administered in accordance with its terms; (ii) each IPC Company and all
the Employee Benefit Plans are in compliance with all Laws applicable to the
Employee Benefit Plans, including ERISA and the Code (or any similar applicable
Law of a country other than the United States); and (iii) to the Knowledge of
Seller, there are no investigations by any Governmental Agency, termination
proceedings or other Actions against or directly involving any Employee Benefit
27
Plan or asserting any rights or claims to benefits under any Employee Benefit
Plan (except claims for benefits payable in the normal operation of the Employee
Benefit Plans).
(c) Except as listed in Schedule 3.10, (i) all material contributions to,
and payments from, any Seller Pension Plan, Seller VEBA and Seller Savings Plan
that may have been required to be made in accordance with the terms of such
plans or any applicable collective bargaining agreement have been timely made;
(ii) no person has failed to make a required installment or any other payment
required under Section 412 of the Code to any Seller Pension Plan before the
applicable due date; and (iii) none of Dynegy, Seller or any of the IPC
Companies or any of their respective Affiliates has contributed to (or been
required to contribute to) a multiemployer plan, within the meaning of Section
3(37) of ERISA, since February 1, 2000 for the benefit of Employees. Schedule
3.10 identifies each trust funding any Employee Benefit Plan that is intended to
meet the requirements of Code Section 501(c)(9), and each such trust meets such
requirements and provides no disqualified benefits (as such term is defined in
Code Section 4976(b)) or (iii) is unfunded.
(d) Except as set forth on Schedule 3.10, (i) each Employee Benefit Plan
that is intended to qualify under Section 401(a) of the Code has been the
subject of a favorable determination letter from the IRS to the effect that such
plan is qualified and the related trust is exempt from Federal income taxes
under Sections 401(a) and 501(a), respectively, of the Code, no such
determination letter has been revoked and, to the Knowledge of Dynegy and
Seller, revocation has not been threatened; and (ii) no event has occurred that
would subject any Employee Benefit Plan to any material Tax under Section 511 of
the Code. Seller has made available to Purchaser a copy of the most recent
determination letter received with respect to each Employee Benefit Plan for
which such a letter has been issued, as well as a copy of any pending
application for a determination letter. Seller has also made available to
Purchaser a list of all amendments as to which a favorable determination letter
has not yet been received.
(e) None of Dynegy, Seller, any of the IPC Companies or any of their
respective Affiliates has made or granted or committed to make or grant any
material benefit improvements under any Seller Pension Plan (except as provided
in the plan documents and/or Memorandum of Agreement dated May 29, 2003 and the
Tentative Agreement of Joint IBEW Negotiating Committee and Illinois Power dated
July 15, 2003 made available to Purchaser) to which Transferred Employees are or
may become entitled which are not reflected in the actuarial report dated
January 1, 2002 provided by Seller to Purchaser and, except as specifically
provided in the documents described in Section 3.10(a) or as permitted by
Section 5.1, there are no other amendments to any Employee Benefit Plan or
Compensation Arrangement that have been adopted or approved, nor has Dynegy, any
IPC Company or any of their respective Affiliates undertaken to make any such
amendments or to adopt or approve any new Employee Benefit Plan or Compensation
Arrangement.
(f) Except for matters that are set forth on Schedule 3.10, with respect
to each Seller Pension Plan, (i) no proceeding has been initiated to terminate
such plan; (ii) there has been no "reportable event" (as such term is defined in
Section 4043(c) of ERISA) prior to the date hereof other than reportable events
for which notice is waived under applicable regulations; (iii) no "accumulated
funding deficiency" (within the meaning of Section 412 of the Code), whether or
28
not waived, has occurred; and (iv) no person has provided or is required to
provide security to such plan under section 401(a)(29) of the Code due to a plan
amendment that results in an increase in current liability.
(g) Dynegy, Seller and their respective Affiliates have complied with the
health care continuation requirements of Part 6 of Title I of ERISA in all
material respects. Except as set forth in Schedule 3.10, neither the execution
and delivery of this Agreement nor the consummation of the transaction
contemplated by this Agreement and by the Ancillary Agreements will (either
alone or in conjunction with any other event) result in an increase in the
amount of compensation or benefits or accelerate the vesting or timing of
payment or cause the funding or delivery of any compensation or benefits payable
to or in respect of any person rendering services to any IPC Company or result
in any limitation on the right of any IPC Company to amend, merge, terminate or
receive a reversion of assets from any Employee Benefit Plan or related trust.
(h) None of Dynegy, Seller nor any of their respective Affiliates nor, to
the Knowledge of Dynegy and Seller, any other "disqualified person" (within the
meaning of Section 4975 of the Code) or "party in interest" (within the meaning
of Section 3(14) of ERISA) has taken any action with respect to any Employee
Benefit Plan which could subject Purchaser or any of the IPC Companies to the
penalty or tax under Section 502(i) or Section 502(l) of ERISA or Section 4975
of the Code.
(i) None of Dynegy, Seller nor any of their respective Affiliates has
taken any action or failed to take any action as of the date hereof that will
result in any potential liability, whether direct or indirect, contingent or
otherwise, to Purchaser or any of the IPC Companies under Section 4063, 4064,
4069, 4204 or 4212(c) of ERISA.
Section 3.11 Environmental Matters. Except as listed in Schedule 3.11:
(a) The IPC Companies, the IPC Assets and the Business are in compliance
with all Environmental Laws, except for any violations that would not
individually or in the aggregate reasonably be expected to result in a Material
Adverse Effect.
(b) Neither any IPC Company nor any Seller Group Member has caused or
allowed the generation, treatment, manufacture, processing, distribution, use,
storage, disposal, Release, transport or handling of any Hazardous Substances at
any of the IPC Assets, except for any such action or actions that would not
individually or in the aggregate reasonably be expected to result in a Material
Adverse Effect.
(c) To the Knowledge of Seller, no IPC Company or any of its Affiliates
has received any written notice from any Governmental Authority or third party
or any other written communication alleging or concerning any material violation
by any IPC Company of any Environmental Law, or responsibility or liability of
any IPC Company under, any Environmental Law, or in connection with the Release,
threatened Release or presence of any Hazardous Substances at, on, or beneath,
to, from or in the indoor or outdoor environment at any of the Businesses or IPC
Asset or any off-site location (including soil, sediment, surface water,
groundwater, air or any component of a structure), which would reasonably be
29
expected to result in a Material Adverse Effect. To the Knowledge of Seller,
there are no pending or threatened Actions with respect to the Businesses or the
IPC Assets alleging or concerning any violation of or responsibility or
liability under any Environmental Law or the Release, threatened Release or
presence of any Hazardous Substances at, on, beneath, to, from or in the indoor
or outdoor environment at any of the Businesses or IPC Assets or any off-site
location (including soil sediment, surface water, groundwater, air or any
component of a structure) that, if adversely determined, would reasonably be
expected to result individually or in the aggregate in a Material Adverse
Effect.
(d) The IPC Companies hold and are in material compliance with all Permits
from all Governmental Authorities under all Environmental Laws required for the
operation of the Business and the IPC Assets, except Permits the failure of
which to hold would not individually or in the aggregate reasonably be expected
to have a Material Adverse Effect. To the Knowledge of Seller, there are no
pending or threatened Actions seeking to modify, revoke or deny renewal of any
of such Permits.
(e) To the Knowledge of Seller, no claims have been asserted or threatened
against any of the IPC Companies or any Seller Group Member for any personal
injury (including wrongful death) or property damage (real or personal) arising
out of exposure to Hazardous Substances used, handled, generated, transported,
disposed of or Release at any of the IPC Assets, that, if adversely determined,
would reasonably be expected to result in a Material Adverse Effect individually
or in the aggregate.
(f) None of the IPC Companies and none of the Seller Group Members is
subject to any outstanding written Governmental Order or settlement agreement
with any Person relating to any of the IPC Assets or the Business, in each case
with respect to any Environmental Matters that, if adversely determined, would
reasonably be expected to result in a Material Adverse Effect individually or in
the aggregate.
(g) To the Knowledge of Seller, no IPC Assets are listed or proposed for
listing on the NPL, or on the Comprehensive Environmental Response Compensation
and Liability Information System List ("CERCLIS") or any similar state list of
sites.
Section 3.12 Compliance with Applicable Laws.
-------------------------------
(a) The IPC Companies hold all Permits necessary to entitle the IPC
Companies to own or lease, operate and use the IPC Assets (except with respect
to IPC Assets not owned or leased by the IPC Companies, before giving effect to
asset transfers contemplated by this Agreement), and for the lawful conduct of
the Business, other than any Permits for which the failure of an IPC Company to
hold such Permits would not individually or in the aggregate reasonably be
expected to have a Material Adverse Effect (collectively, the "Material
Permits"). Schedule 3.12(a) sets forth a list and brief description of each
Material Permit. Each Material Permit is valid and in full force and effect.
Except as set forth in Schedule 3.12(a), each IPC Company is in compliance in
all material respects with its Material Permits. The Business is not being, and
none of the IPC Companies or their respective Affiliates has received any notice
from any Person that the Business is being, conducted in violation of any Law,
including any Law relating to occupational health and safety, except for
30
possible violations that would not individually or in the aggregate reasonably
be expected to result in a Material Adverse Effect. Notwithstanding the
foregoing, no representation or warranty in this Section 3.12 is made with
respect to ERISA matters, environmental matters, labor and employee matters and
intellectual property matters. In no event shall Material Permits be deemed to
include any item which is a Material Contract.
(b) Each of the IPC Companies is in compliance with regulations under
Illinois Law governing its operations as an Integrated Distribution Company,
under 83 Illinois Administrative Code Part 452, to the extent applicable.
(c) Schedule 3.12(c) sets forth a list of each municipal and county
franchise agreement to which any IPC Company is a party as of the date hereof.
Section 3.13 Labor Matters; Employees.
------------------------
(a) Schedule 3.13(a) lists all collective bargaining, labor or similar
agreements, including material local or side agreements (other than Employee
Benefit Plans as set forth in Section 3.10), in effect to which any IPC Company
is a party or by which any IPC Company is bound or otherwise used in the
Business). Copies of all such agreements have been made available to Purchaser.
Since February 1, 2000, each IPC Company has complied in all material respects
with its obligations related to, and is not in material default under, any
collective bargaining agreement to which any IPC Company is a party or by which
any IPC Company, the Business or the IPC Assets may be subject or bound. To the
Knowledge of Seller, there are currently no union organizing activities relative
to any IPC Company, the IPC Assets or the Business among the current employees
of any IPC Company. Other than ordinary grievances concerning individual
employees that are being resolved solely pursuant to internal grievance
procedures and immaterial and ordinary course Actions pending or, to the
Knowledge of Seller, threatened involving employment matters, (i) there is no
labor strike, dispute, slowdown, work stoppage or lockout actually pending or,
to the Knowledge of Seller, threatened against or directly and adversely
affecting any IPC Company, the IPC Assets or the Business; (ii) there is no
unfair labor practice charge or complaint against any IPC Company or involving
the IPC Assets or the Business pending or, to the Knowledge of Seller,
threatened before the National Labor Relations Board or any similar state or
foreign agency; and (iii) there is no pending or, to the Knowledge of Seller,
threatened employee or governmental claim or investigation regarding employments
matters, including any charges to the Equal Employment Opportunity Commission or
state employment practice agency, or, to the Knowledge of Seller, investigations
regarding Fair Labor Standards Act compliance, audits by the Office of Federal
Contractor Compliance Programs.
(b) Since February 1, 2000, no IPC Company has effectuated (i) a "plant
closing" (as defined in the WARN Act) affecting any site of employment or one or
more facilities or operating units within any site of employment or facility of
any IPC Company; or (ii) a "mass layoff" (as defined in the WARN Act) affecting
any site of employment or facility of any IPC Company, nor has any IPC Company
been engaged in layoffs or employment terminations sufficient in number to
trigger application of any similar state or local Law.
31
(c) As of the date of this Agreement, Employees of the IPC Companies who
are represented by the Laborers International Union or the Pipefitters receive
the same employee benefits as the employees of the IPC Companies who are
represented by the International Brotherhood of Electrical Workers (the "IBEW"),
as provided for in the Joint Benefits Agreement with the IBEW.
Section 3.14 Material Contracts. Except as set forth in Schedule 3.14:
(a) No IPC Company is a party to or bound by: (i) any Contract that
provides for remaining annual consideration in an amount in excess of
$5,000,000; (ii) any Contract that restricts any IPC Company, the IPC Assets,
the Business or any Person who after the Closing would be an Affiliate of such
IPC Company from engaging in any line of business or competing with any Person;
(iii) any Contract limiting the right of any IPC Company to pay dividends or
distributions to its shareholders; (iv) any Contract that would impose or
expressly permit the imposition of, or require any Person to impose or expressly
permit the imposition of, upon and due to the consummation of the transactions
contemplated by this Agreement or any Ancillary Agreement, any Lien other than
Permitted Liens upon any of the businesses, assets or properties of Purchaser or
any of its Affiliates; or (v) any Contract that is a "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the General Rules
and Regulations promulgated by the SEC) of the IPC Companies (such Contracts
described in clauses (i) through (v), collectively the "Material Contracts".
Notwithstanding the foregoing, no representation or warranty in this
Section 3.14 is made with respect to, and "Material Contracts" shall be deemed
not to include any Contract relating to, ERISA matters, environmental matters,
labor and employee matters, personal property, intellectual property matters and
real property matters (other than the real property matters identified on
Schedule 3.14). In no event shall Material Contracts be deemed to include any
item which is a Material Permit.
(b) Each IPC Company that is a party to a Material Contract has performed
in all material respects all obligations to be performed by it and has observed
in all material respects all terms to be observed by it under such Material
Contract. No IPC Company has received any written notice of cancellation or
threatened cancellation relating to a Material Contract or has any Knowledge
that a Material Contract is likely to be cancelled, other than upon any
expiration of such Material Contract in accordance with its terms.
(c) Except as set forth in Schedule 3.14, each Material Contract is a valid
and binding agreement, is in full force and effect, is Enforceable by the IPC
Company that is a party thereto against each other party thereto in accordance
with its terms, except for those Material Contracts which by their terms will
expire prior to the Closing (or are otherwise terminated prior to the Closing in
the ordinary course of business or in accordance with the provisions of this
Agreement). To the Knowledge of Seller, each other party to a Material Contract
is not in default or in breach in any material respect of any such Material
Contract.
Section 3.15 Intellectual Property.
---------------------
(a) Schedule 3.15 contains a complete list of all issued patents,
registered copyrights, trademark registrations, domain name registrations, and
applications for any of the foregoing that have been issued to, assigned to or
32
filed by any of the IPC Companies or used in the Business, except for such
issued patents, registered copyrights, trademark registrations, domain name
registrations, and applications for any of the foregoing, the failure of which
to have would not individually or in the aggregate reasonably be expected to
have a Material Adverse Effect. Except as would not individually or in the
aggregate reasonably be expected to result in a Material Adverse Effect, the IPC
Companies have all rights to the Intellectual Property owned, licensed or used
by them as are necessary to conduct the Business.
(b) Except as disclosed in Schedule 3.15, (i) all material patents,
trademark registrations, service ▇▇▇▇ registrations and internet domain name
registrations issued to, assigned to or filed by any of the IPC Companies or
used in the Business are in full force and effect and all applications for any
such patent, trademark and service ▇▇▇▇ are pending without challenge (other
than office actions which may have been issued by the U.S. Patent and Trademark
Office or its foreign equivalents); (ii) the material Intellectual Property in
the form of Contracts is Enforceable by the IPC Company that is a party to such
Contracts; and (iii) the IPC Companies have the right to bring actions for
infringement or unauthorized use of the material Intellectual Property owned by
the IPC Companies.
(c) As of the date hereof and except as disclosed in Schedule 3.15,
(i) during the three years before the Closing Date, no written claim has been
made or asserted against any of the IPC Companies that alleges any Intellectual
Property owned or used by any of the IPC Companies or used in the Business and
material to their business infringes the Intellectual Property of another
Person; (ii) no litigation, arbitration or other proceeding is currently pending
or, to the Knowledge of Seller, threatened against any of the IPC Companies or
any of their respective Affiliates with respect to any material Intellectual
Property owned or used by or used in the Business; (iii) during the three years
before the Closing Date, no claim has been made or asserted against any of the
IPC Companies or any of their respective Affiliates that challenges the
validity, enforceability or ownership of any material Intellectual Property
owned or used by the IPC Companies or used in the Business; (iv) to the
Knowledge of Seller, the conduct of the Business does not violate, conflict with
or infringe the Intellectual Property owned by any other Person; and (v) to the
Knowledge of Seller, there is no continuing infringement by any other Person of
the material Intellectual Property owned or used by any of the IPC Companies or
used in the Business.
(d) Schedule 3.15 contains a complete list of all material Software owned
or licensed by any of the IPC Companies or used in the Business. Except as
disclosed in Schedule 3.15 or as would not individually or in the aggregate
reasonably be expected to result in a Material Adverse Effect, the IPC Companies
either: (i) own the entire right, title and interest in and to the Software used
in the Business free and clear of Liens except for Permitted Liens; or (ii) have
the right and license to use the same in the conduct of the Business. Except as
would not individually or in the aggregate reasonably be expected to result in a
Material Adverse Effect, the IPC Companies have all rights to the Software owned
licensed or used by them or in the Business as are necessary to conduct their
Business.
Section 3.16 Real Property. The IPC Properties and the scope of the IPC
Companies' rights in the IPC Properties are sufficient for the operation of the
Business in the manner currently operated and in compliance in all material
33
respects with all applicable Laws. No IPC Company owns, leases or uses in
connection with the Business any real property other than the IPC Properties.
Except as set forth on Schedule 3.16 or as would not individually or in the
aggregate reasonably be expected to result in a Material Adverse Effect: (i) the
IPC Companies have good, valid, marketable and insurable fee simple title to the
IPC Owned Real Property, a good, valid, marketable and insurable leasehold
interest in the Leased Real Property, and easements or other similar rights in,
and quiet enjoyment of, the IPC Other Real Property, in each case free and clear
of any Liens other than Permitted Liens (and, in the case of the Leased Real
Property, subject to (a) any assignment or transfer restrictions and other terms
and conditions contained in any applicable lease, and (b) if applicable, the
lack of recordation of such lease or a memorandum thereof in the applicable
local real estate recording office); (ii) all improvements and occupancy, and
the use of such improvements and occupancy of the IPC Properties, and all
business operations thereon conform in all material respects with all applicable
zoning, building, fire and safety Laws and, to the Knowledge of Seller, none of
the IPC Properties has received any currently effective notice of noncompliance
with any Laws; (iii) each lease, sublease, easement, license or other agreement
or instrument comprising any portion of the IPC Properties is a valid and
binding agreement in full force and effect and Enforceable by the IPC Company
which is a party thereto against the other parties thereto, no material default
by any of the IPC Companies or, to the Knowledge of Seller, by any other party
exists under any provision thereof and no condition or event exists which after
notice or lapse of time or both would constitute a material default thereunder
by any of the IPC Companies or, to the Knowledge of Seller, any other party;
(iv) there are, to the Knowledge of Seller, no disputes, oral agreements, or
forbearance programs in effect with respect to any such lease, sublease,
easement, license or other agreement or instrument; (v) no IPC Company nor any
IPC Property is in material breach or default under, or in violation of or
noncompliance with, any Liens and, to the Knowledge of Seller, no event has
occurred and no condition or state of facts exists which, with the passage of
time or the giving of notice or both, would constitute such a breach, default,
violation or noncompliance; (vi) none of the IPC Companies has received written
notice and Seller have no Knowledge of (A) any default by a landlord or other
Person under any fee mortgage or other Lien that is superior to any lease,
sublease, easement or license comprising a portion of the IPC Properties or (B)
any claim of paramount title by any third party claiming the right to terminate
any lease, sublease, easement or license comprising a portion of the IPC
Properties; (vii) the IPC Companies have legal and practical access to all roads
and utilities needed for the conduct of their business on the IPC Properties in
the manner presently conducted; (viii) none of the IPC Companies has received
and, to the Knowledge of Seller, there do not exist any adverse claims to such
access that would adversely affect the use currently being made of such access
by the IPC Companies; (ix) there are no encroachments onto IPC Properties of any
improvements on any adjoining property; (x) the IPC Properties are not located
within any flood plain or subject to any similar type of restrictions for which
any permit, license or additional insurance may be necessary for the use and
operation thereof; and (xi) there are no pending condemnation or similar
proceedings relating to any of the IPC Properties. The transfer of the
Generation Assets pursuant to the Asset Transfer Agreements (including for these
purposes the Generation Agreement) were consummated in compliance in all
material respects with all Laws, Permits and any approvals of any Governmental
Authority.
34
Section 3.17 Brokers. No broker, finder or investment banker (other than
Credit Suisse First Boston LLC) is entitled to any brokerage, finder's fee or
other fee or commission payable by Dynegy or Seller or any of their respective
Affiliates in connection with the transactions contemplated hereby and by the
Ancillary Agreements.
Section 3.18 Personal Property. Schedule 3.18 contains a list of each
Contract or right under which any of the IPC Companies is lessee, or holds or
operates, any machinery, equipment, vehicle or other tangible personal property
owned by a Person other than the IPC Companies, except those that are terminable
by the IPC Company party thereto without penalty on 60 days or less notice and
those that provide for annual payments of $500,000 or less.
Section 3.19 Availability of Assets; Affiliate Transactions.
----------------------------------------------
(a) Except as set forth in Schedule 3.19, the IPC Assets constitute all
the material assets used in the Business and are sufficient for the conduct of
the Business as it is currently conducted.
(b) Schedule 3.19 sets forth a description of all material services
provided by any Affiliate of any of the IPC Companies (other than another IPC
Company) to any of the IPC Companies with respect to the Business utilizing
either (i) assets not included in the IPC Assets or (ii) employees that are not
Active Employees, and the manner in which the costs of providing such services
have been allocated to the Business.
Section 3.20 Title to Property. The IPC Companies have good and marketable
title to all of the material IPC Assets (other than the IPC Properties, which
are covered by Section 3.16), free and clear of all Liens, except for Permitted
Liens.
Section 3.21 Bank Accounts; Powers of Attorney; Minute Books.
-----------------------------------------------
(a) Schedule 3.21 lists a complete and correct list of all bank accounts
and safe deposit boxes of each IPC Company and persons authorized to sign or
otherwise act with respect thereto and a complete and correct list of all
persons holding a general or special power of attorney granted by any of the IPC
Companies and a complete and correct copy thereof.
(b) The minute books of each of the IPC Companies have been made available
to Purchaser. Such minute books contain true and complete records of all
meetings and other corporate action taken by the board of directors and
stockholders of each of the IPC Companies during the past three years.
35
Section 3.22 Regulation as a Utility. IPC is regulated as a public utility
by the State of Illinois. Except as set forth in the previous sentence, neither
IPC nor any "subsidiary company" or "affiliate" of IPC is subject to regulation
as a public utility or public service company (or similar designation) by any
other state in the United States or any foreign country. Dynegy and Seller are
public utility holding companies as defined by PUHCA, but currently claim
exemptions from registration under PUHCA under Section 3(a)(1) of PUHCA pursuant
to orders of the SEC issued thereunder.
Section 3.23 Regulatory Proceedings. Except as listed on Schedule 3.23, and
other than fuel adjustment or purchase gas adjustment, manufactured gas plant
remediation expense adjustment or similar adjusting rate mechanisms, none of the
IPC Companies all or part of whose rates or services are regulated by a
Governmental Authority (a) is a party to any rate proceeding before a
Governmental Authority that would reasonably be expected to result in orders
that, individually or in the aggregate, would have a Material Adverse Effect;
(b) has rates that have been or are being collected subject to refund, pending
final resolution of any rate proceeding pending before a Governmental Authority
or on appeal to a court; or (c) is a party to any Contract with any Governmental
Authority (other than franchise, customer and service area agreements) imposing
conditions on rates or services in effect as of the date hereof.
Section 3.24 Hedging. Except as set forth in Schedule 3.24, none of the IPC
Companies engages in any natural gas, electricity or other futures or options
trading or is a party to any price swaps, ▇▇▇▇▇▇, futures or similar
instruments, except for transactions and Contracts entered into, or hedge
Contracts, for the purchase or sale of electricity or hydrocarbons, transmission
rights and ancillary services or other financial ▇▇▇▇▇▇ and swaps to which any
of the IPC Companies is a party that, to the Knowledge of Seller, are in
accordance with the general practices of other similarly situated companies in
the industry.
Section 3.25 Responsibility for Compliance with ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. IPC has
responsibility for establishing and maintaining internal control over financial
reporting, as defined in the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, of IPC through the Closing to
the extent required of IPC through such date in its capacity as a Subsidiary of
Dynegy, pursuant to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
Section 3.26 Insurance. Each of the IPC Companies is currently insured with
insurers rated at least A.M. Best A-VII, and are in such amounts and against
such types of risks as are customary and appropriate in its industry or
otherwise deemed reasonable by Seller. All such policies are in full force and
effect; however, except for the coverage required under Section 5.5(c), coverage
of the IPC Companies under Seller's insurance policies will terminate at
Closing. As respects the current policies of insurance covering the IPC
Companies, Corporate Risk Management & Insurance has not received any written
notice of cancellation with respect to any insurance policy covering any IPC
Company, except as would not have a Material Adverse Effect. All premiums due
and payable with respect to such policies have been paid. For any written notice
of any demand or suit against any IPC Company for damages because of bodily
injury, including death, personal injury or property damage made against any IPC
Company estimated to have an ultimate liability of $500,000 per occurrence or
more, Seller and Dynegy represent that these matters have been reported to IPC's
36
excess insurance carrier(s) to the extent that information has been disclosed in
writing from the IPC Companies' personnel to the Corporate Risk Management &
Insurance Department (Houston).
Section 3.27 Clinton Nuclear Power Station. Except as set forth in Schedule
3.27, as of the date hereof, to Seller's Knowledge:
(a) neither AmerGen nor any of its Affiliates have made demand, notice of
claim, claim or potential claim against Seller or any of its Affiliates arising
from the Asset Purchase Agreement dated June 30, 1999, between AmerGen and IPC
or other agreement related to the sale of the Clinton Nuclear Power Station
("APA"), including any claim for indemnification pursuant to Section 8.1(b) of
the APA;
(b) neither Seller nor any of its Affiliates have made demand, notice of
claim, claim or potential claim against AmerGen arising from the APA or other
agreements related to the sale of the Clinton Nuclear Power Station, including
any claim for indemnification pursuant to Section 8.1(a) of the APA;
(c) no demands, claims or potential claims have been asserted against
Seller or any of its Affiliates arising out or related to IPC's ownership or
operation of the Clinton Nuclear Power Station; and
(d) no demands, claims or potential claims, liabilities or obligations have
been asserted against Seller or any of its Affiliates arising from (or alleged
to arise from) the off-site disposal, treatment, storage, transportation or
recycling of Hazardous Substances from the Clinton Nuclear Power Station,
including any shipments from Clinton Nuclear Power Station prior to December 15,
1999.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller, IGC and Dynegy to enter into this Agreement and
the Ancillary Agreements and to consummate the transactions contemplated hereby
and thereby, Purchaser hereby represents and warrants to Seller, IGC and Dynegy
as follows:
Section 4.1. Organization and Qualification.
Purchaser is a corporation duly incorporated, validly existing and in good
standing under the Laws of the State of Missouri, is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the character of Purchaser's properties or the nature of its business
makes such qualification necessary, except in jurisdictions, if any, where the
failure to be so qualified would not individually or in the aggregate reasonably
be expected to result in a material adverse effect on Purchaser's ability to
perform its obligations under this Agreement or the Escrow Agreement. Purchaser
has the requisite corporate power and authority to own, use or lease its
properties and to carry on its business as it is now conducted. Purchaser has
made available to Seller a complete and correct copy of its certificate of
37
incorporation and by-laws, each as amended to date, and Purchaser's certificate
of incorporation and by-laws as so made available are in full force and effect.
Purchaser is not in default in the performance, observation or fulfillment of
any provision of its certificate of incorporation and by-laws. Purchaser is
treated as a corporation for all Tax purposes and is eligible to be the
purchaser in a "qualified stock purchase" as such term is defined in Section 338
of the Code.
Section 4.2. Authority.
Purchaser has full corporate power and authority to execute and deliver
this Agreement, the Escrow Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement,
the Escrow Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by Purchaser's board of directors,
and no other authorization or consent on Purchaser's part is necessary to
authorize this Agreement, the Escrow Agreement or to consummate the transactions
contemplated hereby. This Agreement and the Escrow Agreement have been duly and
validly authorized, executed and delivered by Purchaser and is Enforceable
against Purchaser.
Section 4.3. Conflicts. The execution and delivery of this Agreement, the
Escrow Agreement and the consummation of the transactions contemplated hereby,
and the performance by Purchaser of its obligations hereunder do not and will
not:
(a) except as listed in Schedule 4.3(a), require any writ, waiver, consent,
judgment, decree, approval, order, act or Permit of, or registration, filing
with or notification to any Governmental Authority, except for Permits that are
ministerial in nature and are customarily obtained from Governmental Authorities
after closings in connection with transactions of the same nature as are
contemplated hereby; or
(b) except as listed on Schedule 4.3(b), conflict with, result in any
violation of or the breach of or constitute a default (with notice or lapse of
time or both) under, or give rise to any right of termination, purchase, first
refusal, cancellation, modification or acceleration or guaranteed payments or a
loss of rights under, (i) any provision of the certificate of incorporation or
by-laws (or similar organization documents) of Purchaser; (ii) any provisions of
any material Contract or other obligation or any Governmental Order or Permit to
which Purchaser is a party or by which Purchaser or any of its properties or
assets may be bound, except in the case of clause (ii) such conflicts,
violations, breaches, defaults, or rights of termination, cancellation,
modification or acceleration, guaranteed payments or losses of rights which,
individually or in the aggregate, would not reasonably be expected (A) to result
in a material adverse effect on, or otherwise materially impair the ability of,
Purchaser to perform its obligations under this Agreement or (B) to prevent the
consummation of any of the transactions contemplated hereby; or
(c) violate the provisions of any Law or Governmental Order applicable to
Purchaser or any of its assets or properties.
38
Section 4.4. Securities Matters. Purchaser is an "accredited investor" as
that term is defined in Regulation D promulgated under the Securities Act.
Purchaser (a) is acquiring the Shares solely for investment with no present
intention to distribute any of the Shares to any Person and (b) will not sell or
otherwise dispose of any of the Shares except in compliance with the
registration requirements or exemption provisions of the Securities Act and any
other applicable securities Laws.
Section 4.5. Litigation. As of the date hereof, there is no Action (or
group of related Actions) pending or, to the Knowledge of Purchaser, threatened
against Purchaser that seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement.
Section 4.6. Availability of Funds. Purchaser currently has the financial
ability to consummate the transactions contemplated by this Agreement and
Purchaser will, at the Closing and thereafter as necessary to comply herewith,
have sufficient cash in immediately available funds to pay the cash portion of
the Purchase Price pursuant to Article II, to consummate the transactions
contemplated hereby and otherwise to satisfy its obligations under this
Agreement, including those under Section 5.9.
Section 4.7. Brokers. No broker, finder or investment banker (other than
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Purchaser or any of its
Affiliates.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1. Conduct of Business Prior to the Closing. Except as
contemplated by this Agreement, any Ancillary Agreement or as set forth on
Schedule 5.1, from the date hereof until the Closing, the Dynegy Parties shall
cause the Business to be conducted in the ordinary course to maintain the IPC
Assets in good operating condition and repair and to use their commercially
reasonable efforts (consistent with past practice) to keep intact the Business,
keep available the services of the IPC Companies' employees and the employees
used in connection with the Business and preserve the goodwill of the customers,
suppliers, contractors, Governmental Authorities, distributors and others having
a relationship with any of the IPC Companies. Without limiting the generality of
the foregoing, except as contemplated by this Agreement, any Ancillary Agreement
or as set forth on Schedule 5.1, Dynegy and Seller shall not permit any IPC
Company to do any of the following without the prior written consent of
Purchaser, not to be unreasonably withheld (such consent to be granted or
withheld, as the case may be, promptly after a Seller's written request
therefor):
(a) modify or amend its articles of incorporation or by-laws (or comparable
constitutive documents) in a way that would adversely affect the consummation of
the transactions contemplated by this Agreement or any Ancillary Agreement;
(b) modify, terminate or amend any Material Contract, IPC Other Real
Property or Leased Real Property, other than in the ordinary course;
39
(c) adopt or amend any Employee Benefit Plan or Compensation Arrangement or
any related trust or enter into or adopt any collective bargaining agreement or
other Contracts with any labor union or similar organization that applies to, or
covers, Employees, except, in each case, (i) in the ordinary course consistent
with past practice in a manner that does not materially increase the cost of the
compensation and benefits of any Employee or (ii) as required by applicable Law;
(d) grant to any Employee any increase in guaranteed cash compensation,
except (i) in the ordinary course consistent with past practice or (ii) as may
be required (A) under existing Contracts, or (B) pursuant to any Employee
Benefit Plan as in effect on the date hereof;
(e) sell, transfer or lease any of the IPC Assets to, or extend, modify,
terminate, amend or enter into any Contract with, any of their Affiliates,
except pursuant to intercompany transactions in the ordinary course, subject to
the requirements of Section 5.7;
(f) fail to make or incur capital expenditures in 2004 (or, if applicable,
the portion of 2004 prior to the Closing Date) in accordance with Schedule
5.1(f), the result of such failure being that less than the cumulative total of
the year-to-date capital expenditures set forth in Column G of Schedule 5.1(f)
are made in 2004 (or, if applicable, the portion of 2004 prior to the Closing
Date). In computing the amount of actual capital expenditures made, no amounts
in respect of IPP (Column B in Schedule 5.1(f)) and new business (Column E in
Schedule 5.1(f)) will be included;
(g) except in the ordinary course, enter into any material lease, license
or easement of real property that cannot be assigned to Purchaser in connection
with the transactions contemplated by this Agreement without the consent of the
other parties thereto; provided, however, that an IPC Company may enter into any
such Contract if an IPC Company shall have used commercially reasonable efforts
to exclude such consent right from such Contract in negotiating the provisions
thereof;
(h) make any change in any method of accounting or accounting principles,
practices or policies, other than those required by GAAP or the applicable rules
and regulations of the SEC;
(i) issue, grant, sell or encumber any Equity Interest or any right
relating thereto or make any other changes in the equity capital structure of
any of the IPC Companies;
(j) acquire by merging or consolidating with, by purchasing 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 or otherwise acquire any assets that are material, individually or in
the aggregate, to the Business, except pursuant to capital expenditures in
accordance with Schedule 5.1(f);
(k) sell, lease, transfer, convey, license or otherwise dispose of, or
mortgage, pledge, or impose or suffer to be imposed any Lien other than
Permitted Liens on, any of the IPC Assets, except inventory and obsolete,
damaged, broken or excess equipment, items or materials sold in the ordinary
course consistent with past practices and licenses granted in the ordinary
course;
40
(l) cancel any debts owed to or claims held by it, other than in the
ordinary course;
(m) accelerate or delay collection of any notes or accounts receivable in
advance of or beyond their regular due dates or the dates when the same would
have been collected in the ordinary course (other than any accelerations or
delays occurring in the ordinary course);
(n) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than (A) dividends
and distributions by any Subsidiary of IPC to IPC; (B) regular quarterly cash
dividends with respect to the preferred stock of IPC; or (C) with respect to
restructuring and eliminating the Intercompany Note; (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock; or (iii) purchase, redeem or otherwise acquire any shares of
capital stock of IPC or any Subsidiary of IPC or any other securities thereof or
any rights, warrants or options to acquire any such shares or other securities
other than the preferred shares of IPC;
(o) settle any material contingent liabilities with respect to the IPC
Assets or the Business for which Purchaser could be liable other than in the
ordinary course;
(p) make any fundamental change in the Business or the operations of the
IPC Companies;
(q) except as required by applicable Law, prepare or file any Tax Return
(including any amended Tax Return) relating to any IPC Company inconsistent with
past practice or, on any such Tax Return, take any position, make any election,
or adopt any method that is inconsistent with positions taken, elections made or
methods used in preparing or filing similar Tax Returns in prior periods, or
settle any Audit or other proceeding relating to Taxes payable by or relating to
any IPC Company that could reasonably be expected to have an adverse effect on
such IPC Company in a Post-Closing Tax Period;
(r) incur any indebtedness for borrowed money in excess of $5,000,000 in
the aggregate; provided, however, that nothing herein shall prevent Seller from
prefunding interest payments under the Intercompany Note;
(s) take any action to (or fail to take any action necessary not to)
violate any order or regulation of the ICC (in IPC's good faith interpretation
of any such regulation), governing IPC's operation as an Integrated Distribution
Company under 83 Illinois Administrative Code Part 452;
(t) make any change in the management of IPC's information technology
department that would have a substantial adverse effect on IPC's ability to
manage its information technology systems or to integrate its information
technology systems with those of Purchaser, other than a change required by
applicable Law or resulting from "for cause" termination; or
(u) authorize or commit to do or agree to take, whether in writing or
otherwise, any of the foregoing actions.
41
Section 5.2. Access to Information.
(a) From March 1, 2004 or, if earlier, the date an application is filed
with the ICC for approval of the transactions contemplated by this Agreement,
until the Closing, to the extent permitted by applicable Law (including
antitrust Laws), the Dynegy Parties shall afford the employees, counsel,
accountants, consultants and representatives of Purchaser reasonable access,
during normal business hours, to the offices, properties, facilities, work
papers and books and records of the IPC Companies and their Affiliates and their
accountants relating to the Business, including organizational charts and other
human resources records, information systems architecture, database
designs/structures, sample data extracts, and hardware/software inventory
including code and designs (with the exception of confidential personnel records
or information as to which disclosure would result in the loss of a legal
privilege or protection) as Purchaser reasonably deems necessary or advisable,
and to those Active Employees to whom Purchaser reasonably requests access;
provided, however, that in no event shall Dynegy or Seller be deemed to have
breached the provisions of this Section 5.2(a) with respect to the access
provided to the counsel, accountants, consultants and representatives of
Purchaser if the Dynegy Parties have used commercially reasonable efforts to
cause their respective counsel, accountants and representatives to provide the
level of access otherwise required pursuant to this Section 5.2(a). All
information and knowledge obtained as a result of or in connection with in any
investigation conducted or access provided pursuant to this Section 5.2(a) shall
be subject to the Confidentiality Agreement and any joint defense agreement
entered into by the parties in accordance with their respective terms and the
terms hereof.
(b) From March 1, 2004 or, if earlier, the date an application is filed
with the ICC for approval of the transactions contemplated by this Agreement,
until the Closing, to the extent permitted by applicable Law and without
unreasonable interference with IPC's business, Dynegy shall and shall cause IPC
to cooperate with Purchaser in planning and preparation for integration of
operations, systems, processes and other key business activities of IPC and
Purchaser, including identification and commitment of IPC personnel for
integration planning and making available IPC personnel to serve as an
integration coordinator and key support personnel in the areas of Information
Technology, Human Resources, Energy Delivery and Accounting.
(c) Purchaser, Dynegy and Seller shall provide reasonable cooperation to
each other, and shall cause their respective officers, employees, accountants,
consultants and representatives to provide reasonable cooperation to each other,
for a period of 180 days after the Closing to ensure the orderly transition of
the Business from Seller to Purchaser and to minimize any disruption to the
respective businesses of Seller, Dynegy and Purchaser that might result from the
transactions contemplated hereby. After the Closing, upon reasonable written
notice, Purchaser, Dynegy and Seller shall furnish or cause to be furnished to
each other and their employees, counsel, auditors and representatives reasonable
access, during normal business hours, to such information and assistance
relating to the Business as is reasonably necessary for planning any systems
conversions, process changes, litigation, employee benefits, environmental,
financial reporting and accounting matters, the preparation and filing of any
Tax Returns or the defense of any Tax audit, claim or assessment or any other
similar reasonable matter. In no event shall Purchaser, Dynegy or Seller be
42
deemed to have breached the provisions of this Section 5.2(c) with respect to
the access provided to their respective counsel, auditors and representatives if
the party obligated to provide access pursuant to the terms of this Section
5.2(c) shall have used commercially reasonable efforts to cause their respective
counsel, auditors and representatives to provide the level of access otherwise
required pursuant to this Section 5.2(c). Each party shall reimburse the other
for reasonable out-of-pocket costs and expenses incurred in assisting the other
pursuant to this Section 5.2(c).
(d) No party shall be required by any provision of Section 5.2(a), (b) or
(c), 5.12, 5.17 or 7.2 to take any action that would unreasonably interfere with
the conduct of its business or unreasonably disrupt its normal operations or
result in any actual or reasonably expected breach of applicable Law.
Section 5.3 Governmental Permits and Approvals.
(a) HSR Act Filings. Each party hereto shall, as soon as practicable as
mutually agreed by the parties, file or cause to be filed with the Federal Trade
Commission ("FTC") and the Department of Justice ("DOJ") any notifications
required to be filed under the HSR Act with respect to the transactions
contemplated hereby. Such parties shall use all reasonable best efforts to
respond on a timely basis to any requests for additional information made by
either of such agencies.
(b) Other Regulatory Approvals.
(i) Each party hereto shall cooperate and use reasonable best efforts
to prepare and file as soon as practicable all necessary
documentation, to effect all necessary applications, notices,
petitions, filings and other documents, and to use reasonable
best efforts to obtain all necessary permits, consents, approvals
and authorizations of all Governmental Authorities (including
those listed on Schedules 8.1(b) and 8.2(b)) necessary or
advisable to obtain for ---------------- ------ the consummation
of the transactions contemplated by this Agreement (it being
understood that references in this Agreement to "obtaining" such
permits, consents, approvals and authorizations shall mean making
all such declarations, filings or registrations; giving such
notices; obtaining such authorizations, consents or approvals;
and having such waiting periods expire as are necessary to avoid
a violation of applicable Law).
(ii) Subject to Section 5.3(c), the parties hereto further agree to
(A) take any act, make any undertaking or receive any clearance
or approval required by any Governmental Authority or applicable
Law to obtain a Final Order, and (B) satisfy any conditions
imposed by any Governmental Authority in all Final Orders. Each
of the parties hereto shall (x) respond as promptly as
practicable to any inquiries or requests received from any
Governmental Authority for additional information or
documentation, and (y) not enter into any agreement with any
Governmental Authority not to consummate the transactions
contemplated by this Agreement, except with the prior consent of
the other parties hereto. Subject to Section 5.3(c), each of the
43
parties hereto shall avoid or eliminate each and every impediment
under any antitrust, competition, or trade or energy regulation
Law (including the FPA) that may be asserted by any Governmental
Authority with respect to the transactions contemplated hereby so
as to enable the Closing Date to occur as soon as reasonably
possible. The steps involved in the preceding sentence shall
include agreeing to such limitations on conduct or actions as may
be required in order to obtain all necessary permits, consents,
approvals and authorizations of all Governmental Authorities
(including those listed on Schedule 8.1(b) and 8.2(b)) necessary
or advisable to obtain for the consummation of the transactions
contemplated by this Agreement as soon as reasonably possible, to
avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order in any
suit or proceeding, which would otherwise have the effect of
preventing or delaying the Closing Date, and defending through
litigation on the merits, including appeals, any claim asserted
in any court by any party.
(iii) Purchaser shall make the commitments reflected on Schedule
5.3(b) in the application to ICC.
(c) Exceptions.
(i) Notwithstanding anything to the contrary in this Agreement,
Purchaser and its Affiliates shall not be required to take any
action or actions that individually or together with all other
actions would (A) have a material adverse effect on the business,
financial condition or results of operation (1) of Purchaser and
its Subsidiaries, or (2) of the Business after Closing, (B)
result in a change to IPC's deferred tax balances or rate base
valuation or accounting entries other than as provided on
Schedule 8.2(b), Item I (iv), (C) result in recovery of less than
the portion of Purchaser's costs of accomplishing IPC's
reorganization determined for recovery in accordance with
Schedule 8.2(b), Item I(V), (D) subject IPC to any dividend
restriction other than that set forth on Schedule 8.2(b), Item I
(vi), (E) result in the operation by IPC without the rider
identified on Schedule 8.2(b), Item I (vii), if such operation
without such rider would have a material adverse effect on the
business, financial condition or results of operation (1) of
Purchaser and its Subsidiaries, or (2) of the Business after
Closing, or (F) otherwise change the terms of the regulatory
approvals described in Schedule 8.2(b), Items I (iv)-(vi), in a
manner adverse to Purchaser or the IPC Companies.
(ii) Notwithstanding anything to the contrary in this Agreement,
neither Dynegy nor the Seller and their respective Affiliates
shall be required to take any action or actions that individually
or together with all other actions would (A) have a Material
Adverse Effect prior to the Closing or a material adverse effect
on the business, financial condition or results of operation of
DMG, or on the business of selling capacity and energy products
from or in respect of DMG's existing generation assets, (B)
result in a change to the terms of the PPA that is adverse to
DYPM, or (C) result in Seller or any of its Affiliates making any
payment or having any continuing obligation pursuant to or
otherwise in respect of the Intercompany Note or making any
additional capital contribution to any of the IPC Companies or
44
Purchaser or any of its Affiliates as a condition to the
transactions contemplated by this Agreement and the Ancillary
Agreements.
(d) Within 90 days of the execution of this Agreement, Seller shall cause
IPC to and IPC shall undertake all necessary steps to submit a conditional
membership application to accomplish the transfer of functional control of IPC's
transmission facilities to the Midwest Independent Transmission System Operator,
Inc. ("MISO"), provided that such transfer shall be conditioned in all respects
on the consummation of the transactions contemplated hereby to occur at Closing.
In accordance herewith, the joint application of the parties to the FERC
provided for in Section 5.3(e) hereof shall also include an application seeking
all necessary approvals under the FPA to transfer functional control of such
facilities to the MISO.
(e) Responsibilities. Purchaser shall, in coordination with Seller, have
primary responsibility for the preparation of any applications with or
notifications to the FERC with respect to the FERC approvals described on
Schedules 8.1(b) and 8.2(b), and Seller and Purchaser shall jointly file any
such applications or notifications. Purchaser shall have primary responsibility
for the preparation and filing of any applications with or notifications to the
SEC under PUHCA. Purchaser and its Affiliates shall have primary responsibility
for the preparation and filing of any applications or notifications to the ICC.
Each of Purchaser and Dynegy shall be responsible for its filings with the FTC
and/or the DOJ. Each party hereto shall have the right to review and approve in
advance all such necessary applications, notices, petitions, filings, testimony,
exhibits, responses to discovery requests or other documents made or prepared in
connection with the transactions contemplated by this Agreement, which approval
shall not be unreasonably withheld or delayed.
Section 5.4 Notice of Developments. Prior to the Closing, each party shall,
promptly after obtaining Knowledge of the occurrence (or non-occurrence) of any
condition, event, circumstance, change, occurrence or state of facts arising
subsequent to the date of this Agreement that would result in a material breach
of any such representation or warranty or covenant of this Agreement of such
party, give written notice thereof to the other parties and shall use its
commercially reasonable efforts to remedy promptly such breach; provided,
however, that the delivery of, or failure to deliver, any notice pursuant to
this Section 5.4 shall not limit or otherwise affect the remedies available
hereunder, including the rights to indemnification under Article IX (other than
to the extent set forth in Section 8.3).
Section 5.5 Insurance; Risk of Loss.
(a) Dynegy and Seller shall keep, or cause to keep, all insurance policies
that provide coverage for any IPC Companies, the Business or any IPC Assets, as
the case may be, in full force and effect through the Closing, or provide for
the renewal of all such policies that are expiring by their own terms prior to
such date. In the event of a property loss in respect of any asset of the
Business, the IPC Assets or IPC Companies prior to the Closing, Seller and
Dynegy agree to cede recovered insurance proceeds (net of deductible) in respect
of such asset to Purchaser post-Closing for the repair of such asset. Except for
the coverage required under Section 5.5(c), as of the Closing, Dynegy and Seller
shall cause the termination of all insurance coverage for the Business, the IPC
Assets or the IPC Companies and their respective businesses, assets, and current
or former employees, and Purchaser shall become solely responsible for all
45
insurance coverage and related risk of loss based on events occurring after the
Closing with respect to the IPC Companies, the Business, the IPC Assets, and
their respective businesses, assets, and current and former employees; provided,
however, that (i) no such termination by Dynegy or Seller of any "occurrence"
coverage in force prior to the Closing shall be effected so as to prevent
Purchaser or any IPC Company from recovering under such coverage for losses from
events or damages occurring prior to the Closing; and (ii) no such termination
of any "claims-made" coverage in force prior to the Closing shall be effected so
as to prevent Purchaser or any IPC Company from recovering under such coverage
for losses from events or damages occurring prior to the Closing to the extent
the applicable insurance company or third party claims administrator shall have
received written notice of claims or written notice of circumstances that are
reasonably likely to give rise to a claim that occurred relating to such events
on or before or within 60 days after the Closing. Dynegy and Sellers shall use
commercially reasonable efforts to report to the applicable insurance company or
third party claims administrator, on a timely basis before the Closing, any
claims of which they have Knowledge (or circumstances that are reasonably likely
to give rise to a claim) relating to events occurring prior to the Closing.
(b) For all insurance and/or self-insurance claims of the Business, the IPC
Assets or the IPC Companies filed prior to the Closing, and for those claims of
the Business, the IPC Assets or the IPC Companies identified as set forth in the
foregoing clauses (i) and (ii), upon the consummation of the Closing, Purchaser
shall be responsible for any and all costs related to any such claims, including
deductibles, self-insured retentions, claims adjusting expenses, loss conversion
factor expenses, retroactive premium adjustments, audits, collateral
requirements and associated costs, uninsured losses, security deposits, legal
fees, indemnity benefits and any other costs that become due and payable in
connection with any such claims. Purchaser shall reimburse Dynegy for these
costs by wire transfer of funds within twenty days of receipt of an invoice from
Dynegy therefore, accompanied by reasonable supporting detail.
(c) For a period of three years after the Closing Date, Seller and Dynegy
shall maintain, at their expense, directors and officers liability and fiduciary
liability policies which provide coverage on terms as commercially reasonably
similar to the terms of such current insurance coverage. If Seller fails to
maintain such coverage or has a change in control, then Seller must purchase
run-off coverage, which will provide coverage in scope and amount commercially
reasonably similar to those maintained prior to the Closing Date. The expiration
date of such run-off policy shall be three years from the Closing Date.
(d) To the extent that, after the Closing Date, Purchaser or Seller or any
Affiliate thereof requires any information regarding claim data or other
information pertaining to the Business, the IPC Assets or the IPC Companies in
order to make filings with insurance carriers or administer or manage a claim,
upon request, Dynegy and Seller shall promptly supply such information to
Purchaser or Purchaser shall or shall cause the applicable IPC Company promptly
to supply such information to Seller or the applicable Affiliate of Seller, as
the case may be. To the extent that Purchaser will require the utilization of
the claims data maintained by an insurance company, Purchaser agrees to assume
sole responsibility for obtaining a subscription from any insurance company to
obtain such claims information and the related costs associated with any such
service.
46
(e) The provisions of this Section 5.5 shall not apply to any insurance
policies that provide funding for any Employee Benefit Plan or employee
Compensation Arrangement.
Section 5.6 Confidentiality.
(a) Purchaser acknowledges that the information provided or to be provided
to it in connection with the transactions contemplated hereby is subject to the
Confidentiality Agreement, the terms of which are incorporated herein by
reference; provided, however, that the parties hereby agree that as of the
Closing Date the term of the Confidentiality Agreement shall be hereby amended
to be the later of (i) two years from the Closing Date and (ii) three years from
the date hereof; provided, further, however, that after the Closing, Purchaser,
its Affiliates and the IPC Companies may use or disclose any confidential
information related to any IPC Company, the IPC Assets or the Business.
(b) Dynegy agrees that for a period of two years after the Closing, it and
its Affiliates will not use or disclose, and Dynegy will use its commercially
reasonable efforts and will cause its Affiliates and each of their respective
employees, officers, directors, agents and representatives not to use or
disclose to any party other than Purchaser or any of its Affiliates any
confidential information relating to the IPC Assets, the Business or any IPC
Company. The obligation to keep such information confidential does not apply to
information that (i) is or becomes generally available to the public other than
as a result of an unauthorized disclosure by Dynegy, any of its Affiliates or
any of their respective directors, employees, agents or representatives, or (ii)
is required by applicable Law or applicable Tax, accounting or SEC disclosure
obligations or the applicable rules of any stock exchange or quotation system to
be disclosed, but only to the extent required to be disclosed.
Section 5.7 Intercompany Arrangements. Except as listed on Schedule 5.7:
(a) all receivables or payables of any IPC Company, on the one hand, from
or to, as applicable, Dynegy or any of its Affiliates (other than any IPC
Company), on the other hand, shall be settled as of the Closing; and
(b) all contracts or other arrangements existing immediately prior to the
Closing between any IPC Company, on the one hand, and Dynegy or any of its
Affiliates (other than any IPC Company), on the other hand, shall be terminated
as of the Closing, except as specifically provided in Section 5.5; provided,
however, that Items 1 and 2 on Schedule 5.7 shall be terminated as of the later
of the Closing Date or December 31, 2004.
Section 5.8 Use of Dynegy and Seller's Names. Prior to the Closing, Seller
may cause the IPC Companies to remove any right, title or interest in any logo,
trade name, trademark, service ▇▇▇▇, house ▇▇▇▇, domain name, web site or
company name to the extent it contains or consists of the "Dynegy" name or the
"Dynegy" emblem or any other ▇▇▇▇ in which one or the other of these elements
appear. Purchaser will use reasonable efforts to cause the IPC Companies to
remove all such items described in the preceding sentence from the IPC Assets
within 60 days after the Closing Date. From and after the Closing, Purchaser
will not and will cause each IPC Company not to use such items.
47
Section 5.9 Change of Control Offer. From and after the Closing, Purchaser
shall cause IPC to comply with the change of control redemption offer provisions
of the Supplemental Indenture dated as of December 20, 2002 to the General
Mortgage Indenture and Deed of Trust dated as of November 1, 1992 for the 11
1/2% bonds due 2010.
Section 5.10 Further Assurances. Except as otherwise provided in this
Agreement, from time to time following the Closing, each party shall use
commercially reasonable efforts to execute and deliver, or cause to be executed
and delivered, all such documents and instruments and shall take, or cause to be
taken, all such further or other actions as such other party may reasonably deem
necessary or desirable to consummate the transactions contemplated by this
Agreement or any agreement contemplated hereby.
Section 5.11 No Public Announcement. None of Purchaser, Dynegy or Seller
shall (nor shall Seller permit any of the IPC Companies to) and each of them
shall use their commercially reasonable efforts to cause their Affiliates and
each of its and their respective representatives, directors, officers and agents
not to, without the approval of the other, make any press release or other
public announcement concerning the transactions contemplated by this Agreement,
except as and to the extent that any such party shall be so obligated by
applicable Law, applicable accounting and SEC disclosure obligations or the
applicable rules of any stock exchange or quotation system, in which case the
other parties shall be advised and the parties shall use their commercially
reasonable efforts to cause a mutually agreeable release or announcement to be
issued; provided, however, that the foregoing shall not preclude communications
or disclosures necessary in connection with regulatory filings and interactions
with Governmental Authorities (and members thereto and employees thereof) to
implement the provisions of this Agreement and the Ancillary Agreements.
Section 5.12 Access to Records.
(a) To facilitate the resolution of any claims made by or against or
incurred by Dynegy or its Affiliates prior to the Closing or for any other
reasonable purpose, for a period of seven years after the Closing Date, Dynegy
and its representatives shall have reasonable access to all of the books and
records of the IPC Companies relating to periods prior to the Closing (including
books and records relating to the IPC Assets and the Business); provided that
(i) in the case of books and records relating to Taxes, the covenant shall be
for a period of time equal to the relevant statute of limitations with respect
to such Taxes, including any extensions thereof, and (ii) with respect to items
referred to in Sections 9.1(c), (d), (e), (f), (g), (h), or (i), the covenant
shall be in force during the pendency of any Action or threatened Action related
to such items. Such access shall be afforded by Purchaser upon receipt of
reasonable advance written notice and during normal business hours. Dynegy shall
be solely responsible for any costs or expenses incurred by it pursuant to this
Section 5.12(a). If Purchaser shall desire to dispose of any of such books and
records prior to the expiration of such seven-year period, Purchaser shall,
prior to such disposition, give Dynegy a reasonable opportunity, at Dynegy's
expense, to segregate and remove such books and records as Dynegy may select.
(b) To facilitate the resolution of any claims made by or against or
incurred by Purchaser or any of its Affiliates after the Closing or for any
other reasonable purpose, for a period of seven years after the Closing Date,
48
Purchaser and its representatives shall have reasonable access to all of the
books and records relating to the IPC Companies (including books and records
relating to the IPC Assets and the Business) which Dynegy or any of its
Affiliates may retain after the Closing Date; provided that, in the case of
books and records relating to Taxes, the covenant shall be for a period of time
equal to the relevant statute of limitations with respect to such Taxes,
including any extensions thereof. Such access shall be afforded by Dynegy and
its Affiliates upon receipt of reasonable advance written notice and during
normal business hours. Purchaser shall be solely responsible for any costs and
expenses incurred by it pursuant to this Section 5.12(b). If Dynegy or any of
its Affiliates shall desire to dispose of any of such books and records prior to
the expiration of such seven-year period, Dynegy shall, prior to such
disposition, give Purchaser a reasonable opportunity, at Purchaser's expense, to
segregate and remove such books and records as Purchaser may select.
Section 5.13 No Solicitation. From the date hereof through the earlier of
the termination of this Agreement or the Closing Date, Dynegy and Seller shall
not, and Dynegy shall not permit its Subsidiaries, and shall use its
commercially reasonable efforts to cause any officers, directors, employees,
financial advisors and other agents or representatives of Dynegy or its
Subsidiaries not to, directly or indirectly, solicit or encourage (including by
way of furnishing any non-public information concerning the IPC Companies or
their assets) inquiries or proposals, or participate in any discussions or
negotiations with any Person (other than Purchaser and its agents and
representatives), concerning a Potential Transaction. For purposes of this
Agreement, a "Potential Transaction" shall mean a possible acquisition of the
Business, whether by merger or by the acquisition of the stock or substantially
all the assets of Seller or IPC.
Section 5.14 Terminated Employees. On the Closing Date, Dynegy shall
provide Purchaser with a list that sets forth the number of full and part time
employees of any IPC Companies involuntarily terminated, and whether or not such
termination was for cause, during the period beginning 90 days prior to the
Closing Date.
Section 5.15 Intercompany Note. At or within two days prior to the Closing,
the parties will take the actions set forth on Schedule 5.15 with respect to the
Intercompany Note.
Section 5.16 Covenant Not to ▇▇▇.
(a) Each of Dynegy and Seller shall not, and shall cause their respective
Affiliates and their respective successors not to, directly or indirectly, ▇▇▇
any Purchaser Group Member with regard to any Generation Liabilities, and shall
release and forever discharge all Purchaser Group Members from such Generation
Liabilities.
(b) Each of Dynegy and Seller shall not, and shall cause each of their
respective Affiliates and each of their respective successors not to, directly
or indirectly, argue, assert, claim, agree or bring any Action or enter into any
settlement that alleges or stipulates that any Purchaser Group Member is or
should be responsible, liable or obligated to take or not to take any action,
make any payment, incur any expense, with respect to any liabilities,
49
commitments, or obligations of Seller or any of its Affiliates or in connection
with the Generation Liabilities.
Section 5.17 IPC Property. At least 120 days prior to Dynegy's good faith
estimate of the Closing Date, Dynegy and Seller shall and shall cause their
Affiliates to make available to Purchaser, for inspection or copying by
Purchaser at Purchaser's expense (but only to the extent that such documents or
materials are in the possession or control of Dynegy, Seller, or any of their
Affiliates) existing documents containing (i) the legal descriptions of the IPC
Owned Real Property and the material Leased Real Properties, and (ii) lists or
summaries of all other IPC Properties (together with legal descriptions
thereof), together with copies of any easement, license, right of way, use or
similar agreements, and any other title documents relating to the IPC Other Real
Property. Dynegy and Seller shall cooperate reasonably, and shall cause IPC to
cooperate reasonably and to execute such customary affidavits and documents
(with such modifications as may be necessary for factual accuracy), as may be
reasonably requested by Purchaser's title insurance company, prior to the
Closing Date in connection with any title insurance coverage reasonably obtained
by Purchaser at Closing; provided that neither Dynegy nor Seller (nor any of
their Affiliates, other than IPC) nor any of the officers or employees of Seller
or of Dynegy (or of any of their Affiliates, including IPC) shall be required to
incur any cost or liability in connection with the acquisition by Purchaser of
title insurance at the Closing or any affidavits or other instruments required
by Purchaser's title company as a condition to issuing such title insurance at
the Closing, it being understood that any such title affidavits or documents
shall be provided solely by IPC and any costs associated with such title
insurance (and any title endorsements and other documents or instruments
required in connection with Purchaser's title insurance) shall be borne solely
by Purchaser.
Section 5.18 Remediation of Excluded Environmental Matters.
(a) After the Closing, if (x) Purchaser reasonably determines that
Remediation of a Hazardous Substance should be performed in response to (i) a
requirement of an Environmental Law; (ii) a Governmental Order from a
Governmental Authority with jurisdiction over the applicable Excluded
Environmental Matters; (iii) a reasonable claim or demand by a third party made
in connection with an Environmental Law or Excluded Environmental Matters or
liability under the common law for the actual or alleged presence or Release of
Hazardous Substances; or (iv) the presence or Release of a Hazardous Substance
in excess of an applicable and relevant standard in an Environmental Law which
necessitates Remediation under such Environmental Law, and (y) such Remediation
relates to the Business or IPC Assets as they existed immediately prior to the
Closing, then Purchaser shall implement the required Remediation. In such event,
Purchaser shall notify Dynegy at least twenty (20) Business Days, or as soon as
reasonably possible if prompt Remediation is legally required or advisable under
this Section 5.18, in advance of commencing such Remediation and shall request
authorization from Dynegy to perform or cause one of its Affiliates to perform
the Remediation; provided, however, if Purchaser is required by a Governmental
Authority with jurisdiction to immediately take remedial action, Purchaser shall
proceed as required and notify Dynegy as soon as practicable thereafter of its
action and provide the other information required by this Section 5.18.
Purchaser's notice to Dynegy shall include a reasonably detailed description of
the Remediation to be performed and a detailed cost estimate for such
50
Remediation. Upon Purchaser's receipt of Dynegy's written consent (which shall
not be unreasonably withheld or delayed) to perform (or cause one of its
Affiliates to perform) the Remediation, Purchaser shall commence the Remediation
in accordance with the Remediation plan. Except for claims treated in the last
sentence of Section 9.5(a), Dynegy shall reimburse Purchaser or such Affiliate
of Purchaser for all cost and expenses incurred in connection with such
Remediation within 30 days of Purchaser or such Affiliate submitting an invoice
therefor to Dynegy; provided, however, that Purchaser may, at its discretion,
submit invoices either periodically or at the completion of Remediation and
Dynegy shall reimburse Purchaser or such Affiliate for all costs and expenses
incurred in connection with such Remediation within 30 days of receiving such
invoice. Purchaser shall promptly notify Dynegy of any material changes in the
Remediation plan or costs and obtain approval, which shall not be unreasonably
withheld, for such changes. Notwithstanding any other provision to the contrary
in this Section 5.18(a), after Purchaser receives written notice from a
Governmental Authority with jurisdiction over Remediation performed at a site by
Purchaser under this Section that such Remediation has been completed and/or
that no further Remediation is needed at that time, Purchaser shall perform no
further Remediation at the site unless subsequently required to do so in
accordance with the terms of such notice or a new event subject to Sections
5.18(a)(i), (ii), (iii) or (iv). Dynegy, Seller or any Affiliate thereof may
request that a Governmental Authority issue such notice.
(b) In the event that Purchaser chooses to develop, or cause any IPC
Company to develop, any IPC Assets for a use other than the transmission,
distribution and sale of electrical energy and natural gas or substantially
similar industrial purposes, Dynegy shall not become responsible under this
Section 5.18 for Remediation costs that, due to the changed use, are higher than
the Remediation costs would be if such IPC Assets continued to be used for
transmission, distribution and sale of electrical energy and natural gas or
substantially similar industrial purposes. Accordingly, if such IPC Assets, or
any portion thereof, ceases to be used for transmission, distribution and sale
of electrical energy and natural gas or substantially similar industrial
purposes (including repowering or development for such purposes), and if due to
such changed use, the costs of Remediation relating to Excluded Environmental
Matters are higher than the cost of Remediation would be if such IPC Assets (in
their entirety) had continued to be used for transmission, distribution and sale
of electrical energy and natural gas or substantially similar industrial
purposes, except for claims treated in the last sentence of Section 9.5(a),
Dynegy shall be responsible only for the costs of Remediation that Purchaser
would have incurred if such IPC Assets were being used for transmission,
distribution and sale of electrical energy and natural gas or substantially
similar industrial purposes.
(c) If IPC, individually or collectively with DMG, shall be required, after
the Closing prior to December 31, 2010, pursuant to either (i) a final,
non-appealable Governmental Order in full force and effect entered by a court
with proper jurisdiction over IPC or issued by the U.S. Environmental Protection
Agency or (ii) a legally binding, non-appealable consent decree or
administrative order or other settlement in full force and effect with all
required approvals of applicable Governmental Authorities entered into by (x)
DMG and IPC or (y) IPC (with the approval of Dynegy pursuant to Section 9.3)
regarding, in each such case, any Clean Air Act Litigation (each of such
Governmental Order, consent decree or other settlement, a "Mandate") to
implement or pay for implementation of Best Available Control Technology
51
("BACT"), or any other emission limitation requiring installation of pollution
control devices, measures or technologies on any plant that is a Generation
Asset due to any alleged violation of the Clean Air Act, 42 U.S.C. Sec. 7401 et
seq. (such liability, the "BACT Liability"), AND
(A) DMG, to the extent it is subject to the Mandate, fails to
perform in any material respect in accordance with the terms of any
such Mandate (it being understood that this clause (A) does not apply
if IPC is individually or collectively with DMG subject to the
Mandate), AND
(B) the Governmental Authority that issued or agreed to such
Mandate, or a party to such Mandate, as the case may be, seeks a
remedy to enforce IPC's compliance with the terms of the Mandate due
to the failure of IPC or DMG, as the case may be, to have performed
the obligations under such Mandate, AND
(C) Purchaser has demanded in writing that the Seller
Indemnitors comply with their indemnification obligations pursuant to
and in accordance with the requirements of Article IX with respect to
IPC's Indemnifiable Losses due to the Mandate, AND
(D) the Seller Indemnitors collectively fail to comply in any
material respect with such indemnification obligations then due within
ten days of the Seller Indemnitors' receipt of such demand, AND
(E) the Escrowed Funds in the Escrow Account shall have been
exhausted,
then Dynegy shall cause DMG to, promptly following receipt of a notice from IPC
that the foregoing events described in clauses (A)-(E) have occurred and are
continuing, take such action or actions as may be reasonably necessary, to the
extent not prohibited by applicable Law, to cause the affected Generation Asset
to become in compliance with the Mandate, including, to the extent required for
such compliance, (x) by reducing the generation output of such Generation Asset
or (y) by effecting the shutdown in whole or in part of such Generation Asset.
The parties specifically agree that the provisions contained in Section 11.16
are applicable to the obligations provided for in this Section 5.18(c).
For purposes of this Section 5.18(c): "Clean Air Act Litigation" means the
▇▇▇▇▇▇▇ Litigation and any Other Claim, as such terms are defined in the Escrow
Agreement; and "Best Available Control Technology" shall have the meaning as set
forth at Section 169(3) of the Clean Air Act, 42 U.S.C. Section 7479.
Section 5.19 Consent Solicitation. At Purchaser's request, Seller shall
cause IPC to commence a solicitation of consents from the holders of IPC's 11
1/2 % bonds due 2010 to effect amendments to the indenture pursuant to which
such bonds were issued. Such amendments will be designated by Purchaser with
Seller's consent, which consent will not be unreasonably withheld or delayed.
Such solicitation shall expire on the Closing Date, and any amendments for which
approval is obtained shall be effective only if the Closing occurs. Any
out-of-pocket expenses reasonably incurred by IPC in connection with such
consent solicitation, including any consent payments to bondholders that are
approved by Purchaser, shall be reimbursed by Purchaser promptly after receiving
52
invoices therefor from IPC. The successful completion of the consent
solicitation is not a condition to the Closing.
Section 5.20 Generation Asset Transfers.
(a) The parties shall cooperate and use commercially reasonable efforts to
identify all assets (i) transferred pursuant to any Asset Transfer Agreements or
to be transferred under the Generation Agreement that are not used in the
generation operations of DMG and are used in connection with the Business and
(ii) owned by any IPC Company, not used in connection with the Business and
necessary for the operation by DMG of its generation business.
(b) Following the Closing, Dynegy shall cause DMG to transfer to IPC the
assets identified by Dynegy and Purchaser pursuant to clause (i) of Section
5.20(a), pursuant to the Generation Agreement. Following the Closing, Purchaser
shall cause IPC to transfer to DMG the assets identified by Dynegy and Purchaser
pursuant to clause (ii) of Section 5.20(a) pursuant to the Generation Agreement.
In connection with such transfers pursuant to this Section 5.20(b), Dynegy shall
and shall cause IPC and their respective Affiliates to, in consultation with
Purchaser, make all necessary filings with and obtain all necessary appraisals
and governmental orders from the applicable Governmental Authorities.
Section 5.21 Certain Additional Agreements.
(a) At least 60 days prior to the Closing Date, Purchaser shall advise
Seller whether transitional services will be required by Purchaser from and
after the Closing Date and which such services will be required. In such event,
Seller and Purchaser shall negotiate in good faith the schedules of services to
be provided, the length of time for such services (which shall in no event
exceed 90 days) and the rates at which such services will be provided to
Purchaser, which rates will be at fair market value. Any transition services
agreement entered into pursuant to this Section 5.21 is referred to as the
"Transition Services Agreement". Notwithstanding anything to the contrary in
this Agreement, the execution of a Transition Services Agreement shall not be a
condition to the Closing for any party. Dynegy, the IPC Companies and Purchaser
will cooperate during the period prior to Closing to minimize, to the extent
reasonably practicable, the need for the IPC Companies to rely on transitional
services after the Closing.
(b) Dynegy shall cause DMG (and any applicable Affiliate of DMG that owns
or has rights to real property subject to such Agreement) to execute an Easement
and Facilities Agreement (the "Easement and Facilities Agreement"), as grantor,
granting valid, enforceable and insurable easement in recordable form over the
real property Generation Assets to IPC, and including the terms set forth on
Exhibit E. Dynegy and Purchaser shall negotiate in good faith to finalize the
Easement and Facilities Agreement within 30 days after the date hereof and
otherwise in form and substance mutually satisfactory to the parties. Prior to
the Closing (and, if applicable, subsequent to the Closing), the Dynegy Parties
shall use good faith, reasonable efforts (including causing DMG or any other
Affiliate of DMG that owns or has rights to the Generation Assets) to request
and obtain an agreement (each, a "Subordination Agreement"), in recordable form
and otherwise in customary form, from each mortgagee (which term, as used in
53
this Section 5.21(b), shall include the grantee or beneficiary under a deed of
trust) holding a mortgage (which term as used herein shall include a deed of
trust) encumbering the Generation Assets, which Subordination Agreement shall
provide for subordination of such mortgage to the Easement and Facilities
Agreement. The proposed form of Subordination Agreement provided by Dynegy (or
its Affiliate) to each mortgagee, and any modifications to such form, shall be
subject to the approval of Dynegy and Purchaser (which approval shall not be
unreasonably withheld or delayed). Dynegy shall keep Purchaser advised of the
status of material responses from or communications with such mortgagees (and
provide copies of drafts of the Subordination Agreement sent to or by any such
mortgagee or its counsel). Dynegy shall promptly (i) make available to Purchaser
copies of any mortgages encumbering the Generation Assets, (ii) provide
Purchaser with a copy of any executed Subordination Agreement obtained from a
mortgagee, (iii) cause any such executed Subordination Agreement to be recorded
in the applicable local real estate recording office, and (iv) provide Purchaser
with evidence of such recordation; provided, however, that any legal fees of the
mortgagees and the cost of title endorsements required by the mortgagees related
to the Subordination Agreement shall be shared equally by Purchaser and the
Dynegy Parties Prior to the date that Dynegy shall have obtained an executed
Subordination Agreement from a mortgagee (or in the event that any mortgagee
refuses to execute a Subordination Agreement following good faith, reasonable
efforts by the Dynegy Parties to obtain one), Dynegy shall give Purchaser prompt
written notice of any acceleration of the applicable mortgage and any action
subsequent thereto by such mortgagee to enforce the mortgage. Notwithstanding
anything to the contrary set forth herein, the receipt of an executed
Subordination Agreement from any mortgagee shall not be a condition to
Purchaser's obligation to close hereunder. This Section 5.21(b) shall survive
the Closing. Notwithstanding the foregoing, nothing contained in this Section
5.21(b) shall require any of the Dynegy Parties or their Affiliates to take, or
refrain from taking, any action that could reasonably constitute a breach or
default under the terms of any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
indebtedness for borrowed money, or to require any of the Dynegy Parties or
their Affiliates to pay any fees (other than its share of the legal fees of the
mortgagees and the cost of title endorsements required by the mortgagees as
provided above in this Section) to any trustee, issuer, holder, lender, secured
party or other Person under any such mortgage, indenture or instrument, or
commence any solicitation in order to carry out or meet the obligations in this
Section.
(c) Seller shall cause IPC to allow the AmerGen Power Supply Agreement to
expire in accordance with its terms as of December 31, 2004. Seller shall cause
IPC to enter into one or more agreements for the purchase of 700 MW of firm
capacity and energy during calendar years 2005 and 2006 (the "Base Energy
Contracts") for which any necessary regulatory approvals shall have been
obtained. In particular, the Base Energy Contracts will have the following
characteristics:
(i) the aggregate amount of firm capacity and energy guaranteed to IPC
under the Base Energy Contracts shall be (1) 400 MW provided 24-hours
per day, each day of the year, and (2) 300 MW provided between 6 a.m.
and 10 p.m. (prevailing time in Decatur, Illinois) each Business Day
(as such term is defined in the PPA), and shall satisfy MAIN Guides
and MISO capacity resource requirements for obtaining network
integration transmission service under the applicable OATT and for
54
accreditation by the applicable NERC regional reliability council or
successor organizations;
(ii) IPC shall make all reasonable efforts to obtain financial
transmission rights associated with the energy provided under the Base
Energy Contracts, including but not limited to nominating the
transmission of such energy to the IPC system in the MISO process for
financial transmission right allocation, and, further, IPC shall not
sell, divest, transfer or otherwise dispose of such rights;
(iii) the Base Energy Contracts shall have a term of January 1, 2005
through December 31, 2006;
(iv) the Base Energy Contracts shall have been solicited through an
independently administered competitive bidding process in which at
least one party unaffiliated with Dynegy submitted an offer, and IPC
shall have obtained the prior written consent of Purchaser (which
shall not be unreasonably withheld) with respect to the choice of the
independent administrator, whose fees and expenses shall be reimbursed
by Purchaser within five Business Days of IPC's request;
(v) the Base Energy Contracts shall have been awarded to the bidder
submitting the most favorable bid to IPC, taking into account price,
credit worthiness, certainty of performance and other customary and
commercially reasonable criteria; and
(vi) the Base Energy Contracts shall provide for the payment of actual
or liquidated damages in the event of any failure to deliver the
capacity or energy as specified in clause (i) above.
(d) Dynegy shall, and shall cause each Dynegy Subsidiary (other than any
IPC Company) to execute and deliver to the counterparties thereto immediately
following the Closing counterparts of each Ancillary Agreement to which it is a
party. Purchaser shall cause IPC to execute and deliver to the counterparties
thereto immediately following the Closing counterparts of each Ancillary
Agreement to which it is a party. The parties specifically agree that the
provisions contained in Section 11.16 are applicable to the obligations provided
for in this Section 5.21(d).
(e) The parties shall agree to such changes to the Blackstart Agreement and
the Easement and Facilities Agreement as may be required by any Governmental
Authority in order to obtain all necessary Final Orders for the completion of
the transactions contemplated hereby.
(f) None of the Dynegy Parties will, and Seller will cause IPC not to,
enter into any consent decree or other settlement with regard to Clean Air Act
Litigation (as defined in Section 5.18) for which IPC has direct or contingent
responsibility unless such consent decree or other settlement contains a release
of IPC, in form and substance reasonably acceptable to Purchaser, from all such
responsibility; provided, however, notwithstanding any other provision of this
Agreement to the contrary (including Section 9.3), that such release shall not
be required in the case of any consent decree or other settlement relating to
55
the ▇▇▇▇▇▇▇ Litigation if (1) the amount of liability for which IPC has direct
or contingent liability is not greater than, in the case of a consent decree or
other settlement entered into prior to the Closing, $100,000,000 or, in the case
of a consent decree or other settlement entered into following the Closing, the
amount of Escrow Funds held as of the date of such consent decree or other
settlement under the Escrow Agreement and (2) any performance required of IPC,
directly or contingently, under such consent decree or other settlement is
required to be completed by December 31, 2010. Prior to the Closing, Seller
shall not permit IPC to enter into any consent decree or other settlement with
regard to Clean Air Act Litigation that provides for IPC liability unless DMG
has joint and several liability with IPC.
(g) No later than June 30, 2004, IPC shall file with ICC revised gas
service tariffs proposing a general increase in base rates for gas service. IPC
shall retain (subject to the consent of Purchaser, such consent not be
unreasonably withheld) qualified consultants, and, if it desires, outside
counsel, to assist in the preparation and prosecution of the filing. At Closing,
Purchaser shall pay to Seller an amount equal to the amounts paid or to be paid
by IPC for the work of such qualified consultants and outside counsel on the
filing through Closing.
(h) Dynegy agrees to cause DMG and IPC to provide cooperation to Purchaser
as reasonably requested by Purchaser in any effort to obtain insurance policies
providing coverage for Clean Air Act Litigation liabilities, to the extent such
cooperation would not result in the loss of a legal privilege or protection for
Dynegy, DMG and IPC, or the actual or potential loss, compromise, or limitation
of any defense, claim, position or strategy. All information obtained by
Purchaser as a result of such cooperation shall be subject to any joint defense
agreement entered into by Dynegy and Purchaser. Purchaser will reimburse Dynegy
for out-of-pocket costs and expenses incurred by DMG and/or IPC in providing
such cooperation to Purchaser.
Section 5.22 Status Meetings. In furtherance of the covenants set forth in
this Agreement, representatives of each of Dynegy, IPC and Purchaser shall meet:
(a) no less frequently than once each week, in person or by conference
telephone: (i) to discuss all filings with Governmental Authorities made or to
be made in connection herewith and undertakings, terms and conditions relating
thereto; (ii) to discuss costs incurred or committed to be incurred, concessions
made, undertakings required and other actions or tasks relating to the approvals
and consents required hereunder; and (iii) to discuss regulatory and legislative
plans and strategies; and
(b) subject to applicable Law, upon the request of Dynegy or Purchaser for
a meeting (for which reasonable advance notice will be provided), either in
person or by conference telephone, to discuss (i) financial results (including
budget to actual analysis); (ii) capital project progress; (iii) actions to be
taken or not to be taken or considered in current or potential regulatory
proceedings; (iv) integration coordination; and (v) actions to be taken or not
to be taken or considered in furtherance of the provisions of this Agreement.
Section 5.23 PPA Modification Right.
56
(a) By notice dated not later than September 1, 2004, Purchaser may, at its
sole option and discretion (in accordance with the terms of the PPA), reduce the
amount of Tier 1 Capacity specified in Appendix 1 of the PPA for all months in
calendar year 2005 by up to 200 MW, provided that the IP Load, as defined and
calculated in the PPA, shall have been reduced as a result of retail customers
of IPC switching electricity suppliers or terminating business operations. In
the event IPC releases capacity in calendar year 2005 pursuant to the provisions
of this Section 5.23(a), such release shall apply in the same amount for
calendar year 2006. Any written notice of Released Capacity (as defined in the
PPA) shall include reasonable proof of the net reduction in IP Load, and the
amount of Released Capacity shall not be greater than the amount of the net
reduction in IP Load.
(b) By notice dated not later than September 1, 2005, Purchaser may, at its
sole option and discretion (in accordance with the terms of the PPA), reduce the
amount of Tier 1 Capacity specified in Appendix 1 of the PPA for all months in
calendar year 2006 by an amount not to exceed the difference between 200 MW and
the amount of capacity released, if any, pursuant to Purchaser's election under
Section 5.23(a), provided that the IP Load, as defined and calculated in the
PPA, shall have been reduced as a result of retail customers of IPC switching
electricity suppliers or terminating business operations. Any written notice of
Released Capacity (as defined in the PPA) shall include reasonable proof of the
net reduction in IP Load, and the amount of Released Capacity shall not be
greater than the amount of the net reduction in IP Load.
(c) Notwithstanding anything else in this Agreement, no election by
Purchaser pursuant to this Section 5.23 shall serve as a basis for assertion
that a condition to the Closing has not been satisfied or for indemnification
pursuant to Section 9.1.
Section 5.24 Compliance with ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. In the month following
each calendar quarter, Dynegy shall provide Purchaser with status update on any
assessment required of IPC, in its capacity as a Subsidiary of Dynegy, through
the Closing in accordance with the items detailed in Schedule 5.24 to satisfy,
in all material respects, the requirements of Section 404 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act, and Dynegy shall make available to Purchaser (and Purchaser's outside
advisers) the documentation supporting the implementation of such assessment,
and will permit IPC to retain copies of any such documentation. Dynegy shall use
commercially reasonable efforts to cause IPC to complete such assessment by
September 30, 2004. Purchaser acknowledges that Dynegy's external auditors will
not make any assessment with respect to the performance of the obligations
contained in this Section 5.24.
Section 5.25 Litigation and Clinton Nuclear Power Station Updates. From the
date hereof through the Closing Date, Seller shall give Purchaser monthly notice
of newly filed litigation in which any IPC Company is named as a defendant, as
well as of any event that would have been required to be disclosed in Schedule
3.27 if such event had occurred prior to the date of this Agreement.
57
ARTICLE VI
EMPLOYEES AND EMPLOYEE MATTERS
Section 6.1 Employment of Transferred Employees.
(a) The employment with the IPC Companies of each individual who is an
Active Employee as of the Closing Date shall continue immediately after the
Closing, and each such individual shall be referred to in this Agreement as a
"Transferred Employee." In the case of Active Employees who are members of the
"non-supervisory workforce" of the IPC Companies, within the meaning of 220
Illinois Code 5/16-128(c), such continued employment shall be at no less than
the wage rates, and substantially equivalent fringe benefits and terms and
conditions of employment as those that are in effect on the Closing Date, and
Purchaser shall continue such wage rates and substantially equivalent fringe
benefits and terms and conditions of employment for at least 30 months following
the Closing Date, unless Purchaser and the collective bargaining units
representing such non-supervisory Active Employees mutually agree to different
terms and conditions of employment within such 30-month period. The preceding
sentence is intended to satisfy the requirements of 220 Illinois Code
5/16-128(c), shall be construed in accordance with 220 Illinois Code
5/16-128(c), and shall not be construed to impose upon Purchaser any obligation
that is greater than that imposed by 220 Illinois Code 5/16-128(c). For purposes
of this Article VI, the term "Active Employees" shall include all full-time and
part-time employees, employees on workers' compensation, military leave, special
military leave, maternity leave, leave under the Family and Medical Leave Act of
1993, union leave, sick leave, domestic violence leave, long-term disability, or
layoff with recall rights, and employees on other approved leaves of absence
with a legal or contractual right to reinstatement, in each case who are
employed by any IPC Company. Transferred Employees who are not represented by
labor unions or similar collective bargaining entities are referred to as
"Non-Union Transferred Employees."
(b) Recognition of Transferred Employee Service. On and after the Closing
Date, Purchaser shall recognize the service of each Non-Union Transferred
Employee prior to the Closing for each IPC Company, Seller and any Affiliates of
Seller for purposes of eligibility, vesting and benefit accrual to the extent
that such service was credited to each Non-Union Transferred Employee by Seller,
such IPC Company or such Affiliate, as applicable, under a corresponding
Employee Benefit Plan, except (i) for benefit accrual under any defined benefit
pension plan and (ii) to the extent that such credit would result in duplication
of benefits, provided that Seller provides, as soon as practicable after the
Closing, a list containing each Transferred Employee's service credited by
Seller to Purchaser. Notwithstanding the foregoing, in the event that Purchaser
and/or any of its Affiliates adopts a benefit plan that provides benefits of a
type that Transferred Employees had not received from Seller and its Affiliates
before the Closing, Purchaser and/or such Affiliate(s) (as applicable) may
credit service for Transferred Employees in the same manner as it credits
service for other similarly situated employees. Commencing ninety (90) days
prior to the Closing Date, Seller shall cooperate in good faith with Purchaser
to determine, and effectuate, the most expeditious procedures subject to the
limitations of applicable Law, for transferring from Seller to Purchaser such
data relating to Transferred Employees that is necessary for the operation of
employee benefit plans maintained by Purchaser in which Transferred Employees
will participate immediately after Closing and so that all personnel records of
58
Transferred Employees, the service of all Transferred Employees and all other
information reasonably determined by Purchaser to be needed by Purchaser in
connection with the employment of Transferred Employees will be provided to
Purchaser on or prior to Closing.
(c) ▇▇▇▇▇▇▇▇▇▇▇ Contract. Dynegy shall take any steps necessary or
appropriate so that neither Purchaser nor any IPC Company is required to assume
the agreements with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ identified on Schedule 6.1(c) (the
"▇▇▇▇▇▇▇▇▇▇▇ Contract"), and Dynegy shall retain, and be solely responsible for,
all obligations and liabilities under the ▇▇▇▇▇▇▇▇▇▇▇ Contract. Dynegy hereby
agrees that any provision of services to Purchaser, the IPC Companies and/or any
of their respective Affiliates after the date hereof will not be considered to
violate any of the provisions of Section 4 of the ▇▇▇▇▇▇▇▇▇▇▇ Contract.
(d) ▇▇▇▇▇▇▇ Contract. Dynegy and IPC shall take any steps necessary or
appropriate so that, effective not later than as of the Closing, Dynegy assigns
to IPC and IPC assumes the Contract with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ identified on Schedule
6.1(d).
(e) Termination of Plan Participation and Accruals; Assumption of
Obligation to Pay Bonuses. Dynegy and the IPC Companies shall take all actions
necessary and appropriate so that the participation of the IPC Companies in all
Employee Benefit Plans is terminated before the Closing. Except as otherwise
expressly provided in this Agreement, Transferred Employees shall not accrue
benefits under any Employee Benefit Plans or any employee benefit policies,
plans, arrangements, programs, practices or agreements of Seller or any of their
Affiliates after the Closing Date. For the year in which the Closing Date
occurs, Purchaser shall pay, or cause one of its Affiliates to pay, to the
Transferred Employees any bonuses that would have been payable to the
Transferred Employees for that year had the Transferred Employees remained
employees of any Seller or one of its Affiliates, in accordance with the
provisions of the policy, plan, arrangement, program, practice or agreement
under which the bonus would have been paid (the "Seller Bonus Plans"), provided
such Seller Bonus Plans are specifically identified as such on Schedule 6.1(e)
and provided, further, that accruals have been made as of the Closing Date on
the Working Capital Statements for the IPC Companies in accordance with GAAP. In
determining the amount of the bonuses to be paid by Purchaser in accordance with
the preceding sentence, Purchaser shall apply criteria that are substantially
comparable to the criteria established as of the Closing Date under the Seller
Bonus Plans under which the bonuses would have been paid had the Transferred
Employees remained employees of any Seller or one of its Affiliates, and in no
event shall Purchaser be obligated to pay aggregate bonuses under the Seller
Bonus Plans that exceed the sum of $3 million plus the amount accrued as of the
Closing Date for such bonuses on the Working Capital Statements for the IPC
Companies.
(f) No Duplicate Benefits. Nothing in this Agreement shall cause duplicate
benefits to be paid or provided to or with respect to a Transferred Employee
under any employee benefit policies, plans, arrangements, programs, practices or
agreements. References herein to a benefit with respect to a Transferred
Employee shall include, where applicable, benefits with respect to any eligible
dependents and beneficiaries of such Transferred Employee under the same
employee benefit policy, plan, arrangement, program, practice or agreement.
59
(g) Affiliate Employees. Schedule 6.1(g) sets forth a list of those Active
Employees (if any) who, as of the date hereof, are performing services for any
IPC Company but are employed by an Affiliate of Seller (other than any IPC
Company) (the "Affiliate Employees"). The list of Affiliate Employees shall be
updated not less than 90 days prior to the Closing Date. Purchaser may offer to
employ as of the Closing Date such Affiliate Employees with the consent of
Seller. Each such Affiliate Employee who accepts such offer of employment shall
be a Transferred Employee and shall be treated under this Agreement in a manner
that is comparable to the treatment given to the Transferred Employees who were
employed by an IPC Company.
(h) Term of Assumed Obligations. Notwithstanding anything in this Section
6.1 to the contrary, and except as otherwise expressly provided by Law or this
Agreement or in any Contract with or on behalf of a bargaining unit to which any
IPC Company is a party, Purchaser retains the right to determine after the
Closing the number of non-supervisory and supervisory employees it deems
sufficient to operate and maintain operations and facilities acquired hereunder,
and Purchaser and its Affiliates may, at any time after the Closing, terminate
the employment of any Transferred Employee or renegotiate, alter, amend or
terminate any agreement or Contract concerning employment or any term thereof,
any employee benefit plan, or the participation of any Transferred Employee in
any such plan.
Section 6.2 Transferred Employee Benefit Matters.
(a) Defined Benefit Plans.
(i) Seller Pension Plans. As of the date of this Agreement,
Transferred Employees participate in the single-employer defined benefit
pension plans listed in Schedule 6.2(a), which plans are referred to
collectively in this Agreement as the "Seller Pension Plans" and
individually as a "Seller Pension Plan." The Seller Pension Plans also
cover the Other Plan Participants (as such term is defined below). Each
other person who, immediately before the Closing Date, has an accrued
benefit (which remains payable in whole or in part) under a Seller Pension
Plan, and is either (a) a former employee of any IPC Company or a
predecessor to any IPC Company who is no longer actively employed by
Dynegy, any IPC Company or any of their respective Affiliates (such as
Retirees) or (b) a beneficiary or an alternate payee of an individual
described in clause (a) or of a Transferred Employee is referred to in this
Section 6.2(a) as an "Other Plan Participant." Within the 60-day period
immediately preceding any transfer of assets and liabilities from a Seller
Pension Plan to a Purchaser Pension Plan pursuant to this Section 6.2(a),
Dynegy shall provide the Purchaser with a written certification, in a form
acceptable to Purchaser, that the Seller Pension Plan satisfies each of the
following requirements: (A) the Seller Pension Plan is a single-employer
defined benefit plan that, to the Knowledge of Dynegy and Seller, is
qualified under Section 401(a) of the Code; (B) the Seller Pension Plan
does not have any "accumulated funding deficiency" as defined in Section
302 of ERISA and Section 412 of the Code, whether or not waived,
immediately before the Closing Date; (C) the Seller Pension Plan is not the
subject of termination proceedings or a notice of termination under Title
IV of ERISA; and (D) the Seller Pension Plan does not violate the
requirements of any applicable collective bargaining agreement covering any
Transferred Employees or Other Plan Participants.
60
(ii) Purchaser Obligations. Purchaser shall take all actions necessary
and appropriate to ensure that, as soon as practicable after the Closing
Date, Purchaser, or one of its Affiliates, maintains or adopts one or more
pension plans (hereinafter referred to in the aggregate as the "Purchaser
Pension Plans" and individually as the "Purchaser Pension Plan") effective
as of the Closing Date and to ensure that each Purchaser Pension Plan
satisfies the following requirements as of the Closing Date: (A) the
Purchaser Pension Plan is a single-employer defined benefit plan that, to
the Knowledge of Purchaser, is qualified under Section 401(a) of the Code;
(B) any Purchaser Pension Plan that was in effect before the Closing Date
is in compliance with the funding requirements of Section 302 of ERISA and
Section 412 of the Code; (C) the Purchaser Pension Plan is not the subject
of termination proceedings or a notice of termination under Title IV of
ERISA; (D) the Purchaser Pension Plan does not exclude Transferred
Employees, as a class, from eligibility to participate therein; and (E) the
Purchaser Pension Plan does not violate the requirements of any applicable
collective bargaining agreement covering any Transferred Employees or Other
Plan Participants. No later than ten days after the Closing, Purchaser
shall provide Dynegy with a written certification that the Purchaser
Pension Plan satisfies each of the requirements set forth in this Section
6.2(a)(ii).
(iii) Transfer of Liabilities.
(A) In accordance with the provisions of this Section 6.2(a),
Purchaser shall cause the Purchaser Pension Plans to accept all liabilities
for benefits under the Seller Pension Plans, whether or not vested, that
would have been paid or payable (but for the transfer of assets and
liabilities pursuant to this Section 6.2(a)) to or with respect to the
Transferred Employees and Other Plan Participants under the terms of the
Seller Pension Plans, including all liabilities for "Section 411(d)(6)
protected benefits" (as defined by Section 411(d)(6) of the Code and the
regulations thereunder) that have accrued under the Seller Pension Plans to
or with respect to the Transferred Employees and Other Plan Participants as
of the Closing Date. Notwithstanding the foregoing, neither Purchaser nor
the Purchaser Pension Plans shall assume such liabilities if Dynegy, Seller
and the Seller Pension Plans do not comply in all material respects with
the provisions of Section 6.2(a)(i) and (iv). Purchaser shall not amend the
Purchaser Pension Plans, or permit the Purchaser Pension Plans to be
amended, to eliminate any benefit accrued as of the Closing, whether or not
vested, with respect to which liabilities are transferred pursuant to the
foregoing provisions of this subsection (A), including any such benefit
that is a "Section 411(d)(6) protected benefit" (as defined by Section
411(d)(6) of the Code and regulations thereunder), except to the extent
permitted by applicable Law. Neither Dynegy nor Seller shall take any
action to accelerate the vesting of Transferred Employees in their benefits
(if any) under the Seller Pension Plans. Notwithstanding any other
provision of this Agreement, the Seller Pension Plans shall continue to
make all Benefit Payments to Other Plan Participants until both the Initial
Transfer Amount and True-Up Amount have been transferred to the Purchaser
Pension Plans.
(B) As soon as practicable after the Closing Date, Dynegy shall
deliver to Purchaser a list reflecting each Transferred Employee's service
and compensation under each of the Seller Pension Plans, each Transferred
Employee's and Other Plan Participant's accrued benefit thereunder as of
the Closing Date, and a copy of each pending or final domestic relations
61
order affecting the benefit of any Transferred Employee or Other Plan
Participant.
(iv) Transfer of Assets.
(A) Not later than 90 days after the Closing, Dynegy shall cause its
actuary to calculate the Accrued Liability of each participant in each
Seller Pension Plan who is a Transferred Employee or Other Plan Participant
and then to compare, on a Seller Pension Plan by Seller Pension Plan basis,
the Accrued Liability of all the participants and beneficiaries in each
Seller Pension Plan to the fair market value of the assets of the
respective Seller Pension Plan as of the last day of the calendar month in
which the Closing Date occurs (the "Date of Spinoff"). If the Accrued
Liability of all participants and beneficiaries in a Seller Pension Plan is
less than the fair market value of the assets of that Seller Pension Plan,
then, in accordance with this Section 6.2(a)(iv), Dynegy shall cause to be
transferred to a trust established by Purchaser as part of the respective
Purchaser Pension Plan assets having a value equal to the Accrued Liability
under such Seller Pension Plan for all Transferred Employees and Other Plan
Participants, where each such Accrued Liability shall be determined as of
the Date of Spinoff. If the total Accrued Liability under a Seller Pension
Plan is equal to or more than the fair market value of the assets of that
Seller Pension Plan, then Dynegy shall cause its actuary to determine the
amount of assets allocable to the Accrued Liabilities of the Transferred
Employees and Other Plan Participants in that Seller Pension Plan based on
Section 4044 of ERISA (the "Section 4044 Amount"); and, in accordance with
this Section 6.2(a)(iv), Dynegy shall cause assets having a value equal to
the Section 4044 Amount applicable to the Transferred Employees and Other
Plan Participants under such Seller Pension Plan to be transferred to the
trust established by Purchaser as part of the respective Purchaser Pension
Plan. All such asset transfers shall take place in accordance with the
procedures set forth below in this Section 6.2(a), and shall be in cash
and/or other assets determined by mutual agreement of Dynegy and Purchaser.
(B) The Accrued Liability or the Section 4044 Amount (whichever is
applicable) for each Seller Pension Plan shall be referred to in this
Section 6.2(a)(iv)(B) as "X", and all transfers of assets to each Purchaser
Pension Plan with respect to "X" shall be made in accordance with the
provisions of this Section 6.2(a)(iv)(B). The initial transfer with respect
to each Seller Pension Plan shall be made no later than the later of: (1)
30 days after the end of the calendar month that includes the Closing Date;
or (2) the date on which the requirements of Section 6.2(a)(ii) and the
requirements of Section 6.2(a)(iv)(E) have been satisfied. The date
determined under the prior sentence is referred to in this Agreement as the
"Initial Transfer Date". Dynegy shall cause the trust which is a part of
each Seller Pension Plan to make an initial transfer, on the Initial
Transfer Date to the trust which is a part of the corresponding Purchaser
Pension Plan of assets having a value equal to 85% of the amount estimated
by Dynegy in good faith (determined on a termination basis using the
interest factors specified by the PBGC as in effect as of the Closing Date)
to be equal to "X" with respect to each Seller Pension Plan (the "Initial
Transfer Amount"); provided, however, if Purchaser has satisfied the
requirements of Section 6.2(a)(ii) and the requirements of Section
6.2(a)(iv)(E) have been satisfied and the Seller Pension Plans do not
transfer the Initial Transfer Amount as of the Initial Transfer Date,
62
Dynegy shall immediately thereafter cause the Seller Pension Plans to
transfer to the Purchaser Pension Plans an amount equal to 75 percent of
the fair market value of the assets of each Seller Pension Plan and such
amount shall for all purposes of this Agreement then be deemed to be the
Initial Transfer Amount. Dynegy prior to the Initial Transfer Date for each
Seller Pension Plan shall provide Purchaser with evidence reasonably
satisfactory to Purchaser that such Seller Pension Plan continues to
satisfy the requirements for a qualified plan under Section 401(a) of the
Code. As soon as practicable after the date the final determination of the
amounts to be transferred is made (the "True-Up Date"), but in no event
more than 30 days after the final determination, Dynegy shall cause a
second transfer to be made from the trust which is a part of each Seller
Pension Plan to the trust which is a part of each Purchaser Pension Plan in
cash equal to the True-Up Amount, if any, with respect to such Seller
Pension Plan. The True-Up Amount, if any, for each Seller Pension Plan
shall equal:
"X" minus the Initial Transfer Amount minus benefit payments made to any
Transferred Employees and Other Plan Participants by the Seller Pension
Plan on or after the Closing Date ("Benefit Payments"), as adjusted for
earnings as calculated in accordance with this Section 6.2(a)(iv)(B).
Earnings shall be calculated in accordance with this Section 6.2(a)(iv)(B)
as follows: (1) earnings shall be calculated from the Date of Spinoff to
the Initial Transfer Date on an amount equal to the Initial Transfer Amount
using the compound monthly rate of return (considering both gains and
losses) earned or lost for the same period on the assets of the trust from
which the True-Up Amount is being transferred; and (2) earnings shall be
calculated from the Date of Spinoff to the True-Up Date on an amount equal
to "X" minus the sum of the Initial Transfer Amount and such Benefit
Payments using (a) with respect to the period from the Date of Spinoff to
the last day of the calendar month preceding the True-Up Date, the compound
monthly rate of return (considering both gains and losses) earned or lost
on the assets of the trust from which the True-Up Amount is being
transferred and (b) with respect to the period from the first day of the
calendar month which includes the True-Up Date to the True-Up Date, the
average rate of the 90-day Treasury ▇▇▇▇ on the auction date which
coincides with the first day of such calendar month or, if there is no
auction on such date, the auction date which immediately precedes the first
day of the calendar month which includes the True-Up Date. However, if the
Initial Transfer Amount for a Seller Pension Plan plus the Benefit Payments
made by such plan exceeded "X" with respect to such Seller Pension Plan,
Purchaser as soon as practicable following such determination shall cause a
transfer to be made in cash or such other assets as may be agreed upon by
Dynegy and Purchaser from the trust which is a part of the corresponding
Purchaser Pension Plan to the trust from which the Initial Transfer Amount
was transferred equal to the difference between (i) the sum of such Initial
Transfer Amount and such Benefit Payments and (ii) "X", adjusted to reflect
earnings from the Initial Transfer Date until the date of such transfer
from the trust which is a part of such Purchaser Pension Plan using (a)
with respect to the period from the Initial Transfer Date to the last day
of the calendar month preceding such transfer, the compound rate of return
(considering both gains and losses) on the assets of such Purchaser Pension
Plan and (b) with respect to the period from the first day of the calendar
month in which the transfer occurs and the actual date of such transfer,
the average rate of the 90-day Treasury ▇▇▇▇ on the auction date coincident
63
with the first day of the calendar month in which the transfer occurs or,
if there is no auction on such date, on the auction date which immediately
precedes the first day of the calendar month in which the transfer occurs.
Unless Dynegy and Purchaser agree otherwise, all transfers will occur on
the last Business Day of a calendar month. Finally, notwithstanding
anything in this Section 6.2(a)(iv) to the contrary, the transfers
contemplated in this Section 6.2(a)(iv) shall comply with Section 414(l) of
the Code and the related regulations, and the amount expressly called for
to be transferred pursuant to this Section 6.2(a)(iv) shall be adjusted to
the extent necessary to satisfy Section 414(l) of the Code and the related
regulations as well as Section 4044 of ERISA and the related regulations.
(C) For purposes of this Section 6.2(a)(iv), the term "Accrued
Liability" shall mean with respect to each Seller Pension Plan the present
value of the accrued benefit, as of the Closing Date, of each Transferred
Employee, each Other Plan Participant and each other participant or
beneficiary in such Seller Pension Plan, determined on a termination basis
using the interest factors specified by the PBGC as in effect as of the
Date of Spinoff for an immediate or deferred annuity as appropriate for
each such person and using the other methods and factors specified in the
PBGC's regulations for the valuation of accrued benefits upon a plan
termination. The Accrued Liability and the Section 4044 Amount shall be
determined by an enrolled actuary designated by Dynegy, and Dynegy shall
provide within 90 days after the Closing Date any actuary designated by
Purchaser with all the information reasonably necessary to review the
calculations of the Accrued Liability and the Section 4044 Amount and to
verify that such calculations have been performed in a manner consistent
with the terms of this Agreement. If there is a good faith dispute between
Dynegy's actuary and Purchaser's actuary as to the amount to be transferred
to any plan under this Section 6.2(a) and such dispute remains unresolved
for 30 days, the chief financial officers of Dynegy and Purchaser shall
endeavor to resolve the dispute. If such dispute remains unresolved for 60
days, Dynegy and Purchaser shall select and appoint a third actuary who is
mutually satisfactory to both Dynegy and Purchaser and who shall
recalculate the disputed amount using the actuarial assumptions described
in this Section 6.2(a)(iv)(C). The decision of such third party actuary
shall be rendered within 30 days and shall be conclusive as to any dispute
for which such actuary was appointed. The cost of such third party actuary
shall be divided equally between Dynegy and Purchaser. Purchaser and Dynegy
each shall be responsible for the cost of its own actuary.
(D) In the event that, prior to the later of (i) the date that is
twelve (12) months after the Closing Date or (ii) October 15, 2005, either
party's actuary shall determine that there has been a material error such
that the True-Up Amount was incorrect, that actuary shall determine the
correct True-Up Amount and the amount that must be transferred between the
respective trusts for the Seller Pension Plans and the Purchaser Pension
Plans to correct such error (the "Correction Amount"), and shall provide
the other party's actuary with all the information reasonably necessary to
review the calculations of the Correction Amount and to verify that such
calculations have been performed in a manner consistent with the terms of
this Agreement. Any good faith dispute between Dynegy's actuary and
Purchaser's actuary as to the Correction Amount shall be resolved pursuant
to the dispute-resolution provisions set forth in Section 6.2(b)(iv)(C). As
64
soon as practicable after the date of the final determination of the
Correction Amount, but in no event more than 30 days after such date,
Dynegy or Purchaser, as applicable, shall cause the appropriate trust to
transfer cash equal to the Correction Amount, as adjusted for earnings
calculated in accordance with Section 6.2(a)(iv)(B) from the True-Up Date
through the date of such transfer.
(E) In connection with the transfer of assets and liabilities pursuant
to this Section 6.2(a), Dynegy and Purchaser and their respective
Affiliates shall cooperate with each other in making all appropriate
filings required by the Code or ERISA and the regulations thereunder, and
the transfer of assets and liabilities pursuant to this Section 6.2(a)
shall not take place until as soon as practicable after the latest of (1)
the expiration of the 30-day period following the filing of any required
notices with the Internal Revenue Service pursuant to Section 6058(b) of
the Code, (2) the date Purchaser has delivered to Dynegy a copy of the
Purchaser Pension Plan and, with respect to a Purchaser Pension Plan in
effect on the date of the Closing, a copy of the most recent determination
letter from the Internal Revenue Service to the effect that the Purchaser
Pension Plan is qualified under Section 401(a) of the Code, together with
documentation reasonably satisfactory to Dynegy of the due adoption of any
amendments to the Purchaser Pension Plan required by the Internal Revenue
Service as a condition to such qualification and a certification from
Purchaser that no events have occurred that adversely affect the continued
validity of such determination letter (apart from the enactment of any
Federal law for which the remedial amendment period under Section 401(b) of
the Code has not yet expired), (3) the date Dynegy has delivered to
Purchaser a copy of the most recent determination letter from the Internal
Revenue Service to the effect that each Seller Pension Plan is qualified
under Section 401(a) of the Code, together with documentation reasonably
satisfactory to Purchaser of the due adoption of any amendments to each
Seller Pension Plan required by the Internal Revenue Service as a condition
to such qualification and a certification from Dynegy that no events have
occurred that adversely affect the continued validity of such determination
letter (apart from the enactment of any Federal law for which the remedial
amendment period under Section 401(b) of the Code has not yet expired), and
(4) the receipt of information enabling the enrolled actuary for the
Purchaser Pension Plan to issue the certification required by Section
6058(b) of the Code.
(b) Savings Plans.
(i) As of the date of this Agreement, Transferred Employees
participate in the defined contribution plans listed in Schedule 6.2(b)
(collectively referred to as the "Seller Savings Plans"). Except as
provided in Section 6.2(b)(v), Transferred Employees shall not be entitled
to make contributions to or to benefit from matching or other contributions
under the Seller Savings Plans on and after the Closing Date.
(ii) Purchaser shall take all action necessary and appropriate to
ensure that, as soon as practicable after the Closing Date, Purchaser
maintains or adopts one or more savings plans (hereinafter referred to in
the aggregate as the "Purchaser Savings Plans" and individually as the
"Purchaser Savings Plan") effective as of the Closing Date and to ensure
that each Purchaser Savings Plan satisfies the following requirements as of
the Closing Date: (A) the Purchaser Savings Plan is a qualified,
65
single-employer individual account plan under Section 401(a) of the Code;
(B) the Purchaser Savings Plan does not exclude Transferred Employees from
eligibility to participate therein; (C) the Purchaser Savings Plan permits
Transferred Employees to make before-tax contributions (under Section
401(k) of the Code) and provides for matching contributions by Purchaser;
and (D) the Purchaser Savings Plan does not violate the requirements of any
applicable collective bargaining agreement.
(iii) The terms of the Purchaser Savings Plans, or each such Purchaser
Savings Plan, shall provide that the Transferred Employees shall have the
right to make direct rollovers to such plan of their accounts in a Seller
Savings Plan, including a direct rollover of any notes evidencing loans
made to such Transferred Employees; provided, that in no event shall the
Purchaser Savings Plans be required to accept the transfer of Dynegy common
stock; and provided, further, that Purchaser's obligation to accept
rollovers of loans shall be limited as follows: (A) only loans to
Transferred Employees who elect to roll over their entire account balances,
and who are not in default with respect to their loans at the time of the
rollover, are required to be accepted; and (B) Purchaser may impose such
procedural requirements as it deems necessary or appropriate to facilitate
the rollovers (including, for example, requiring that such rollovers take
place at not more than two specified times and requiring Dynegy to amend
the Seller Savings Plans as necessary to ensure that the rollovers are
permitted to take place in accordance with this Section 6.2(b)).
(iv) Within 90 days after the Closing Date, Seller shall deliver to
Purchaser a list of the Transferred Employees covered by the Seller Savings
Plans, together with each Transferred Employee's service under each of the
Seller Savings Plans as of the Closing Date.
(v) Seller shall contribute all Transferred Employees' contributions
that are based on compensation received prior to the Closing Date and shall
make all required matching contributions with respect to the Transferred
Employees' contributions to the Seller Savings Plans that are (A) eligible
for matching and (B) made while employed by Seller or its Affiliates before
the Closing Date. Such matching contributions shall be made not later than
the date on which all other matching contributions are made to the Seller
Savings Plans with respect to contributions made at the same time as the
Transferred Employees' contributions.
(c) Retiree Medical Benefits.
(i) Purchaser as of the Closing Date shall assume the liabilities,
obligations and responsibilities of Seller and its Affiliates to provide
post-retirement medical, health and life insurance benefits to each former
employee of any IPC Company or any predecessor of any IPC Company whose
employment terminated on or before the Closing Date and any spouse,
dependents or beneficiary of such former employee (individually a "Retiree"
and collectively the "Retirees") which Seller or its Affiliates were
obligated to provide immediately before the Closing Date, including any
liabilities, obligations or responsibilities which Seller or its Affiliates
funded through one, or more than one, trust described in Section 501(c)(9)
of the Code (individually a "Seller's VEBA" and collectively the "Seller's
66
VEBAs"); provided that Purchaser or its Affiliates may, to the extent
permitted by applicable Law, change, amend or terminate such benefits at
any time. Purchaser, as part of such assumption, shall establish or
maintain, as of the Closing Date, a trust, or more than one trust,
described in Section 501(c)(9) of the Code (the "Purchaser's VEBA"), the
assets of which shall fund such post-retirement benefits for such Retirees
and Transferred Employees, and Seller as part of such assumption shall
cause each Seller's VEBA to transfer cash or assets, or cash and assets, to
the Purchaser's VEBA in accordance with this Section 6.2(c) to fund the
payment of such post-retirement benefits following the Closing Date.
Notwithstanding the foregoing, the Purchaser shall not assume such
liabilities if Seller does not comply in all material respects with the
provisions of Section 6.2(c)(ii).
(ii) All transfers of cash or assets, or cash and assets, to
Purchaser's VEBA shall be made as soon as administratively feasible after
the Closing Date or within 20 days following the date on which Seller has
been provided evidence that Purchaser's VEBA satisfies the requirements for
a tax exempt trust under Section 501(c)(9) of the Code, if such date is
later than the Closing Date (the "VEBA Transfer Date"). Seller on the VEBA
Transfer Date shall cause each Seller's VEBA to make a transfer of all of
the cash and assets of each Seller's VEBA. In addition, all assets held in
any 401(h) account under any Seller Pension Plan shall be transferred to a
401(h) account established under the Purchaser Pension Plan(s) designated
by Purchaser no later than the Initial Transfer Date; provided, that
Purchaser has provided Seller with written evidence of the establishment of
such account.
(iii) Purchaser as of the Closing Date shall assume the liabilities,
obligations and responsibilities of Seller and its Affiliates for the
post-retirement medical and other welfare benefits described in Section
6.2(c)(i) for all Transferred Employees and their eligible spouses,
dependents and beneficiaries. Purchaser shall satisfy any requirements of
any applicable collective bargaining agreement covering Transferred
Employees with respect to retiree medical, health, and life insurance
benefits. Seller and its Affiliates shall have no obligation to provide
retiree medical, health and life insurance benefits to any Transferred
Employee after the Closing Date.
(d) Other Welfare Benefits.
(i) Purchaser shall take all action necessary and appropriate to
ensure that, as soon as practicable after the Closing Date, Purchaser
maintains or adopts, as of the Closing Date, one or more employee welfare
benefit plans, including medical, health, dental, flexible spending
account, accident, life, and long-term disability and other employee
welfare benefit plans (including retiree medical and life but excluding
severance benefits) for the benefit of the Transferred Employees (the
"Purchaser Welfare Plans"). Any restrictions on coverage for pre-existing
conditions or requirements for evidence of insurability under the Purchaser
Welfare Plans shall be waived for Transferred Employees, except to the
extent that such restrictions or requirements have not been satisfied under
corresponding plans of Seller and its Affiliates as of the Closing Date.
Transferred Employees shall receive credit under the Purchaser Welfare
Plans for co-payments and payments under a deductible limit made by them
and for out-of-pocket maximums applicable to them during the plan year of
67
the welfare plans maintained by Seller on the Closing Date (hereinafter
referred to collectively as the "Seller Welfare Plans") in accordance with
the corresponding Seller Welfare Plans.
(ii) Dynegy and Seller shall retain responsibility for any valid claim
under a Seller Welfare Plan for disability or life insurance benefits made
by a Transferred Employee on or after the Closing Date arising from a claim
incurred on or before the Closing Date. For purposes of this paragraph, a
claim for life insurance is deemed incurred when the death occurs and a
claim for long term disability benefits is deemed incurred on the first day
the employee is absent from work as a result of the condition that results
in entitlement to disability benefits. As of the Closing Date, Purchaser
shall make available the appropriate Transferred Employees to administer
and process any claim under a Seller Welfare Plan for medical or dental
benefits made by a Transferred Employee on or after the Closing Date
arising from a claim incurred on or before the Closing Date. Upon receipt
of proof of payment reasonably satisfactory to Purchaser, Purchaser shall
reimburse Seller for any medical or dental claim incurred prior to Closing
and that is properly paid under a Seller Welfare Plan for any Transferred
Employee. For purposes of this paragraph, a medical or dental claim is
considered incurred when the services are rendered, the supplies are
provided or medication is prescribed, and not when the condition arose,
except that claims relating to a hospital confinement that begins before
the Closing Date shall be treated as incurred on or before the Closing
Date. Nothing in this Section 6.2(d) shall require any party or benefit
plan to make any payment or to provide any benefit not otherwise provided
by the terms of the Seller Welfare Plans or applicable Law.
(iii) Seller, Purchaser, their respective Affiliates, and the Seller
Welfare Plans and the Purchaser Welfare Plans shall assist and cooperate
with each other in the disposition of claims made under the Seller Welfare
Plans and the Purchaser Welfare Plan, and in providing each other with any
records, documents, or other information within its control or to which it
has access that is reasonably requested by any other as necessary or
appropriate to the disposition, settlement or defense of such claims. From
and after the date of this Agreement, Dynegy and Seller shall cause the
processing and payment of claims for medical and dental benefits under the
Seller Welfare Plans to continue in the normal course consistent with past
practice and in any event as expeditiously as possible.
(iv) Nothing in this Agreement shall require Seller or its Affiliates
to transfer assets or reserves with respect to pre-retirement benefits
under the Seller Welfare Plans to Purchaser or the Purchaser Welfare Plans.
(v) Non-Union Transferred Employees shall be eligible for benefits
under Purchaser severance or separation pay policies or plans that are the
same as or comparable to those provided to similarly situated employees of
Purchaser and its Affiliates.
(vi) Seller shall be responsible for satisfying "continuation
coverage" requirements for all "group health plans" under Section 4980B of
the Code, Part 6 of Title I of ERISA and comparable state law ("COBRA")
with respect to each employee of any Seller or the IPC Companies who does
not become a Transferred Employee (and any spouse, dependents or
beneficiary of such employee or other employee), with respect to each
68
former employee of any Seller or any IPC Company or any predecessor of any
IPC Company whose employment terminated on or before the Closing Date and
any spouse, dependents or beneficiary of such former employee, and with
respect to Transferred Employees (and any spouse, dependents or beneficiary
of such employee or other employee) with respect to qualifying events that
occur on or before the Closing Date. Seller will provide any notices to
Transferred Employees required under COBRA and will comply with any other
applicable provisions of COBRA in connection with their termination of
employment by Seller and its Affiliates. Purchaser shall be responsible for
satisfying "continuation coverage" requirements for all "group health
plans" under COBRA with respect to each Transferred Employee (and any
spouse, dependents or beneficiary of such Transferred Employee) who
experiences a "qualifying event" within the meaning of COBRA after the
Closing Date.
(vii) Seller shall disclose to Purchaser, within 30 days after the
Closing Date, the unused flexible spending account (the "FSA") balances of
each Transferred Employee and shall, to the extent permitted by applicable
Law, transfer such amounts to a plan maintained by Purchaser or one of its
Affiliates. Purchaser shall cause to be maintained for the duration of the
calendar year in which the Closing Date occurs all such unused FSA account
balances of the Transferred Employees that are so transferred.
Section 6.3 Miscellaneous Benefits. On or after the Closing Date, Purchaser
shall: (a) assume all liabilities of Seller or any Affiliate of Seller with
respect to any accrued but unused vacation time of Transferred Employees to the
extent that it is an accrued liability on the financial statements; and (b)
allow Transferred Employees to receive paid time off on or after the Closing
Date for any unused vacation time accrued on the financial statements prior to
the Closing Date in accordance with the applicable policies of Purchaser, except
to the extent otherwise required by applicable law or regulation. For purposes
of applying such policies of Purchaser, Purchaser shall treat service of the
Transferred Employees with any Seller and its Affiliates as though it were
service with Purchaser. Seller and its Affiliates shall have no liability to pay
Transferred Employees for the vacation time described in this Section 6.3.
Section 6.4 Employee Rights.
(a) Nothing herein expressed or implied shall confer upon any employee of
any IPC Company, Seller or its Affiliates, or Purchaser or its Affiliates, or
upon any legal representative of such employee, or upon any collective
bargaining agent, any rights or remedies, including any third party beneficiary
rights or any right to employment or continued employment for any specified
period, of any nature or kind whatsoever under or by reason of this Agreement.
(b) Nothing in this Agreement shall be deemed to confer upon any person
(nor any beneficiary thereof) any rights under or with respect to any plan,
program, or arrangement described in or contemplated by this Agreement, and each
person (and any beneficiary thereof) shall be entitled to look only to the
express terms of any such plan, program or arrangement for his or her rights
thereunder.
69
(c) Nothing in this Agreement shall cause Purchaser or its Affiliates to
have any obligation to provide employment to any individual who is not an Active
Employee or Affiliate Employee or, except as otherwise provided in applicable
collective bargaining agreements, to continue to employ any Transferred Employee
for any period of time following the Closing Date.
Section 6.5 WARN Act Requirements. On and after the Closing Date, Purchaser
shall be responsible with respect to Transferred Employees and their
beneficiaries for compliance with the WARN Act and any similar state or local
Law, including any requirement to provide for and discharge any and all
notifications, benefits and liabilities to Transferred Employees and
Governmental Authorities that might be imposed as a result of the consummation
of the transactions contemplated by this Agreement or otherwise. Purchaser shall
not take any action within ninety (90) days after the Closing Date that would
cause any termination of employment of any employees employed by any IPC Company
or Seller or their Affiliates prior to the Closing Date to constitute a "plant
closing" or "mass layoff" under the WARN Act or any similar state or local Law
or create any liability to Seller or its Affiliates for employment terminations
under the WARN Act or any similar state or local Law, it being understood that
to enable Purchaser to comply with this requirement, Seller shall first inform
Purchaser upon the Closing Date or as soon thereafter as is practicable of all
employees, by location, terminated by any IPC Company or its Affiliates other
than for cause or through voluntary resignation or retirement within the
preceding 90 days.
Section 6.6 Retention of Certain Liabilities by Dynegy. Following the
Closing, Dynegy and its Affiliates covenant to retain all liabilities and
obligations arising out of or relating to (a) the investigation, litigation and
other matters described in items 2 and 5 of Schedule 3.9, (b) except as
otherwise specifically provided in this Article VI, any Controlled Group
Liabilities, (c) notwithstanding Section 7.8(b), any liability for failure to
properly report taxable income or withhold applicable Taxes with respect to the
provision, before the Closing, of the benefits described in item 1 under "Oral
Employee Benefit Plans and Compensation Arrangements" on Schedule 3.10, (d)
except as otherwise specifically provided in this Article VI, the Employee
Benefit Plans listed in Schedule 3.10 under "Employee Benefit Plans," other than
item 16, and (e) the Compensation Arrangements listed in Schedule 3.10 under
"Compensation Arrangements," other than items 4 and 7.
ARTICLE VII
TAX MATTERS AND INDEMNIFICATION
Section 7.1 Preparation and Filing of Tax Returns.
(a) Seller shall timely prepare and file, or cause to be timely prepared
and filed, on a basis consistent with past practice (except as required by
applicable Law or a Final Determination), all Tax Returns required to be filed
by or with respect to any IPC Company (i) in the case of Income Tax Returns, for
any taxable period that ends on or prior to the Closing Date, and (ii) in the
case of Non-Income Tax Returns, that have not yet been filed and are due (taking
into account extensions properly obtained) on or before the Closing Date, and in
70
all cases Seller shall remit or cause to be remitted any Taxes due in respect of
such Tax Returns. Dynegy shall allow Purchaser to review any Non-Income Tax
Returns relating to any IPC Company required to be filed on or before the
Closing Date at IPC's offices in Decatur, Illinois, during normal business hours
prior to filing such Tax Returns.
(b) Purchaser shall timely prepare, or cause to be prepared, on a basis
consistent with past practice (except as required by applicable Law or a Final
Determination), all Income Tax Returns with respect to any IPC Company for any
Straddle Period. Purchaser shall present such Income Tax Returns to Seller for
review at least 30 days before the date on which such Income Tax Returns are
required to be filed. Unless Seller objects in writing at least five days before
the date on which such Income Tax Returns are due (the sole basis for which
shall be Purchaser's failure to prepare such Income Tax Returns on a basis
consistent with past practice), Purchaser shall file, or cause to be filed, such
Income Tax Returns. Purchaser shall remit or cause to be remitted any Income
Taxes due in respect of such Income Tax Returns, provided that Seller shall pay
Purchaser, no later than three days prior to the date such Income Taxes are due,
an amount equal to the amount of such Income Taxes that are attributable to the
Pre-Closing Tax Period. In the case of any Straddle Period all Income Taxes
shall be apportioned between the Pre-Closing Tax Period and the Post-Closing Tax
Period on a closing of the books basis.
(c) Purchaser shall timely prepare and file, or cause to be timely prepared
and filed, all Tax Returns required to be filed by or with respect to any IPC
Company (i) in the case of Income Tax Returns, for any taxable period that
begins after the Closing Date, and (ii) in the case of Non-Income Tax Returns,
that have not yet been filed and are due (taking into account extensions
properly obtained) after the Closing Date. Purchaser shall prepare any
Non-Income Tax Returns described in clause (ii) for any Pre-Closing Tax Period
consistent with past practice (except as required by applicable Law or a Final
Determination), and in all cases Purchaser shall remit or cause to be remitted
any Taxes due in respect of such Tax Returns. Purchaser shall allow Dynegy to
review any Non-Income Tax Returns described in clause (ii) for any Pre-Closing
Tax Period at Purchaser's offices in Decatur, Illinois, during normal business
hours prior to filing such Tax Returns.
(d) Without the written consent of Dynegy (which consent shall not be
unreasonably withheld), Purchaser will not, and will cause its Affiliates not
to, file any amended Income Tax Returns, carry-back claim, or other adjustment
relating to Income Taxes or take any other action with respect to Income Taxes
relating to any IPC Company for, or to, any taxable period that ends on or
before the Closing Date, in each case except as required by a Final
Determination.
Section 7.2 Cooperation. The Seller Indemnitors and Purchaser shall
reasonably cooperate, and shall cause their respective Affiliates, officers,
employees and other representatives reasonably to cooperate, in preparing and
filing all Tax Returns required to be filed under Section 7.1 and in resolving
or managing all disputes or Audits with respect to all taxable periods relating
to Tax Returns or Taxes required to be filed or paid by or with respect to any
IPC Company and in any other matters relating to Taxes required to be paid by or
with respect to any IPC Company, including (a) by maintaining, subject to the
other terms of this Agreement, and making available to each other all books and
records and all relevant correspondence with Governmental Authorities in
71
connection with Tax Returns or Taxes required to be filed or paid by or with
respect to any IPC Company; (b) by promptly informing each other of notices of
any Tax Audit or other Tax proceeding in respect of which one or more of the
parties or any of its Affiliates may have a liability; and (c) by executing any
reasonably necessary powers of attorney.
Section 7.3 Transfer Taxes. The Dynegy Parties (other than IPC), on the one
hand, and Purchaser, on the other hand, shall share equally all documentary,
sales, use, real property transfer, real property gains, registration, value
added, transfer, stamp, recording and similar Taxes, fees and costs together
with any interest thereon, penalties, fines, costs, fees, additions to tax or
additional amounts with respect thereto incurred in connection with the
transactions contemplated by this Agreement ("Transfer Taxes"). The Dynegy
Parties (other than IPC) and Purchaser shall be responsible for jointly
preparing and timely filing (and cooperating with one another in preparing and
filing) any Tax Returns required with respect to any such Transfer Taxes. The
party responsible under the applicable Transfer Tax law for paying a Transfer
Tax (the "Transfer Tax Party") shall make due and timely payment of the Transfer
Tax to the applicable Taxing Authority, provided that the other party pays the
Transfer Tax Party, no later than two Business Days prior to the date such
Transfer Tax is due, such other party's 50% share of such Transfer Tax. The
Transfer Tax Party will provide the other party a true copy of each such Tax
Return as filed and evidence of the timely filing thereof.
Section 7.4 FIRPTA Certificate. Seller shall deliver to Purchaser at the
Closing a certificate, in form and substance reasonably satisfactory to
Purchaser, certifying that the transactions contemplated hereby are exempt from
withholding under Section 1445 of the Code.
Section 7.5 Tax Sharing Arrangements. Seller shall cause the provisions of
any Tax Sharing Arrangement between any IPC Company, on the one hand, and Seller
or any of its Affiliates (other than any IPC Company), on the other hand, to be
terminated as of the Closing Date, and any such Tax sharing Arrangements shall
have no further effect for any taxable year or period (whether current, future
or past), except to the extent of Non-Income Tax liabilities included in the
calculation of Final Adjusted Working Capital.
Section 7.6 Tax Refunds. Seller shall be entitled to any Tax Refund
resulting from any Final Determination regarding Taxes for any Pre-Closing Tax
Period (except to the extent such Taxes have been actually borne by Purchaser).
If any such Tax Refund is received by Purchaser, any IPC Company or any of their
respective Subsidiaries or Affiliates, Purchaser shall forward any such Tax
Refund to Seller (including any interest actually received) within ten days
after receipt thereof. Purchaser shall pay Seller interest at the rate
prescribed under Section 6621(a)(1) of the Code, compounded daily, on any amount
not paid when due in accordance with the foregoing sentence. Purchaser shall be
entitled to any Tax Refund resulting from any Final Determination regarding
Taxes for any Post-Closing Tax Period. If any such Tax Refund is received by
Seller or any of its Subsidiaries or Affiliates, Seller shall forward any such
Tax Refund to Purchaser (including any interest actually received) within ten
days after receipt thereof. Seller shall pay Purchaser interest at the rate
72
prescribed under Section 6621(a)(1) of the Code, compounded daily, on any amount
not paid when due in accordance with the foregoing sentence.
Section 7.7 Section 338(h)(10) Election.
(a) The parties hereto agree that they will jointly make a timely and
irrevocable election pursuant to Section 338(h)(10) of the Code and the Treasury
Regulations thereunder (and, if permissible, under any applicable state or local
Income Tax laws) with respect to Purchaser's purchase of the Common Shares and
the Preferred Shares (collectively, the "Section 338(h)(10) Election"). Dynegy,
Seller, Purchaser and their respective Affiliates shall report the transactions
consistent with such Section 338(h)(10) Election and shall take no position
contrary thereto unless and to the extent required to do so pursuant to a Final
Determination.
(b) Purchaser shall be responsible for preparing drafts of all forms,
attachments and schedules necessary to effectuate the Section 338(h)(10)
Election (including Internal Revenue Service Forms 8023 and 8883 and any similar
forms under applicable state or local income tax laws (the "Section 338
Forms")). The parties shall execute and deliver Internal Revenue Service Form
8023 at the Closing, which form shall be final and binding on the parties
without further adjustment. At least 120 days prior to the latest date for the
filing of each other Section 338 Form, Purchaser shall furnish Seller with a
copy of each such draft Section 338 Form prepared by Purchaser together with a
copy of a report (the "Allocation Report") of the proposed allocation of the
purchase price for federal income tax purposes (less any amount allocated to the
EEI Shares pursuant to Schedule 7.7). If within 30 days of Seller's receipt of
such Section 338 Form and Allocation Report, Seller shall not have objected in
writing to such Section 338 Form or Allocation Report, such Section 338 Form and
Allocation Report shall be final and binding on the parties and the IPC
Companies without any further adjustment. If at least 60 days prior to the
latest date for the filing of such Section 338 Form, Seller and Purchaser cannot
agree upon the final form and content of such Section 338 Form or the Allocation
Report, any disagreement with respect to such Section 338 Form or the Allocation
Report shall be resolved, at least 30 days before the last day for the filing of
such Section 338 Form, by the Accounting Firm. The resolution of the Accounting
Firm shall be final and binding on the parties and the IPC Companies without any
further adjustment. The Section 338 Form and the Allocation Report shall be
revised to reflect the resolution of the Accounting Firm and, once revised,
shall be final and binding on the parties and the IPC Companies without any
further adjustment. The costs, expenses and fees of the Accounting Firm shall be
borne equally by Seller and Purchaser. Once such Section 338 Form is final and
no later than the last date for filing of such Section 338 Form, Dynegy, Seller
and Purchaser shall execute such Section 338 Form, and Purchaser shall file such
Section 338 Form with the applicable Taxing Authority. Notwithstanding the
foregoing, Dynegy, Seller and Purchaser shall fully cooperate to jointly prepare
and execute additional Section 338 Forms in a timely manner as reasonably
necessary with respect to subsequent adjustments of Purchase Price following the
Closing.
(c) Schedule 7.7 sets forth the allocation of the Purchase Price among the
Common Shares and the Preferred Shares, on the one hand, and the EEI Shares, on
the other hand. Seller and Purchaser agree, for all Tax purposes, to allocate
73
any adjustment to the purchase price relating to the Common Shares and the
Preferred Shares to the item or items to which it is principally attributable.
Section 7.8 Tax Indemnification.
(a) After the Closing, the Seller Indemnitors shall be jointly and
severally liable for and pay, and the Seller Indemnitors shall jointly and
severally indemnify and hold harmless each Purchaser Group Member from and
against, any and all Indemnifiable Losses due to: (i) any Taxes imposed on or
with respect to Dynegy or Seller or any of their Affiliates (other than any IPC
Company), or for which Dynegy or Seller or any of their Affiliates (other than
any IPC Company) may otherwise be liable, attributable to any and all taxable
years or periods; (ii) any Taxes imposed on or with respect to any IPC Company
attributable to any Pre-Closing Tax Period or resulting from any transaction in
a Pre-Closing Tax Period (other than (A) Non-Income Taxes imposed on or with
respect to any IPC Company (except as otherwise provided in Article IX by reason
of Section 3.8) and (B) any Income Taxes attributable to transactions or other
activities of Purchaser or its Affiliates entered into or occurring after the
Closing on the Closing Date that are not expressly contemplated by this
Agreement, to the extent such transactions or activities are not entered into or
do not occur in the ordinary course of business); (iii) any Taxes for which any
IPC Company may be liable as a result of having been a member of any Company
Group (including Taxes for which any IPC Company is or may be liable pursuant to
Section 1.1502-6 of the Treasury Regulations or similar provisions of state or
local Law as a result of having been a member of any Company Group, and any
Taxes resulting from any IPC Company ceasing to be a member of any Company
Group, as the case may be); and (iv) any Taxes resulting from or arising out of
any Section 338(h)(10) Election. It is understood and agreed, for the avoidance
of doubt, that the Seller Indemnitors shall be jointly and severally liable for
and pay, and shall jointly and severally indemnify and hold harmless each IPC
Company from and against, any and all Indemnifiable Losses due to any Income
Taxes incurred by a Seller or any IPC Company attributable to the Pre-Closing
Tax Period as a result of or relating to the transactions contemplated by this
Agreement.
(b) After the Closing, Purchaser shall be liable for and pay, and Purchaser
shall indemnify and hold harmless each Seller Group Member from and against any
and all Indemnifiable Losses due to: (i) any Taxes imposed on or with respect to
any IPC Company attributable to any Post-Closing Tax Period; (ii) Non-Income
Taxes imposed on or with respect to any IPC Company; and (iii) any Income Taxes
of any IPC Company attributable to transactions or other activities of Purchaser
or its Affiliates entered into or occurring after the Closing on the Closing
Date that are not expressly contemplated by this Agreement, to the extent such
transactions or activities are not entered into or do not occur in the ordinary
course of business; provided, however, that Purchaser shall not be liable for or
pay, and shall not indemnify or hold harmless any Seller Group Member from and
against any and all Indemnifiable Losses due to, Taxes for which Sellers are
liable under this Agreement (including under Section 7.8(a) or Article IX
(taking into account the limitations set forth in Section 9.5) by reason of a
breach of Section 3.8).
(c) Purchaser or Dynegy (on behalf of the Seller Group Members), as the
case may be, as the Indemnified Party, shall promptly notify Dynegy (on behalf
74
of the Seller Group Members) or Purchaser as the Indemnifying Party, in writing
upon receipt by the Indemnified Party or any of its Affiliates, of notice of any
pending or threatened federal, state, local or foreign Tax Audits that may give
rise to an indemnification claim related to Taxes (a "Tax Controversy") and
thereafter shall promptly forward to the Indemnifying Party copies of notices
and communications with the relevant Governmental Authority relating to such Tax
Controversy, provided, however, that a failure to comply with this provision
shall not affect the Indemnified Party's right to indemnification hereunder
except to the extent such failure materially impairs the Indemnifying Party's
ability to contest any such Tax liabilities. Except as provided in this Section
7.8(c), the Indemnifying Party may elect to control, and may elect to have sole
discretion in handling, settling or contesting any Audit inquiry, information
request, Audit proceeding, suit, contest or any other action with respect to a
Tax Controversy for which it would be required to indemnify the other party,
provided the Indemnifying Party first acknowledges in writing that it has
liability for Taxes that might arise in such proceeding. Notwithstanding the
foregoing, the Indemnifying Party shall not settle any Tax proceeding with
respect to a Tax Controversy on a basis that would materially adversely affect
the Indemnified Party or its Affiliates without obtaining the Indemnified
Party's written consent, which consent shall not be unreasonably withheld or
delayed. Any out-of-pocket expenses incurred by the Indemnified Party in
handling, settling or contesting a Tax Controversy that the Indemnifying Party
has elected to control under this Section 7.8(c) shall be borne by the
Indemnified Party, to the extent incurred during any period the Indemnifying
Party is, in fact, actively contesting such Tax Controversy. Dynegy, on the one
hand, and Purchaser, on the other hand, shall jointly control, and shall each
have the right to participate at its own expense in all activities and strategic
decisions with respect to, any Tax proceedings for which each party would be
required to indemnify the other party with respect to one or more Tax issues.
Either Seller or Dynegy, or both, may assume sole control of any such Tax
proceeding for any Straddle Period if it or they acknowledge(s) in writing that
it or they has or have sole liability for any Taxes that might arise in such
proceeding.
Section 7.9 Survival and Coordination. Notwithstanding anything herein to
the contrary, Section 3.8 and this Article VII shall survive the Closing until
90 days after the expiration of the applicable statute of limitations (giving
effect to any waiver, mitigation or extension thereof). Claims for
indemnification with respect to Income Taxes shall be governed exclusively by
this Article VII and Section 9.8 (but not by any other provision of Article IX).
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1 Conditions to Obligations of Seller. The obligations of Seller
and Dynegy to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:
(a) Representations, Warranties and Covenants. The representations and
warranties of Purchaser contained in this Agreement that are qualified as to
materiality shall be true and accurate at and as of the Closing Date, with the
same force and effect as if made as of the Closing Date (other than such
representations and warranties as are made as of another date, which shall be
true and correct as of such date) and the representations and warranties that
75
are not qualified as to materiality shall be true and accurate in all material
respects as of the Closing Date (other than such representations and warranties
as are made as of another date, which shall be true and accurate in all material
respects as of such date). The covenants and agreements contained in this
Agreement to be complied with by Purchaser at or before the Closing shall have
been complied with in all material respects. Seller shall have received a
certificate from Purchaser signed by an authorized executive officer thereof
with respect to the matters described in this Section 8.1(a).
(b) Regulatory Approvals. Subject to Section 5.3, Final Orders described in
Schedule 8.1(b) (and any necessary implementing regulations) shall have been
obtained and shall not have (1) created a material adverse effect on the
business, financial condition or results of operation of DMG, or on the business
of selling capacity and energy products from or in respect of DMG's existing
generation assets, (2) resulted in a change to the terms of the PPA that is
adverse to the interests of DYPM, or (3) resulted in Seller or any of its
Affiliates making payments or having any continuing obligations pursuant to or
otherwise in respect of the Intercompany Note or making any additional capital
contributions to any IPC Companies or Purchaser or any of its Affiliates as a
condition to the transactions contemplated by this Agreement and the Ancillary
Agreements.
(c) No Proceeding or Litigation. No Action shall have been threatened in
writing or filed by any state or Federal Governmental Authority against any
party seeking to restrain or prohibit or otherwise challenge the legality or
validity of the transactions contemplated by this Agreement or any Ancillary
Agreement.
(d) No Order. There shall not be in effect any applicable Law or
Governmental Order directing that the transactions contemplated by this
Agreement or any Ancillary Agreement not be consummated or which has the effect
of rendering it unlawful to consummate such transactions.
(e) Required Dynegy Consents. Dynegy, its Affiliates and the IPC Companies
shall have received consents, in form and substance reasonably satisfactory to
Dynegy, to the transactions contemplated hereby which are specified in Schedule
8.1(e).
(f) Solvency Opinion. Dynegy shall obtain an opinion letter (the "Solvency
Opinion") (containing customary assumptions, qualifiers and disclaimers),
reasonably satisfactory to Dynegy, from a nationally recognized independent
investment banking, appraisal or solvency firm substantially to the following
effect as of the Closing:
(i) each of Dynegy and Seller is not insolvent and will not be rendered
insolvent as a result of the consummation of the transactions contemplated
to occur at Closing;
(ii) the property of each of Dynegy and Seller does not, and shall not,
following the consummation of the transactions contemplated to occur at the
Closing, constitute unreasonably small capital for each of Dynegy and
Seller to carry out its business as now conducted and as proposed to be
conducted following consummation of the transactions contemplated to occur
at the Closing; and
76
(iii) each of Dynegy and Seller has not incurred and does not intend to
incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be received, and of amounts
to be payable on or in respect of the debts of each of Dynegy and Seller).
(g) Closing Deliveries. Purchaser shall have delivered to Seller each of
the items required to be delivered to it pursuant to Section 2.6(a), (b), (c),
(d), (f) and (g).
Section 8.2 Conditions to Obligation of Purchaser. The obligation of
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions:
(a) Representations, Warranties and Covenants. The representations and
warranties of Seller and Dynegy contained in this Agreement that are qualified
as to materiality or Material Adverse Effect shall be true and accurate at and
as of the Closing Date (other than such representations and warranties as are
made as of another date, which shall be true and accurate as of such date), and
the representations and warranties that are not qualified by materiality or
Material Adverse Effect shall be true and accurate in all material respects as
of the Closing Date with the same force and effect as if made as of the Closing
Date (other than such representations and warranties as are made as of another
date, which shall be true and accurate in all material respects as of such
date), except for instances where the failure to be true and accurate do not in
the aggregate constitute a Material Adverse Effect. The covenants and agreements
contained in this Agreement to be complied with by Seller and Dynegy at or
before the Closing shall have been complied with in all material respects.
Purchaser shall have received a certificate from Seller and Dynegy signed by an
authorized executive officer thereof with respect to the matters described in
this Section 8.2(a).
(b) Regulatory Approvals. Subject to Section 5.3, Final Orders with respect
to the Governmental Orders described in Schedule 8.2(b) (and any necessary
implementing regulations) shall have been obtained and shall not (A) have
created a material adverse effect on the business, financial condition or
results of operation (1) of Purchaser and its Subsidiaries, or (2) of the
Business after Closing, (B) result in a change to IPC's deferred tax balances or
rate base valuation or accounting entries other than as provided on Schedule
8.2(b), Item I (iv), (C) result in recovery of less than the portion of
Purchaser's costs of accomplishing IPC's reorganization identified for recovery
in accordance with Schedule 8.2(b), Item I(v), (D) subject IPC to any dividend
restriction other than that set forth on Schedule 8.2(b), Item I (vi), (E)
result in the operation by IPC without the rider identified on Schedule 8.2(b),
Item I (vii), if such operation without such rider would have a material adverse
effect on the business, financial condition or results of operation (1) of
Purchaser and its Subsidiaries, or (2) of the Business after Closing, or (F)
otherwise change the terms of the regulatory approvals described in Schedule
8.2(b), Items I (iv)-(vi), in a manner adverse to Purchaser or the IPC
Companies.
(c) No Proceeding or Litigation. No claim, action, suit or proceeding shall
have been threatened in writing or filed by any state or Federal Governmental
Authority seeking to restrain or prohibit or otherwise challenge the legality or
validity of the transactions contemplated by this Agreement or any Ancillary
Agreement.
77
(d) No Order. There shall not be in effect any applicable Law or
Governmental Order directing that the transactions contemplated by this
Agreement or any agreement contemplated hereby not be consummated or which has
the effect of rendering it unlawful to consummate such transactions.
(e) Required Consents. Purchaser, Dynegy, its Affiliates and the IPC
Companies shall have received consents, in form and substance reasonably
satisfactory to Purchaser, to the transactions contemplated hereby and by the
Ancillary Agreements which are specified in Schedule 8.2(e).
(f) No Changes. There shall not have occurred since the date hereof any
change or event that individually or in the aggregate would reasonably be
expected to result in a Material Adverse Effect.
(g) Solvency Opinion. Dynegy shall have delivered the Solvency Opinion to
Purchaser that is reasonably satisfactory to Purchaser.
(h) Closing Deliveries. Dynegy and Seller shall have delivered, or caused
to be delivered, to Purchaser each of the items required to be delivered to it
pursuant to Section 2.5 (except clauses (d), (e), (f), (g) and (h) thereof).
(i) Interconnection Agreement. The interconnection agreement between Dynegy
and IPC dated January 9, 2004 shall be in full force and effect and shall not
have been amended.
(j) Closing of ▇▇▇▇▇▇ Assets Transactions. Solely if the Closing occurs
after September 10, 2004, the ▇▇▇▇▇▇ Assets shall have been transferred to DMG
and IPC shall have no remaining obligations with respect to the ▇▇▇▇▇▇ Assets.
For avoidance of doubt, it is the intent of this Section 8.2(j) that all of
IPC's rights, interests, assets, liabilities and obligations with respect to the
▇▇▇▇▇▇ Assets, including IPC's rights, interests, assets, liabilities and
obligations with respect to the electric generating equipment and real estate at
the ▇▇▇▇▇▇ Energy Center, shall have been transferred to or otherwise come to be
held by DMG, through any means permissible under the agreements referred to in
the definition of "▇▇▇▇▇▇ Assets", excluding only those rights, interests,
assets, liabilities and obligations of IPC as a public utility that are
necessary for the continued operation by DMG of the ▇▇▇▇▇▇ Energy Center,
including IPC's rights, interests, assets, liabilities and obligations under the
Interconnection Agreement and the gas service contracts listed on Schedule 3.19.
Section 8.3 Effect of Certain Waivers of Closing Conditions. If prior to
the Closing (i) any party (the "waiving party") has Knowledge of any breach by
any other party of any representation, warranty or covenant contained in this
Agreement or in any certificate delivered pursuant to this Agreement, (ii) the
waiving party would have had the right not to proceed with the Closing as a
result of such breach, and (iii) the waiving party proceeds with the Closing,
the waiving party shall be deemed to have waived such breach and the waiving
party and its Affiliates shall not be entitled to ▇▇▇ for damages or to assert
any other right of remedy for any losses arising from any matters relating to
such condition or breach, notwithstanding anything to the contrary contained
herein or in any certificate delivered pursuant hereto. Solely for purposes of
this Section 8.3, Knowledge shall be deemed to mean (a) with respect to
78
Purchaser, the actual knowledge (without independent inquiry) of the persons
listed on Schedule 1.1(f) that Dynegy is able to demonstrate existed by clear
and convincing evidence, and (b) with respect to Seller, the actual knowledge
(without independent inquiry) of the persons listed on Schedule 1.1(f) that
Purchaser is able to demonstrate existed by clear and convincing evidence.
ARTICLE IX
INDEMNIFICATION
Section 9.1 Obligations of Dynegy. Effective as of the Closing, the Seller
Indemnitors shall jointly and severally (subject to the last sentence of this
Section) indemnify, reimburse and hold harmless each Purchaser Group Member from
and against any and all Indemnifiable Losses due to:
(a) any breach of or inaccuracy in any of the representations and
warranties made by any Dynegy Party, when made or at the Closing, in or pursuant
to this Agreement (without regard to any qualifications as to materiality or
Material Adverse Effect, except as provided in Section 9.9);
(b) any breach or nonperformance of any of the covenants or obligations of
any Dynegy Party contained in this Agreement;
(c) the Generation Liabilities;
(d) the Excluded Environmental Matters;
(e) any liability related to the ▇▇▇▇▇▇ Assets;
(f) any obligation of any IPC Company as a guarantor of any underlying
obligation of Dynegy or any of its Affiliates (other than an IPC Company);
(g) any net refund of amounts under IPC's purchased gas adjustment ("PGA")
rider ordered by the ICC, whether effected by adjustment of any PGA factor or
otherwise, in any PGA reconciliation proceeding relating to any portion of the
period from January 1, 2001 to December 31, 2004, to the extent that payments or
PGA adjustments required to be made by IPC pursuant to such order exceed the
reserve established for potential liability in such proceeding as reflected in
the calculation of the Final Adjusted Working Capital; or any disallowance by
the ICC of IPC's gas costs or investment relating to events prior to the Closing
at the Hillsboro gas storage field whether such disallowance shall be provided
for in any PGA case ("working gas") or in a gas rate case ("cushion gas"), but
only to the extent that such disallowance is not due to any imprudence by IPC
after the Closing; provided, however, that the Seller Indemnitors' liability
under this Section 9.1(g) with respect to any such refund or disallowance shall
be equal to 50% of such refund or disallowance. With respect to indemnification
required under Section 9.1(g), such indemnification shall be required
notwithstanding the fact that the applicable order is subject to appeal, whether
or not the full amount that IPC is required to pay or reflect in adjusted PGA
rates under such order has been paid. In the event that the amount of IPC's
liability pursuant to such order is later reduced or increased, as a result of
79
appeal or otherwise, IPC shall refund the amount of such reduction to Dynegy, or
Dynegy shall pay IPC the amount of such increase, as applicable;
(h) the litigation described in item 3 of Schedule 3.9; or
(i) the matters referred to in Schedule 5.19.
Section 9.2 Obligations of Purchaser. Effective as of the Closing,
Purchaser shall indemnify, reimburse and hold harmless each Seller Group Member
from and against any and all Indemnifiable Losses due to:
(a) any breach of or inaccuracy in any of the representations and
warranties made by Purchaser, when made or at the Closing, in or pursuant to
this Agreement (without regard to any qualification as to materiality or
material adverse effect);
(b) any breach or nonperformance of any of the covenants or obligations of
Purchaser contained in this Agreement; or
(c) the operation of the Business after the Closing.
Section 9.3 Procedures. The following procedures shall apply with respect
to indemnification claims:
(a) Notice of Claims. Any party seeking indemnification of any
Indemnifiable Loss or potential Indemnifiable Loss arising from an Indemnifiable
Claim, whether asserted by a party or a third party, shall give written notice
thereof to the party from whom indemnification is sought setting forth in
reasonable detail the nature and reasonably estimated amount of, and basis for,
such claim to the extent then known. Written notice to the Indemnifying Party of
the existence of a third party claim shall be given by the Indemnified Party
promptly after its receipt of an assertion of liability from the third party,
and in any event within twenty days of such assertion; provided, however, that
failure to give such notice shall not relieve the Indemnifying Party of its
obligations hereunder except to the extent it shall have been prejudiced by such
failure. Within 20 days of notice by the Indemnified Party of any Indemnifiable
Loss or potential Indemnifiable Loss arising from an Indemnifiable Claim, the
Indemnifying Party shall notify the Indemnified Party whether or not it
acknowledges its obligation to indemnify the Indemnified Party for the
Indemnifiable Loss or potential Indemnifiable Loss with respect to such
Indemnifiable Claim. The failure of the Indemnifying Party to respond in
accordance with the preceding sentence shall be deemed a refusal by the
Indemnifying Party to indemnify the Indemnified Party.
(b) Defense.
(i) In the case of a third party claim, the Indemnifying Party may
participate in the defense thereof and, if it so chooses and
irrevocably acknowledges its obligation to indemnify the Indemnified
Party therefor, control the defense of an Indemnifiable Claim with
counsel reasonably satisfactory to the Indemnified Party; provided,
however, that if the Indemnified Party reasonably believes that (x) a
material conflict of interest between the Indemnified Party and the
Indemnifying Party with respect to the claim or its defense exists or
80
is likely to develop during the pendency of the litigation, and as a
result of such conflict, the Indemnifying Party's incentive to defend
such claim could reasonably be expected to be materially compromised,
or (y) the claim raises serious issues regarding the integrity or
moral character of the Indemnified Party or any of its Affiliates, or
of its of their senior management, in its or their capacity as such
(which issues are a fundamental element of the claim) then the
Indemnified Party shall be entitled to control the defense of the
claim in accordance with paragraph (b)(ii) of this Section 9.3, it
being understood that the mere allegation of fraud, willful
misconduct, bad faith, malfeasance or any similar such claim as part
of multiple claims constituting an Indemnifiable Claim, shall not be
deemed, in and of itself, to provide the basis for the Indemnified
Party's rights as set forth in this clause (y). In all cases, the
party without the right to control the defense of the Indemnifiable
Claim may participate in the defense at its own expense. In the case
of a third party claim, the Indemnifying Party shall inform the
Indemnified Party within 20 days of receiving the written notice
seeking indemnification whether the party elects to control the
defense and irrevocably acknowledges its obligation to indemnify the
Indemnified Party therefor. The Indemnifying Party shall be liable for
the reasonable fees and expenses of counsel employed by the
Indemnified Party for any period during which the Indemnifying Party
has not assumed the defense thereof, provided that it either
irrevocably acknowledges in writing its indemnity obligations with
respect to the Indemnity Claim or it is determined by a court of
competent jurisdiction that it is obligated hereunder to provide such
indemnification. If the Indemnifying Party disputes its liability with
respect to a potential Indemnifiable Claim or the amount thereof
(whether or not it desires to defend the Indemnified Party against a
third party claim), the parties shall endeavor in good faith to settle
such dispute. The Indemnifying Party shall not settle or compromise a
third party claim or legal proceeding without the prior written
consent of the Indemnified Party, which consent shall not be
unreasonably withheld, delayed or conditioned; provided that such
prior written consent shall not be required with respect to any
Indemnifiable Claim that relates to any item referred to in Sections
9.1(c), (d), (e), (f), (g), (h), or (i), except with respect to any
Indemnifiable Claim relating to Remediation of Hazardous Substances
that is covered by Section 5.18 shall remain subject in all respects
to the terms of Section 5.18. The Indemnified Party shall not settle
or compromise a third party claim for which it is entitled to
indemnification hereunder without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld,
conditioned or delayed. If the Indemnifying Party does not assume the
defense of any third party claim or litigation resulting therefrom
within 20 days after the date it receives notice of such claim from
the Indemnified Party, the Indemnified Party may defend against such
claim or litigation in such manner as it may deem appropriate,
including settling such claim or litigation, after giving notice to
the Indemnifying Party, on such terms as the Indemnified Party may
deem appropriate. Notwithstanding anything in this Section 9.3 to the
contrary, if for any reason (for example the effect of the limitations
set forth in Sections 9.4 or 9.5 or evidence that an Indemnifiable
Loss may be attributable to events before or after Closing) there is
any uncertainty whether an Indemnifiable Claim will be for the account
of the Seller Indemnitors or Purchaser, the parties will (A) cooperate
in good faith to determine whether an Indemnifiable Claim will be for
81
the account of the Seller Indemnitors or Purchaser, (B) until such
uncertainty is resolved to the mutual satisfaction of the parties,
jointly determine who will control the defense and settlement of any
such Indemnifiable Claim and how such defense and settlement will be
handled, (C) cooperate with each other in the defense and settlement
of such Indemnifiable Claim and the exchange of information relevant
thereto, (D) unless otherwise agreed, share the out-of-pocket costs of
such defense and settlement (including the costs of investigation,
response and mitigation) equally until the parties' respective rights
to indemnification for such costs are resolved, and (E) treat the
defense and settlement of such Indemnifiable Claim as a joint and
common defense, including any joint defense agreement which may be
entered into by the parties.
(ii) In the case of claims described in the proviso to the first
sentence of Section 9.3(b)(i), the Indemnified Party may, by notice to
the Indemnifying Party, assume the exclusive right to defend,
compromise or settle such claim, at the expense of the Indemnifying
Party, but the Indemnifying Party will not be bound by any compromise
or settlement effected without its consent (which consent shall not be
unreasonably withheld, conditioned or delayed). The Indemnified Party
shall conduct the defense in good faith and in a commercially
reasonable manner, and shall inform the Indemnifying Party
periodically, or upon the Indemnifying Party's reasonable request, of
the status of the litigation. The Indemnified Party's choice of
counsel shall be subject to the consent of the Indemnifying Party,
such consent not to be unreasonably withheld or delayed. The
Indemnifying Party may participate in the defense thereof, at its own
expense. If, in order to preserve existing insurance for a claim
against IPC currently maintained by Dynegy, it is necessary to permit
Dynegy's insurer to conduct the defense of IPC, Purchaser will
consider in good faith waiving or sharing its right to control such
defense so that Dynegy's insurance rights are not lost, subject to the
condition that the insurer accepts the tender of the claim without
reservation of rights. Notwithstanding anything to the contrary in
this Section 9.3(b), any Indemnifiable Claim relating to Hazardous
Substances that is covered by Section 5.18 shall remain subject in all
respect to the terms of Section 5.18.
(c) Indemnification Payments on After-Tax Basis. Any indemnification
payment hereunder with respect to any Indemnifiable Loss shall be an amount
which is sufficient to compensate the Indemnified Party for the event giving
rise to such Indemnifiable Loss (the "Indemnified Event"), after taking into
account (i) all increases in federal, state, local, foreign or other Taxes
payable by the Indemnified Party as a result of the receipt of such payment
(excluding any increased Tax that results from the receipt of such payment
causing a reduction in Tax basis or similar Tax attributes); (ii) to the extent
not previously taken into account in computing the amount of such Indemnifiable
Loss, all increases in federal, state, local and other Taxes (including
estimated Taxes) payable by the Indemnified Party for all affected taxable years
and periods as a result of the Indemnified Event; and (iii) to the extent not
previously taken into account in computing the amount of such Indemnifiable
Loss, all reductions in federal, state, local and foreign Taxes (including
estimated Taxes) realized or realizable by the Indemnified Party as a result of
the Indemnified Event and any indemnification payments made with respect thereto
for all affected taxable years and periods. All calculations shall be made at
the time of the relevant indemnification payment using reasonable assumptions
82
(as agreed to by the Indemnifying Party and Indemnified Party) and present value
concepts (using a discount rate equal to the Applicable Rate in effect at the
time of the Indemnified Event using semi-annual compounding). Purchaser and
Seller agree to report each indemnification payment hereunder as an adjustment
to the Purchase Price for federal income tax purposes unless the Indemnified
Party receives an opinion from nationally recognized tax counsel, in form and
substance reasonably satisfactory to the Indemnifying Party, to the effect that
such reporting position is incorrect (it being understood that if any reporting
position is later disallowed in any administrative or court proceedings, the
Indemnifying Party shall indemnify the Indemnified Party for the effects of such
disallowance (including any increased Tax that results from such disallowance),
and it being further understood that the obligations under this parenthetical
clause shall remain in effect without limitation as to time).
(d) If the Indemnifying Party disputes its liability with respect to a
potential Indemnifiable Claim or the amount thereof, the non-prevailing party in
such dispute shall indemnify the prevailing party for attorneys' fees and
expenses incurred by the prevailing party in the conduct of such dispute.
(e) If there shall be any conflicts between this Section 9.3 and Section
5.18, the provisions of Section 5.18 shall control. The foregoing provisions of
this Section 9.3 shall not apply to any Tax Controversy.
Section 9.4 Survival. The representations and warranties contained in or
made pursuant to this Agreement shall expire upon the completion by the
independent auditors of Purchaser of the second annual audit of Purchaser's
financial statements following the Closing Date, but no later than March 31 of
the pertinent year, except that the representations and warranties contained in
Sections 3.1, 3.2, 3.3, 3.17, 4.1, 4.2 and 4.7 shall survive until the
expiration of the applicable statute of limitations. This Article IX shall
survive the Closing and shall remain in effect (a) with respect to Sections
9.1(a) and 9.2(a), so long as the relevant representations and warranties
survive, (b) with respect to Sections 9.1(b) and 9.2(b) to the extent those
Sections relate to the covenants requiring performance solely prior to the
Closing ("Pre-Closing Covenants"), for one year after the Closing, (c) with
respect to Sections 9.1(b) and 9.2(b) to the extent those Sections relate to
covenants requiring performance after the Closing, so long as the applicable
covenant survives, (d) with respect to Section 9.1(i), for the period provided
in Schedule 5.19, and (e) with respect to all of the other provisions of this
Article IX, indefinitely. Any matter as to which a non-speculative claim has
been asserted in good faith by written notice in accordance with Section 9.3(a)
that is pending, unresolved and being diligently pursued at the end of any
applicable limitation period shall continue to be covered by this Article IX
notwithstanding any applicable limitation period until such matter is finally
terminated, not being diligently pursued or otherwise resolved by the parties
under this Agreement or by a court of competent jurisdiction and any amounts
payable hereunder are finally determined and paid. Any Indemnifiable Claim that
has not been asserted against the Indemnifying Party in accordance with Section
9.3(a) prior to the end of any applicable limitation period shall be barred and
forever waived by the Person entitled to assert such claim.
83
Section 9.5 Limitations on Indemnification.
(a) The Seller Indemnitors shall not be required to indemnify any Person
under Section 9.1(a) unless (i) the indemnified amount that would be payable by
the Seller Indemnitors with respect to any given Indemnifiable Claim exceeds
$400,000 ("Seller Includable Claims"); and (ii) the aggregate amount for all
Seller Includable Claims exceeds $30,000,000, and in such event, Seller
Indemnitors shall be responsible for only the amount in excess of $30,000,000;
provided, however, that the foregoing limitations do not apply to
indemnification based upon or resulting from any inaccuracy in any of the
representations and warranties set forth in Sections 3.1, 3.2, 3.3 and 3.17. In
no event shall the total indemnification to be paid by the Seller Indemnitors
under Section 9.1(a) exceed $400,000,000; provided, however, that the foregoing
limitations do not apply to indemnification based upon or resulting from any
inaccuracy in any of the representations and warranties set forth in Sections
3.1, 3.2, 3.3 and 3.17. The Seller Indemnitors shall not be required to
indemnify any Person under Section 9.1(d) unless the amount that would be
payable by the Seller Indemnitors with respect to any given Indemnifiable Claim
exceeds $400,000.
(b) Purchaser shall not be required to indemnify any Person under Section
9.2(a) unless (i) the indemnified amount that would be payable by Purchaser with
respect to any given Indemnifiable Claim exceeds $400,000 ("Purchaser Includable
Claims"); and (ii) the aggregate amount for all Purchaser Includable Claims
exceeds $30,000,000, and in such event, Purchaser shall be responsible for only
the amount in excess of $30,000,000; provided, however, that the foregoing
limitations do not apply to indemnification based upon or resulting from any
inaccuracy in any of the representations and warranties set forth in Sections
4.1, 4.2 and 4.7. In no event shall the total indemnification to be paid by
Purchaser under Section 9.2(a) exceed $400,000,000; provided, however, that the
foregoing limitations do not apply to indemnification based upon or resulting
from any inaccuracy in any of the representations and warranties set forth in
Sections 4.1, 4.2 and 4.7.
(c) Any Indemnifiable Claim with respect to any breach or nonperformance by
any party of a representation, warranty, covenant or agreement shall be limited
to the amount of actual Indemnifiable Losses sustained by the Indemnified Party
by reason of such breach or nonperformance, net of any insurance or other
proceeds received by the Indemnified Party in respect of such claim. Nothing in
this Agreement is intended to require or permit the payment by the Indemnifying
Party of duplicative, in whole or in part, indemnity payments hereunder to an
Indemnified Party.
(d) If an inaccuracy in any of the representations and warranties made by
Dynegy or Seller, or a breach of any of the covenants of Dynegy or Seller, gives
rise to an adjustment in the Purchase Price or is otherwise addressed in some
other provision of this Agreement, then such inaccuracy or breach shall not give
rise to an indemnification obligation under Section 9.1.
(e) If any Indemnifiable Claim is based upon or resulting from any
inaccuracy in any of the representations and warranties and is also subject to
indemnification under Sections 9.1(b) through (i), the provisions of this
Section 9.5 applicable to inaccuracies in any representation or warranty shall
be inapplicable to such Indemnifiable Claim.
84
(f) If any Indemnifiable Claim is based upon or resulting from any breach
or inaccuracy in Section 3.19(a), Dynegy shall have the right and option, but
not the obligation, to contribute and deliver, or cause to be contributed and
delivered, within 30 days after notice with respect to such Indemnifiable Claim
has been delivered in accordance with Section 9.3(a), such assets as are
required to cure (in whole or in part) such breach or inaccuracy. In the event
Dynegy makes such election and fails for whatever reason to cure (in whole or in
part) such breach or inaccuracy, in no event shall such failure be deemed a
breach or non performance of a covenant or obligation of any Dynegy Party, and
Purchaser shall be entitled to pursue any remedy available to it with respect to
the original breach or inaccuracy of Section 3.19(a) to the extent such breach
or inaccuracy remains uncured.
Section 9.6 Mitigation. Each potential Indemnified Party shall use
commercially reasonable efforts to address any claims or liabilities in the same
manner it would respond to such claims or liabilities in the absence of the
indemnification provisions of this Agreement. In the event that any party shall
willfully fail to make such commercially reasonable efforts to mitigate or
resolve any claim or liability, then notwithstanding anything else to the
contrary contained herein, the other party shall not be required to indemnify
any Person for any Indemnifiable Loss that could reasonably be expected to have
been avoided if such party had made such efforts.
Section 9.7 Remedies Exclusive. Except as otherwise provided in Article
VII, the remedies provided for in this Article IX shall be exclusive and shall
preclude assertion by any Indemnified Party of any other rights or the seeking
of any and all other remedies against the Indemnifying Party for claims based on
this Agreement, other than fraud. In no event shall the mere breach of a
representation or warranty be deemed to constitute bad faith, misconduct or
fraud. Each party hereby waives any provision of Law to the extent that it would
limit or restrict the agreement contained in this Section 9.7.
Section 9.8 Tax Indemnification Matters. Notwithstanding anything to the
contrary in this Article IX, the above provisions of Article IX shall not apply
to Income Tax indemnification matters, which matters shall instead by governed
by Article VII.
Section 9.9 Qualification as to Materiality. The following occurrences as
to materiality or Material Adverse Effect shall not be disregarded in the
application of Section 9.1(a): (i) in the fifth sentence of Section 3.5; (ii) in
the phrase "fairly presents in all material respects" in Section 3.6; and (iii)
clause (ii) of Section 3.7(a) and the definition of "Material Adverse Effect" as
used in such clause. The requirement to disregard qualifications as to
materiality and Material Adverse Effect shall not be deemed to modify or
eliminate any dollar amount specifically stated in this Agreement or any concept
of materiality that is embodied in any requirement of Law or in GAAP.
85
ARTICLE X
TERMINATION AND WAIVER
Section 10.1 Termination. This Agreement may be terminated as to all
parties at any time prior to the Closing:
(a) by the mutual written consent of Dynegy and Purchaser; or
(b) by either Dynegy or Purchaser, by written notice to the other party, if
the Closing shall not have occurred on or before December 31, 2004 (the
"Termination Date"); provided, however, that the right to terminate this
Agreement under this Section 10.1 shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been the
principal cause of, or shall have resulted in, the failure of the Closing to
occur on or prior to such date; or
(c) by Dynegy, by written notice to Purchaser, if there shall have been one
or more breaches of any representation or warranty, or any covenant or agreement
of Purchaser hereunder, which breach or breaches individually or in the
aggregate would reasonably be expected to prevent, materially delay or
materially impair Purchaser's or its Affiliates' ability to consummate the
transactions contemplated by this Agreement, and such breach shall not have been
remedied within 30 days after receipt by Purchaser of notice in writing from
Dynegy specifying the nature of such breach and requesting that it be remedied
or Dynegy shall not have received adequate assurance of a cure of such breach
within such 30-day period; or
(d) by Purchaser, by written notice to Dynegy, if there shall have been one
or more breaches of any representation or warranty, or any covenant or agreement
of Dynegy or Seller hereunder, which breach or breaches individually or in the
aggregate would result in a Material Adverse Effect or reasonably be expected to
prevent, materially delay or materially impair Dynegy's or Seller's ability to
consummate the transactions contemplated by this Agreement, and such breach
shall not have been remedied within 30 days after receipt by Dynegy of notice in
writing from Purchaser, specifying the nature of such breach and requesting that
it be remedied or Purchaser shall not have received adequate assurance of a cure
of such breach within such 30-day period; or
(e) by either Dynegy or Purchaser in the event that any Governmental
Authority shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall have become
final and non-appealable.
Section 10.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 10.1:
(a) this Agreement shall forthwith become void thereafter and there shall
be no liability on the part of either party except that (i) the Section
5.2(a)(last sentence only), Section 5.6, Section 10.1, this Section 10.2 and
Article XI shall survive any such termination and (ii) nothing herein shall be
deemed to release any party from any liability for any willful breach by such
party of the terms and provisions of this Agreement or to impair the right of
86
any party to compel specific performance by any other party of its obligations
under this Agreement; and
(b) Purchaser and its Affiliates shall return or destroy (and provide a
certificate to Dynegy from an authorized officer of Purchaser certifying to such
destruction) all documents and other material received from Dynegy, Seller, any
IPC Company or any representative of Dynegy relating to the transactions
contemplated hereby, whether so obtained before or after the execution hereof,
to Dynegy; and all confidential information received by Purchaser or its
Affiliates shall be treated in accordance with the Confidentiality Agreement,
which shall remain in full force and effect notwithstanding the termination of
this Agreement.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Expenses. Except as otherwise specified in this Agreement or
the Ancillary Agreements, as applicable:
(a) all costs and expenses, including fees and disbursements of counsel,
financial advisors and accountants (including any brokerage, finder's or other
fee or commission), incurred in connection with this Agreement and the Ancillary
Agreements, and the transactions contemplated hereby and thereby shall be paid
by the party incurring such costs and expenses, whether or not the Closing shall
have occurred;
(b) all non-recurring, out-of-pocket costs and expenses payable to third
parties, if any, incurred by the IPC Companies in connection with this Agreement
and the transactions contemplated hereby, including the fees, expenses and
disbursements of the IPC Companies' outside counsel and accountants shall be
paid by Dynegy (it being understood that time and expenses of employees of the
IPC Companies in connection with the transactions contemplated by this Agreement
and the Ancillary Agreements shall be borne by the IPC Companies); and
(c) the aggregate out-of-pocket costs and expenses payable to third parties
incurred by Purchaser, Seller and Dynegy in connection with obtaining the
Solvency Opinion shall be paid one-half by Purchaser and one-half by Dynegy.
Section 11.2 No Additional Representations.
(a) In connection with Purchaser's investigation of the IPC Assets, the IPC
Companies and the Business, Purchaser has received from Seller certain
projections, estimates and other forecasts and certain business plan
information. Purchaser acknowledges that there are uncertainties inherent in
attempting to make such projections, estimates and other forecasts and plans,
that Purchaser is familiar with such uncertainties, that Purchaser is taking
full responsibility for making its own evaluation of the adequacy and accuracy
of all projections, estimates and other forecasts and plans so furnished to it
and any use of or reliance by Purchaser on such projections, estimates and other
forecasts and plans shall be at its sole risk, and without limiting any other
provisions herein, that Purchaser shall have no claim against anyone with
respect thereto. Accordingly, Purchaser acknowledges, agrees and confirms that
Seller and its Affiliates, officers, directors, employees, agents and
representatives, do not make, have not made nor shall be deemed to have made any
87
representation or warranty to Purchaser, express or implied, at law or in
equity, with respect to such projections, estimates, forecasts or plans.
(b) Purchaser acknowledges that it and its representatives have been
permitted reasonable access to the books and records, facilities, equipment, Tax
Returns, Contracts, insurance policies (or summaries thereof) and other
properties and assets of the IPC Companies that it and its representatives have
desired or requested to see or review, and that it and its representatives have
had a full opportunity to meet with the officers and knowledgeable employees of
the IPC Companies to discuss the IPC Assets, the IPC Companies and the Business.
Purchaser acknowledges that (i) none of Seller, any IPC Company and any other
Person has made or is making any representation or warranty, expressed or
implied or other, as to any of the IPC Companies, IPC Assets or the Business,
this Agreement or the transactions contemplated hereby, or the accuracy or
completeness of any information regarding any of the IPC Companies, the IPC
Assets or the Business furnished or made available to Purchaser and its
representatives, except as set forth in this Agreement and (ii) Purchaser has
not relied on any representation or warranty from Dynegy and Seller or any other
Person in determining to enter into this Agreement, except as set forth in this
Agreement and the Ancillary Agreements.
(c) Purchaser hereby agrees not to initiate, or cause to be initiated,
against Seller or any of its Affiliates or any other Person any Action (or make
any claim within any Action), and no Seller or any of its Affiliates or any
other Person will have or will be subject to any liability or indemnification
obligation to Purchaser or any other Person based on representations and
warranties (other than representations and warranties contained in this or any
Ancillary Agreement for such time as such representations and warranties survive
in accordance with this Agreement or such Ancillary Agreement, as the case may
be), or resulting from the distribution to Purchaser, or Purchaser's use of, any
information provided to Purchaser, including any information (including
opinions, statements and data), projections, documents or material made
available to Purchaser at any time in certain "data rooms", management
presentations, "break out" discussions, other discussions among the parties and
their representatives, responses to inquiries submitted on behalf of Purchaser,
whether orally or in writing, or in any other form in connection with this
Agreement or in furtherance of the transactions contemplated by this Agreement.
Nothing in the foregoing paragraph shall be construed to limit the provisions of
Article IX or fraud claims.
(d) Purchaser has such knowledge and experience in financial and business
matters so that it is capable of evaluating the merits and risks of this
acquisition. Purchaser is aware of and has considered the financial risks and
hazards of this acquisition and has undertaken such investigation, and has been
provided with and has evaluated such documents and information, as it has deemed
necessary in connection with the execution, delivery and performance of this
Agreement. Purchaser hereby acknowledges and agrees that, except as set forth in
Article III of this Agreement, the Shares are transferred "AS IS," "WHERE IS"
AND, SUBJECT TO THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III,
WITH ALL FAULTS AND WITHOUT ANY OTHER REPRESENTATION OR WARRANTY OF ANY KIND OR
NATURE WHATSOEVER, EXPRESS OR IMPLIED, ORAL OR WRITTEN, AND IN PARTICULAR,
WITHOUT LIMITING ANY OF THE FOREGOING, WITHOUT ANY IMPLIED WARRANTY OR
88
REPRESENTATION AS TO (A) CONDITION, VALUE, MERCHANTABILITY OR FITNESS OR
SUITABILITY FOR ANY SPECIFIC PURPOSE AS TO ANY OF THE ASSETS OR PROPERTIES OF
THE IPC COMPANIES, (B) THE OPERATION OF THE BUSINESS BY PURCHASER AFTER THE
CLOSING IN ANY MANNER OR (C) THE PROBABLE SUCCESS OR PROFITABILITY OF THE
OWNERSHIP, USE OR OPERATION OF THE BUSINESS OR THE IPC ASSETS BY PURCHASER AFTER
THE CLOSING. Nothing in the foregoing paragraph shall be construed to limit the
provisions of Article IX or fraud claims.
Section 11.3 Materiality. Subject to Section 8.2(b), as used in this
Agreement, the term "material" (except with regard to material compliance) and
the concept of the "material" nature of an effect upon the IPC Assets, the
Business or the IPC Companies shall be measured relative to the IPC Assets, the
Business and the IPC Companies at the time of such measurement. Despite the fact
that there are items that have been included in the Schedules and may be
included elsewhere in this Agreement, the inclusion of such items shall not be
deemed to be an agreement by Seller that such items are "material" or to further
define the meaning of such term for purposes of this Agreement.
Section 11.4 Disclosure Schedules. The Disclosure Schedules to this
Agreement are arranged corresponding to the numbered and lettered sections
contained in this Agreement, but the terms of this Agreement and disclosures in
any Schedules shall qualify any other applicable representation and warranty
provision of this Agreement (whether or not qualified by a Schedule) to the
extent the relevance of such disclosure is reasonably apparent based on the
facts specified in such matters described.
Section 11.5 Limitation on Damages. Notwithstanding anything to the
contrary elsewhere in this Agreement, no party (or its Affiliates) shall, under
any circumstance, be liable to any other party (or its Affiliates) for (i) any
exemplary or punitive damages in connection with this Agreement, except for any
such damages awarded to a third party for which an Indemnifying Party is liable
hereunder, or (ii) any damages to the extent such damages were not reasonably
foreseeable.
Section 11.6 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by facsimile or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 11.6):
(a) if to Seller, IGC or Dynegy:
Illinova Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Legal Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
89
Illinova Generating Company
c/o Dynegy Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Dynegy Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
O'Melveny & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Purchaser:
Ameren Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 11.7 Headings. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 11.8 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any applicable Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
90
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
Section 11.9 Entire Agreement. Except with respect to the Confidentiality
Agreement (which shall survive in accordance with its terms except as otherwise
specified in Section 5.6), this Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and supersedes any and all
prior agreements and undertakings, both written and oral, between the parties
with respect to the subject matter hereof.
Section 11.10 Assignment. This Agreement may not be assigned by any party,
by operation of Law or otherwise without the prior written consent of the other
party (which consent may be granted or withheld in the sole and absolute
discretion of such other party); provided, however, that Purchaser may assign
any of its rights and obligations under this Agreement to a Subsidiary of
Purchaser; provided, further, that no such assignment shall relieve Purchaser of
any of its obligations under this Agreement. Any attempted assignment in
violation of this Section 11.10 shall be void. In the event any party (a)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(b) transfers all or substantially all of its properties and assets to any
Person, then and in any such case, proper provision shall be made so that the
successors and assigns of such party shall assume the obligations set forth in
this Agreement.
Section 11.11 No Third-Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of the parties and their successors and
permitted assigns and nothing herein is intended to or shall confer upon any
other Person any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, except as expressly provided in
this Agreement.
Section 11.12 Amendment. This Agreement may not be modified or amended
except by and to the extent set forth in an instrument in writing signed by the
parties.
Section 11.13 Waiver. Purchaser or any Dynegy Party may (a) extend the time
for the performance of any of the obligations or other acts of any Dynegy Party
or Purchaser, respectively, (b) waive any inaccuracies in the representations
and warranties of any Dynegy Party or Purchaser, respectively, contained herein
or in any document delivered by any Dynegy Party or Purchaser, respectively,
pursuant hereto or (c) waive compliance with any of the agreements or conditions
of any Dynegy Party or Purchaser, respectively, contained herein. Any such
extension or waiver shall be valid only if, and to the extent, set forth in an
instrument in writing signed by the party to be bound thereby. Any waiver of any
term or condition shall not be construed as a waiver of any subsequent breach or
a subsequent waiver of the same term or condition, or a waiver of any other term
or condition, of this Agreement. The failure of any party to assert any of its
rights hereunder shall not constitute a waiver of any of such rights.
91
Section 11.14 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of New York, applicable to
contracts executed in and to be performed entirely within that state. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in any New York state or federal court sitting in the City
of New York, and the parties hereby irrevocably submit to the exclusive
jurisdiction of such courts in any such action or proceeding and irrevocably
waive the defense of an inconvenient forum to the maintenance of any such action
or proceeding. Each party irrevocably consents to the service of any and all
process in any such action or proceeding by the mailing of copies of such
process to such party at its address specified in Section 11.6. The parties
agree that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by Law. Nothing in this Section 11.14 shall affect the
right of any party to serve legal process in any other manner permitted by Law.
The consents to jurisdiction set forth in this Section 11.14 shall not
constitute general consents to service of process in the State of New York and
shall have no effect for any purpose except as provided in this Section 11.14
and shall not be deemed to confer rights on any Person other than the parties.
Section 11.15 WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 11.15.
Section 11.16 Specific Performance; Remedies. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
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. No failure or delay on the
part of any party in exercising any right, power, privilege or remedy may be, or
may be deemed to be, a waiver thereof; nor may any single or partial exercise of
any right, power, privilege or remedy preclude any other or further exercise of
the same or any other right, power, privilege or remedy.
Section 11.17 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
Section 11.18 Representation by Counsel; Interpretation. The parties each
acknowledge that each party has participated in the drafting of and been
represented by counsel in connection with this Agreement and the transactions
92
contemplated hereby. Accordingly, any rule of Law or any legal decision that
would require interpretation of any claimed ambiguities in any portions of this
Agreement against the party that drafted it has no application and is expressly
waived. If any provision of this Agreement is, in the judgment of the trier of
fact, ambiguous or unclear, that provision shall be interpreted in a reasonable
manner to effect the intent of the parties.
Section 11.19 Commercially Reasonable Efforts to Consummate. Without
limitation on the other obligations of the parties pursuant to this Agreement,
each party shall use its commercially reasonable efforts to consummate the
Closing as soon as reasonably practicable.
* * *
93
IN WITNESS WHEREOF, Seller, IGC, Dynegy and Purchaser have caused this
Purchase Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
ILLINOVA CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇
Title: Senior Vice President & Treasurer
ILLINOVA GENERATING COMPANY
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇
Title: Senior Vice President & Treasurer
DYNEGY INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
-----------------
Name:
Title:
AMEREN CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President Regulatory
Policy, General Counsel & Secretary
94
Exhibits
--------
*Exhibit A Adjusted Working Capital Procedures
*Exhibit B Generation Agreement
*Exhibit C-1 Termination Agreement (Illinova)
*Exhibit C-2 Termination Agreement (DHI)
Exhibit D Power Purchase Agreement
Exhibit E Term Sheet for Easement and Facilities Agreement
Exhibit F Form of Blackstart Agreement
*Exhibit G Form of Escrow Agreement
Exhibit H Tier 2 Memorandum
Schedules
---------
Schedule 1.1(a) - Reference Balance Sheet
Schedule 1.1(b) - Permitted Liens
*Schedule 1.1(c) - Exceptions to Excluded Environmental Matters
Schedule 1.1(d) - Existing IPC Obligations
Schedule 1.1(e) - Generation Assets
Schedule 1.1(f) - Knowledge of Purchaser and Seller
Schedule 3.2 - Capitalization of Subsidiaries
Schedule 3.4(a) - Governmental Authority Consents and Approvals
*Schedule 3.4(b) - No Violation
*Schedule 3.7 - Absence of Changes
*Schedule 3.8 - Taxes
*Schedule 3.9 - Litigation
*Schedule 3.10 - Employee Benefit Plans
*Schedule 3.11 - Environmental Matters
Schedule 3.12(a) - Material Permits and Compliance With Applicable
Law
Schedule 3.12(c) - Municipal Franchise Agreements
*Schedule 3.13(a) - Employee Matters
*Schedule 3.14 - Material Contracts
*Schedule 3.15 - Intellectual Property Matters
Schedule 3.16 - Real Property
*Schedule 3.18 - Personal Property
*Schedule 3.19 - Affiliate Transactions
*Schedule 3.21 - Bank Accounts
Schedule 3.23 - Regulatory Proceedings
Schedule 3.24 - Hedging
*Schedule 3.27 _ Clinton Nuclear Power Station
Schedule 4.3(a) - Purchaser Approvals
Schedule 4.3(b) - Purchaser Conflicts
*Schedule 5.1 - Conduct of Business
*Schedule 5.1(f) - Capital Expenditures
Schedule 5.3(b) - Potential Regulatory Commitments and Conditions
to be Accepted by Purchaser
*Schedule 5.7 - Permitted Intercompany Arrangements
Schedule 5.15 - Intercompany Note
*Schedule 5.19 - Consent Solicitation
*Schedule 5.24 - Seller's Implementation Plan of Section
404 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
*Schedule 6.1(c) - Employment Agreement (▇▇▇▇▇▇▇▇▇▇▇)
*Schedule 6.1(d) - Employment Agreement (▇▇▇▇▇▇▇)
*Schedule 6.1(e) - Seller Bonus Plans
*Schedule 6.1(g) - Affiliate Employees
Schedule 6.2(a) - Seller Pension Plans
Schedule 6.2(b) - Seller Savings Plans
Schedule 7.7 - Purchase Price Allocation
Schedule 8.1(b) - Required Seller Regulatory Approvals
Schedule 8.1(e) - Required Dynegy Consents
Schedule 8.2(b) - Required Purchaser Regulatory Approvals
Schedule 8.2(e) - Required Purchaser Consents
---------------
* Filed confidentially pursuant to Rule 104
EXHIBIT A
CLOSING DATE STATEMENT PROCEDURES
---------------------------------
[Filed confidentially pursuant to Rule 104]
[EXHIBIT B TO SPA]
GENERATION AGREEMENT
[Filed confidentially pursuant to Rule 104]
EXHIBIT C-1
TERMINATION AGREEMENT
---------------------
[Filed confidentially pursuant to Rule 104]
EXHIBIT C-2
TERMINATION AGREEMENT
---------------------
[Filed confidentially pursuant to Rule 104]
[EXHIBIT D TO SPA]
POWER PURCHASE AGREEMENT
BETWEEN
ILLINOIS POWER COMPANY
AND
DYNEGY POWER MARKETING, INC.
DATED AS OF ____________, 2004
TABLE OF CONTENTS
PAGE
1. Definitions and Interpretation...........................................1
(a) Definitions.........................................................1
(b) Interpretation.....................................................10
(c) No Presumption of Construction For or Against Any Party............10
(d) Titles and Headings................................................10
(e) Modification of Shaped Daily On-Peak Index.........................11
2. Term of Agreement.......................................................11
3. MISO Change to Sub-Zonal or Nodal Measurement...........................11
4. Interconnection Agreement...............................................11
5. IP's Entitlement to Capacity and Energy from DYPM.......................11
(a) Tier 1 Capacity and Tier 1 Energy..................................11
(b) Tier 2 Capacity and Energy.........................................12
(c) Delivery of Energy and Ancillary Services by DYPM..................12
(d) Network Resources..................................................13
(e) Use of Capacity, Energy, and Ancillary Services....................13
(f) Minimum and Maximum Energy Quantities..............................13
(g) Right to Market Energy and Ancillary Services to Third Parties.....14
(h) Limit on IP Purchases of Capacity and Energy from Third Parties....14
(i) DYPM Supply Resources..............................................15
6. Quality of Energy Supplied by DYPM......................................15
7. Scheduling..............................................................15
(a) Scheduling of IP Load..............................................15
(b) Reserve Nomination/Ancillary Services..............................15
(c) Rolling 10-Day Energy and Ancillary Services Forecast..............16
(d) Monthly Energy and Ancillary Services Forecast.....................16
(e) DYPM Daily Resource Schedule.......................................16
(f) Scheduling with MISO...............................................16
(g) DYPM Failure to Provide Capacity, Energy, and/or Ancillary
Services...........................................................16
(h) Dispatch to Serve IP Load and Reliability Dispatch.................17
(i) Ancillary Services.................................................18
8. Financial Transmission Rights and Financial Flowgate Rights;
Congestion Costs........................................................19
(a) Congestion Credit..................................................19
(b) Financial Transmission Rights......................................19
9. Metering and Meters.....................................................20
(a) Metering...........................................................20
(b) Meter Testing and Inaccuracies.....................................20
10. Billing and Payment.....................................................21
(a) Semi-Monthly Billing Statements and Payments.......................21
(b) Provision of Final Monthly Data to DYPM............................21
(c) True-Up Billing Statements.........................................21
(d) Interest on Late Payments..........................................23
(e) Billing Disputes...................................................23
(f) Right of Set-Off...................................................23
(g) Maintenance of Records.............................................23
(h) Audit Rights.......................................................24
(i) True-Up Billing Statement Applicable to Final Month of Term........24
11. Force Majeure Events....................................................24
(a) Occurrences Constituting Force Majeure Events......................24
(b) Invocation of Force Majeure Condition..............................25
(c) Consequences of Force Majeure Condition............................25
12. Pricing and Payments....................................................25
(a) Tier 1 Capacity Charges and Tier 1 Energy Charges..................25
(b) Negotiated Tier 2 Capacity Charges and Negotiated
Tier 2 Energy Charges..............................................26
(c) Supplemental Energy Charges........................................26
(d) Underscheduled Energy Charges and Surcharges.......................26
(e) Overscheduling Surcharge...........................................26
(f) Reliability Compensation...........................................27
(g) Unmetered Energy...................................................27
(h) Sample Calculation.................................................27
13. Events of Default, Liability and Remedies...............................27
(a) Defaults...........................................................27
(b) Indemnification....................................................28
(c) No Consequential or Punitive Damages...............................28
(d) Warranty Disclaimer................................................28
(e) Remedies...........................................................29
(f) Exclusive Remedy...................................................29
14. Dispute Resolution......................................................29
ii
(a) Administrative Committee Procedure.................................29
(b) Arbitration........................................................29
(c) Obligations to Pay Charges and Perform Other Obligations...........30
15. Security Guarantee......................................................30
(a) By DYPM in Favor of IP.............................................30
(b) By IP in Favor of DYPM.............................................30
(c) Costs of Security Guarantee........................................31
16. Sale, Assignment, Mortgage or Pledge....................................31
(a) Sale or Assignment or Rights and Obligations.......................31
(b) Consent to Mortgage or Pledge......................................31
17. Governing Law...........................................................32
18. Notices.................................................................32
19. Confidentiality...........................................................
20. Miscellaneous Provisions................................................33
(a) Non-Waiver.........................................................33
(b) Third Party Beneficiaries..........................................33
(c) No Association, Partnership or Joint Venture.......................33
(d) Survival of Obligations............................................33
(e) Successors and Assignees...........................................33
21. Amendments..............................................................33
22. Entire Agreement........................................................33
23. FERC Standard of Review.................................................33
24. Severability............................................................34
APPENDICES
----------
Appendix 1: Monthly Tier 1 Capacities
Appendix 2: Maximum Energy Quantities
Appendix 3: Design Limits of Primary Resources
Appendix 4: Form of Guaranty
Appendix 5: Sample Calculation of Charges
Appendix 6: Unmetered Energy Amounts
iii
POWER PURCHASE AGREEMENT
THIS POWER PURCHASE AGREEMENT (this "Agreement"), dated as of
____________, 2004, between ILLINOIS POWER COMPANY, an Illinois corporation
("IP"), and DYNEGY POWER MARKETING, INC., a Texas corporation ("DYPM") (IP and
DYPM are sometimes referred to herein individually as a "Party" and collectively
as "Parties").
WITNESSETH:
WHEREAS, IP owns electric generating facilities and is currently
engaged in the purchase, transmission, distribution and sale of electric energy
in the State of Illinois;
WHEREAS, IP and Illinova Corporation ("Illinova") entered into that
certain Asset Transfer Agreement dated October 1, 1999 pursuant to which
Illinova acquired from IP certain generating units;
WHEREAS, Illinova Power Marketing, Inc. ("IPMI") was a wholly-owned
subsidiary of Illinova and became the owner and operator of such units upon
consummation of the Asset Transfer Agreement;
WHEREAS, IPMI changed its name to Dynegy Midwest Generation, Inc.
("DMG");
WHEREAS, DMG is an affiliate of DYPM, and DYPM has the right to market
and sell electric capacity and energy produced by such units;
WHEREAS, IP will require the output of additional generating resources,
in addition to those which it may own or to which it may be entitled by
contracts other than this Agreement, in order to meet its service obligations
under the Illinois Public Utilities Act in a safe and reliable manner and to
fulfill other statutory and contractual obligations to provide electric
generation and transmission services; and
WHEREAS, IP desires to receive and purchase, and DYPM desires to
deliver and sell, electric capacity, energy and ancillary services.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein set forth, and for other good and valuable consideration, the receipt and
sufficiency thereof are hereby acknowledged, the Parties agree as follows:
1. Definitions and Interpretation
------------------------------
(a) Definitions
-----------
As used in this Agreement: (i) the terms set forth in this Section 1(a)
shall have the respective meanings so set forth, and (ii) the terms defined
elsewhere in this Agreement shall have the respective meanings therein so
specified.
"Alternative Resource" means any Supply Resource other than a Primary
Resource; provided, that, for purposes of providing Capacity under this
Agreement, an Alternative Resource shall be deemed firm if: (i) DYPM has
reserved firm transmission service from such Alternative Resource to a Point of
Delivery, or the Alternative Resource has been designated an IP Network
Resource, and (ii) such Alternative Resource is otherwise capable of providing
Capacity.
"Ancillary Services" mean the services described in Section 7(i).
"Asset Transfer Agreement" means that certain Asset Transfer Agreement
dated as of October 1, 1999 between IP and Illinova for the transfer of
ownership of certain fossil-fueled generating units from IP to Illinova.
"Audits" has the meaning set forth in Section 10(h).
"Bandwidth Allowance" means, for any hour, the amount (in MWh) equal to
the product of: (i) Scheduled Energy other than Negotiated Tier 2 Energy for
such hour, multiplied by (ii) the applicable Bandwidth Percent.
"Bandwidth Percent" means: (i) ten percent (10%) in calendar year 2005,
and (ii) seven percent (7%) in calendar year 2006.
"Bankrupt" means with respect to any entity, the state of being after
such entity: (i) files a petition or otherwise commences, authorizes or
acquiesces in the commencement of a proceeding or cause of action under any
bankruptcy, insolvency, reorganization or similar law, or has any such petition
filed or commenced against it, (ii) makes a general assignment for the benefit
of creditors, or (iii) otherwise becomes bankrupt or insolvent (however
evidenced), or (iv) has a liquidator, administrator, receiver, trustee,
conservator or similar official appointed with respect to it or any substantial
portion of its property or assets.
"Business Day" means any Day, Monday through Friday, excluding the
following holidays: New Year's Day, Memorial Day (observed), Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
"Capacity" means firm electric load-carrying capability, expressed in
megawatts, that, for those Supply Resources within MAIN, satisfies MAIN Guides
and, for all other Supply Resources, satisfies IP or MISO Network Resource
requirements for obtaining designated network integration transmission service
under the applicable OATT and for accreditation by the applicable NERC regional
reliability council or successor organizations, if applicable.
"Central Prevailing Time" or "CPT" means Central Standard Time or
Central Daylight Time as in effect in the State of Illinois on a given Day.
"Congestion Costs" means the difference in the locational marginal
prices at the Points of Delivery and the IP Zonal Price attributable to
transmission system congestion, as defined in MISO's applicable FERC-approved
tariff and as calculated and published by MISO.
"CPS1 or CPS2 Violation" means a failure of the IP Control Area to
achieve compliance with Control Performance Standard Nos. 1 or 2, as defined in
NERC Operations Policy 1.E.
"Credit Rating" means, with respect to any entity, the rating then
assigned to such entity's unsecured, senior long-term debt obligations (not
supported by third party credit enhancements) by S&P, ▇▇▇▇▇'▇ or any other
rating agency agreed by the Parties, or if such entity does not have a rating
for its senior unsecured long-term debt, then the rating then assigned to such
entity as an issuer rating by S&P or ▇▇▇▇▇'▇.
"Daily A/S Schedule" has the meaning set forth in Section .
"Daily Energy Schedule" has the meaning set forth in Section 7(a)(i).
2
"Daily On-Peak Index" means the "into Cinergy" "on peak" index as
published in the ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.'s Power Markets Week's Daily Price
Report - Daily Price Indexes, as such terms are defined in such publication;
provided, however, that if such index is not available for a given Day, the
Daily On-Peak Index shall be the PJM Average Hourly On-Peak Price.
"Daily Resource Schedule" means a schedule provided by DYPM to IP for
each Day, in accordance with Section 7(e).
"Day" means a 24-hour period, commencing at 12:00 a.m. Central
Prevailing Time, except that the "Day" shall be a 23-hour period on the first
day of Daylight Savings Time each year and shall be a 25-hour period on the
first day following the last full day of Daylight Savings Time each year.
"Delivery Services" means those services, as defined in Section 16-102
of the PUA, 220 ILCS 5/16-102, that IP provides to retail customers in its
Service Area in accordance with a tariff approved or allowed into effect by the
ICC pursuant to Section 16-108 of the PUA, 220 ILCS 5/16-108.
"Design Limits" means the items listed in Appendix 3 with respect to
the Primary Resources, as such items or Primary Resources may be changed from
time to time by notice from DYPM to IP, and any similar design limits on any
other Supply Resources.
"DHI" means Dynegy Holdings Inc., an Illinois corporation.
"DMG" means Dynegy Midwest Generation, Inc., an Illinois corporation,
and formerly known as Illinova Power Marketing, Inc.
"Downgrade Event" means that a Guarantor's senior unsecured debt is
rated below Investment Grade.
"DYPM" means Dynegy Power Marketing, Inc., a Texas corporation.
"Effective Date" means the latest of: (i) January 1, 2005, (ii) the
date of closing of the transaction in which Ameren Corporation or its subsidiary
acquires 100 percent (100%) of the common stock of Illinois Power, or (iii) the
date that this Agreement is permitted by FERC to go into effect.
"Electric Energy Incorporated Interchange Agreement" means the "Power
Supply Agreement between Electric Energy, Incorporated and the Sponsoring
Companies", dated September 2, 1987.
"Energy" means firm electric energy meeting the requirements as
specified in Section 6, expressed in MWh, except that non-firm energy and
transmission may be used to serve IP Load provided that Supply Resources are
designated and available to meet Scheduled Load obligations under this
Agreement.
"Event of Default" means a failure or action listed in Section 13(a).
"FERC" means the Federal Energy Regulatory Commission or any successor
agency thereto.
"Financial Flowgate Right" or "FFR" has such meaning as is set forth in
the applicable MISO FERC-approved tariff.
"Financial Transmission Right" or "FTR" has such meaning as is set
forth in the applicable MISO FERC-approved tariff.
3
"Force Majeure Condition" has the meaning set forth in Section 11(b).
"Force Majeure Event" has the meaning set forth in Section 11(a).
"Good Utility Practice" means any of the practices, methods and acts
engaged in or approved by a significant portion of the electric utility industry
during the relevant time period, or any of the practices, methods and acts
which, in the exercise of reasonable judgment in light of the facts known at the
time the decision was made, could have been expected to accomplish the desired
result consistent with law, regulation, good business practices, reliability,
safety and expedition. Good Utility Practice is not intended to be limited to
the optimum practice, method or act, to the exclusion of all others, but rather
to be a spectrum of acceptable practices, methods or acts.
"Guarantor" means: (i) with respect to DYPM, DHI, if DHI has a Credit
Rating that is Investment Grade, or another guarantor with a Credit Rating that
is Investment Grade and which is acceptable to IP, and (ii) with respect to IP,
Ameren Corporation, if Ameren Corporation has a Credit Rating that is Investment
Grade, or another guarantor with a Credit Rating that is Investment Grade and
which is acceptable to DYPM.
"ICC" means the Illinois Commerce Commission or any successor agency
thereto.
"IDC" means an Integrated Distribution Company, as defined in 83
Illinois Administrative Code Part 452, Subpart B.
"Illinova" means Illinova Corporation, an Illinois corporation.
"Interconnection Agreement" means that certain Second Revised
Interconnection Agreement dated as of January 9, 2004 between IP and DMG, as may
be amended from time to time.
"Investment Grade" means a Credit Rating of at least BBB- from S&P or
Baa3 from ▇▇▇▇▇'▇.
"IP" means Illinois Power Company, an Illinois corporation.
"IP Control Area" means the electric power system or combination of
electric power systems to which a common automatic generation control scheme is
applied by IP in order to: (i) match, at all times, the power output of the
generators within the electric power system(s) and Capacity and Energy purchased
from entities outside the electric power system(s), with the load within the
electric power system(s); (ii) maintain, within the limits of Good Utility
Practice, scheduled interchange with other control areas; and (iii) maintain the
frequency and voltage of the electric power system(s) within reasonable limits
in accordance with Good Utility Practice.
"IP Load" means the total amount of Capacity, Energy and Ancillary
Services required by IP as an IDC, in accordance with MAIN and/or MISO
requirements: (i) to provide Capacity and Energy to its retail customers located
within the Service Area, (ii) to provide open access transmission service to its
transmission customers in accordance with the terms of an Open Access
Transmission Tariff, and (iii) to provide Delivery Services to retail customers
located within the Service Area in accordance with its Delivery Services tariff
approved by the ICC as in effect from time-to-time; provided, that IP Load shall
include such retail customers served by IP only for such time as IP is and
remains an IDC; provided, further, that IP Load shall not include any sales of
Capacity, Energy, or Ancillary Services to wholesale customers served by IP or
any other load-serving entity; provided, further, that for purposes of this
Agreement, retail customers served under competitive service contracts entered
into prior to the date of this Agreement shall be considered retail customers;
and, provided, further, that if IP ceases to be an IDC, the IP Load shall
4
include only those customers which IP would have been permitted to serve had IP
remained an IDC.
"IP System" means the electric transmission system owned by IP.
"IP Zonal Price" means, when there exists an LMP Market, the price
identified by MISO for Energy withdrawals from the transmission system
functionally controlled by MISO at locations on the IP System.
"kW" means kilowatts.
"kWh" means kilowatt-hours.
"Lender" or "Lenders" means: (i) any person or entity that, from time
to time, has made loans, entered into a lease financing or extended other
financial accommodation, directly or indirectly, to DYPM or DMG or for the
financing or refinancing of any Primary Resource or Primary Resources, or of
this Agreement, (ii) the holders of any bond, note or other evidence of such
loans or other financial accommodation, or (iii) any person or entity acting on
behalf of any such Lender or Lenders to whom any Lender's or Lenders' rights
under financing documents have been transferred, any trustee on behalf of such
Lender or Lenders, and any person or entity subrogated to the rights of such
Lender or Lenders.
"Letter of Credit" means one or more irrevocable, standby letters of
credit issued by a U.S. commercial bank or a foreign bank with a U.S. branch
capable of issuing letters of credit with such bank having a credit rating of at
least A- from S&P or A3 from Moody's, in a form and substance acceptable to the
Party in whose favor the letter of credit is issued.
"LMP" means the locational marginal price for a given generator bus, as
calculated and posted by MISO.
"LMP Market" means, for a given hour, a system, implemented and
operated by MISO, in which users of the electric transmission grid in the
Midwest are charged for electric transmission congestion based on the location
of the transmission busses where they inject and withdraw power from the
transmission system and the prices for electric energy at such busses. Such a
system may or may not include a central clearing market for sales and purchases
of electric energy. A necessary characteristic of an LMP Market, however, is the
calculation and publishing by MISO of prices for electric energy (in $/MWh) at
the Points of Delivery.
"Load Change Factor" means, with respect to any hour, the use of
on-line generation to provide intra-hour changes in Energy requirements, and
shall be specified as the Capacity (in MW) necessary to meet the peak demand in
such hour less the equivalent quantity of MW equal to the Scheduled Energy for
such hour.
"Load Growth Agreement" means an agreement under which IP purchases
Capacity and/or Energy to satisfy IP load growth not satisfied under the
agreements identified in clauses (i) through (v) of the definition of Qualified
Agreements or through purchases of Tier 1 Capacity and/or Tier 1 Energy;
provided, that: (A) IP shall provide reasonable proof of the timing and amount
of the growth in IP Load, (B) the amount of Capacity and Energy purchased under
a Load Growth Agreement (i) shall commence no sooner than the growth in load
projected by IP, (ii) shall be limited to the quantity of load growth in On-Peak
and Off-Peak periods, as separately projected by IP, and (iii) Energy purchased
under a Load Growth Agreement shall be scheduled by IP only after IP has
scheduled as much Energy as practicable under the Qualified Agreements
identified in the clauses (i) through (v) of the definition of Qualified
5
Agreements, and as much Tier 1 Energy as practicable under this Agreement, and
(C) prior to entering into any Load Growth Agreement, DYPM shall have the option
at its sole election to restore any Released Capacity and associated Energy
under Section 5(a)(ii) in the amount of such load growth.
"MAIN" means the Mid-American Interconnected Network, or any successor
organization thereto, or any organization that assumes any or all of the
responsibilities of MAIN that relate to this Agreement.
"Maximum Energy Quantities" means the maximum amount of Energy that
DYPM is obligated to provide to IP during a given hour and during a given
Quarter, as applicable, as specified in Appendix 2.
"Metering Point" means the location of the meter associated with a
Primary Resource, generally on the low voltage side of the step-up transformer
of such Primary Resource.
"MISO" means the Midwest Independent Transmission System Operator,
Inc., or any successor organization thereto, or any organization that has
operational and/or functional control of the IP System.
"Moody's" means ▇▇▇▇▇'▇ Investor Services, Inc.
"MW" means megawatts.
"MWh" means megawatt-hours.
"Negotiated Tier 2 Capacity" means Capacity, in addition to the Tier 1
Capacity, to be provided by DYPM to IP pursuant to a Negotiated Tier 2
Memorandum.
"Negotiated Tier 2 Energy" means Energy, in addition to the Tier 1
Energy, to be provided by DYPM to IP pursuant to a Negotiated Tier 2 Memorandum.
"Negotiated Tier 2 Memorandum" means a writing between the Parties
setting forth the period, amount, price and other terms and conditions of any
Negotiated Tier 2 Capacity and/or Negotiated Tier 2 Energy purchase agreed to
between the Parties in accordance with Section 5(b)(i).
"NERC" means North American Electric Reliability Council or any
successor organization thereto.
"Net Energy Load" means the Energy portion of the Net Load, which shall
be, for any hour, the difference equal to: (i) the Energy portion of the IP Load
for such hour (including any Ancillary Services converted to Energy), minus (ii)
the Energy portion of Qualified Purchases for such hour.
"Net Load" means, for any hour, the difference equal to: (i) the actual
IP Load for such hour, minus (ii) the Qualified Purchases for such hour.
"Network Integration Transmission Service" has the meaning provided in
IP's or MISO' then-current Open Access Transmission Tariff.
"Network Resource" has the meaning provided in IP's or MISO's
then-current Open Access Transmission Tariff.
"Off-Peak Hours" means, (i) on Business Days, (A) the hours ending at 1
CPT through 6 CPT, and (B) the hours ending 23 and 24 CPT, and (ii) all hours on
all other Days.
6
"On-Peak Hours" means, on Business Days, the hours ending 7 CPT through
22 CPT.
"Open Access Transmission Tariff" or "OATT" means IP's or MISO's
then-current open access transmission tariff as accepted, approved or allowed
into effect by the FERC, and any successor tariffs.
"Operating Limits" means, with respect to any Supply Resource, the
Design Limits and the maximum electric generating ability, minimum electric
generating ability, maximum ramp rates, limits on reactive power output, and the
like, that must be respected by the operator of such Supply Resource in order to
comply with Good Utility Practice, as such information relating to the Supply
Resource is provided by DYPM to IP and, if necessary, to MISO, from time to
time.
"Operating Reserve Requirement" means any obligation to maintain
spinning operating reserve or supplemental operating reserve in accordance with
MAIN Guide No. 5, the requirements of any other regional reliability council of
which the IP System or the IP Control Area is a member, or the requirements of
MISO.
"Overscheduled Energy" means, for any hour, the amount, if any, by
which: (i) the difference equal to (A) the Scheduled Energy with respect to such
hour, minus (B) the Net Energy Load in such hour, exceeds (ii) the Bandwidth
Allowance with respect to such hour; provided, however, that in no event shall
Overscheduled Energy be less than zero.
"PJM Average Hourly On-Peak Price" means the arithmetic mean of the
sixteen (16) PJM Hourly On-Peak Prices for the applicable Day
"PJM Hourly On-Peak Price" means the prices published by the PJM
Interconnection for the PJM Western Hub load zone for hours ending eight (8)
through twenty three (23) Eastern Prevailing Time (which correspond to the
On-Peak Hours) for the applicable Day of delivery.
"Point of Delivery" means, for a Primary Resource, the high voltage
side of the step-up transformer closest to that Primary Resource, or, for any
Alternative Resource, an interface between the IP System and the transmission
system of another entity to the extent IP has the capacity to receive electric
energy at such interface.
"Primary Resource" means a Supply Resource identified in Appendix 3.
"PUA" means the Illinois Public Utilities Act, 220 ILCS 5/1-101 et
seq., as it may be amended from time to time.
"PURPA" means the Public Utility Regulatory Policies Act of 1978, as it
may be amended from time to time.
"Qualified Agreements" means: (i) the Electric Energy Incorporated
Interchange Agreement; (ii) those certain agreements entered into by IP pursuant
to an RFP with one or more entities under which IP will purchase, in calendar
years 2005 and 2006, 400 MW of Capacity and associated Energy provided 24-hours
per day each day of the year, and 300 MW of Capacity and associated Energy
during hours ending 7 through 22 CPT each Business Day; (iii) any agreements
with one or more entities under which IP will purchase 200 MW of Capacity and
associated Energy during all hours of calendar year 2006; (iv) that certain
agreement for Capacity and/or Energy between IP and State Farm Insurance
Company; (v) any purchase IP is required to make under PURPA from a Qualifying
Facility; (vi) any Load Growth Agreement; (vii) any purchases by IP to replace
such Capacity and/or Energy not provided under the terms of one or more of the
7
foregoing agreements; and (viii) any purchases made on IP's behalf by DYPM
pursuant to IP's express direction.
"Qualified Purchases" means, for any hour: (i) 200 MW of Capacity and
associated Energy pursuant to the Electric Energy Incorporated Interchange
Agreement provided 24-hours per day, consistent with IP's permanent power
schedule election under such agreement, provided that such election for 2005 is
no different than such election for 2004; (ii) 400 MW of Capacity and associated
Energy provided 24-hours per day each day of the year, and 300 MW of Capacity
and associated Energy during hours ending 7 through 22 CPT each Business Day
pursuant to those certain agreements entered into by IP pursuant to an RFP;
(iii) 200 MW of Capacity and associated Energy provided under any agreements
with one or more entities during all hours of calendar year 2006; (iv) purchases
of Capacity and associated Energy pursuant to that certain agreement for
Capacity and/or Energy between IP and State Farm Insurance Company; (v) any
amounts of Capacity and Energy IP is required to purchase under PURPA from a
Qualifying Facility; (vi) any amounts of Capacity and Energy purchased by IP
pursuant to any Load Growth Agreement; (vii) any amounts of Capacity and Energy
purchased by IP to replace such Capacity and/or Energy not provided under the
terms of one or more of the foregoing agreements; (viii) any amounts of Capacity
and Energy purchased on IP's behalf by DYPM pursuant to IP's express direction.
"Qualifying Facility" means a qualifying facility as that term is
defined by PURPA.
"Quarter" means each of the three month periods ending March 31, June
30, September 30 and December 31 of each calendar year.
"Released Capacity" has the meaning set forth in Section 5(a)(ii)(b).
"Reliability Compensation" means compensation to be paid by IP to DYPM
for Reliability Dispatch Energy in accordance with Section 12(f).
"Reliability Dispatch" means the direction or operational control of a
Primary Resource by IP or MISO in accordance with Section 7(h)(ii).
"Reliability Dispatch Energy" means Energy generated by a Primary
Resource under conditions of Reliability Dispatch.
"RFP" means one or more Requests for Proposals for provision of
electrical Capacity, Energy, and ancillary services to be issued by IP.
"S&P" means Standard & Poor's Rating Group (a division of ▇▇▇▇▇▇-▇▇▇▇,
Inc.).
"Scheduled Ancillary Services" means the amount of Ancillary Services
that IP schedules to be served from Supply Resources in each hour of the Day as
set forth in the applicable Daily A/S Schedule.
"Scheduled Energy" means the aggregate amount of Tier 1 Energy and
Negotiated Tier 2 Energy, if applicable, that IP specifies for delivery by DYPM
to IP in each hour on a given Day, as set forth by IP in the applicable Daily
Energy Schedule.
"Scheduled Load" means, collectively, the Scheduled Ancillary Services
and Scheduled Energy in each hour of a given Day.
"Security Guarantee" means a form of security described in Section 15.
8
"Semi-Monthly Billing Statement" has the meaning set forth in Section
10(a).
"Semi-Monthly Payment" has the meaning set forth in Section 10(a).
"Service Area" means the geographic area within which IP is lawfully
entitled to provide Capacity and Energy to retail customers as of the date of
this Agreement.
"Shaped Daily On-Peak Index" means: (i) the applicable PJM Hourly
On-Peak Price divided by the PJM Average Hourly On-Peak Price, multiplied (ii)
by the Daily On-Peak Index.
"Supplemental Energy" means, for any hour, the lesser of: (i) the
difference equal to (A) the Net Energy Load in such hour, minus (B) the
Scheduled Energy with respect to such hour, or (ii) the Bandwidth Allowance for
such hour; provided, however, that in no event shall Supplemental Energy be less
than zero.
"Supply Resource" means (i) an electric generating unit capable of
providing Capacity, Energy and/or Ancillary Services to which DYPM holds the
rights to dispatch and/or control the operating level thereof and, accordingly,
the rights to Capacity, Energy and/or Ancillary Services provided by such
electric generating unit, or (ii) any contractual or similar rights to Capacity,
Energy and/or Ancillary Services to which DYPM is entitled.
"Surcharge Factor" means: (i) 1.175 in calendar year 2005, and (ii)
1.15 in calendar year 2006.
"Term" has the meaning set forth in Section 2.
"Tier 1 Capacity" means Capacity in the amounts specified in Appendix 1
(as such amounts may be reduced by the amount of Released Capacity, if any) that
DYPM shall provide to IP, and IP shall purchase from DYPM, to meet IP Load,
throughout the Term.
"Tier 1 Capacity Price" means $4.00/kW-month.
"Tier 1 Energy" means Energy, other than Negotiated Tier 2 Energy,
Supplemental Energy, and Underscheduled Energy, that DYPM shall provide to IP,
and IP shall purchase from DYPM, in the amounts specified in Sections 5 and 7,
to meet IP Load throughout the Term.
"Tier 1 Energy Price" means $30.00/MWh.
"Transmission Losses" means the cost of delivering Energy on the
transmission system between the point of receipt and the point of delivery
attributable to real energy losses, as defined in the applicable MISO
FERC-approved tariff, or as defined in the FERC pro forma Open Access
Transmission Tariff applied by the applicable transmission owners.
"True-Up Billing Statement" has the meaning set forth in Section 10(c).
"Underscheduled Energy" means, for any hour, the amount, if any, by
which (i) the difference equal to (A) the Net Energy Load in such hour, minus
(B) the Scheduled Energy with respect to such hour, exceeds (ii) the Bandwidth
Allowance with respect to such hour; provided, however, that in no event shall
Underscheduled Energy be less than zero.
9
"Unmetered Energy" means deliveries of Energy by DYPM to IP for certain
property, equipment, facilities, and appurtenances owned by IP, on land owned or
controlled by DMG, used by IP to serve IP Load, as further described in Appendix
6.
(b) Interpretation
In this Agreement, unless a different intention clearly appears:
(i) the singular number includes the plural and vice versa;
(ii) the reference to any Party includes such Party's successors
and assignees but, if applicable, only if such successors and assignees
are permitted by this Agreement, and reference to a Party in a
particular capacity excludes such Party in any other capacity or
individually;
(iii) reference to any gender includes the other gender;
(iv) reference to any agreement (including this Agreement),
document or instrument means such agreement, document or instrument as
amended or otherwise modified and in effect from time to time in
accordance with the terms thereof and, if applicable, the terms hereof;
(v) reference to any Section or Appendix means such Section of
this Agreement or such Appendix to this Agreement, as the case may be,
and references in any Section or definition to any clause or paragraph
means such clause or paragraph of such Section or definition;
(vi) "hereunder", "hereof", "hereto" and words of similar import
shall be deemed references to this Agreement as a whole and not to any
particular Section or other provision hereof or thereof;
(vii) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding
such term;
(viii) relative to the determination of any period of time, "from"
means "from and including", "to" means "to but excluding" and "through"
means "through and including"; and
(ix) reference to any law (including statutes and ordinances)
means such law as amended, modified, codified or reenacted, in whole or
in part, and in effect from time to time, including rules and
regulations, promulgated thereunder.
(c) No Presumption of Construction For or Against Any Party
-------------------------------------------------------
Any rule of construction or interpretation requiring this Agreement to
be construed or interpreted for or against any Party shall not apply to the
construction or interpretation hereof.
(d) Titles and Headings
-------------------
Section titles and headings in this Agreement are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
10
(e) Modification of Shaped Daily On-Peak Index
------------------------------------------
If any information needed for calculation of the Shaped Daily On-Peak
Index becomes discontinued, the Parties promptly shall initiate expedited good
faith negotiations in respect of an appropriate replacement index or alternate
pricing methodology for immediate implementation. If the Parties reach agreement
on the terms of an appropriate replacement index or alternate pricing
methodology, the Parties shall reduce the agreement to writing and make it part
of this Agreement, whereupon such terms shall become binding upon the Parties.
If the Parties are unable to reach such agreement, such disagreement shall be
resolved as provided in Section 14.
2. Term of Agreement
-----------------
This Agreement shall become effective as of the Effective Date and
shall continue in effect for a period ending at 11:59 p.m. CPT on December 31,
2006 (the "Term").
3. MISO Change to Sub-Zonal or Nodal Measurement
---------------------------------------------
If, during the Term of this Agreement, MISO utilizes a system for
scheduling, pricing, and/or calculating congestion, losses, or other charges
based on sub-zones or transmission nodes, rather than there being a single zone
for the IP Load, the Parties will revise this Agreement to reflect this
utilization of such sub-zonal or nodal concepts by MISO. Sections of this
Agreement that shall be modified pursuant to the provisions of the foregoing
sentence include, but are not limited to, Subsections 12(c), 12(d), and 12(e).
For the term of this Agreement, (y) IP shall not request, without the prior
written consent of DYPM, that MISO separate the IP Control Area into more than
one load zone; and (z) DYPM shall not request, without the prior written consent
of IP, that MISO separate the IP Control Area into more than one load zone.
4. Interconnection Agreement
-------------------------
The Interconnection Agreement shall remain in effect for the duration
of the Term.
5. IP's Entitlement to Capacity and Energy from DYPM
-------------------------------------------------
(a) Tier 1 Capacity and Tier 1 Energy
(i) Base Amounts. Except as otherwise provided in this Agreement
and subject to the terms of this Agreement, IP shall be entitled to,
and shall purchase from DYPM, and DYPM shall provide and shall sell to
IP, at all times during the Term: (A) Tier 1 Capacity in the amounts
specified in Appendix 1 (as such amount may be reduced by the amount of
Released Capacity, if any), and (B) Tier 1 Energy and Ancillary
Services in hourly amounts equal to the Scheduled Load.
(ii) Capacity Release.
(a) Capacity Release for 2005. By notice dated not
later than September 1, 2004, IP may, at its sole option and
discretion, reduce the amount of Tier 1 Capacity specified in
Appendix 1 of this Agreement for all months in calendar year
2005 by up to 200 MW, provided that the IP Load shall have
been reduced as a result of retail customers of IP switching
electricity suppliers or terminating business operations. In
the event IP releases capacity in calendar year 2005 pursuant
to the provisions of this Section 5(a)(ii)(a), such release
shall apply in the same amount to calendar year 2006.
11
(b) Capacity Release for 2006. By notice dated not
later than September 1, 2005, IP may, at its sole option and
discretion, reduce the amount of Tier 1 Capacity specified in
Appendix 1 of this Agreement for all months in calendar year
2006 by an amount not to exceed the difference between 200 MW
and the amount of capacity released, if any, pursuant to IP's
election under Section 5(a)(ii)(a), provided that the IP Load
shall have been reduced as a result of retail customers of IP
switching electricity suppliers or terminating business
operations (capacity released pursuant to Sections 5(a)(ii)(a)
or 5(a)(ii)(b) being the "Released Capacity").
(c) Any amounts of Tier 1 Capacity released by IP
pursuant to the provisions of this Section 5(a)(ii) shall be
applied notionally to each month set forth on Appendix 1.
During the period of any such release (A) the Tier 1 Capacity
shall be reduced by the amount of the Released Capacity, and
(B) the Tier 1 Energy for each Quarter shall be reduced by an
amount equal to (1) the Tier 1 Energy for such Quarter,
multiplied by (2) the amount of the Released Capacity divided
by the Tier 1 Capacity (prior to such reduction).
(d) Any written notice of Released Capacity shall
include reasonable proof of the net reduction in IP Load, and
the amount of Released Capacity shall not be greater than the
amount of the net reduction in IP Load. In addition to
releasing Tier 1 Capacity in accordance with Subsections
5(a)(ii)(a) and (b), IP may by agreement with DYPM release any
amount of Tier 1 Capacity at any time, upon such advance
notice, and for such period or periods, as the Parties may
agree.
(b) Tier 2 Capacity and Energy
--------------------------
(i) Negotiated Tier 2 Capacity and Energy. IP may purchase
Negotiated Tier 2 Capacity and/or Negotiated Tier 2 Energy from DYPM
for any period, in such amounts and at such price or prices, and on
such terms and conditions, as the Parties may agree, if requested by IP
in writing at least ten (10) Business Days prior to the start of such
period, or upon shorter notice if otherwise agreed to by the Parties.
The Parties shall record the period, amount, price and other terms and
conditions of any Negotiated Tier 2 Capacity and/or Energy purchase in
a Negotiated Tier 2 Memorandum. The Negotiated Tier 2 Memorandum shall
set forth the manner in which the amount of the Negotiated Tier 2
Capacity and/or Energy provided or delivered to IP shall be determined.
(ii) Supplemental Energy and Underscheduled Energy in an LMP
Market. If an LMP Market exists during any hour, IP shall acquire from
MISO all Supplemental Energy and Underscheduled Energy, if any,
required to meet the Net Energy Load.
(iii) Supplemental Energy and Underscheduled Energy with No LMP
Market. If an LMP Market does not exist during the applicable hour, IP
shall (subject to the quantity limitations set forth in Section 5(f))
purchase such Supplemental Energy and Underscheduled Energy from DYPM.
(c) Delivery of Energy and Ancillary Services by DYPM
-------------------------------------------------
(i) Points of Delivery. All Tier 1 Energy, Negotiated Tier 2
Energy, if any, and Ancillary Services provided by DYPM to IP shall be
delivered at the Points of Delivery. To the extent DYPM provides IP
Supplemental Energy or Underscheduled Energy, such Supplemental Energy
12
or Underscheduled Energy shall be delivered to the Points of Delivery.
Title to such Energy or Ancillary Services shall pass from DYPM to IP
at the Points of Delivery.
(ii) Transmission. DYPM shall be responsible for obtaining and/or
providing transmission service for the Tier 1 Energy, Negotiated Tier 2
Energy, Supplemental Energy, Underscheduled Energy, and Ancillary
Services to the Points of Delivery. DYPM shall be responsible for
obtaining and/or providing firm transmission of the Tier 1 Capacity and
Negotiated Tier 2 Capacity, to the Points of Delivery, to the extent
such Capacity is provided by Alternative Resources. IP shall be
responsible for obtaining and providing transmission for Tier 1 Energy,
Negotiated Tier 2 Energy, Supplemental Energy, Underscheduled Energy,
and Ancillary Services obtained from DYPM from the Points of Delivery
to the IP Load.
(iii) Transmission Losses for Alternative Resources. To the extent
incremental Transmission Losses are incurred by IP as a consequence of
the delivery of Energy by DYPM from Alternative Resources to Points of
Delivery other than such Points of Delivery adjacent to Primary
Resources, and not caused by the negligence of IP, DYPM shall pay to IP
an amount equal to the net difference between the Transmission Losses
incurred by IP for delivery of such Energy to such Points of Delivery
and what such costs would have been incurred for delivery of such
Energy to the Points of Delivery adjacent to Primary Resources.
(d) Network Resources
-----------------
IP shall annually designate the Primary Resources as Network Resources
and shall be responsible for procuring the Network Integrated Transmission
Service from the Primary Resources to the IP Load. IP shall comply with any
request of DYPM for IP to designate an Alternative Resource as a Network
Resource, to the extent permitted under the FERC-approved tariffs of IP and/or
MISO.
(e) Use of Capacity, Energy, and Ancillary Services
-----------------------------------------------
IP shall use all Capacity, Energy, and Ancillary Services provided
hereunder only to serve Net Load. IP shall not resell to any customer not
included in the IP Load any Energy, Capacity or Ancillary Services provided by
DYPM under this Agreement, except as provided in Section 5(g)(ii).
(f) Minimum and Maximum Energy Quantities
-------------------------------------
(i) Minimum Energy. The Scheduled Energy for any hour shall not
be less than, and IP shall be obligated to schedule and purchase not
less than, the anticipated Net Energy Load.
(ii) Maximum Capacity. DYPM shall not be obligated, pursuant to
this Agreement, to provide to IP more Capacity, at any point in time or
in any period, than the lesser of: (A) the Capacity volumes specified
in Appendix 1 for a given month plus any similar maximum Negotiated
Tier 2 Capacity amount specified in a Negotiated Tier 2 Memorandum for
that month, or (B) the Capacity component of the Net Load.
(iii) Maximum Hourly Energy. DYPM shall not be obligated, pursuant
to this Agreement, to provide any Energy to IP in any hour, aggregated
across all Points of Delivery, in excess of the lesser of: (A) the
Maximum Hourly Energy Quantities set forth in Appendix 2 plus any
applicable hourly maximums for Negotiated Tier 2 Energy specified in a
Negotiated Tier 2 Memorandum, or (B) the Net Energy Load.
13
(iv) Maximum Quarterly Energy. DYPM shall not be obligated,
pursuant to this Agreement, to provide any Energy to IP in any hour if
provision of such Energy would cause the sum of the Energy delivered to
IP pursuant to this Agreement during the present Quarter to exceed
applicable Maximum Quarterly Energy Quantity set forth on Appendix 2
plus any applicable quarterly maximums for Negotiated Tier 2 Energy
specified in a Negotiated Tier 2 Memorandum.
(v) Net Load. The Net Load (including the Net Energy Load) shall
not be increased due to the failure of any provider of Capacity,
Energy, or Ancillary Services under a Qualified Agreement to provide
the full amount of Qualified Purchases, and in no event shall DYPM be
obligated pursuant to this Agreement to provide any Capacity, Energy,
or Ancillary Services to replace such Qualified Purchases.
(vi) Released Capacity. The maximum amounts set forth in Sections
5(f)(ii), (iii), and (iv) shall be reduced by the amount of any
Released Capacity and corresponding Energy as provided in Section
5(a)(ii).
(g) Right to Market Energy and Ancillary Services to Third Parties
--------------------------------------------------------------
(i) DYPM shall be entitled to sell to any other party,
consistent with applicable tariffs and/or regulations, Tier 1 Energy
and Ancillary Services to which IP is entitled under this Agreement,
but does not schedule in any period, for DYPM's own account and at its
own risk, and DYPM shall have no obligation to account to IP for any
revenues or profits received by DYPM as a result of such sales;
provided, that nothing in this Section 5(g)(i) shall excuse or limit
DYPM's obligation to provide to IP in any period, Tier 1 Capacity,
Tier 1 Energy and related Ancillary Services to which IP is entitled
under this Agreement.
(ii) In the event there does not exist an LMP Market and
Scheduled Energy exceeds Net Energy Load for a given hour, IP shall
have the exclusive right to sell such excess Energy to third parties.
Without limiting IP's scheduling and payment obligations hereunder
(including the obligation to schedule the Net Load), IP shall not be
required to pay to DYPM any revenues received from such sales.
(h) Limit on IP Purchases of Capacity and Energy from Third Parties
---------------------------------------------------------------
(i) Except as provided in Section 5(h)(ii), IP shall purchase
exclusively from DYPM all of IP's Energy and Capacity requirements to
serve the IP Load, except for (a) Qualified Purchases and/or (b)
Supplemental Energy or Underscheduled Energy obtained from MISO as
provided herein.
(ii) IP shall provide DYPM notice of the term of and amounts of
Capacity and amounts of Energy to be purchased under any Qualified
Agreement within ten (10) days after IP's entry into such Qualified
Agreement, but in no case later than the effective date of such
Qualified Agreement.
(iii) Notwithstanding any provision in this Agreement to the
contrary, nothing in this Agreement shall restrict IP's ability to
purchase Capacity, Energy and/or Ancillary Services pursuant to
Qualified Agreements.
14
(i) DYPM Supply Resources
---------------------
DYPM shall be free to meet its supply obligations under this Agreement
with any combination of Supply Resources chosen by DYPM in DYPM's sole
discretion.
6. Quality of Energy Supplied by DYPM
----------------------------------
All Energy which DYPM shall deliver to IP pursuant to this Agreement,
whether generated or procured by DYPM, shall be in the form of three-phase
alternating current having a nominal frequency of approximately 60 cycles per
second, a harmonic content consistent with the requirements of the Institute of
Electrical and Electronic Engineers Standard No. 519, and a voltage content
consistent with the guidelines applied by IP to the IP System.
7. Scheduling
----------
(a) Scheduling of IP Load
---------------------
(i) IP shall provide DYPM with a Daily Energy Schedule, no later
than 6:30 a.m. CPT of the preceding Business Day, setting forth the
aggregated amount of Scheduled Energy during each hour of the
applicable Day. IP shall provide DYPM with a Daily A/S Schedule, no
later than 6:30 a.m. CPT of the preceding Business Day, setting forth
the aggregated amount of Scheduled Ancillary Services during each hour
of the applicable Day. If an LMP Market does not exist and IP
anticipates that Net Energy Load will be materially different than
Scheduled Energy, IP will use its best efforts to communicate such
expectations to DYPM at least seventy-five (75) minutes before the hour
of delivery; provided, -------- that for purposes of determining
Supplemental Energy, Overscheduled Energy, Underscheduled Energy, and
any amount payable pursuant to Section 12, only the daily forecast
delivered at 6:30 a.m. CPT of the preceding Business Day shall be
designated as the Scheduled Energy. If IP does not provide DYPM a Daily
Energy Schedule or Daily A/S Schedule for a given Day by the required
time, the forecasted Energy or Ancillary Services, as appropriate,
specified for the applicable Day in the most recent rolling 10-Day
Energy and Ancillary Services forecast, pursuant to Section 7(c), shall
be deemed to be the Daily Energy Schedule or Daily A/S Schedule, as
applicable.
(ii) IP shall use good faith efforts to ensure that Scheduled
Energy and Scheduled Ancillary Services for a given hour shall equal
the anticipated Net Load for such hour, subject to the quantity limits
set forth in Sections 5(f) and 7(i), and to the provisions of Section
5(h).
(iii) The Daily Energy Schedule or the Daily A/S Schedule can be
amended by mutual agreement of the Parties to reflect any Energy or
Ancillary Services that may be requested by DYPM, provided that DYPM
remains obligated to provide the amounts of Capacity, Energy, and
Ancillary Services otherwise required by this Agreement.
(b) Reserve Nomination/Ancillary Services
-------------------------------------
As part of the Daily A/S Schedule provided pursuant to Section 7(a), IP
shall specify hourly amounts of Tier 1 Capacity to be held as reserves for
Spinning Reserves, Non-Spinning Reserves, Regulation and other Ancillary
Services consistent with the applicable MAIN and/or MISO tariff requirements and
Section 7(i), and shall specify the Load Change Factor for each hour.
15
(c) Rolling 10-Day Energy and Ancillary Services Forecast
-----------------------------------------------------
By 10:00 a.m. CPT each Day, IP shall submit to DYPM a non-binding
10-day forecast of the hourly IP Load including Ancillary Services, to be
provided by DYPM under this Agreement.
(d) Monthly Energy and Ancillary Services Forecast
----------------------------------------------
IP shall submit to DYPM, no later than the fifteenth (15th) day of each
month, a non-binding monthly forecast of the hourly IP Load, including Ancillary
Services, to be provided by DYPM under this Agreement for the following three
months.
(e) DYPM Daily Resource Schedule
----------------------------
(i) No later than 11:00 a.m. CPT, DYPM shall provide to IP a
Daily Resource Schedule for the next Day, identifying Supply Resources
sufficient to provide Tier 1 Capacity, Negotiated Tier 2 Capacity, if
any, Scheduled Energy and Scheduled Ancillary Services to meet the
Scheduled Load.
(ii) The Supply Resources listed on the Daily Resource Schedule
shall be Network Resources such that IP can use Network Integration
Transmission Service under the IP OATT to move Energy and Ancillary
Services provided by DYPM from the Supply Resources to IP's load
busses. IP shall, in cooperation with DYPM, identify the Supply
Resources as IP Network Resources pursuant to obtaining Network
Integration Transmission Service under the IP and/or MISO OATT. If
Alternative Resources are designated by DYPM, DYPM shall provide, in
addition to the Alternative Resources identified in the Daily Resource
Schedule, the applicable OASIS schedules identifying firm transmission
capacity from such Alternative Resources to the Points of Delivery.
(f) Scheduling with MISO
--------------------
DYPM and IP shall cooperate in efforts to undertake all actions
necessary to schedule transmission of Capacity, Energy, or Ancillary Services:
(i) to the Points of Delivery and/or (ii) from the Points of Delivery to the IP
Load.
(g) DYPM Failure to Provide Capacity, Energy, and/or Ancillary
----------------------------------------------------------
Services
--------
(i) Additional Actions. In the event that DYPM fails to provide
Energy, and/or Ancillary Services as required by this Agreement, and
such failure is not excused pursuant to the terms of this Agreement or
applicable law, and is not the result of actions or inactions by IP,
DYPM shall promptly procure and/or dispatch sufficient additional
Supply Resources to meet such requirements. In the event DYPM fails
promptly to procure and/or dispatch such additional Supply Resources as
required in the foregoing sentence, IP shall take reasonable actions,
consistent with Good Utility Practice, to maintain the balance of
electric supply and electric load on the IP System and in the IP
Control Area, including obtaining additional Energy, and/or Ancillary
Services as necessary to balance electric supply and electric load on
the IP System and in the IP Control Area.
(ii) Cover Costs
-----------
(y) Capacity. If and to the extent: (A) DYPM fails, for at
least five (5) consecutive Days, (i) to identify Supply Resources
with Capacity sufficient to meet Scheduled Load or (ii) to
16
deliver Capacity from Supply Resources identified on a Daily
Resource Schedule, and (B) such failure of DYPM (i) is not
excused by the terms of this Agreement or applicable law and (ii)
is not the result of actions or inactions by IP, then, (1) after
consultation with DYPM, IP shall be entitled to purchase Capacity
that it reasonably anticipates that DYPM will be unable to
supply, provided that any such purchases are communicated to
DYPM, and provided, further, that any such purchases are only to
the extent of any such anticipated inability of DYPM to provide
capacity, and (2) DYPM shall reimburse IP for the out-of-pocket
costs reasonably incurred by IP to obtain replacement Capacity
from a third-party on commercially equivalent terms and
conditions for the period of such anticipated continuing failure
in excess of the amounts IP otherwise would have been obligated
to pay DYPM hereunder for such Capacity, including replacement
Capacity and firm transmission.
(z) Energy. If and to the extent: (A) DYPM fails to
procure and/or dispatch sufficient additional Supply Resources
to supply Energy in accordance with Section 7(g)(i), and (B)
such failure of DYPM (i) is not excused by the terms of this
Agreement or applicable law and (ii) is not the result of
actions or inactions by IP, then DYPM shall reimburse IP for
the third-party, out-of-pocket costs reasonably incurred by IP
to obtain replacement Energy for the period of such failure on
commercially equivalent terms and conditions as a result of
such failure in excess of the amounts IP otherwise would have
been obligated to pay DYPM hereunder for such Energy,
including replacement Energy and transmission, Congestion
Costs, and related Transmission Losses.
(iii) Documentation Requirements. IP shall provide all supporting
documentation reasonably required to substantiate and verify the cover
costs described in Section 7(g)(ii).
(iv) CPS1 or CPS2 Violations. If and to the extent IP
demonstrates that DYPM has failed to provide Scheduled Ancillary
Services as required by this Agreement or otherwise fails to operate
Supply Resources in accordance with Operating Limits, and such failure
is not excused by the terms of this Agreement or applicable law and is
not the result of actions or inactions by IP: (A) DYPM shall reimburse
IP for the penalties incurred by IP as a consequence of any resulting
CPS1 or CPS2 Violation by IP, and (B) DYPM shall provide any increase
in quantities of Ancillary Services required by Main or Miso as a
consequence thereof, at DYPM's expense. Except as provided in this
Section 7(g)(iv), DYPM shall have no obligation or liability with
respect to any CPS1 or CPS2 Violation by IP.
(v) Mitigation. IP shall use commercially reasonable efforts to
mitigate the costs incurred in obtaining such replacement Capacity,
Energy and/or Ancillary Services, and, for avoidance of doubt, DYPM
shall have no obligation to reimburse any costs incurred by IP to
obtain quantities of Capacity, Energy, or Ancillary Services in excess
of quantity of each class of service required to be provided by DYPM
hereunder.
(h) Dispatch to Serve IP Load and Reliability Dispatch
--------------------------------------------------
(i) Except as provided in Section 7(h)(ii), DYPM shall control,
cause to be controlled the operation of, or otherwise utilize, the
Supply Resources identified by DYPM for providing Capacity, Energy
and/or Ancillary Services for purposes of serving the IP Load as
required by this Agreement. DYPM shall dispatch such Supply Resources
as required by this Agreement in the manner required to support
compliance with applicable requirements and guidelines of NERC, MAIN,
any other regional reliability council of which the IP System or IP
Control Area is a member, and the MISO.
17
(ii) IP shall be authorized to direct DYPM to dispatch any
Primary Resource out of economic dispatch order, subject to the
Operating Limits or to any other limits reasonably imposed by DYPM or
DMG, if and to the extent such redispatch is necessary in the sole
judgment of IP to ensure the reliability of the IP System, to maintain
the integrity of the IP System, or to fulfill a requirement of the
Open Access Transmission Tariff or other applicable tariff, or a
requirement or directive of NERC, MAIN, any other regional reliability
council of which the IP System or IP Control Area is a member, or
MISO, notwithstanding that such dispatch may be contrary to principles
of economic dispatch or to a previously-established planned outage
schedule ("Reliability Dispatch"). Notwithstanding the foregoing, in
no case shall DYPM be required to operate any Primary Resource in a
manner which exceeds the Operating Limits or which, in DYPM's
reasonable judgment, jeopardizes the health or safety of any person or
property or the safety or integrity of the Primary Resource.
Redispatch of a Primary Resource to provide reactive power support,
including emergency redispatch or non-emergency redispatch, is covered
in and subject to the Interconnection Agreement.
(iii) DYPM shall be entitled to Reliability Compensation from IP
in accordance with Section 12(f) for Reliability Dispatch Energy. IP
acknowledges and agrees that this Agreement and the foregoing
provisions of this Section 7(h) in particular do not apply to or
authorize or allow any action by or direction from IP relating to
returning the IP System to normal operation in the event of a whole or
partial blackout on the IP System, and that any rights or obligations
with respect thereto shall be governed by a separate black start
service agreement directly between IP and DMG.
(i) Ancillary Services
------------------
IP shall specify in the Daily A/S Schedule no more than those Ancillary
Services necessary to meet the then-applicable MAIN and/or MISO requirements for
Ancillary Services for the IP Load, subject to the limitations specified in this
Section 7(i), after use of all other sources of Ancillary Services available to
IP. DYPM shall be obligated to provide to IP only those Ancillary Services
specified in such Daily A/S Schedule. DYPM shall have no obligation under this
Agreement to provide reserve sharing services to IP or on IP's behalf to other
entities or otherwise to respond to a reserve-sharing event. IP shall minimize
the amount of Ancillary Services required to be provided by DYPM by, in good
faith, maintaining or increasing existing customer demand side qualified
resources for both spinning and non-spinning reserves and maintaining or
increasing the provision of self-supplied Ancillary Services by transmission
system customers in effect as of the date of execution of this Agreement.
Furthermore, DYPM shall determine the specific Supply Resources from which
Ancillary Services will be provided. Unless otherwise specifically set forth in
this Agreement, there will be no separate charge for these Ancillary Services
not converted to Supplemental Energy or Underscheduled Energy. Beginning on the
date, if any, that MISO starts to operate a market for Ancillary Services, IP
shall compensate DYPM for the provision of Ancillary Services in excess of the
minimum amount required by MAIN or MISO on the date of this Agreement (except as
set forth in Section 7(g)(ii)). Reciprocally, beginning on the same date, IP
shall be compensated by DYPM for the provision of Ancillary Services less than
the minimum amount required by MAIN or MISO on the date of this Agreement.
"Ancillary Services" shall consist of the following:
(i) Spinning Reserves. This service is defined as the amount of
generation which is on-line and loaded at less than maximum output,
ready to serve additional demand and which can be fully applied in 10
minutes in the event of a system contingency.
(ii) Non-Spinning Reserves. This service is defined as the amount
of generating capability not connected to the system but capable of
serving demand within 10 minutes.
18
(iii) Regulation. This service is defined as the amount of
generating capability in the form of Spinning Reserves necessary to
provide for the continuous balancing of resources (generation and
interchange) with load. Regulation service is accomplished by
committing on-line generation whose output is raised or lowered
(predominantly through the use of automatic generating control
equipment) as necessary to follow the moment-by-moment changes in load.
(iv) Frequency Response Service. This service is defined as the
amount of generating capability necessary to maintain scheduled
interconnection frequency at sixty cycles per second (60 Hertz).
If, however, the services contemplated by the MISO and/or its tariff,
including the Ancillary Services provided hereunder, are changed materially from
those in effect on the date of this Agreement, the Parties shall cooperate to
make conforming changes to this Agreement to fulfill the purposes of this
Agreement; provided, that no such changes shall alter the allocation between the
Parties of the economic benefits and risks of this Agreement.
8. Financial Transmission Rights and Financial Flowgate Rights;
------------------------------------------------------------
Congestion Costs
----------------
(a) Congestion Credit
-----------------
Following the implementation of an LMP Market: (i) DYPM shall reimburse
IP for any charges for Congestion Costs imposed by MISO on IP associated with
transmitting Tier 1 Energy, Negotiated Tier 2 Energy (if such Negotiated Tier 2
Memorandum provides that DYPM shall be responsible for such Congestion Costs),
Supplemental Energy, and Underscheduled Energy from Supply Resources to the IP
Load, and (ii) in the event IP holds FTRs or FFRs on DYPM's behalf, IP shall
pass-through to DYPM any financial benefits and financial obligations received
from or imposed by MISO associated with holding such FTRs or FFRs on DYPM's
behalf. In accordance with the foregoing sentence, DYPM shall credit or debit
IP, as appropriate, for the amount of any such amounts charged or credited by
MISO to IP on the True-Up Billing Statement issued following the receipt from
MISO of necessary data for completion of such calculations.
(b) Financial Transmission Rights
-----------------------------
(i) Annual Load Forecast
No later than fifteen (15) Business Days prior to MISO-established
deadline for submitting to MISO nominations for FTRs or FFRs, IP shall
provide DYPM with an annual forecast of the IP Load, by month. IP
shall use its best efforts in developing such load forecast but shall
not be responsible to DYPM for any differences between the forecast
and actual IP Load.
(ii) FTR/FFR Nomination
At least two (2) Business Days prior to the MISO-established
deadline for submitting to MISO nominations for FTRs or FFRs, DYPM
shall provide IP a list of the FTRs and/or FFRs that DYPM wishes IP to
have allocated by MISO in order to reduce DYPM's net liability to
reimburse IP for Congestion Costs in accordance with Section 8(a). IP
shall include such nominated FTRs and FFRs identified by DYPM in IP's
list of nominated FTRs and FFRs submitted to MISO. IP shall in no way
be restricted from nominating FTRs and/or FFRs in addition to those
identified by DYPM.
19
(iii) FTR/FFR Allocation
IP shall assign to DYPM at no charge (except for any
administrative charges assessed by MISO), for the Term of this
Agreement, all FTRs and FFRs allocated to IP by MISO that correspond to
the nominated FTRs and FFRs requested by DYPM, provided, however, that
such FTRs and FFRs may be reduced pro rata to the extent that the
quantity of FTRs and FFRs allocated to IP is less than the quantity of
FTRs and FFRs nominated by IP; and, provided, further, that FTRs and
FFRs so allocated shall be provided first to IP Load served by
Qualified Agreements and DYPM pursuant to the provisions of this
Agreement, prior to providing any FTRs and FFRs applicable to other IP
Load. IP shall be entitled to receive FTRs and/or FFRs associated with
Qualified Agreements in the same pro rata manner. In no event shall
DYPM have rights to any FTRs or FFRs provided by MISO to IP to the
extent such FTRs or FFRs are in effect following the Term of this
Agreement. In the event MISO does not permit the assignment of FTRs or
FFRs from IP to DYPM, (x) IP shall pass-through to DYPM at no charge
all financial benefits provided by MISO to IP as a result of IP holding
those FTRs or FFRs as if such FTRs or FFRs had in fact been assigned to
DYPM; (y) IP shall pass-through to DYPM all financial obligations
imposed by MISO on IP as a result of IP holding those FTRs or FFRs as
if such FTRs or FFRs had in fact been assigned to DYPM, including any
administrative charges assessed by MISO. DYPM shall provide to IP such
forms of credit as MISO may require from IP as a result of IP holding
such FTRs or FFRs on DYPM's behalf.
(iv) Other FTRs or FFRs
To the extent DYPM utilizes or intends to utilize Alternative
Resources to supply the Net Load, and so requests that IP seek, on DYPM
behalf, certain FTRs or FFRs from MISO, IP will use reasonable efforts
to request such FTRs or FFRs on DYPM's behalf. If such FTRs or FFRs are
unavailable or cannot be obtained despite IP's reasonable efforts, IP
shall notify DYPM as soon as practicable, and DYPM will reimburse IP
for any Congestion Costs and related Transmission Losses arising from
DYPM's use of such Alternative Resources rather than Primary Resources
for delivery of its supply obligations hereunder. DYPM shall bear all
costs, if any, related to obtaining FTRs or FFRs pursuant to this
Section 8(b)(iv).
9. Metering and Meters
-------------------
(a) Metering
--------
(i) All Energy delivered by DYPM to IP from a Primary Resource
shall be metered at the existing meter installations located at the
Metering Points. Such metering installations shall be provided,
installed and maintained pursuant to the Interconnection Agreement.
Such meters shall be kept under seal, and such seals shall be broken
only by DYPM and only when the meters are to be tested or adjusted.
(ii) At IP's option and expense, back-up meters may be installed
at any Metering Point. Back-up meters shall be installed, owned, tested
and maintained in accordance with procedures to be agreed upon by the
Parties.
(b) Meter Testing and Inaccuracies
------------------------------
The meters shall be tested, any adjustments to the billing statements
shall be made, and records relating to the meters shall be maintained, as
provided in Sections 11.3 through 11.7 of the Interconnection Agreement, which
Sections are incorporated herein by reference, mutatis mutandis.
20
10. Billing and Payment
-------------------
(a) Semi-Monthly Billing Statements and Payments
--------------------------------------------
(i) Semi-Monthly Billing Statements
-------------------------------
DYPM shall provide to IP, on the fifteenth (15th) day of a
month or, if such date is not a Business Day, on the next succeeding
Business Day, a Semi-Monthly Billing Statement setting forth: (A)
one-half of the monthly charge for Tier 1 Capacity and Negotiated Tier
2 Capacity, if any, for that month; (B) the total MWh of Tier 1 Energy
reflected in the Daily Energy Schedules for the first through fifteenth
(15th) days of that month, (C) if applicable, the price charged by DYPM
for any Negotiated Tier 2 Energy as well as the total MWh of Negotiated
Tier 2 Energy reflected in the Daily Energy Schedules for the first
through fifteenth (15th) days of that month, and (D) based on the
information provided in clauses (A) through (C) of this Section 10(a),
the total amount due from IP to DYPM as a Semi-Monthly Payment for the
first through fifteenth (15th) days of that month.
DYPM shall provide to IP, on the last day of a month or, if
such date is not a Business Day, on the next succeeding Business Day, a
Semi-Monthly Billing Statement setting forth: (w) one-half of the
monthly charge for Tier 1 Capacity and Negotiated Tier 2 Capacity, if
any, for that month; (x) the total MWh of Tier 1 Energy reflected in
the Daily Energy Schedules for the sixteenth (16th) through last days
of that month, (y) if applicable, the price charged by DYPM for any
Negotiated Tier 2 Energy as well as the total MWh of Negotiated Tier 2
Energy reflected in the Daily Energy Schedules for the sixteenth (16th)
through last days of that month, and (z) based on the information
provided in clauses (w) through (y) of this Section 10(a), the total
amount due from IP to DYPM as a Semi-Monthly Payment for the sixteenth
(16th) through last days of that month.
(ii) Semi-Monthly Payment
--------------------
On or before the third (3rd) Business Day following provision
of a Semi-Monthly Billing Statement by DYPM to IP, IP shall pay DYPM,
by electronic funds transfer, the total amount due from IP to DYPM as
specified in such Semi-Monthly Billing Statement (a "Semi-Monthly
Payment"); provided, however, that IP may reduce the amount paid as a
result of a good faith dispute with the information provided in the
Semi-Monthly Billing Statement, to the extent of the amount disputed as
provided in Section 10(e).
(b) Provision of Final Monthly Data to DYPM
---------------------------------------
On or before the fifth (5th) Business Day of a calendar month, IP and
DYPM shall exchange all data in their respective possessions reasonably
necessary to calculate the True-Up Monthly Billing Statement to be prepared by
DYPM hereunder; provided, however, that IP shall provide to DYPM all information
necessary to calculate Supplemental Energy, Overscheduled Energy, and
Underscheduled Energy as soon as provided by MISO to IP.
(c) True-Up Billing Statements
--------------------------
DYPM shall prepare True-Up Billing Statements under this Agreement no
more frequently than once per calendar month. True-Up Billing statements shall
show all usage amounts, unit charges and billing calculations used in
calculation of such True-Up Billing Statement, including the following items:
21
(i) Tier 1 Capacity and Negotiated Tier 2 Capacity, in MW.
(ii) Tier 1 Energy, Negotiated Tier 2 Energy, Supplemental
Energy, Overscheduled and Underscheduled Energy, by hour and in total,
in MWh (specifying the amount of each determined, as applicable,
through meter readings or, for Energy delivered from Alternative
Resources, through schedules).
(iii) Scheduled Energy, by hour and in total, in MWh.
(iv) Reliability Dispatch Energy, separated into incremental
Energy and decremental Energy, by hour and in total, in MWh.
(v) Tier 1 Capacity Price in $/kW-month, Negotiated Tier 2
Capacity Price, Negotiated Tier 2 Energy Price, Tier 1 Energy Price,
and Supplemental Energy Price, in $/MWh.
(vi) Daily On-Peak Index, PJM Hourly On-Peak Price, Shaped Daily
On-Peak Index, in $/MWh.
(vii) In the event an LMP Market exists, the IP Zonal Price and
the LMP at each Point of Delivery, for all hours, in $/MWh.
(viii) Charges for Tier 1 Capacity and Tier 1 Energy, in
accordance with Section 12(a).
(ix) Charges for Negotiated Tier 2 Capacity and Negotiated Tier 2
Energy, if applicable, in accordance with Section 12(b).
(x) Charges relating to Supplemental Energy, in accordance with
Section 12(c).
(xi) Charges or surcharges relating to Underscheduled Energy, in
accordance with Section 12(d).
(xii) Surcharges relating to Overscheduled Energy, in accordance
with Section 12(e).
(xiii) Reliability Compensation, in accordance with Section 12(f).
(xiv) Charges or credits for Congestion Costs, in accordance with
Section 8(a), as well as sub-components leading to such charges or
credits.
(xv) Credits for the cost of any replacement Capacity or Energy
obtained by IP during such month, in accordance with Section 7(g)(ii).
(xvi) Congestion Costs and Transmission Losses for deliveries from
Alternative Resources.
(xvii) Financial benefits provided by MISO to IP as a result of IP
holding FTRs or FFRs on DYPM's behalf, in accordance with Section 8(a).
(xviii) Financial obligations imposed by MISO on IP as a result of
IP holding FTRs or FFRs on DYPM's behalf, in accordance with Section
8(a).
22
(xix) Administrative charges assessed by MISO as a result of IP
holding FTRs or FFRs on DYPM's behalf, in accordance with Sections
8(b)(iii) and 8(b)(iv).
(xx) Total amount of Semi-Monthly Payments made by IP to DYPM
pursuant to Section 10(a).
(xxi) Net payment due from IP to DYPM or net credit due from DYPM
to IP.
Net payment due from IP to DYPM pursuant to a True-Up Billing Statement shall be
due on the due date of the next Semi-Monthly Payment that occurs at least five
(5) Business Days after such True-Up Billing Statement was provided to IP. If
the IP Load is recalculated, or if any other amount required to prepare a
True-Up Billing Statement is recalculated or restated not more than twelve (12)
months after the date of such True-Up Billing Statement, the True-Up Billing
Statement shall be recalculated and adjusted in a subsequent True-Up Monthly
Billing Statement after such recalculation.
(d) Interest on Late Payments
-------------------------
Amounts due from one Party to the other and not paid by the due date
specified in Sections 10(a)(ii), 10(c), or 10(i), as applicable, shall bear
interest at the prime rate posted by BankOne Illinois, or its corporate
successor, from the due date until the date of payment. Any amount paid by one
Party to the other that is later determined to have been in excess of the
payment due shall accrue interest at such rate from the date payment was made
until the date such overpayment is returned or credited to the Party owed.
(e) Billing Disputes
----------------
(i) If DYPM or IP disputes in good faith any data provided by the
other Party pursuant to this Section 10, or if IP disputes any portion
of the any ▇▇▇▇ prepared pursuant to this Section 10, the Party
disputing the data or ▇▇▇▇ shall provide written notice of the portion
of the data or ▇▇▇▇ which is disputed to the other Party. IP shall pay
the undisputed portion of such ▇▇▇▇. Payment of the disputed amount or
any billing adjustment which is necessary as a result of this Section
10(e) shall not be required until the dispute is resolved. The Parties
shall use diligent, good faith efforts to resolve such dispute as
promptly as possible. Disputes arising under this Section 10(e) which
have not been resolved within thirty (30) days following notice of the
dispute to the other Party shall be resolved in accordance with Section
14.
(ii) Upon resolution of the dispute, any required payment shall be
made within two (2) Business Days of such resolution along with
interest as described in Section 10(d) from and including the due date
but excluding the date paid. Any dispute with respect to data or a ▇▇▇▇
is waived unless the other Party is notified in accordance with Section
10(e)(i) within twelve (12) months of the date of such ▇▇▇▇.
(f) Right of Set-Off
----------------
(Reserved.)
(g) Maintenance of Records
----------------------
IP and DYPM shall keep and maintain all records and calculations
supporting each billing statement submitted to IP (including all supporting data
which was provided by DYPM) for three (3) years following the date the billing
statement was submitted to IP.
23
(h) Audit Rights
------------
(i) IP shall be entitled to cause independent audits to be
performed of the billing statements provided by DYPM in accordance with
this Section 10, including supporting documentation and calculations.
Similarly, each Party shall be entitled to cause independent audits to
be performed of the data provided by the other Party in accordance with
this Section 10, including supporting documentation and calculations.
Such audits (collectively, "Audits") may be performed at the request of
each Party no more than once in a calendar year, unless the Party being
audited consents to more frequent Audits, and shall cover all monthly
data or billing statements prepared by IP or DYPM, respectively,
subsequent to the last preceding Audit, if any. Within twelve (12)
months following termination of this Agreement, either Party shall be
entitled to cause an Audit to be performed applicable to the time
period subsequent to the last preceding Audit, if any.
(ii) Such Audits shall be conducted by an independent auditor
selected by the Party invoking its right to audit pursuant to this
Section 10(h). The Party being audited shall give the independent
auditor access to all records, calculations and work papers necessary
for the auditor to audit and verify the accuracy of the data or monthly
billing statements prepared, as applicable. The independent auditor
shall establish such procedures as are necessary to prevent any market
information or other confidential information of one Party from being
disclosed to the other Party, and shall agree in writing as a condition
of engagement not to disclose any such information to the Party
invoking its right to audit pursuant to this Section 10(h). Any amount
which the auditor finds, as a result of an error in a monthly data or
billing statements provided by one Party to the other, to be owed from
one Party to the other Party shall be paid by the Party owing such
amount within thirty (30) days following the date of the auditor's
report, with interest at the rate determined in accordance with Section
10(d) from the date payment was originally due on the monthly billing
statement which the auditor finds to have been in error or the date
paid or repaid.
(i) True-Up Billing Statement Applicable to Final Month of Term
-----------------------------------------------------------
No later than ten (10) Business Days following receipt by DYPM from
MISO and IP of all data necessary to calculate a True-Up Billing Statement
covering the final month of the Term of this Agreement, DYPM shall provide to IP
a True-Up Billing Statement covering: (i) the period between the month covered
by the most recently provided True-Up Billing Statement and the final month of
the Term, and (ii) the final month of the Term. Solely with regards to the
True-Up Billing Statement provided in accordance with this Section 10(i), the
Party owing money shall pay to the other Party the undisputed amount indicated
on such True-Up Billing Statement, by electronic funds transfer, on or before
the fifth (5th) Business Day following presentation of the billing statement to
IP.
11. Force Majeure Events
--------------------
(a) Occurrences Constituting Force Majeure Events
---------------------------------------------
A "Force Majeure Event" means an event or circumstance which prevents a
Party from performing its obligations under this Agreement, which event or
circumstance is not within the reasonable control of, or the result of the
negligence of such Party, and which, by the exercise of due diligence, such
Party is unable to overcome or avoid or cause to be avoided, including: (i)
explosion or fire not caused by the negligence of the Party claiming force
majeure, (ii) flood, earthquake, storm or other revulsions of nature or natural
calamity or Act of God, (iii) war, insurrection, riot or civil disobedience or
unrest, (iv) acts of sabotage, or (v) any other event, occurrence or
circumstance beyond the reasonable control of the affected party, whether or not
24
of the same class or character as those enumerated in this sentence; provided,
however, that equipment failure shall not constitute a Force Majeure Event.
(b) Invocation of Force Majeure Condition
-------------------------------------
A Force Majeure Condition shall exist only upon declaration thereof by
a Party by written or oral notice to the other Party (with any such oral notice
to be promptly confirmed in writing) that a Force Majeure Event has occurred or
is occurring. Such notice shall be given by the Party claiming a Force Majeure
Condition to the other Party as soon as practicable after the Force Majeure
Event occurs. Such written notice or, if oral notice is given, the written
confirmation thereof, shall provide all relevant particulars about the Force
Majeure Event, including the anticipated duration of the Force Majeure
Condition.
(c) Consequences of Force Majeure Condition
(i) During a Force Majeure Condition, and to the extent a Party's
performance is prevented by a Force Majeure Event, the Party claiming a
Force Majeure Condition shall have no obligation to supply or receive
Capacity, Energy or Ancillary Services to or from the other Party, or
from the Supply Resources affected by the Force Majeure Condition, and
shall have no obligation to supply or reimburse the other Party for any
replacement Capacity, Energy or Ancillary Services therefore. In the
event DYPM claims a Force Majeure Condition, any Tier 1 Capacity and
Negotiated Tier 2 Capacity to which IP was otherwise entitled during
the period that the Force Majeure Condition is in effect shall be
reduced by the amount of the Capacity affected by the Force Majeure
Condition, with such amount of affected Capacity being first allocated
to Negotiated Tier 2 Capacity and then to Tier 1 Capacity, up to the
total amount of Capacity affected by the Force Majeure Event. The Tier
1 Energy, Negotiated Tier 2 Energy and amount of Ancillary Services
required to be provided by DYPM shall be reduced on a ratable basis.
(ii) During a Force Majeure Condition, IP's obligation to pay
Capacity charges pursuant to Sections 12(a) and 12(b) shall be reduced
pro rata by the ratio of the Capacity rendered unavailable to the sum
of the Tier 1 Capacity and the Negotiated Tier 2 Capacity, for the
month or months, or portions thereof, during which the Force Majeure
Condition continues.
(iii) Any Party claiming a Force Majeure Condition shall and shall
cause its affiliates or, where applicable, other unit owners or
operators, to exercise all reasonable efforts to terminate or resolve a
Force Majeure Condition, and such Party shall make periodic reports to
the other Party on the status of the Force Majeure Condition and the
anticipated date for its resolution or termination.
(iv) Neither a Force Majeure Event nor a Force Majeure Condition
shall suspend either Party's obligation to make payments already
accrued.
12. Pricing and Payments
--------------------
For each calendar month, IP will pay the following amounts:
(a) Tier 1 Capacity Charges and Tier 1 Energy Charges
-------------------------------------------------
(i) Tier 1 Capacity Charges. IP shall pay DYPM a charge for
Capacity for each calendar month equal to: (A) 2,800 MW (as adjusted
for any Released Capacity as provided in Section 5(a)(ii), multiplied
25
by (B) the Tier 1 Capacity Price, multiplied by (C) a conversion factor
of 1,000 kW per MW.
(ii) Tier 1 Energy Charges. IP shall pay DYPM a charge for
Tier 1 Energy for each calendar month equal to the sum, for each hour
of such calendar month, of product of: (A) the Tier 1 Energy Price,
multiplied by (B) the Scheduled Energy for such hour.
(b) Negotiated Tier 2 Capacity Charges and Negotiated Tier 2
--------------------------------------------------------
Energy Charges
---------------
IP shall pay DYPM for any Negotiated Tier 2 Capacity and/or Negotiated
Tier 2 Energy purchased by IP in a calendar month at the prices set forth in the
Negotiated Tier 2 Memorandum applicable to such transaction or transactions.
(c) Supplemental Energy Charges
---------------------------
(i) For each hour in which an LMP Market exists, IP shall purchase
Supplemental Energy from MISO at the IP Zonal Price. If the IP Zonal
Price for such Supplemental Energy for such hour exceeds the Tier 1
Energy Price, DYPM shall pay IP an amount equal to the product of: (w)
such excess in price and (x) the amount of such Supplemental Energy for
such hour. If the Tier 1 Energy Price exceeds the IP Zonal Price for
such Supplemental Energy for such hour, IP shall pay DYPM an amount
equal to the product of: (y) such excess in price and (z) the amount of
such Supplemental Energy for such hour.
(ii) For each hour in which no LMP Market exists, IP shall
purchase Supplemental Energy from DYPM at the Tier 1 Energy Price.
(d) Underscheduled Energy Charges and Surcharges
--------------------------------------------
(i) For each hour in which an LMP Market exists, IP shall purchase
Underscheduled Energy from the MISO at the IP Zonal Price, and IP shall
pay DYPM a surcharge for Underscheduled Energy equal to: (y) the amount
of Underscheduled Energy, multiplied by (z) the positive difference, if
any, of the Tier 1 Energy Price less the IP Zonal Price for such hour.
(ii) For each hour in which no LMP Market exists, IP shall
purchase Underscheduled Energy from DYPM, at the following prices: (A)
for On-Peak Hours, the price for Underscheduled Energy shall be the
Surcharge Factor multiplied by the Shaped Daily On-Peak Index
applicable to such hour; and (B) for Off-Peak Hours, the price for
Underscheduled Energy shall be the Tier 1 Energy Price.
(e) Overscheduling Surcharge
------------------------
(i) For each hour in which an LMP Market exists, IP shall pay DYPM
a surcharge for Overscheduled Energy equal to: (y) the amount of
Overscheduled Energy, multiplied by (z) the positive difference, if
any, of the IP Zonal Price for such hour less the Tier 1 Energy Price.
(ii) For each On-Peak hour in which no LMP Market exists, IP shall
pay DYPM a surcharge for Overscheduled Energy equal to: (A) the amount
of Overscheduled Energy multiplied by (B) the positive difference, if
any, equal to (y) the Surcharge Factor multiplied by the Shaped Daily
On-Peak Index applicable to such hour, minus (z) the Tier 1 Energy
Price. There shall be no surcharge paid by IP to DYPM for Overscheduled
Energy during Off-Peak hours in which no LMP Market exists, other than
26
any charge paid by IP to DYPM for Scheduled Energy owing to the fact
that all Overscheduled Energy is also Scheduled Energy.
(f) Reliability Compensation
------------------------
In the event no LMP Market exists, for each event of Reliability
Dispatch requested by IP, MAIN, or MISO requiring incremental or decremental
Energy or Ancillary Services production from a given Primary Resource, IP shall
reimburse DYPM for the following costs associated with such Reliability
Dispatch.
(i) If such Reliability Dispatch requires incremental Energy
production from a Primary Resource, IP shall reimburse DYPM in the
amount of 110% of DYPM's actual startup, variable operations and
maintenance, and fuel costs associated with the startup or incremental
Energy production from such Primary Resource.
(ii) If such Reliability Dispatch requires decremental Energy
production from a Primary Resource and an equal amount of incremental
Energy production from another Primary Resource, IP shall reimburse
DYPM in the amount of any increased costs of Energy production as a
result of such changes in Energy production levels on account of such
Reliability Dispatch.
(iii) If such Reliability Dispatch requires decremental Energy
production from a Primary Resource and DYPM is unable or not permitted
to increment Energy production of another Primary Resource, IP shall
reimburse DYPM in the amount of the margin foregone (revenues minus
incremental production costs) by DYPM for existing Energy schedules
with one or more third-parties as a result of such Reliability
Dispatch.
(g) Unmetered Energy
----------------
IP shall compensate DYPM for Unmetered Energy based on the estimated
annual amounts in MWh provided on Appendix 6 and a price of $30/MWh. Unmetered
Energy is not subject to the scheduling provisions of Section nor shall
Unmetered Energy be considered Tier 1 Energy.
(h) Sample Calculation
------------------
A sample calculation of charges for Tier 1 Energy, Overscheduled
Energy, Supplemental Energy, and Underscheduled Energy is attached as Appendix
5. In the event of any conflict between Appendix 5 and the terms of this
Agreement, the terms of this Agreement shall govern.
13. Events of Default, Liability and Remedies
-----------------------------------------
(a) Defaults
--------
Subject to Sections 11, 13(c), and 13(f), and any other applicable
provision of this Agreement, any of the following shall constitute an "Event of
Default":
(i) Either Party's failure to discharge or perform any material
duty or obligation under this Agreement other than those instances set
forth in clauses (ii) through (vi) of this Section 13(a), which failure
is not cured within 20 days after receipt of notice from the
non-defaulting Party describing such Event of Default;
27
(ii) Either Party's failure to pay any undisputed amount due and
payable under this Agreement, which failure is not cured through
payment of such undisputed amount within two (2) Business Days after
receipt of notice from the non-defaulting Party describing such Event
of Default and demanding payment;
(iii) Failure of DYPM to provide Capacity, Energy, or Ancillary
Services in accordance with this Agreement resulting in the obligation
of DYPM to pay IP at least twenty-five million dollars ($25,000,000)
pursuant to Section 7(g)(ii) over any consecutive three (3) months
during the Term;
(iv) Either Party or its Guarantor becomes Bankrupt;
(v) Either Party fails to provide and maintain the Security
Guaranty required hereunder within two (2) Business Days after receipt
of notice from the non-defaulting Party describing such Event of
Default and demanding such Security Guarantee; and
(vi) Either Party's corporate status is dissolved and not
reinstated within thirty (30) days after such dissolution or, if such
dissolution was inadvertent, within thirty (30) days after discovery of
such dissolution.
(b) Indemnification
---------------
Subject to Sections 11, 13(c), and 13(f), and any other applicable
provision of this Agreement: (i) DYPM shall not be liable for, and IP shall
indemnify DYPM from and against, any and all claims, damages, liabilities or
expenses, whether suffered or incurred by DYPM or by some other person or
entity, resulting from or caused by IP's gross negligence or willful misconduct;
(ii) IP shall not be liable for, and DYPM shall indemnify IP from and against,
any and all claims, damages, liabilities or expenses, whether suffered or
incurred by IP or by some other person or entity, resulting from or caused by
the gross negligence or willful misconduct of DYPM; and (iii) if IP and DYPM are
held jointly and severally liable for any claim, damage, liability or expense of
any third party, a right of contribution shall exist as between IP and DYPM.
(c) No Consequential or Punitive Damages
------------------------------------
Notwithstanding any other provision in this Agreement to the contrary,
in no event or any circumstances shall either Party be liable to the other for
any special, incidental, indirect, consequential (including loss of profit, loss
of use, claim of liability on account of any business interruption of the
injured Party, or claims of customers), punitive or exemplary damages, whether
such claim, damage, liability, expense or loss is based on contract, warranty or
tort (including intentional acts, errors or omissions, negligence, indemnity,
strict liability or otherwise).
(d) Warranty Disclaimer
-------------------
EXCEPT AS SET FORTH IN SECTION 6, DYPM MAKES NO WARRANTIES (EXPRESS OR
IMPLIED) WITH REGARD TO THE ENERGY, CAPACITY OR ANCILLARY SERVICES SOLD OR
PROVIDED PURSUANT TO THIS AGREEMENT, INCLUDING ANY WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE.
28
(e) Remedies
--------
(i) If an Event of Default has occurred, the non-defaulting
Party, at its discretion, may take either of the following actions:
(A) In the case of clauses (ii), (iii), (iv) or (v)
of Section 13(a), immediately terminate this Agreement;
(B) In the case of clauses (i) or (vi) of Section
13(a), proceed pursuant to the dispute resolution procedures
set forth in Section 14;
(ii) The rights and remedies herein provided in case of an Event
of Default or other breach shall be exclusive and in lieu of all other
rights and remedies existing at law or in equity.
(f) Exclusive Remedy
----------------
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY AND TO THE
MAXIMUM EXTENT PERMITTED BY LAW, THE REMEDIES SET FORTH IN SECTIONS 7(g) SHALL
BE IP'S EXCLUSIVE REMEDIES AND DYPM'S EXCLUSIVE LIABILITY FOR ANY FAILURE OF
DYPM TO PROVIDE CAPACITY, ENERGY OR ANCILLARY SERVICES REQUIRED BY THIS
AGREEMENT.
14. Dispute Resolution
------------------
(a) Administrative Committee Procedure
----------------------------------
If any dispute or disagreement arises out of or relates to matters
concerning this Agreement or the breach, termination or validity thereof
("Dispute"), and, if applicable, a Party has not elected a remedy provided for
in Sections 7(g) or 13(e), at the written request of either Party, the Dispute
shall be referred to an officer of each Party, who shall attempt to timely
resolve the disagreement. If such representatives can resolve the disagreement,
such resolution shall be reported in writing to and shall be binding upon the
Parties. If such representatives cannot resolve the disagreement within thirty
(30) days after the date of a notice requesting such referral, or if a Party
fails to appoint a representative within ten (10) days after the date of a
notice requesting such referral, then, at the election of either Party, the
matter shall proceed to arbitration as provided in Section 14(b).
(b) Arbitration
-----------
If the Parties are unable, pursuant to Section 14(a), to resolve a
Dispute arising on a matter pertaining to this Agreement, such Dispute shall be
settled by arbitration and any award issued pursuant to such arbitration may be
enforced in any court of competent jurisdiction. Either Party may commence
arbitration by serving written notice thereof on the other Party, which notice
shall designate the issue(s) to be arbitrated, the specific provisions of this
Agreement under which such issues arose and such Party's proposed resolution of
such issue(s). Representatives from IP and DYPM shall meet for the purpose of
jointly selecting an arbitrator within ten (10) days after the effective date of
such notice. If no arbitrator has been selected within twenty (20) days of the
date of such notice, then an arbitrator shall be selected in accordance with the
procedures of the American Arbitration Association. Whether selected by the
Parties or in accordance with the procedures of the American Arbitration
Association, the arbitrator shall have qualifications and experience in an
occupation, profession or discipline relevant to the subject matter of the
Dispute. Any such arbitration shall be conducted in accordance with the
commercial arbitration rules of the American Arbitration Association in effect
on the date of such notice other than as specifically modified herein. The
arbitrator shall be bound by the provisions of this Agreement, where applicable,
and shall have no authority to modify such provisions in any manner. The
29
arbitrator shall render a decision resolving the Dispute in a manner which is
equitable under the facts and circumstances and in light of the applicable
provisions of this Agreement, and which may include a monetary award to a Party
or a directive that a Party take certain actions or refrain from certain
actions, but shall have no authority to fashion any other type or form of
relief; provided, that nothing in this Section 14(b) shall preclude the
arbitrator from rendering a decision which adopts the resolution of an issue
proposed by one of the Parties. The decision of the arbitrator shall be final
and binding upon both Parties, and a Party may have any court having
jurisdiction over the Parties enter judgment in accordance with the arbitrator's
award.
(c) Obligations to Pay Charges and Perform Other Obligations
--------------------------------------------------------
Except as to such matters with respect to which a Party has elected the
remedy provided by Sections 13(e) or 7(g), if a Dispute should arise on any
matter which is not resolved as provided in Section 14(a), then, pending
resolution of the Dispute by arbitration pursuant to Section 14(b), DYPM shall
continue to operate the Primary Resources and otherwise perform its obligations
hereunder in a manner consistent with the applicable provisions of this
Agreement, and IP shall continue to pay all charges required and perform all
other obligations in accordance with the applicable provisions of this
Agreement.
15. Security Guarantee
------------------
(a) By DYPM in Favor of IP
----------------------
DYPM shall post a Security Guarantee with and in favor of IP in the
aggregate amount of $5,000,000 to ensure the timely performance of DYPM's
obligations to deliver Capacity and Energy to IP in accordance with the terms of
this Agreement, including any obligation of DYPM arising under this Agreement to
pay money to IP. Such Security Guarantee shall, at DYPM's option, consist of one
of the following: (i) an irrevocable letter of guaranty issued by DYPM's
Guarantor, in the form of Appendix 4, (ii) a Letter of Credit, or (iii) cash or
an irrevocable guaranty or bond issued by a bank, insurance company, other
financial institution or other Guarantor of acceptable creditworthiness to IP,
in each case in favor of IP; provided, that in the event of a Downgrade Event
with respect to DYPM's Guarantor, if any (or until such Guarantor shall be
Investment Grade), DYPM shall, within 15 days following the date of such
Downgrade Event, post the full amount of the Security Guarantee in accordance
with clauses (a)(ii) or (a)(iii) of this Section 15 and shall maintain the full
amount of the Security Guarantee in accordance with clauses (a)(ii) or (a)(iii)
of this Section 15 for the duration of such Downgrade Event.
(b) By IP in Favor of DYPM
----------------------
IP shall post a Security Guarantee with and in favor of DYPM in the
aggregate amount of $25,000,000 to ensure the timely performance of IP's
obligations to DYPM in accordance with the terms of this Agreement, including
any obligation of IP arising under this Agreement to pay money to DYPM. Such
Security Guarantee shall, at IP's option, consist of one of the following: (i)
an irrevocable letter of guaranty issued by IP's Guarantor, in the form of
Appendix 4, (ii) a Letter of Credit, or (iii) cash or an irrevocable guaranty or
bond issued by a bank, insurance company, other financial institution or other
Guarantor, of acceptable creditworthiness to DYPM, in each case in favor of
DYPM; provided, that in the event of a Downgrade Event with respect to DYPM's
Guarantor, if any, IP shall, within 15 days following the date of such Downgrade
Event, post the full amount of the Security Guarantee solely in accordance with
option (ii) or (iii) and shall maintain the full amount of the Security
Guarantee solely in accordance with option (ii) or (iii) for the duration of
such Downgrade Event.
30
(c) Costs of Security Guarantee
---------------------------
Costs of a Security Guarantee shall be borne by the applicant for such
Security Guarantee.
16. Sale, Assignment, Mortgage or Pledge
------------------------------------
(a) Sale or Assignment or Rights and Obligations
--------------------------------------------
Neither Party may assign its rights or obligations under this Agreement
to a third party without the express written consent of the other Party, which
may not be unreasonably withheld.
(b) Consent to Mortgage or Pledge
-----------------------------
Notwithstanding any limitations on sale, lease, transfer or assignment
imposed by Section 16(a), IP hereby consents to the mortgage, pledge or
refinancing of any Primary Resource or Primary Resources, or of this Agreement,
by DYPM or DMG including the creation of a security interest in any Primary
Resource or Primary Resources or in this Agreement in, favor of any Lenders. IP
further agrees to execute documentation to evidence such consent; provided that
IP shall have no obligation to waive any of its rights under this Agreement. IP
further acknowledges that any such mortgage, pledge, refinancing or creation of
security interest may require the recognition of certain rights of Lenders in
the underlying documents, including:
(i) that this Agreement shall not be amended or terminated
(except for termination permitted pursuant to the terms of this
Agreement) without the consent of the Lenders;
(ii) that, without extending any cure period set forth in this
Agreement, Lenders shall be given notice of, and the same opportunity
to cure, any breach or default of this Agreement by DYPM;
(iii) that, if a Lender forecloses, takes a deed in lieu thereof
or otherwise exercises its remedies pursuant to any security documents,
then IP shall, at such Lender's request, continue to perform all of its
obligations hereunder, and Lender or its nominee may perform in the
place of DYPM, and may assign this Agreement to another party in place
of DYPM (provided either (A) such proposed assignee is creditworthy (or
posts a Security Guarantee as contemplated hereunder) and possesses or
acquires through an operator experience and skill in the operation of
electric generation plants similar in nature to the Primary Resources,
or (B) IP consents to the assignment to such proposed assignee, which
consent shall not be unreasonably withheld, it being understood that IP
may, in deciding whether to grant such consent, take into account the
creditworthiness and the electric generation plant experience and skill
of the proposed assignee or its Guarantor), and enforce all of DYPM's
rights and obligations under this Agreement;
(iv) that neither Lender(s) nor its nominee shall have liability
under this Agreement except to the extent any such Lender or its
nominee elects to perform DYPM's obligations as contemplated by
paragraph (iii) above;
(v) that IP shall accept performance in accordance with this
Agreement by Lender(s) or its (their) nominees;
(vi) that IP shall make all payments to an account designated by
Lender(s); and
31
(vii) that IP shall make such representations and warranties to
Lender(s) as Lender(s) may reasonably request with regard to: (A) IP's
corporate existence, (B) IP's corporate authority to execute, deliver
and perform this Agreement, (C) the binding nature of this Agreement on
IP, (D) receipt of regulatory approvals by IP with respect to its
performance under this Agreement, and (E) whether any defaults by DYPM
are known by IP to then exist under this Agreement.
17. Governing Law
-------------
This Agreement shall be deemed to be an Illinois contract and shall be
construed in accordance with and governed by the laws of the State of Illinois
without regard to its conflict of laws provisions.
18. Notices
-------
Unless otherwise provided in this Agreement, any notice, consent or
other communication required to be made under this Agreement shall be in writing
and shall be delivered to the address set forth below or such other address as
the receiving Party may from time to time designate by written notice:
If to IP, to:
Illinois Power Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
If to DYPM, to:
Dynegy Power Marketing, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President
All notices shall be effective when received.
19. Confidentiality
---------------
Each Party agrees that it will treat in confidence this Agreement and
all documents, materials and other information which it shall have obtained
regarding the other Party during the course of the negotiations leading to, and
its performance of, this Agreement (whether obtained before or after the
Effective Date), each Party shall return to the other Party all copies of any
nonpublic documents and materials which may have been furnished in connection
herewith. This Agreement and such documents, materials and information shall not
be communicated to any third party (other than a Party's counsel, accountants,
financial advisors, corporate parents, affiliates, officers, directors or
employees thereof, or in connection with the sale or assignment or financing or
refinancing of such Party or its affiliates or a Primary Resource or Primary
Resources or this Agreement if DYPM or IP (as the case may be) has given prior
notice to the other Party and entered into a confidentiality agreement
satisfactory to the other Party with the proposed recipient of the information).
The obligation of each Party to treat such documents, materials and other
information in confidence shall not apply to any information which: (i) is or
becomes available to such Party from a source other than the other Party, (ii)
is or becomes available to the public other than as a result of disclosure by
such Party or its agents, (iii) is required to be disclosed under applicable law
32
or judicial process, but only to the extent it must be disclosed, or (iv) such
Party reasonably deems necessary to disclose to obtain any of the consents or
approvals contemplated hereby.
20. Miscellaneous Provisions
------------------------
(a) Non-Waiver
----------
The failure of either Party to insist in any one or more instances upon
strict performance of any provisions of this Agreement, or to take advantage of
any of its rights hereunder, shall not be construed as a waiver of any such
provisions or the relinquishment of any such right or any other right hereunder,
which shall remain in full force and effect.
(b) Third Party Beneficiaries
-------------------------
This Agreement is intended solely for the benefit of the Parties
hereto. Nothing in this Agreement shall be construed to create any duty to, or
standard or care with reference to, or any liability to, any person or entity
not a Party to this Agreement.
(c) No Association, Partnership or Joint Venture
--------------------------------------------
This Agreement shall not be interpreted or construed to create an
association, joint venture or partnership between the Parties or to impose any
partnership obligation or liability upon either Party. DYPM is an independent
contractor and neither Party shall have any right, power or authority to enter
into any agreement or undertaking for, or to act on behalf of, or to act as or
be an agent or representative of, or otherwise bind, the other Party, unless,
and only to the extent that, such right, power and authority is expressly
provided for in this Agreement.
(d) Survival of Obligations
-----------------------
Cancellation, expiration or earlier termination of this Agreement shall
not relieve the Parties of obligations that by their nature should survive such
cancellation, expiration or termination, including exclusion of warranties and
remedies, exclusions of consequential damages, limitations on liability, audits,
promises of indemnity, and confidentiality.
(e) Successors and Assignees
------------------------
This Agreement shall inure to the benefit of and be binding upon the
successors and permitted assignees of the Parties.
21. Amendments
----------
No amendments or changes to this Agreement shall be binding unless made
in writing and duly executed by both Parties.
22. Entire Agreement
----------------
This Agreement supersedes all previous representations, understandings,
negotiations and agreements either written or oral between the Parties hereto or
their representatives with respect to the subject matter hereof and constitutes
the entire agreement of the Parties with respect to the subject matter hereof.
33
23. FERC Standard of Review
-----------------------
Absent the agreement of the Parties to the proposed change, the
standard of review for changes to this Agreement specifying the rate(s) or other
material economic terms and conditions agreed to by the Parties herein, whether
proposed by a Party, a non-party or FERC acting sua sponte, shall be the "public
interest" standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas
Service Corp., ▇▇▇ ▇.▇. ▇▇▇ (1956), and Federal Power Commission v. Sierra
Pacific Power Co., 350 U.S. 348 (1956) (the "Mobile-Sierra" doctrine).
24. Severability
------------
The Parties agree that in the event that any portion of this Agreement
is determined to be invalid, illegal or unenforceable for any reason, the
remaining portions of this Agreement shall be unaffected and unimpaired thereby,
and shall remain in full force and effect, to the fullest extent permitted by
applicable law, and the Parties shall negotiate in good faith to amend this
Agreement to affect the intent of the Parties in entering into this Agreement.
IN WITNESS WHEREOF the Parties hereto, by their duly authorized representatives,
have caused this Agreement to be executed on the date first written above.
ILLINOIS POWER COMPANY DYNEGY POWER MARKETING, INC.
By: By:
Name: Name:
Title: Title:
34
LIST OF APPENDICES
Appendix 1: Monthly Tier 1 Capacities
Appendix 2: Maximum Energy Quantities
Appendix 3: Design Limits of Primary Resources
Appendix 4: Form of Guaranty
Appendix 5: Sample Calculation of Charges
Appendix 6: Unmetered Energy Amounts
APPENDIX 1
MONTHLY TIER 1 CAPACITIES
2005 and 2006 Monthly Tier 1 Capacity Volumes (in megawatts)
------------------------------------------------------------
-----------------------
January 2,300
-----------------------
February 2,300
-----------------------
March 2,300
-----------------------
April 2,300
------------------------
May 2,800
-----------------------
June 2,800
-----------------------
July 2,800
-----------------------
August 2,800
--------------- --------
September 2,800
-----------------------
October 2,300
-----------------------
November 2,300
-----------------------
December 2,300
-----------------------
APPENDIX 2
MAXIMUM ENERGY QUANTITIES
2005 and 2006 Maximum Quarterly Energy Quantities (in MWh per Quarter)
----------------------------------------------------------------------
----------------
Q1 2,600,000
----------------
Q2 2,600,000
----------------
Q3 3,450,000
----------------
Q4 2,850,000
----------------
Total = 11,500,000 megawatt hours per year
2005 and 2006 Maximum Hourly Energy Quantities (in MWh per hour)
----------------------------------------------------------------
---------------------
January 2,300
---------------------
February 2,300
---------------------
March 2,300
---------------------
April 2,300
----------------------
May 2,800
---------------------
June 2,800
---------------------
July 2,800
---------------------
August 2,800
--------------- -----
September 2,800
---------------------
October 2,300
---------------------
November 2,300
---------------------
December 2,300
---------------------
APPENDIX 3
DESIGN LIMITS OF PRIMARY RESOURCES
Ramp Rates
SCR --------------------------------------------
Emergency Operation Zero to Normal Emergency
Operation Operation Normal Normal Minimum Minimum
Maximum Minimum Minimum Minimum To Full Load To Full Load
Load (MW) Load (MW) Load (MW) (MW/min) (MW/min) (MW/min)
▇▇▇▇▇▇▇ 1 588 280 450 1 4 5
▇▇▇▇▇▇▇ 2 588 250 450 1 4 5
▇▇▇▇▇▇▇ 3 602 150 150 2 5 5
--------- --------- -------- -------- -------- ---------
▇▇▇▇▇▇▇ Station 1778 680 1050 4 13 15
Havana 1-5 242 0 35 5 5 5
Havana 6 448 0 73 3 4 10
--- - -------- -------- -------- ---------
Havana Station 690 0 108 8 9 15
Hennepin 1 76 0 22 1 1 1
Hennepin 2 225 64 64 2 2 2
--------- --------- -------- -------- -------- ---------
Hennepin Station 301 64 86 3 3 3
▇▇▇▇▇▇▇▇▇▇ 1 77 0 22 0.5 1 1.5
▇▇▇▇▇▇▇▇▇▇ 2 105 0 26 0.5 1 1.5
--------- --------- -------- -------- -------- ---------
▇▇▇▇▇▇▇▇▇▇ Station 182 0 48 1 2 3
Wood River 1-3 133 0 40 3 3 3
Wood River 4 99 0 30 1 1 2
Wood River 5 362 115 115 2.5 2 3
--------- --------- -------- -------- -------- ---------
Wood River Station 594 115 185 6.5 6 8
-------- -------- ------- ------- ------ --------
Fossil Steam Plants Total 3545 859 1477 22.5 33 44
▇▇▇▇▇▇▇ 1-4 63 0 N/A N/A N/A N/A
▇▇▇▇▇▇▇▇▇ 1-4 89 0 N/A N/A N/A N/A
▇▇▇▇▇▇ 1-4 188 0 N/A N/A N/A N/A
▇▇▇▇▇▇▇▇▇▇ ▇▇ 12 0 N/A N/A N/A N/A
Combustion Turbines Total 352
System Total 897
(TABLE CONTINUED)
Minimum
Start-up Time to Down
Normal Minimum Times Minimum
Hot Cold Cycling For Econ. Operating
(hours) (hours) Unit Shut-down(hours) Time (hours)
▇▇▇▇▇▇▇ 1 14 26
▇▇▇▇▇▇▇ 2 14 26
▇▇▇▇▇▇▇ 3 7 12
▇▇▇▇▇▇▇ Station
Havana 1-5
Havana 6 1.5 10 X 6 6
Havana Station
Hennepin 1 2 8 X 6 6
Hennepin 2 6 10
Hennepin Station
▇▇▇▇▇▇▇▇▇▇ 1 3 6 X 6 6
▇▇▇▇▇▇▇▇▇▇ 2 3 6 X 6 6
▇▇▇▇▇▇▇▇▇▇ Station
Wood River 1-3
Wood River 4 4 7 X 6 6
Wood River 5 5 14
Wood River Station
Fossil Steam Plants Total
▇▇▇▇▇▇▇ 1-4 10 Min. 10 Min. X 1
▇▇▇▇▇▇▇▇▇ 1-4 15 Min. 15 Min. X 1.5
▇▇▇▇▇▇ 1-4 10 Min. 10 Min. X 1
▇▇▇▇▇▇▇▇▇▇ ▇▇
Combustion Turbines Total
System Total
Notes and additional limitations:
--------------------------------
Ramp rates may be further limited at times by stack opacity.
Wood River 5 minimum load requires reduction of steam pressure.
Havana 6 emergency ramp rate requires a minimum of 2 coal ▇▇▇▇▇ in operation.
No more than one start up per day on cycled steam units.
▇▇▇▇▇▇▇ 1 and 2 and Havana minimum loads may change after gaining experience
with SCR operation.
APPENDIX 4
FORM OF GUARANTY
This Guaranty Agreement (the "Guaranty") is made on this ____ day of
___________, 2004 by _____________________, a ____________corporation
("Guarantor") in favor of _________________________ ("Beneficiary"), a
___________ corporation in consideration of the Beneficiary extending credit to
____________________ ("Debtor").
WHEREAS, Beneficiary and Debtor have entered into or are anticipating
entering into a Power Purchase Agreement (the "Agreement");
WHEREAS, Debtor is a wholly owned subsidiary of the Guarantor.
WHEREAS, as a condition of such Agreement, Beneficiary is requiring
Guarantor to enter into this Guaranty; and
WHEREAS, as part of the Agreement, the Beneficiary will be extending
credit to the Debtor, and Guarantor wishes to provide this Guaranty to the
Beneficiary as part of Debtor's consideration for such Transactions and to
induce the Beneficiary to extend credit to the Debtor.
NOW THEREFORE, in order to satisfy the aforementioned condition of the
Agreement, and further, in order for Guarantor to obtain benefits resulting from
Beneficiaries performance pursuant to the Agreement, Guarantor desires to enter
into this Guaranty and hereby agrees as follows:
1. Guaranty. Guarantor hereby unconditionally and irrevocably guarantees to the
Beneficiary, subject to the terms and conditions contained herein, the prompt
payment when due of all sums hereafter owed by Debtor to Beneficiary under the
terms of the Agreement (such obligations are herein referred to as the
"Agreement Obligations"); provided, however, that the Guarantor's maximum
financial obligation under this instrument is limited to $_________________. The
Agreement Obligations are deemed to include, without limitation, interest and
any other charges due and payable, such as late fees, service charges, cover
costs or liquidated damages
2. Amendments. No amendment of this Guaranty shall be effective unless signed
by Guarantor and Beneficiary. No waiver by Beneficiary of any provision of this
Guaranty nor consent to any departure by Guarantor therefrom shall in any event
be effective unless the same shall be in writing and signed by Beneficiary, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
3. Addresses for Notices. All notices and other communications provided for
hereunder shall, unless otherwise specifically provided elsewhere herein, (i) be
in writing and shall be addressed to the parties at their respective addresses
set forth below or at such other addresses as shall be designated in a written
notice to the other party, and (ii) when mailed, be effective five (5) business
days after being deposited in the U.S. mail, registered or certified, return
receipt requested, postage prepaid, or, in the case of personal delivery, when
delivered at the following addresses:
if to the Guarantor: [insert notice address]
if to Debtor: [insert notice address]
if to Beneficiary: [insert notice address]
4. Non-waiver of Claim or Defense Under the Agreement. Nothing contained herein
shall constitute a waiver, discharge or release of any claim or defense, whether
it or they be at law, equity or otherwise, that the Guarantor or Debtor has, or
at any other time hereafter, will have against Beneficiary with respect to, or
relating in any way, to (i) Beneficiary's performance under the Agreement or
(ii) Guarantor's or Debtor's obligation to pay the Agreement Obligations. In the
event and for the duration that Guarantor assumes the Agreement Obligations,
Guarantor shall be entitled to and enjoy all the rights, defenses and benefits
to which Debtor is entitled or may become entitled under the Agreement, other
than defenses expressly waived by the Debtor in the Agreement or otherwise
waived in this Guaranty. Further, this Guaranty shall be absolute and
unconditional irrespective of any lack of validity or enforceability of or
defect or deficiency in the Agreement or any other documents executed in
connection with the Agreement.
5. Limitations. Notwithstanding any other provision of this Guaranty, Guarantor
shall not be liable for consequential, incidental, exemplary, equitable, loss of
profits, punitive, or tort damages. This Guaranty shall constitute a guarantee
of payment and not of collection. Guarantor's obligations and liability under
this Guaranty shall be limited to payment obligations, and Guarantor shall have
no obligation to buy, sell, deliver, supply or transport gas, electricity or any
other commodity under the Agreement.
6. Payment. Guarantor agrees to be held responsible for the Agreement
Obligations, and agrees to pay the Agreement Obligations upon the failure by the
Debtor to make any payments that are due and payable at any time.
7. Subrogation. Guarantor shall be subrogated to all rights of Beneficiary
against Debtor upon payment or satisfaction of all Agreement Obligations owing
to Beneficiary.
8. Effect of Certain Events. Guarantor agrees that Guarantor's liability
hereunder will not be released, reduced or impaired by the occurrence of any one
or more of the following events:
a. the insolvency, bankruptcy, reorganization, release, receivership
or discharge of Debtor; or
b. the renewal, consolidation, extension, modification or
amendment from time to time of the Agreement.
9. Waiver. Guarantor hereby waives notice of acceptance of this Guaranty,
creation or change of the amount of the Agreement Obligations, dishonor,
nonpayment, protest and presentment.
10. Term. This Guaranty shall remain in full force and effect until
_____________, or the Guarantor may, by providing ten (10) days prior written
notice to Beneficiary, earlier terminate this Guaranty; provided that this
Guaranty shall remain in full force and effect after either such expiration or
termination with respect to all Agreement Obligations incurred prior thereto,
until such Agreement Obligations have been fully satisfied, performed and
discharged.
11. Successors and Assigns. This Guaranty shall inure to the benefit of
Beneficiary, its successors assigns and creditors. The Beneficiary shall have
the right to assign this Guaranty to any person or entity without the prior
consent of the Guarantor; provided, however, that no such assignment shall be
binding upon the Guarantor until it receives written notice of such assignment
from the Beneficiary. The Guarantor may assign its obligations under this
Guaranty only with the prior written consent of Beneficiary, which shall not be
unreasonably withheld. Any reasonable uncertainty on the part of the Beneficiary
concerning the ability on the part of any potential assignee of the Guarantor to
2
carry out the Guarantor's obligations hereunder shall be considered a reasonable
basis for withholding consent, unless and until the potential assignee can
reasonably satisfy the Beneficiary that the assignee is capable of performing
the obligations of the Guarantor hereunder.
12. Governing Law and Jurisdiction. THE VALIDITY, CONSTRUCTION, INTERPRETATION
AND EFFECT OF THIS GUARANTY SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK UNLESS OTHERWISE PROVIDED HEREIN.
13. Headings. The headings used herein are for purposes of convenience only and
shall not be used in construing the provisions hereof.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by its duly authorized officer effective as of this ____
day of ______________, 2004.
GUARANTOR
[insert Guarantor's legal name]
By: _____________________________
Title: ____________________________
3
APPENDIX 5
SAMPLE CALCULATION OF CHARGES
(See attached.)
SEMI-MONTHLY BILLING STATEMENT (SAMPLE 1)
Date of Statement 15-Jul-05
Covers Schedules for July 1 through July 15
(A) one-half of the monthly
charge for Tier 1 Capacity $5,600,000.00
one-half of the monthly
charge for Negotiated Tier 2 Capacity $200,000.00
(B) total MWh of Tier 1 Energy
in the Daily Energy Schedules 517,150 MWh $15,514,500.00
(C) price for any Negotiated Tier 2 Energy
total MWh for any Tier 2 Energy 0 MWh $ -
Total Amount Due from IP to DYPM
as a Semi-Monthly Payment for the
first through fifteenth days of the month $21,314,500.00
SEMI-MONTHLY BILLING STATEMENT (SAMPLE 2)-
Date of Statement 31-Jul-05
Covers Schedules for July 16 through July 31
(A) one-half of the monthly-
charge for Tier 1 Capacity $5,600,000.00
one-half of the monthly
charge for Negotiated Tier 2 Capacity $200,000.00
(B) total MWh of Tier 1 Energy
in the Daily Energy Schedules 505,700 MWh $15,171,000.00
(C) price for any Negotiated Tier 2 Energy
total MWh for any Tier 2 Energy 0 MWh $ -
Total Amount Due from IP to DYPM
as a Semi-Monthly Payment for the
sixteenth through last days of the month $20,971,000.00
TRUE-UP BILLING STATEMENT (SAMPLE)
Date of Statement 15-Aug-05
Covers Schedules for July 1 through July 31
(i) Tier 1 Capacity 2800 MW
Negotiated Tier 2 Capacity 300 MW
(ii) Tier 1 Energy 992,400 MWh
Negotiated Tier 2 Energy 0 MWh
Supplemental Energy 31,959 MWh
Overscheduled Energy 7,025 MWh
Underscheduled Energy 17,559 MWh
(iii) Scheduled Energy 1,022,850 MWh
(iv) Reliability Dispatch Energy
Incremental Energy 0 MWh
Decremental Energy 0 MWh
(v) Tier 1 Capacity Price 4.00 $/kW-month
Negotiated Tier 2 Capacity Price 1.33 $/kW-month
Tier 1 Energy Price 30.00 $/MWh
Negotiated Tier 2 Energy Price - $/MWh
Supplemental Energy Price 30.00 $/MWh
(vi) Daily On-Peak Index see data on hourly sheets
PJM Hourly On-Peak Price see data on hourly sheets
Shaped Daily On-Peak Index see data on hourly sheets
(vii) LMP does not exist at this point
(viii) Charges for Tier 1 Capacity $11,200,000.00
Charges for Tier 1 Energy $29,771,970.00
(ix) Charges for Negotiated Tier 2 Capacity $ -
Charges for Negotiated Tier 2 Energy $ -
(x) Charges for Supplemental Energy $958,769.70
(xi) Charges or surcharges for Underscheduled Energy $672,551.80
(xii) Surcharges relating to Overscheduled Energy $106,349.25
(xiii) Reliability Compensation $ -
(xiv) Charges or credits for Congestion Costs $ -
TRUE-UP BILLING STATEMENT (SAMPLE)
Date of Statement 15-Aug-05
Covers Schedules for July 1 through July 31
Credits for replacement Capacity or Energy obtained
(xv) by IP $ -
Congestion Costs and Transmission Losses from
(xvi) Alternative Resource deliveries $ -
(xvii) FTR FFR benefits from MISO to IP $ -
(xviii) FTR FFR obligations on IP from MISO $ -
(xix) Administrative charges on IP from MISO $ -
(xx) Total amount of Semi-Monthly Payments made $42,285,500.00
(xxi) Net payment/(credit) due from IP/DYPM $424,140.75
APPENDIX 6
UNMETERED ENERGY AMOUNTS
▇▇▇▇▇▇▇
IP ASSET USAGE COMPONENT A B C = D = E F G =
-------- --------------- (A x B) C/1000 D x E x F
----------------------------------------------------------------------------------------------------------------------------
ESTIMATED
ACTUAL ACTUAL TOTAL RUN HOURS 3-PHASE KWH USED
# VOLTS AMPS ▇▇▇▇▇ ▇▇ PER YEAR FACTOR PER YEAR
- ----- ---- ----- -- -------- ------ --------
Tie Transformer #4: Fans 40 466 0.5 9,320 9.3 2880 1.73 46,436
Oil Pumps 4 466 3.5 6,524 6.5 2880 1.73 32,505
345 KV Breakers: Heaters 2 202 1.2 485 0.5 8760 1.73 7,347
(4556, 4560)
Compressor Motor 2 202 7.2 2,909 2.9 12 1.73 60
345 KV Breakers:
(4564, 4592, 4576
4572, 4568, 4588
4584, 4580) Heaters @ 150W 8 1,200 1.2 1286 1.73 2,670
Heaters @ 350W 8 2,800 2.8 1286 1.73 6,229
Heaters @ 180W 16 2,880 2.9 1286 1.73 6,407
Heaters @ 500W 24 12,000 12.0 1286 1.73 26,697
Compressor Motor 8 197 37.6 59,258 59.3 12 1.73 1,230
138 KV Breakers: Heaters @ 160W 6 960 1.0 1286 1,235
(B400, 1632, 1526)
Compressor Motor 3 197 9.5 5,615 5.6 12 67
Switchyard Building: Station Batteries Charge 1 197 7 1,379 1.4 8760 1.73 20,898
Air Conditioners 2 197 14.4 5,674 5.7 3285 1.73 32,243
Heaters @ 5000W 3 15,000 15.0 3285 1.73 85,246
Lighting @ 80W 18 1,440 1.4 200 1.73 498
Comm/Super Equipment 1 2.0 8760 1.73 30,310
Switchyard Lighting: Lights @ 1000W 72 72,000 72.0 200 14,400
218 314,480
HAVANA
IP ASSET USAGE COMPONENT A B C = D = E F = D x E
-------- --------------- (A x B) C/1000
---------------------------------------------------------------------------------------------------------------
ESTIMATED
ACTUAL ACTUAL TOTAL RUN HOURS KWH USED
# VOLTS AMPS ▇▇▇▇▇ ▇▇ PER YEAR PER YEAR
- ----- ---- ----- -- -------- --------
138 KV Breakers:
(1302, 1422, 1406,
1352, 1362, 1356) Heater 1 6 236 2 2,832 2.8 1286 3,642
Heater 2 6 236 2 2,832 2.8 1286 3,642
Heater 3 6 236 2 2,832 2.8 8760 24,808
Compressor Motor 6 236 7.3 10,337 10.3 12 124
24 32,216
HENNEPIN
IP ASSET USAGE COMPONENT A B C = D = E F G =
-------- --------------- (A x B) C/1000 D x E x F
------------------------------------------------------------------------------------------------------------------------------------
ESTIMATED
NAMEPLATE NAMEPLATE TOTAL RUN HOURS 3 - PHASE KWH USED
# VOLTS AMPS ▇▇▇▇▇ ▇▇ PER YEAR FACTOR PER YEAR
- --------- --------- ----- ---- --------- --------- --------
Tie Transformer #1 Fans 28 196 1.2 6,586 6.6 2535 1.73 28,881
Oil Pumps 4 196 13.6 10,662 10.7 2535 1.73 46,760
Heater 1 112 1.8 202 0.2 8760 1,766
Tie Transformer #2 Fans 28 196 1.2 6,586 6.6 2535 1.73 28,881
Oil Pumps 4 196 13.6 10,662 10.7 2535 1.73 46,760
Heater 1 112 1.8 202 0.2 8760 1,766
138 KV Breakers:
(1302, 1552, 1512,
1516, 1556, 6101) Heaters 12 225 1.6 4,320 4.3 8760 37,843
Compressor Motor 6 225 4.6 6,210 6.2 12 75
34 KV Breakers:(3401, Heaters 4 240 1.3 1,248 1.2 8760 10,932
T380, T340, 3422)
Heaters 4 240 1.3 1,248 1.2 1286 1,605
Compressor Motor 4 240 3.7 3,552 3.6 12 43
96 205,314
▇▇▇▇▇▇
IP ASSET USAGE COMPONENT # A B C = D = E F = D x E
-------- --------------- --- (A x B) C/1000
--------- --------- ------- ------ --------- ---------
ESTIMATED
NAMEPLATE NAMEPLATE TOTAL RUN HOURS KWH USED
VOLTS AMPS ▇▇▇▇▇ ▇▇ PER YEAR PER YEAR
--------- --------- ------- ------- --------- ---------
138 KV Breakers: (1324, Heaters 4 248 2.5 2,480 2.5 8760 21,725
1328, 1320, 1316) Tank Heaters 24 120 10.42 30,010 30.0 720 21,607
Compressor Motor 4 248 10 9,920 9.9 12 119
=== =========
32 43,451
=== =========
WOOD RIVER
IP ASSET USAGE COMPONENT A B C = D = E F G =
-------- --------------- (A x B) C/1000 D x E x F
----------------------------------------------------------------------------------------------------------------------------
ESTIMATED
ACTUAL ACTUAL TOTAL RUN HOURS 3-PHASE KWH USED
# VOLTS AMPS ▇▇▇▇▇ ▇▇ PER YEAR FACTOR PER YEAR
--- ----- ------ ----- -- -------- ------- --------
Tie Transformer #1 Cooler 1 1 240 16.5 3,960 4.0 8760 1.73 60,013
Cooler 2 1 240 15.5 3,720 3.7 438 1.73 2,819
Strip Heaters 2 120 1.9 456 0.5 8760 3,995
Tie Transformer #2 Cooler 1 1 240 45 10,800 10.8 8760 1.73 163,672
Cooler 2 1 240 45 10,800 10.8 438 1.73 8,184
Strip Heaters 2 240 2 960 1.0 8760 8,410
138 KV Breakers:
(1302, 1306, 1310,
1436, 1452, 1456,
1502, 1506) Heater 1 8 240 3.3 6,336 6.3 1286 8,148
Heater 2 8 240 6.3 12,096 12.1 1286 15,555
Heater 3 8 240 1.2 2,304 2.3 8760 20,183
34.5 KV Breakers:
(710, 720, 730,
3406, 3410, 3474,
3475) Compressor Motor 7 240 7.4 12,432 12.4 12 149
Compressor Heater 7 240 0.7 1,176 1.2 1286 1,512
Heater 1 7 240 0.7 1,176 1.2 8760 10,302
Heater 2 7 240 0.7 1,176 1.2 1286 1,512
Heater 3 7 240 0.7 1,176 1.2 1286 1,512
Interrupter Heater 7 240 14 23,520 23.5 500 11,760
34.5 KV Breaker:
(3402) Hydraulic Pump 1 240 6.3 1,512 1.5 12 18
Heater 1 1 240 0.7 168 0.2 8760 1,472
Heater 2 1 240 2 480 0.5 1286 617
Heater 3 1 240 1.5 360 0.4 1286 463
Pole Lights Pole Lights 60 120 8.333 59,998 60.0 730 43,798
=== =======
138 364,094
=== =======
VERMILION
IP ASSET USAGE COMPONENT A B C = D = E F G =
-------- --------------- (A x B) C/1000 D x E x F
----------------------------------------------------------------------------------------------------------------------------
ESTIMATED
ACTUAL ACTUAL TOTAL RUN HOURS 3-PHASE KWH USED
# VOLTS AMPS ▇▇▇▇▇ ▇▇ PER YEAR FACTOR PER YEAR
--- ----- ------ ----- -- -------- ------- --------
Tie Transformer #1 Fans 72 217 1.5 23,436 23.4 2880 1.73 116,768
Tie Transformer #2 Fan Banks 3 425 12 15,300 15.3 8760 1.73 231,868
Oil Pumps 3 425 7 8,925 8.9 8760 1.73 135,257
138 KV Breakers:
(1306, 1330, 1326,
1332, 1314, 1318) Heater Set 1 217 8 1,736 1.7 8760 15,207
Compressor Motor 1 217 4 868 0.9 12 10
Heaters 4 217 2 1,736 1.7 8760 15,207
Compressor Motor 1 217 4 868 0.9 12 10
Heaters 4 217 2 1,736 1.7 8760 15,207
Hydraulic Winding Motor 2 217 8 3,472 3.5 1 3
Heaters 6 217 3 3,906 3.9 8760 34,217
Heaters 12 217 1 2,604 2.6 8760 22,811
69 KV Breakers:
(620, 612, 624, 628
608, 604, 632) Hydraulic Winding Motor 4 217 8 6,944 6.9 1 7
Heaters 6 217 1 1,302 1.3 8760 11,406
Compressor Motor 2 217 7 3,038 3.0 12 36
Heaters 3 217 1.3 846 0.8 8760 7,414
Compressor Motor 1 217 3 651 0.7 12 8
=== =======
125 605,437
=== =======
[EXHIBIT E TO SPA]
EASEMENT AND FACILITIES AGREEMENT TERMS
---------------------------------------
The Easement and Facilities Agreement between all necessary parties will,
together with such other terms and conditions mutually acceptable to the
parties, contain provisions addressing the following matters:
o Granting (or amending) easements to provide IPC sufficient rights in
respect of the Generation Assets to access, locate, operate, repair,
maintain, remove, replace and alter certain existing facilities and
equipment of IPC used in connection with IPC's Business (the
"Facilities").
o Granting (or amending) easements for the use of common facilities
(ground grid, conduits, retention ponds, spill prevention systems,
parking).
o Identification of the party (or parties) responsible for operating,
maintaining, repairing and altering the common facilities for the
benefit of both parties.
o Procedure for allocating costs between the parties (and billing and
payment terms) of operating and maintaining common facilities.
o Dispute resolution procedures; Injunctive relief.
o General covenant to cooperate with each other.
o Covenant of further assurances.
o Allocating risk of environmental liability arising out of the use of
the Generation Assets and the easement property, including
indemnification, release and insurance therefore.
[EXHIBIT F TO SPA]
BLACK START SERVICE AGREEMENT
BY AND BETWEEN
ILLINOIS POWER COMPANY AND
DYNEGY MIDWEST GENERATION, INC.
DATED AS OF _______________________, 2004
BLACK START SERVICE AGREEMENT
BY AND BETWEEN
ILLINOIS POWER COMPANY AND
DYNEGY MIDWEST GENERATION, INC.
This Black Start Service Agreement is entered into as of the day of , 2004, by
and between Illinois Power Company, an Illinois corporation ("Illinois Power"),
and Dynegy Midwest Generation, Inc., an Illinois corporation ("DMG"), for the
purpose of DMG providing Black Start Service to Illinois Power for purposes of
system re-energization and restoration following a system-wide blackout on the
Illinois Power T&D System.
W I T N E S S E T H:
WHEREAS, Illinois Power is the owner and operator of the Illinois Power T&D
System;
WHEREAS, DMG is the owner and operator of certain fossil-fueled generating units
that are listed on Schedule A which have the capability to be started without
taking electric energy from the Illinois Power T&D System;
WHEREAS, such DMG generating units are interconnected to the Illinois Power T&D
System;
WHEREAS, Illinois Power desires to have DMG provide Black Start Service for
purposes of the re-energization and restoration of the Illinois Power T&D System
following a system-wide blackout on the Illinois Power T&D System and DMG
desires to provide such Black Start Service;
WHEREAS, Illinois Power and DMG have agreed to execute this Agreement in order
to establish the terms and conditions DMG's provision of Black Start Service to
Illinois Power.
NOW, THEREFORE, in consideration of the mutual representations, covenants, and
agreements hereinafter set forth, and intending to be legally bound hereby,
Illinois Power and DMG covenant and agree as follows:
ARTICLE 1
DEFINITIONS AND USAGES
----------------------
1.1 Definitions. Whenever used with initial capitalization in this
Agreement, the following terms shall have the following meanings:
"Agreement" shall mean this Black Start Service Agreement between
Illinois Power and DMG, including all Schedules attached hereto, and
any amendments hereto or thereto.
"ADR" shall mean Alternative Dispute Resolution.
"Applicable Laws and Regulations" shall mean all duly promulgated
applicable federal, state and local laws, regulations, rules,
ordinances, codes, decrees, judgments, directives, or judicial or
administrative orders, permits and other duly authorized actions of
any Governmental Authority.
"Black Start Capable" shall mean an electric generating unit that is
capable of being started without electrical energy being supplied from
the Illinois Power Transmission System or the Illinois Power
Distribution System.
1
"Black Start Service" shall mean the services provided by DMG to
Illinois Power under the terms of this Agreement to deliver electric
energy to Illinois Power at the Interconnection Point(s) following a
Blackout.
"Blackout" shall mean a total or partial loss or interruption of
electric power on the Illinois Power T&D System that requires the
delivery of electric energy from one or more of the Units to restart
Designated Generation Resources to re-energize and restore the
Illinois Power T&D System to normal operating condition.
"Breaching Party" shall have the meaning assigned to such term in
Section 11.2 of this Agreement.
"Claim" shall have the meaning assigned to such term in Section 10.2.1
of this Agreement.
"Confidential Information" means any plan, specification, pattern,
procedure, design, device, list, concept, policy or compilation
relating to the present or planned business of a Party regardless of
whether such Confidential Information is conveyed orally,
electronically, in writing, through inspection, observed by either
Party while visiting the premises of the other Party, or otherwise
deduced by the other Party.
"Default" shall have the meaning assigned to such term in Section 11.2
of this Agreement.
"Designated Generation Resource" shall mean the coal-fired generating
unit listed on Schedule A as being the generating resource to be
started with electric energy supplied by the applicable Unit or Units.
"Designated Transmission Path" shall mean the direct transmission
circuit between the Interconnection Point for the applicable Unit(s)
and the Designated Generation Resource as listed on Schedule A.
"DMG" shall have the meaning assigned to such term in the first
paragraph hereof.
"Effective Date" shall mean the date on which this Agreement becomes
effective in accordance with Section 2.1.
"Emergency" shall mean a condition or situation: (i) that in the
reasonable judgment of the Party making the claim is imminently likely
to endanger life or property; or (ii) that, in the case of Illinois
Power, is imminently likely (as determined in a non-discriminatory
manner) to cause a material adverse effect on the security of, or
damage to the T&D System, the Illinois Power Interconnection
Facilities or the transmission systems of others to which the Illinois
Power T&D System is directly connected; or (iii) that, in the case of
Producer, is imminently likely (as determined in a non-discriminatory
manner) to cause a material adverse effect on the security of, or
damage to, the Facility or Facilities. Any condition or situation that
results from a lack of sufficient generating capacity to meet load
requirements or that results from economic conditions shall not
constitute an Emergency unless one of the conditions or situations
identified in this definition as constituting an Emergency also exists
independently.
"Facility" or "Facilities" shall mean the Units and the
generation-related assets used, owned and/or leased by DMG in
connection with the Units and shall include such generation-related
assets acquired by DMG after the Effective Date for use in connection
with the Units.
2
"FERC" shall mean the Federal Energy Regulatory Commission or any
successor to the authority thereof.
"Force Majeure" shall mean an event or occurrence or circumstance
beyond the reasonable control of and without the fault or negligence
of, and that could not have been avoided by reasonable foresight
and/or diligence by, the Party claiming Force Majeure, including, but
not limited to, acts of God, labor dispute (including strike), flood,
earthquake, storm, fire, lightning, epidemic, war, riot, civil
disturbance, sabotage, acts of public enemy, or explosion, which, in
any of the foregoing cases, by the exercise of due diligence,
including the taking of actions in accordance with Good Utility
Practice, such Party is unable to overcome, and which wholly or in
part prevents such Party from performing its obligations under this
Agreement. Mere economic hardship of a Party does not constitute Force
Majeure.
"Good Utility Practice" shall mean any of the practices, methods and
acts engaged in or approved by a significant portion of the electric
industry during the relevant time period, or any of the practices,
methods and acts which, in the exercise of reasonable judgment in
light of the facts known at the time the decision was made, could have
been expected to accomplish the desired result at a reasonable cost
consistent with good business practices, reliability, safety and
expedition. Good Utility Practice is not intended to be limited to the
optimum practice, method, or act to the exclusion of all others, but
rather to be acceptable practices, methods, or acts generally accepted
in the region. Good Utility Practice shall include, but not be limited
to, compliance with Applicable Laws and Regulations, Applicable
Standards, the National Electric Safety Code, and the National
Electrical Code, as they may be amended from time to time, including
the criteria, rules and standards of any successor organizations.
"Governmental Authority" shall mean any federal, state, local or other
governmental regulatory or administrative agency, court, commission,
department, board, or other governmental subdivision, legislature,
rulemaking board, tribunal, or other governmental authority having
jurisdiction over the Parties, their respective facilities, or the
respective services they provide.
"ICC" shall mean the Illinois Commerce Commission or any successor to
the authority thereof.
"Indemnified Party" shall have the meaning assigned to such term in
Section 10.2.1 of this Agreement.
"Indemnifying Party" shall have the meaning assigned to such term in
Section 10.2.1 of this Agreement.
"Illinois Power" shall have the meaning assigned to such term in the
first paragraph hereof.
"Illinois Power Distribution System" shall mean the facilities owned,
controlled, or operated by Illinois Power, either jointly or
individually, for the purposes of providing distribution services.
"Illinois Power Transmission System" shall mean the facilities owned,
controlled, or operated by Illinois Power, either jointly or
individually, for purposes of providing point-to-point or network
transmission service under the OATT or the tariffs of an RTO.
"Illinois Power T&D System" shall mean the Illinois Power Transmission
System and the Illinois Power Distribution System, collectively.
3
"Interconnection Points" are the points at which the DMG's ownership
of its Facilities ends and Illinois Power's ownership of the Illinois
Power T&D System begins, and where electric energy generated by the
Units is delivered to the Illinois Power T&D System, as indicated on
the one-line diagram attached as Schedule B and described in Schedule
C.
"MAIN" shall mean the Mid-America Interconnected Network, a regional
reliability governing body, or any successor to the authority thereof.
"NERC" shall mean North American Electric Reliability Council or any
successor to the authority thereof.
"Net Electric Output" shall mean the total output of electric energy
of each Unit identified in Schedule A, net of the auxiliary electric
load of the applicable Facility, including transformer and other
losses.
"Non-Breaching Party" shall have the meaning assigned to such term in
Section 11.2 of this Agreement.
"OATT" shall mean Illinois Power's Open Access Transmission Tariff, on
file with FERC, as it may be amended or superseded from time to time,
under which transmission service is provided by or for Illinois Power
over the Illinois Power T&D System, or any future transmission tariff
on file with FERC governing transmission service over the Illinois
Power T&D System, including, but not limited to, an RTO transmission
tariff.
"Parties" shall mean Illinois Power and DMG collectively.
"Party" shall mean Illinois Power and DMG individually.
"Permitted Recipient" shall have the meaning assigned to such term in
Section 14.3.
"Restoration Plan" shall have the meaning assigned to such term in
Section 3.5.
"RTO" shall mean the regional transmission organization, if any, that
assumes responsibility for operating the transmission systems of its
transmission-owning members, including Illinois Power.
"Schedule" shall mean any of the schedules, designated as Schedule A,
B, C, or D attached to this Agreement and which are incorporated
herein by reference.
"Transmission Providers" shall mean those entities that own, operate,
or control facilities used for the transmission of electric energy in
interstate commerce and are subject to the requirements of FERC Order
No. 888, as amended, either by operation of law or voluntary
submission to its requirements.
"Transmission Operator" shall mean the persons or entity designated by
Illinois Power who coordinate the interconnection of the Facilities
with the Illinois Power T&D System.
"Units" shall mean those Black Start Capable fossil-fueled generating
units listed on Schedule A.
1.2 Interpretation. The following terms and conditions shall apply in
any interpretation and construction of this Agreement.
4
1.2.1 Unless preempted by federal law, this Agreement, and the legal
relations between the Parties with respect to this Agreement, shall be
performed, interpreted and enforced in accordance with internal laws
of the State of Illinois without regard to rules concerning conflicts
of law that would direct the application of the laws of any other
jurisdiction.
1.2.2 This Agreement shall be deemed to be the separate black start
agreement referred to in Section 7.5 of the Interconnection Agreement
by and between the Parties dated November 30, 2000.
1.2.3 This Agreement sets forth the entire understanding and agreement of
the Parties as to the subject matter of this Agreement and merges and
supersedes all prior written and oral understandings, offers,
agreements, commitments, representations, writings, discussions or
other communications of every kind between the Parties pertaining to
Black Start Service and any such prior agreements, understandings,
offers, agreements, commitments, representations, writings,
discussions or other communications shall not be used in interpreting
or construing this Agreement.
1.2.4 This Agreement may be amended or modified only by a writing executed
by the authorized representatives of both Parties. Any purported
amendment or modification that is not in writing and so executed shall
be null and void from its inception.
1.2.5 No provision, condition or requirement of this Agreement may be waived
except by mutual agreement of the Parties as expressed in writing and
signed by both Parties. No waiver by either Party of the performance
of any provision, condition or requirement herein shall be
interpreted, construed or deemed to be a waiver of, or in any manner
release the other Party from, performance of any other provision,
condition or requirement herein; nor shall it be interpreted,
construed or deemed to be a waiver of, or in any manner release the
other Party from future performance of the same provision, condition,
or requirement; nor shall any delay or omission of a Party in
exercising any right hereunder in any manner impair the exercise of
any such right or any like right accruing to it thereafter.
1.2.6 The headings, captions and titles of this Agreement are inserted for
convenience only and shall not be deemed part thereof or be taken into
consideration in the interpretation or construction of this Agreement.
1.2.7 Whenever used herein the singular number shall include the plural, the
plural shall include the singular, and the use of any gender shall
include all genders.
1.2.8 Wherever in this Agreement provision is made for a communication to be
"written" or "in writing" this means any hand-written, typewritten or
printed communication, including telex, cable and facsimile
transmission, provided in accordance with Article 17.
1.2.9 Wherever in this Agreement provision is made for the giving of notice,
consent or approval by any person, such notice, consent or approval
shall be in writing and the word "notify" shall be construed
accordingly, unless the text specifically allows or requires the
notice, consent or approval to be given in a form other than writing.
1.2.10 References to day or days are references to calendar days, and unless
otherwise noted, specifically include weekends, holidays, or other
non-work days.
1.2.11 A reference to an Article, Section, Paragraph or Schedule is, unless
otherwise noted, to an Article, Section, Paragraph or Schedule of or
to this Agreement.
5
1.2.12 A reference to any agreement or document is to that agreement or
document (including attachments, exhibits and schedules thereto and,
where applicable, any of its provisions) as amended, novated,
supplemented, assigned or replaced.
1.2.13 A reference to any Party to this Agreement includes its permitted
substitutes, successors and assigns.
1.2.14 Where an expression is defined, another part of speech or grammatical
form of that expression has a corresponding meaning.
1.2.15 References to "include" and "including" shall be construed as
"include, without limitation" and "including, without limitation."
1.2.16 A reference to any statute, regulation, proclamation, ordinance, or
order includes all statutes, regulations, proclamations, ordinances,
or orders varying, consolidating, or replacing such statute,
regulation, proclamation, ordinance, or order and a reference to a
statute includes all regulations, proclamations, ordinances, and
orders issued under that statute.
1.2.17 A reference to any authority, association or body whether statutory or
otherwise shall, in the event of any such authority, association or
body ceasing to exist or being reconstituted, renamed or replaced or
the powers or functions thereof being transferred to any other
authority, association or body, be deemed to refer respectively to the
authority, association or body established or constituted in lieu
thereof or as nearly as may be succeeding to the powers or functions
thereof.
1.2.18 All Schedules referred to in this Agreement are expressly incorporated
herein by reference as if set forth in full, whether or not attached
hereto. In the event of any conflict between the terms and conditions
of this Agreement and the terms and conditions of any exhibit,
schedule or other documents referenced herein, the terms and
conditions of this Agreement shall govern and control.
1.2.19 If any provision of this Agreement is held to be illegal, invalid, or
unenforceable and such invalidity or unenforceability does not have a
material and substantial negative impact on the rights, duties and
obligations of either Party hereto (a) such provision shall be fully
severable, (b) this Agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised
a part of this Agreement, and (c) the remaining provisions of this
Agreement shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance from this Agreement. Furthermore, (i) in lieu of such
illegal, invalid, or unenforceable provision, there shall be added
automatically as a part of this Agreement a provision as similar in
terms to such illegal, invalid, or unenforceable provision as may be
possible and as may be legal, valid, and enforceable and (ii) such
illegality, invalidity or unenforceability shall not affect the
validity or enforceability in that jurisdiction of any other provision
of this Agreement nor the validity or enforceability in other
jurisdictions of that or any other provision of this Agreement.
1.2.20 This Agreement shall be considered for all purposes as prepared
through the joint efforts of the Parties, and shall not be construed
against one Party or the other as a result of the preparation,
submittal or other event of negotiation, drafting or execution of this
Agreement.
6
ARTICLE 2
EFFECTIVE DATE; TERM; REGULATORY FILING
---------------------------------------
2.1 Effective Date. This Agreement shall be effective on
____________________ , 2004, subject to acceptance by the FERC.
2.2 Term. This Agreement shall continue in effect until the earlier of
December 31, 2006 or termination:
(i) pursuant to Article 12; or
(ii) upon mutual agreement of the Parties. Any termination under this
Section 2.2 shall not take effect until FERC either authorizes any request for
termination of this Agreement in accordance with its terms or accepts a written
notice of termination.
2.3 Regulatory Filing. Following its execution by the Parties, DMG shall
file this Agreement with FERC as required by the Federal Power Act. To the
extent deemed necessary by Illinois Power, Illinois Power may file this
Agreement with the ICC following its execution by the Parties. The Parties
agree to reasonably cooperate with each other with respect to such filing and
provide any information, including the filing of testimony, reasonably
required by the filing Party to comply with applicable filing requirements.
ARTICLE 3
BLACK START SERVICE
-------------------
3.1 Purpose of Service. The Parties acknowledge and agree that the purpose
of this Agreement is solely to provide to Illinois Power at the Interconnection
Points the electric energy necessary to start the Designated Generation
Resources following a Blackout and that Producer is assuming no obligations with
respect to the Units the Designated Generation Resources or otherwise except as
expressly set forth in this Agreement.
3.2 Service Provided. Subject to the terms and conditions of this
Agreement, DMG shall provide Illinois Power with Black Start Service from the
Units at the applicable Interconnection Points for the term of this Agreement.
3.3 Other Service Excluded. Black Start Service as provided for in this
Agreement shall not include any other generating, capacity or ancillary
services, and the provision of any such services by DMG to Illinois Power shall
be pursuant to the terms and conditions of a separate agreement(s) for such
service(s).
3.4 No Fees or Charges. DMG shall have no obligation to pay Illinois
Power any wheeling or other fees, charges or compensation for electric power
and/or energy transferred through Illinois Power's equipment or facilities
pursuant to this Agreement, and Illinois Power waives any right it might
otherwise have to collect such charges.
3.5 Restoration Plan. Illinois Power shall develop a plan, consistent
with the terms and conditions set forth in this Agreement, including procedures
and sequencing of actions and studies, modeling or simulations to confirm same,
for re-energization and restoration of the Illinois Power T&D System to normal
operation following a Blackout in consultation with DMG ("Restoration Plan").
Such Restoration Plan shall not obligate Producer to any service or requirements
of Black Start Service over and above those set forth in this Agreement. Upon
finalization of the Restoration Plan, Illinois Power shall provide DMG a copy of
the Restoration Plan, including any studies, modeling or simulations performed
in development of the Restoration Plan. The Restoration Plan shall become
effective thirty (30) days after its receipt by DMG; provided, however, if the
7
Restoration Plan requires substantial retraining of DMG personnel to implement,
such Restoration Plan shall become effective upon completion of such training.
3.6 Restoration Plan Requirements. Both Parties acknowledge and agree that
DMG acquired the Units from Illinois Power and that, as of the Effective Date,
the capabilities of the Units have not been tested, studied or modeled to
determine the capabilities of the Units under conditions requiring Black Start
Service. Consequently, the Parties agree that the following requirements shall
be reflected in the Restoration Plan.
3.6.1 Because the Units are not designed to, or capable of,
maintaining voltage and frequency on the Illinois Power T&D
System by themselves, Illinois Power shall ensure that the
Designated Transmission Path:
(i) is de-energized and free of any faults prior to
issuing any instructions to DMG pursuant to
Article 5;
(ii) permits a no load voltage of .95 per unit to be
maintained by the Unit(s) at the Designated
Generation Resource;
(iii) has only that minimum load connected to it as is
necessary to maintain stability on the Designated
Transmission Path once a Unit(s) has begun
delivering electric energy to an Interconnection
Point(s) on the Designated Transmission Path; and
(iv) is the lowest impedence transmission path to the
applicable Designated Generation Resource.
3.6.2 Each Unit will deliver its Net Electric Output to the
applicable Interconnection Point. Except as permitted
pursuant to Paragraph 3.6.1(iii) above, a Unit will not be
required to pick up any load other than the auxiliary
electric load of the applicable Facility, including
transformer and other losses, and starting loads of the
Designated Generation Resource(s). Furthermore, the Unit(s)
and the Facilities shall not be responsible for (i)
re-energizing and/or restoring the Illinois Power T&D System
to normal operating condition, (ii) maintaining voltage and
frequency on the Illinois Power T&D System, (iii) picking up
Illinois Power native load, or (iv) restoring transmission
paths and interties with other electric transmission
systems. Notwithstanding the immediately preceding sentence,
each Unit shall continue to deliver electric energy to the
applicable Interconnection Point pursuant to Illinois
Power's instructions for the duration of the re-energization
and restoration of the Illinois Power T&D System following
the Blackout.
3.6.3 If any Unit is not able to comply with the requirements of
the Restoration Plan, the Party becoming aware of such
noncompliance shall notify the other Party in writing.
Following such notification, the Parties shall make a mutual
determination of the Unit's ability to comply with the
Restoration Plan regarding this parameter as of the date of
the initial Black Start Capability verification test
pursuant to Section 4.3 for the Unit. If such determination
indicates that a Unit operating parameter did not permit
compliance with the Restoration Plan as of the date of such
test, the Restoration Plan shall be revised such that the
determined capability regarding this parameter as of the
date of such test shall become the standard for that Unit in
determining compliance with the Restoration Plan.
Notwithstanding the foregoing, DMG, consistent with Good
Utility Practice, shall not knowingly cause or through
degradation allow the Units to become unable to operate in a
manner not in compliance with the Restoration Plan.
8
3.7 Electric Energy Output. Illinois Power shall have sole responsibility
for the Net Electric Output of the Unit(s) providing Black Start Service
following its delivery to Illinois Power as set forth in Section 5.4 below.
3.8 Compensation for Black Start Service. Illinois Power shall pay DMG
for Black Start Service in accordance with Article 6 of this Agreement.
ARTICLE 4
BLACK START REQUIREMENTS AND TESTING
------------------------------------
4.1 General. Subject to the terms and conditions of this Agreement, DMG
shall demonstrate the capability of each Unit to provide Black Start Service to
the Illinois Power T&D System at the applicable Interconnection Point on an
annual basis.
4.2 Black Start Capability Requirements. Each Unit shall be required to
meet the following criteria.
4.2.1 Each Unit shall have the ability to start within the time
specified on Schedule A for that Unit without the input of
electric power from another source that requires the
delivery of such electric power over the Illinois Power T&D
System.
4.2.2 Each Unit shall have the ability to close into a dead
(de-energized) bus.
4.2.3 Each Unit shall have specific procedures for the initiation,
maintenance and cessation of Black Start Service pursuant to
this Agreement on site.
4.3 Black Start Capability Testing. Each Unit shall be tested as required
by MAIN to verify that it meets the requirements set forth in Section 4.2 above,
but in no event shall such test be less than nine (9) months from the last
verification test. At those locations with multiple Units, only one Unit shall
be tested annually. If not tested within the prior twelve (12) month period,
Black Start Capability verification testing of a Unit(s) shall be conducted by
DMG within twelve (12) months of the execution of this Agreement. Black Start
Capability tests shall be scheduled by DMG in consultation with Illinois Power;
provided, however, DMG shall have the right to final determination of test dates
and schedules. Illinois Power shall, at its own expense, have the right to
observe the testing of the Units and DMG shall provide Illinois Power notice of
each test not less than five (5) business days prior to each initial test and as
much notice as practicable of any retest pursuant to Section 4.3.5 below.
Illinois Power shall own and have sole responsibility for the electric energy
output of the Unit(s) during testing and, unless otherwise agreed by the Parties
in advance of the test, shall pay DMG for such testing in accordance with
Article 6 of this Agreement; provided, however, DMG shall not be entitled to
compensation from Illinois Power for any test that is not successfully
completed.
4.3.1 Annual Black Start Capability tests shall, at a minimum,
include:
(i) starting and bringing the Unit to synchronous
speed without an electrical feed from the Illinois
Power T&D System; and (ii) simulating switching
needed to connect the Unit to the Interconnection
Point following a Blackout.
4.3.2 The ability of a Unit to close into a dead (de-energized)
bus as required under Paragraph 4.2.2 above may be
demonstrated by opening the breaker on the high side of the
Unit's generator step-up transformer and then closing the
generator breaker on the low side of the Unit's generator
9
step-up transformer without the generator breaker tripping
open.
4.3.3 If a Unit fails to successfully complete a Black Start
Capability test, DMG shall have a seven (7) day grace period
within which it may retest the Unit without financial
penalty. If the Unit does not successfully complete a new
Black Start Capability test within the seven (7) day grace
period immediately following a failed Black Start Capability
test, DMG shall not be entitled to compensation from
Illinois Power for the period from the time of the first
unsuccessful test until the Unit successfully completes a
Black Start Capability test other than compensation for any
test that is successfully completed.
4.3.4 DMG shall provide Illinois Power records of all Black Start
Capability tests for each Unit. Such records shall include
for each test:
(i) Unit location;
(ii) Unit name;
(iii) date(s) of the test;
(iv) method used to start Unit (diesel, compressed air,
high pressure natural gas, etc.);
(v) duration of the test from start of the test until
test terminated, including
(a) time test started (de-energization of
all sources of AC power to Unit);
(b) time Unit startup initiated;
(c) time Unit reached nominal voltage and
frequency;
(d) time breaker closed to energize
equipment or load (if applicable); and
(e) time Unit shut down or test
concluded/terminated.
(vi) whether the Unit was able to start without being
connected to the Illinois Power T&D System;
(vii) whether the Unit was able to close a circuit
breaker into a dead (de-energized) bus, if
applicable;
(viii) if a breaker was closed to energize equipment or
load, a description of equipment or load
energized;
(ix) whether the Unit successfully started;
(x) whether the Unit was able to reach nominal voltage
and frequency under no load conditions and capable
of supplying power;
(xi) an explanation of the cause(s) of any failed test
and corrective actions taken; and
(xii) unless previously provided, a copy of the black
start procedures for the Unit.
ARTICLE 5
BLACK START OPERATIONS AND MAINTENANCE
--------------------------------------
5.1 General. Illinois Power shall operate, maintain and control the
Illinois Power T&D System and DMG shall operate, maintain and control the Units:
(i) in a safe and reliable manner; (ii) in accordance with Good Utility
Practice; (iii) in accordance with NERC and MAIN operational and/or reliability
criteria, protocols, and directives applicable to black start operations; and
(iv) in accordance with this Agreement. Consistent with the proceeding sentence,
DMG has sole authority to determine whether and to what extent any Unit is
available for operation and the extent and timing of any maintenance of the
Units. DMG shall provide to Illinois Power reports concerning Unit maintenance
as may be reasonably requested by Illinois Power.
5.2 Request for Black Start Service. Upon notice from Illinois Power of
the existence of a Blackout, Illinois Power may request that DMG place the
start up and operation of the Units under the control of Illinois Power's
dispatcher or its designated representative for the duration of the
re-energization and restoration of the Illinois Power T&D System following the
Blackout. Illinois Power's control of a Unit shall be implemented in a manner
10
consistent with the Restoration Plan, Good Utility Practice, safe operating
procedures, the design limits and equipment warranties of the Unit, and
Applicable Laws and Regulations, including, but not limited to, the emissions
limitations for the Unit as reflected in the Unit's air permit, and DMG shall
have no obligation to comply with any operational request of Illinois Power that
is not consistent therewith or that would place any Unit at risk. In addition,
Illinois Power shall not unduly discriminate between the Units and other
generating facilities providing similar service(s) to the Illinois Power T&D
System; provided, however, that nothing in this provision shall require Illinois
Power to request the start up and operation of a Unit to provide Black Start
Service before requesting similar service(s) from other generating facilities
connected to the Illinois Power T&D System.
5.3 Initiation of Black Start Service. Subject to the requirements and
limitations of Section 5.2 above, DMG shall comply with the operational
instructions of Illinois Power's dispatcher or its designated representative
related to Black Start Service for the duration of the re-energization and
restoration of the Illinois Power T&D System following the Blackout. Upon
receiving instructions to commence Black Start Service from a particular
Unit(s), DMG shall use best efforts to man the Unit(s), prepare for black start
operations, start the Unit(s) and be ready to commence generation of electric
energy within the time specified in Schedule A.
5.4 Re-energization. Upon instructions from Illinois Power, DMG shall
commence generation of electric energy with the specified Unit(s) and shall
deliver same to the Interconnection Point associated with the Unit in question.
Unless otherwise provided in the Restoration Plan, Illinois Power shall be
responsible for taking all actions necessary to deliver electric energy
generated by the Unit(s) from the Interconnection Point to the Designated
Generating Resource over the Designated Transmission Path , including
maintaining the Designated Transmission Path in a fault free condition, closing
of any breakers on the Illinois Power T&D System and balancing connected load on
the Designated Transmission Path to maintain minimum stability thereon during
and after startup of the Designated Generating Resource.
5.5 Cessation of Black Start Service. Upon DMG's receipt of notice from
Illinois Power's dispatcher or its designated representative that the Illinois
Power T&D System has been re-energized and restored to normal operation, DMG
shall cease provision of Black Start Service to Illinois Power and resume its
normal delivery schedule.
5.6 System Restoration Drills. Each Unit shall participate in any tests or
drills initiated by Illinois Power or its designated representative designed to
test or simulate restoration of the Illinois Power T&D System following a
Blackout. Illinois Power shall coordinate such tests or drills with DMG, and
shall use best efforts to schedule such tests or drills in conjunction with the
annual Black Start Capability tests required pursuant to Article 4 and when they
will not interfere with the normal operation of the Unit(s). Such tests and
drills shall be treated as if they were an actual request for Black Start
Service by Illinois Power pursuant to Section 5.2 above, and Illinois Power
shall pay DMG for such Black Start Service in accordance with Article 6 of this
Agreement.
ARTICLE 6
COMPENSATION, BILLING AND PAYMENT
---------------------------------
6.1 Compensation. As compensation for DMG Black Start Service pursuant to
this Agreement, Illinois Power shall pay DMG the amount calculated pursuant to
Schedule D for Black Start Services provided to Illinois Power under this
Agreement during the preceding month. In the event that any reference number or
amount set forth in Exhibit D is no longer determined or published, DMG and
Illinois Power shall mutually agree on the reference to be substituted for such
reference number or amount. In addition, Illinois Power shall waive any and all
charges under any agreement between Illinois Power and DMG, that DMG may incur
11
in assisting Illinois Power in restoration of the Illinois Power T&D System
following a total or partial blackout on the Illinois Power T&D System.
6.2 Invoices. Within a reasonable time after the first day of each month,
DMG shall prepare and promptly deliver to Illinois Power an invoice for Black
Start Services provided to Illinois Power under this Agreement during the
preceding month. Each invoice shall delineate the month in which the Black Start
Services were provided, fully describe the Black Start Services rendered, and be
itemized to reflect the Black Start Services performed or provided.
6.3 Payment. Each Black Start Services invoice shall be paid within
fifteen (15) days of its receipt by Illinois Power. All payments shall be made
by Illinois Power in immediately available funds payable to DMG, or by wire
transfer to a bank named and account designated by DMG.
6.4 Payment Disputes. Illinois Power shall have until two (2) years after
it receives an invoice to contest in good faith the correctness of any charge on
such invoice. If Illinois Power disputes an invoice, or an adjustment thereto,
Illinois Power will, if it has not yet paid such invoice, pay the full amount of
the invoice, including the disputed portion thereof and immediately provide DMG
with notice of the disputed amount and the basis for such dispute. DMG will
promptly review the dispute, and will notify Illinois Power of any error in the
invoice and refund the amount, if any, that Illinois Power is due as a result of
such redetermination. If Illinois Power disagrees with DMG's redetermination,
then Illinois Power may submit the matter to senior officers of Illinois Power
and DMG for good faith discussion and resolution of the dispute. If such senior
officers are unable to resolve the dispute following good faith discussions to
do so, then either Party may proceed under to the provisions of Article 16 for
purposes of achieving a final resolution of such dispute. DMG will make any
refunds required hereunder to Illinois Power no later than the fifteenth (15th)
day after the later of: (i) receipt by Illinois Power of such notice of
redetermination; (ii) resolution of such dispute by senior officers of Illinois
Power and DMG; or (iii) final resolution of such dispute pursuant to Article 16.
Refunds by DMG to Illinois Power under this Section 14.4 will include interest
from the date of the original payment until the date such refund, together with
interest thereon, is made, which interest will accrue at the rate provided for
in Section 14.6.
6.5 Waiver. Payment of an invoice shall not relieve Illinois Power from
any other responsibilities or obligations it has under this Agreement, nor shall
such payment constitute a waiver by Illinois Power of any claims it may have
arising under this Agreement.
6.6 Interest. Interest on any unpaid amounts shall be at a rate equal to
two (2) percentage points above the then effective monthly prime commercial
lending rate per annum announced by Citibank, NA, New York, New York office,
from time to time; provided, that for any period that such rate exceeds any
applicable maximum rate permitted by law, the rate shall equal said applicable
maximum rate. Interest on delinquent amounts shall be calculated from the due
date of the ▇▇▇▇ to the date of payment. When payments are made by mail,
invoices shall be considered as having been paid on the date of receipt of
payment by DMG.
6.7 Default. In the event Illinois Power fails to make payment to DMG on
or before the due date, as set forth above, and such failure of payment is not
corrected within thirty (30) calendar days after DMG notifies Illinois Power to
cure such failure, a default by said Party shall be deemed to exist and the
provisions of Article 11 shall apply.
6.8 Service During Dispute. In the event of a billing dispute between
Illinois Power and DMG under Section 14.4, DMG shall continue to provide Black
Start Service as long as Illinois Power complies with the provisions of Section
6.4.
12
6.9 Rebilling. DMG reserves the right to issue a revised invoice in the
event the original invoice was inaccurate for any reason, provided such revised
invoice is issued within two (2) years following the date on which the invoice
to be corrected became due and payable. All invoiced amounts and payments under
an invoice shall be deemed true and correct two (2) years following the date on
which the invoice became due and payable and no revision thereof shall be made
thereafter.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
------------------------------
7.1 DMG. DMG is duly organized and validly existing under the laws of the State
of Illinois. DMG is qualified to do business under the laws of the State of
Illinois, is in good standing under the laws of the State of Illinois, has the
power and authority to own its properties, to carry on its business as now being
conducted, and to enter into this Agreement and the transactions contemplated
herein and perform and carry out all covenants and obligations on its part to be
performed under and pursuant to this Agreement, and is duly authorized to
execute and deliver this Agreement and consummate the transactions contemplated
herein.
7.2 Illinois Power. Illinois Power is duly organized, validly existing and
qualified to do business under the laws of the State of Illinois, is in good
standing under its certificate of incorporation and the laws of the State of
Illinois, has the corporate authority to own its properties, to carry on its
business as now being conducted, and to enter into this Agreement and the
transactions contemplated herein and perform and carry out all covenants and
obligations on its part to be performed under and pursuant to this Agreement,
and is duly authorized to execute and deliver this Agreement and consummate the
transactions contemplated herein.
7.3 The Agreement. This Agreement is the legal, valid and binding obligation of
each Party upon its execution by both Parties, and upon its acceptance by the
FERC becomes enforceable in accordance with its terms, except as limited by
Applicable Laws and Regulations.
ARTICLE 8
ASSIGNMENT
----------
8.1 Successors and Assigns. This Agreement, and the rights and obligations
created thereby, shall bind and inure to the benefit of the successors and
permitted assigns of the Parties hereto.
8.2 Assignments Requiring Consent. Except as provided in Sections 8.3
and 8.4 below, neither Party shall voluntarily assign its rights nor delegate
its duties under this Agreement, or any part of such rights or duties, without
the written consent of the other Party, which consent shall not be unreasonably
withheld or delayed, and any such assignment or delegation made without such
written consent shall be null and void.
8.3 Assignments Not Requiring Consent.
8.3.1 Either Party may assign its rights or delegate its duties
under this Agreement, or any part of such rights or duties,
without the written consent of the other Party to any person
or entity that purchases or otherwise acquires, directly or
indirectly, all or substantially all of the outstanding
assets, shares of stock or other ownership interest, as
applicable, of the assigning Party;
8.3.2 DMG may assign this Agreement or portion of this Agreement,
as applicable, in conjunction with the sale of any Unit or
all or any portion of the Facilities not rising to the level
13
of "all or substantially all" of its assets, stock or other
ownership interest without Illinois Power's written consent
as long as the creditworthiness of the assignee, or any
person or entity guaranteeing the assignee's obligations
under this Agreement, if any, is equal to or better than
that of DMG at the time of the sale, or Illinois Power shall
receive other adequate assurance, in a form reasonably
acceptable to DMG in its sole discretion, of such assignee's
ability to fulfill all of the obligations of DMG under this
Agreement with respect to such Unit or Facility(ies). DMG
may also assign this Agreement or portion of this Agreement,
as applicable, to any wholly-owned direct or indirect
affiliate of DMG's parent which acquires DMG or any of the
Units or Facilities without the written consent of Illinois
Power.
8.3.3 Illinois Power may assign this Agreement to any wholly-owned
direct or indirect affiliate of Illinois Power's parent
which acquires Illinois Power or all of the Illinois Power
T&D System or Illinois Power's business without the written
consent of DMG. Further, if Illinois Power transfers
operational control of all or any portion of the Illinois
Power T&D System to an RTO, Illinois Power may assign this
Agreement or portion of this Agreement, as applicable, to
the RTO without the written consent of DMG, provided the RTO
assumes in writing all or the duties and obligations of
Illinois Power, existing and future, under this Agreement.
The foregoing notwithstanding, nothing contained herein
shall limit the DMG's right to defend this Agreement or to
challenge such assignment, or the terms or conditions
thereof.
8.4 Financing or Refinancing.
8.4.1 Notwithstanding the provisions of Section 8.2, DMG may,
without the written consent of Illinois Power, assign,
transfer, pledge or otherwise dispose of its rights and
interests hereunder to any lender, whether as security for
amounts payable or otherwise, under a financing, which
financing may include without limitation, one or more leases
(whether capital, operating, synthetic or otherwise),
subleases, mortgages, loans, equity and/or debt issues
(including bonds), the proceeds of which are used for
purposes of financing or refinancing any or all of the Units
or Facilities subject to this Agreement, including upon or
pursuant to the exercise of remedies under such financing or
refinancing, or by way of assignments, transfers,
conveyances of dispositions in lieu thereof.
8.4.2 Illinois Power agrees, if requested by DMG, to enter into an
agreement (in a form reasonably acceptable to Illinois
Power) with the lender, pursuant to which Illinois Power
will acknowledge the creation of security over DMG's rights
under this Agreement and agree that, upon breach of this
Agreement or any loan documents by DMG or the insolvency of
DMG, the lender shall:
(i) have the right within a reasonable period of time
as specified therein to cure any breach of this
Agreement, provided the lender agrees to perform
DMG's obligations under the Agreement during the
cure period; and
(ii) have the right, upon cure any such breach of this
Agreement, to assume all the rights and
obligations of DMG under this Agreement.
8.5 Obligation of Continued Performance. Except for assignments that do
not require the other Party's written consent, no assignment or transfer of
rights or obligations under this Agreement by either Party shall relieve that
Party from full liability and financial responsibility for the performance
thereof after such transfer or assignment unless and until the transferee or
assignee shall agree in writing to assume all of the obligations and duties,
14
existing and future, of the assigning or transferring Party and (i)(a) the
non-assigning Party shall have received all amounts then due and payable to it
under this Agreement, if any; and (b) the creditworthiness of such assignee, or
any person or entity guaranteeing the assignee's obligations under this
Agreement, if any, is equal to or better than that of the assignor at the time
of the sale, or the non-assigning Party shall have received other adequate
assurance of such assignee's ability to fulfill all of the obligations,
including monetary obligations, of the assignor under this Agreement, in a form
reasonably acceptable to the non-assigning Party in its sole discretion, or (ii)
the non-assigning Party has consented in writing to release the assigning Party
from liability and financial responsibility for the performance of the assigning
Party's obligations under this Agreement, such consent not to be unreasonably
withheld.
ARTICLE 9
FORCE MAJEURE
-------------
9.1 Force Majeure Events. Notwithstanding anything in this Agreement to
the contrary, neither Party shall be liable in damages or otherwise responsible
to the other Party for a failure to carry out any of its obligations under this
Agreement, other than the obligation to pay an amount when due, if and only to
the extent that it is unable to so perform or is prevented from performing by a
Force Majeure Event. Such exclusion from liability shall extend only for the
period of time necessitated by such Force Majeure Event. Nothing herein shall be
construed to require any Party to settle a labor dispute, lockout or strike.
9.2 Notice. The Party claiming Force Majeure shall give notice to the
other Party of any Force Majeure Event as soon as reasonably practicable, but
not later than two (2) days after the date on which such Party knew of the
commencement of the Force Majeure event.
9.3 Procedures for Force Majeure Event. If a Party claims the occurrence
of a Force Majeure Event as a basis for being excused from performance of its
obligations under this Agreement, then such Party shall: (i) provide prompt
written notice of such Force Majeure Event to the other Party giving an
estimation of its expected duration and the probable impact on the performance
of its obligations hereunder; (ii) exercise all reasonable efforts to continue
to perform its obligations under this Agreement; (iii) expeditiously take all
reasonable action to correct or cure the Force Majeure Event; and (iv) provide
prompt notice to the other Party of cessation of the Force Majeure Event. All
performance obligations hereunder shall be extended by a period equal to the
period during which either Party's obligations were suspended as a result of a
Force Majeure Event.
ARTICLE 10
LIABILITY AND INDEMNIFICATION
-----------------------------
10.1 Limitation of Liability. Except as otherwise expressly provided in
this Agreement, neither Illinois Power nor DMG, nor their respective officers,
directors, agents, employees, parents, affiliates, or successors or assigns of
any of them, shall be liable to the other Party or its parent, subsidiaries,
affiliates, officers, directors, agents, employees, successors or assigns for
claims, suits, actions or causes of action for incidental, punitive, special,
indirect, or consequential damages (including, without limitation, attorneys'
fees or litigation costs, loss of profits or revenue on work not performed, for
loss of use of or under-utilization of the other Party's facilities, or loss of
use of revenues or loss of anticipated profits), resulting from either Party's
performance or non-performance of an obligation imposed on it by this Agreement
, including, without limitation, any such damages which are based upon causes of
action for breach of contract, tort, breach of warranty or strict liability,
save and except to the extent that such damages are caused by the negligence or
willful misconduct of Illinois Power, or DMG, or their respective officers,
directors, agents, employees, parents or affiliates. The provisions of this
Section 10.1 shall survive termination, cancellation, suspension, completion, or
expiration of this Agreement.
15
10.2 Indemnification.
10.2.1 Mutual Obligation. Each Party ("Indemnifying Party") shall
indemnify, defend and hold the other Party, its parent,
affiliated and subsidiary and its and their partners,
directors, officers, employees, stockholders,
representatives, servants, and agents (including but not
limited to contractors and their employees) (each and
"Indemnified Party") harmless from and against all
liabilities, damages, losses, penalties, claims, demands,
costs or expenses (including court costs, reasonable
attorneys' fees and other costs of defense), suits and
proceedings of any nature whatsoever for any personal injury
(including death) or any property damage ("Claim") that
occurs or arises out of or otherwise results from or is in
any manner connected with the performance or nonperformance
of this Agreement by the Indemnifying Party save and except
to the extent that such injury or damage is attributable to
the gross negligence or willful, wanton or purposeful
misconduct of the Indemnified Party.
10.2.2 Indemnification Procedures.
10.2.2.1 Notice. The Indemnified Party shall give the
Indemnifying Party prompt notice of the assertion
of a Claim or of the commencement of any action or
proceeding with respect to a Claim. Such notice
shall describe the claim in reasonable detail, and
shall indicate the amount (estimated if necessary)
of the claim that has been, or may be sustained
by, the Indemnified Party. In the event that the
Indemnified Party fails to provide prompt notice
of a Claim and the Indemnifying Party is actually
and materially prejudiced as a result, the
Indemnifying Party shall have no further liability
under the indemnification provisions of this
Agreement with respect to such Claim.
10.2.2.2 Defense of Claim. Promptly after receipt by the
Indemnifying Party of notice of any Claim or
notice of the commencement of any action,
administrative or legal proceeding, or
investigation with respect to a Claim, the
Indemnifying Party shall assume the defense
thereof with counsel designated by the
Indemnifying Party and satisfactory to the
Indemnified Party, such satisfaction not to be
unreasonably withheld; provided, however, that if
the defendants in any such action include both the
Indemnified Party and the Indemnifying Party and
the Indemnifying Party shall have reasonably
concluded that there may be legal defenses
available to the Indemnified Party with respect to
a Claim which are different from or additional to,
or inconsistent with, those available to the
Indemnifying Party, then the Indemnifying Party
shall so notify the Indemnified Party and the
Indemnified Party shall have the right to select
separate counsel to participate in the defense of
such Claim on behalf of the Indemnified Party at
the expense of the Indemnifying Party. Except as
provided in Section 10.2.2.4 below, neither Party
may settle or compromise any claim without the
prior consent of the other Party; provided,
however, such consent shall not be unreasonably
withheld or delayed.
10.2.2.3 Right to Assume Defense. If a Party believes
itself entitled to indemnification under this
Agreement with respect to a Claim, and the
16
Indemnifying Party fails or refuses to assume the
defense of such Claim after receiving notice of
same pursuant to Section 10.2.2.1, the Indemnified
Party shall have the right, but not the
obligation, to contest or settle such Claim and
submit the issue of indemnification for resolution
pursuant to Article 16..
10.2.2.4 Indemnified Amount. In the event that a Party is
obligated to indemnify and hold the other Party
and its successors and assigns harmless under this
Article 10, the amount owing to the Indemnified
Party will be the amount of the Indemnified
Party's actual out-of-pocket loss net of any
insurance proceeds received or other recovery
actually received by or applied for the benefit of
the Indemnified Party.
10.2.3 Employees. Each Party shall comply with applicable worker's
compensation laws, and the indemnities of this Article 10
shall be fully applicable to all claims and payments arising
under such laws.
10.2.4 Survival. The indemnification obligations of each Party
under this Article 10 shall continue in full force and
effect regardless of whether this Agreement has either
expired or been terminated or canceled.
10.3 Illinois Power Interconnection Facilities. DMG acknowledges that
certain controls and switches relating to the Illinois Power Interconnection
Facilities are physically located within the Facilities and under the physical
control of DMG. Such controls and switches shall be operated strictly in
accordance with the direction of Illinois Power. If DMG or any person or entity
subject to DMG's control shall operate such controls and switches, or any of
them, in any manner that is not in strict accordance with the direction of
Illinois Power, DMG shall indemnify, defend and hold Illinois Power, its parent,
affiliates and subsidiaries, and its and their partners, directors, officers,
employees, stockholders, representatives, servants, and agents (including but
not limited to contractors and their employees) (each and "Indemnified Party")
harmless from and against all liabilities, damages, losses, penalties, claims,
demands, costs or expenses (including court costs, reasonable attorneys' fees
and other costs of defense), suits and proceedings of any nature whatsoever for
any personal injury (including death) or any property damage ("Claim") that
occurs or arises out of or otherwise results from or is in any manner connected
with the failure of DMG or any person or entity subject to DMG's control to
operate such controls and switches in strict accordance with the direction of
Illinois Power (to the extent such direction is consistent with Good Utility
Practice) save and except to the extent that such injury or damage is
attributable to the gross negligence or willful, wanton or purposeful misconduct
of Illinois Power or any person or entity subject to its control.
ARTICLE 11
BREACH, CURE AND DEFAULT
------------------------
11.1 Breach. A breach of this Agreement shall occur upon the failure by a
Party to perform or observe any material term or condition of this Agreement. A
breach of this Agreement shall include:
11.1.1 The failure to pay any amount when due;
11.1.2 The failure to comply with any material term or condition of
this Agreement, including but not limited to any material
breach of a representation, warranty or covenant made in
this Agreement;
17
11.1.3 The appointment of a receiver or liquidator or trustee for
the Party or of any property of the Party, and such
receiver, liquidator or trustee is not discharged within
sixty (60) days;
11.1.4 The filing of a case in bankruptcy or any proceeding under
any other insolvency law against the Party by a third-party,
and such case or proceeding has not been stayed or dismissed
within sixty (60) days of filing; or
11.1.5 The filing of a voluntary petition in bankruptcy under any
provision of any federal or state bankruptcy law by the
Party.
11.2 Cure and Default. Except for breaches set forth in Sections 11.1.3,
11.1.4, and 11.1.5 above, upon a Party's breach of its obligations under this
Agreement, the other Party ("Non-Breaching Party") shall give the Party in
breach ("Breaching Party") a written notice describing such breach in reasonable
detail, including the nature of the breach and, where known and applicable, the
steps necessary to cure such breach, and demanding that the Breaching Party cure
such breach. The Breaching Party shall be deemed to be in "Default" of its
obligations under this Agreement if: (1) it fails to cure its breach within
thirty (30) days after its receipt of such notice, or (2) where the breach is
such that it cannot be cured within such thirty-day period, the Breaching Party
does not commence in good faith all such steps as are reasonable and appropriate
to cure such breach within such thirty-day period and thereafter diligently
pursue such action to completion. Breaches set forth in Sections 11.1.3 and
11.1.4, above shall become a "Default" upon the expiration of the time period
set forth in such section. Breaches set forth in Section 11.1.5 above shall
become a "Default" immediately upon the occurrence of the breach.
11.3 Right to Compel Performance. Notwithstanding the foregoing, upon the
occurrence of a Default, the non-defaulting Party shall be entitled to (i)
commence an action to require the Defaulting Party to remedy such Default and
specifically perform its duties and obligations under this Agreement in
accordance with the terms and conditions hereof, and (ii) exercise such other
rights and remedies as it may have in equity or at law.
ARTICLE 12
TERMINATION OF SERVICE
----------------------
12.1 Expiration of Term. Except as otherwise specified in this Article 12,
this Agreement may only be terminated at the conclusion of the Term of this
Agreement stated in Article 2 hereof.
12.2 Termination Upon Default. Subject to the limitations set forth in
Section 12.3, in the event of Default by DMG, Illinois Power may only terminate
this Agreement upon the later of:
12.2.1 Its giving of written notice of termination to DMG and any
affected regulatory agency;
12.2.2 The filing at FERC of a notice of termination for the
Agreement, which filing must be accepted by FERC; or
12.2.3 The receipt of any other regulatory approvals required for
the termination of the Agreement.
12.3 Dispute As To Default. If a Party disputes that it is in Default, no
termination of this Agreement may occur absent final resolution of such dispute
pursuant to Article 16 and upon the satisfaction of all the conditions stated
above in Section 12.2.
18
12.4 Survival of Rights. Termination of this Agreement shall not relieve
either Party of any of its liabilities and obligations arising hereunder prior
to the date such termination becomes effective. Any provision of this Agreement
that by its terms survives termination of this Agreement shall survive such
termination.
ARTICLE 13
LABOR RELATIONS
---------------
Each Party shall promptly notify the other Party, orally and then in
writing, of any labor dispute or anticipated labor dispute of which its
management has actual knowledge that might reasonably be expected to affect the
operations of the other Party with respect to this Agreement.
ARTICLE 14
CONFIDENTIALITY
---------------
14.1 General. Except as otherwise provided in this Section, each Party
shall hold in confidence and shall not disclose to any person Confidential
Information, regardless of whether such Confidential Information was conveyed to
the Party prior, or subsequent, to the execution of this Agreement.
14.2 Scope. Confidential Information shall not include information that the
receiving Party can demonstrate: (1) is generally available to the public other
than as a result of a disclosure by the receiving Party; (2) was in the lawful
possession of the receiving Party on a non-confidential basis before receiving
it from the disclosing Party; (3) was supplied to the receiving Party without
restriction by a third Party, who, to the knowledge of the receiving Party,
after due inquiry, was under no obligation to the other Party to keep such
information confidential; (4) was independently developed by the receiving Party
without reference to Confidential Information of the disclosing Party; or (5)
was disclosed with the prior written approval of the disclosing Party.
14.3 Release of Confidential Information. Neither Party shall release or
disclose any Confidential Information of the other Party: (1) to any persons
other than its employees, agents, representatives, RTO, other Transmission
Providers, MAIN, or NERC (each, a "Permitted Recipient"); provided that: (1) any
such disclosure to a Permitted Recipient will be only on a need-to-know basis in
connection with this Agreement, and (2) such Permitted Recipient has first been
advised of the confidentiality provisions of this Article 14 and has agreed to
comply with such provisions, is bound by another confidentiality agreement
acceptable to the Parties in their reasonable discretion, or by FERC Standards
of Conduct regarding disclosure of information; or (2) as specifically provided
in Section 14.7 below.
14.4 Rights. Each Party retains all rights, title and interest in the
Confidential Information that each Party discloses to the other Party. The
disclosure by each Party to the other Party of Confidential Information shall
not be deemed a waiver by either Party or any other person or entity of the
right to protect the Confidential Information from public disclosure.
14.5 No Warranties. By providing Confidential Information, neither Party
makes any warranties or representations as to its accuracy or completeness;
provided, however that the Party receiving such Confidential Information shall
be entitled to rely on such Confidential Information for the purposes of its
performance of this Agreement. In addition, by supplying Confidential
Information, neither Party obligates itself to provide any particular
information or Confidential Information to the other Party nor to enter into any
further agreements or proceed with any other relationship or joint venture.
14.6 Standard of Care. Each Party shall use at least the same standard of
care to protect Confidential Information it receives as that it uses to protect
its own Confidential Information from unauthorized disclosure, publication or
19
dissemination. Each Party may use Confidential Information solely to fulfill its
obligations under this Agreement and not for any other purpose.
14.7 Order of Disclosure. If a Party is legally required to disclose
Confidential Information of the other Party by law, rule, regulation, order or
other governmental action, or action of any entity with the right, power, and
authority to do so, including but not limited to subpoena, oral deposition,
interrogatories, requests for production of documents, or administrative order,
that Party shall provide the other Party with prompt notice of such request(s)
or requirement(s) so that the other Party may seek an appropriate protective
order or waive compliance with the terms of this Agreement. In the absence of a
protective order or waiver, the disclosing Party shall disclose such
Confidential Information which in the opinion of its counsel the Party is
legally required to disclose. Each Party will use reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded any Confidential
Information so furnished.
14.8 Termination of Agreement. Upon termination of this Agreement for any
reason, each Party shall, within thirty (30) days of receipt of a written
request from the other Party, destroy, erase or delete (with such destruction,
erasure and deletion certified in writing to the other Party) or return to the
other Party, without retaining copies thereof, any and all written or tangible
Confidential Information received from or on behalf of the other Party.
14.9 Remedies. The Parties agree that monetary damages would be inadequate
to compensate a Party for the other Party's breach of its obligations under this
Article 14. Each Party accordingly agrees that the other Party shall be entitled
to equitable relief, by way of injunction or otherwise, for any breach or
threatened breach of the obligations of confidentiality imposed by this Article
14, which equitable relief shall be granted without bond or proof of damages,
and the receiving Party shall not plead in defense that there would be an
adequate remedy at law. Such remedy shall not be deemed to be an exclusive
remedy for the breach of this Article 14, but shall be in addition to all other
remedies available at law or in equity. The Parties further acknowledge and
agree that the covenants contained herein are necessary for the protection of
legitimate business interests and are reasonable in scope. No Party, however,
shall be liable for indirect, incidental or consequential or punitive damages of
any nature or kind resulting from or arising in connection with this Article 14,
unless disclosed through a Party's gross negligence or willful, wanton or
purposeful conduct.
14.10 Press Releases. Each Party agrees to coordinate with the other Party
all press, news, or other releases to the media related to this Agreement and to
allow the other Party to review such releases prior to release.
20
ARTICLE 15
AUDIT RIGHTS
------------
Subject to the requirements of confidentiality under Article 14 of
this Agreement, either Party shall have the right, during normal business hours,
and upon prior reasonable notice to the other Party to audit each other's
accounts and records pertaining to either Party's performance and/or
satisfaction of obligations arising under this Agreement within two (2) years
from the date of such performance or satisfaction of such obligation. Said audit
shall be performed at the offices where such accounts and records are maintained
and shall be limited to those portions of such accounts and records that relate
to obligations under this Agreement.
ARTICLE 16
DISPUTES
--------
16.1 Submission. Any claim or dispute which either Party may have against
the other arising out of the Agreement shall be submitted in writing to the
other Party within sixty (60) days after the claim or dispute initially arises.
In the event of a dispute over payment, the Parties shall first utilize the
dispute resolution provisions of Section 6.4 before utilizing the provisions of
this Article 16. The submission of any claim or dispute under this Section 16.1
shall include a concise statement of the question or issue in dispute, together
with relevant facts and documentation to fully support the claim.
16.2 Alternative Dispute Resolution. If any such claim or dispute arises,
the Parties shall use their best efforts to resolve the claim or dispute,
initially through good faith negotiations or upon the failure of such
negotiations, through mutually agreed to ADR techniques; however, either Party
may terminate its participation in ADR during any stage of ADR and proceed under
Section 16.3.
16.3 Arbitration. If any claim or dispute arising hereunder is not resolved
within sixty (60) days after notice thereof to the other Party, either Party may
demand in writing the submission of the dispute to binding arbitration in
Chicago, Illinois, or some other mutually agreed upon location and shall be
heard by one neutral arbitrator under the American Arbitration Association's
Commercial Arbitration Rules.
16.4 Time Limitation. Unless the Parties otherwise agree, the arbitration
process shall be concluded not later than six (6) months after the date that it
is initiated and the award of the arbitrator shall be accompanied by a reasoned
opinion if requested by either Party. The arbitrator shall have no authority to
award punitive or treble damages or any damages inconsistent with the provisions
of this Agreement. The arbitration shall be conducted as a common law
arbitration and the decision of the arbitrator rendered in such a proceeding
shall be final. Judgment may be entered upon it in any court having
jurisdiction.
16.5 Procedures. The procedures for the resolution of disputes set forth
herein shall be the sole and exclusive procedures for the resolution of
disputes; provided, however, that a Party may seek a preliminary injunction or
other preliminary judicial relief if in its judgment such action is necessary to
avoid irreparable damage or to preserve the status quo. Despite such action, the
Parties will continue to participate in good faith in the procedures specified
herein. All applicable statutes of limitations and defenses based upon the
passage of time shall be tolled while the procedures specified herein are
pending. The Parties will take any action, if any, required to effectuate such
tolling. Each Party is required to continue to perform its undisputed
obligations under this Agreement pending final resolution of a dispute. All
negotiations pursuant to these procedures for the resolution of disputes will be
confidential, and shall be treated as compromise and settlement negotiations for
purposes of the Federal Rules of Evidence and state rules of evidence.
21
ARTICLE 17
NOTICES AND COMMUNICATIONS
--------------------------
17.1 Notices. All notices required or permitted under this Agreement shall
be in writing unless otherwise specified in this Agreement and shall be
personally delivered or sent by certified or registered first class mail with
postage prepaid, facsimile transmission, or overnight express mail or courier
service addressed as follows:
TO DMG: TO ILLINOIS POWER:
Notices Notices
------- -------
Dynegy Midwest Generation, Inc. Illinois Power Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Att: Senior Vice President Att:
---------------------------
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
Illinois Power Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Att: Transmission Operator
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices shall be deemed given upon receipt by the addressee.
17.2 Change of Address. Either Party may change its address and telephone
numbers for notices by notice to the other in the manner provided above.
17.3 Oral Notice. Notwithstanding Section 17.1, any notice hereunder, with
respect to an Emergency or other occurrence requiring prompt attention of the
Party receiving such notice, or as necessary during day-to-day operations, may
be made orally provided that such notice is confirmed in writing promptly
thereafter. Notice in an Emergency, or as necessary during day-to-day
operations, shall be provided, (i) if by Illinois Power, to a shift leader in
the control room at the appropriate Facility and (ii) if by a Facility, to the
Transmission Operator.
ARTICLE 18
MISCELLANEOUS PROVISIONS
------------------------
18.1 Compliance With Law. This Agreement and all rights and obligations of
the Parties hereunder are subject to all applicable state and federal laws and
all applicable duly promulgated orders and regulations and duly authorized
actions taken by the executive, legislative or judicial branches of government,
or any of their respective agencies, departments, authorities or other
instrumentalities having jurisdiction and in performing its obligations under
this Agreement each Party shall comply with all such laws, orders and
regulations.
22
18.2 Federal Power Act Rights Preserved. Nothing contained in this
Agreement shall be construed as affecting in any way the ability of any Party to
this Agreement to exercise its rights under the Federal Power Act and pursuant
to FERC's rules and regulations promulgated thereunder, including but not
limited to, each Party's unilateral right to make application to FERC for a
change in the rates, terms and/or conditions of this Agreement; provided,
however, that the "public interest" standard of review set forth in United Gas
Pipe Line Co. v. Mobile Gas Service Corp., ▇▇▇ ▇.▇. ▇▇▇ (1956), and Federal
Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) (the
"Mobile-Sierra" doctrine), shall not be applicable to either Party's application
to FERC for a change in the rates, terms and/or conditions of this Agreement.
18.3 Taxes. Each Party agrees to pay any and all local, state, federal
sales, use, excise or any other taxes which are now, or in the future may be,
assessed and legally owed by such Party pertaining to goods provided and/or the
services performed under this Agreement. Each Party shall be responsible for any
income taxes that apply to the monies it receives hereunder.
18.4 Relationship of the Parties. Nothing in this Agreement is intended to
create a partnership, joint venture or other joint legal entity making any Party
jointly or severally liable for the acts of the other Party. Unless otherwise
agreed to in a writing signed by both Parties, neither Party shall have any
authority to create or assume in the other Party's name or on its behalf any
obligation, express or implied or to act or purport to act as the other Party's
agent or legal empowered representative for any purpose whatsoever. Each Party
shall be solely liable for the payment of all wages, taxes, and other costs
related to the employment of persons by that Party, including all federal,
state, and local income, social security, payroll and employment taxes and
statutorily-mandated workers' compensation coverage. Except as expressly
provided for herein, neither Party shall be liable to any third party in any way
for any engagement, obligation, commitment, contract, representation or for any
negligent act or omission to act of the other Party.
18.5 No Third Party Rights. No person or Party shall have any rights or
interests, direct or indirect, in this Agreement or the services or facilities
to be provided hereunder, or both, except the Parties, their successors, and
authorized assigns. The Parties specifically disclaim any intent to create any
rights in any person or Party as a third-party beneficiary to this Agreement or
to the services or facilities to be provided hereunder, or both.
18.6 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties' duly authorized representatives have
executed this Agreement as of the Effective Date.
DYNEGY MIDWEST GENERATION, INC. ILLINOIS POWER COMPANY
By: By:
------------------------------ ------------------------------
Name: Name:
------------------------------ ------------------------------
Title: Title:
------------------------------ ------------------------------
23
SCHEDULE A
to
Black Start Service Agreement
between
Illinois Power Company and Dynegy Midwest Generation, Inc
Dated _______________, 2004
--------------- ------------------- ------------------------------------ ---------------------------- --------------------------
Unit Designated Designated Generation Resource(s) Start Time Comments
Transmission Path
--------------- ------------------- ------------------------------------ ---------------------------- --------------------------
▇▇▇▇▇▇▇ 1 Hennepin 1 90 Minutes
--------------- ------------------- ------------------------------------ ---------------------------- --------------------------
▇▇▇▇▇▇▇ 2 Hennepin 1 90 Minutes
--------------- ------------------- ------------------------------------ ---------------------------- --------------------------
▇▇▇▇▇▇▇ 3 Hennepin 1 90 Minutes
--------------- ------------------- ------------------------------------ ---------------------------- --------------------------
▇▇▇▇▇▇▇ 4 Hennepin 1 90 Minutes
--------------- ------------------- ------------------------------------ ---------------------------- --------------------------
▇▇▇▇▇▇▇▇▇ 1 Wood River 1-4 90 Minutes - Manned If first Unit started
120 Minutes - Unmanned
--------------- ------------------- ------------------------------------ ---------------------------- --------------------------
▇▇▇▇▇▇▇▇▇ 2 Wood River 1-4 120 Minutes - Manned If second Unit started;
150 Minutes - Unmanned due to manual operation
--------------- ------------------- ------------------------------------ ---------------------------- --------------------------
▇▇▇▇▇▇▇▇▇ 3 Wood River 1-4 150 Minutes - Manned If third Unit started;
180 Minutes - Unmanned due to manual operation
--------------- ------------------- ------------------------------------ ---------------------------- --------------------------
▇▇▇▇▇▇▇▇▇ 4 Wood River 1-4 180 Minutes - Manned If fourth Unit started;
210 Minutes - Unmanned due to manual operation
--------------- ------------------- ------------------------------------ ---------------------------- --------------------------
▇▇▇▇▇▇ 1 ▇▇▇▇▇▇▇▇▇▇ 1-2 90 Minutes - Manned
180 Minutes - Unmanned
--------------- ------------------- ------------------------------------ ---------------------------- --------------------------
▇▇▇▇▇▇ 2 ▇▇▇▇▇▇▇▇▇▇ 1-2 90 Minutes - Manned
180 Minutes - Unmanned
--------------- ------------------- ------------------------------------ ---------------------------- --------------------------
▇▇▇▇▇▇ 3 ▇▇▇▇▇▇▇▇▇▇ 1-2 90 Minutes - Manned
180 Minutes - Unmanned
--------------- ------------------- ------------------------------------ ---------------------------- --------------------------
▇▇▇▇▇▇ 4 ▇▇▇▇▇▇▇▇▇▇ 1-2 90 Minutes - Manned
180 Minutes - Unmanned
--------------- ------------------- ------------------------------------ ---------------------------- --------------------------
▇▇▇▇▇▇▇▇▇▇ 3 ▇▇▇▇▇▇▇▇▇▇ 1-2 90 Minutes
--------------- ------------------- ------------------------------------ ---------------------------- --------------------------
A-1
SCHEDULE B
to
Black Start Service Agreement
between
Illinois Power Company and Dynegy Midwest Generation, Inc
Dated ______________, 2004
One Line Diagram
----------------
B-1
SCHEDULE C
to
Black Start Service Agreement
between
Illinois Power Company and Dynegy Midwest Generation, Inc
Dated _________________________, 2004
Interconnection Points
C-1
SCHEDULE D
to
Black Start Service Agreement
between
Illinois Power Company and Dynegy Midwest Generation, Inc
Dated ____________________, 2004
COMPENSATION
------------
1. Compensation to be paid by Illinois Power to DMG under Article 6 of the
Agreement shall be calculated pursuant to the following formula:
COMPENSATION = ({[(FIXED BLACK START COSTS) / 12] + [(VARIABLE BLACK
START COSTS) / 12] + [(TRAINING COSTS) / 12] + [(FUEL
STORAGE & CARRYING COSTS) / 12] + (ENERGY COSTS)} X [1+
INCENTIVE FACTOR])
2. The Fixed Black Start Costs shall be calculated as follows:
Fixed Black Start Costs = CDR X 365 X Unit Cap X BSAF
where:
CDR is the Capacity Deficiency Rate applicable in the PJM
Interconnection, L.L.C. market for the year in question (i.e., the
annualized per MW capital cost component of new combustion turbine).
Unit Cap is the generating units installed capacity.
BSAF is the black start allocation factor, which varies by unit type.
The following values shall be used for the BSAF:
hydro: 0.01
diesel generator: 0.02
CT: 0.02
3. Variable Black Start Costs shall be calculated as follows:
Variable Black Start Costs = (Unit O&M x Y)
where:
Y is the variable O&M factor.
Y = 1% (.01) unless another value is supported by the documentation of
costs
4. Training Costs shall be calculated as follows:
Training Costs = [(50 staff-hours/year/facility x $75/hour) / 12]
If DMG proposes the use of other variables, the basis for the
variables proposed for use for a specific Unit must be documented.
5. Fuel Storage & Carrying Costs shall be calculated as follows:
FS&C Costs = (Run Hours) x (Fuel Burn Rate) x (12 Month Forward Strip
+ Basis) x (Interest Rate/12)
where:
Run Hours are actual run hours required for Unit to run; provided,
however, Run Hours shall not be less than 16 hours unless mutually
agree by Illinois Power/RTO and DMG
Fuel burn rate is actual Unit fuel burn rate.
12 Month Forward Strip is the average of the forward prices for the
actual fuel burned in the Unit.
Basis is the transportation costs from the location referenced in the
forward price data to the Unit plus any variable taxes.
D-1
Interest Rate will be a representative annual interest rate.
If DMG proposes the use of other variables, the basis for the
variables proposed for use for a specific Unit must be documented.
Note: This component applies only to oil-fired units as it is
assumed that there is an inherent reserve available for hydro
and gas units and that there would be no additional fuel
storage or carrying charges necessary to maintain black start
capability.]
6. Energy Costs shall be calculated as follows:
Energy Costs = (Run Hours) x (Energy Cost)
where:
Run Hours is the greater of 16 hours or the actual run hours of the Unit
from start until restoration of the Illinois Power T&D System to normal
operation.
Energy Cost is the price reported in as the "ComEd, into" price in Megawatt
Daily under the "Day-ahead markets " column for the day and hour (On-Peak
or Off-Peak) in question.
7. Incentive Factor
An incentive factor, Z, is applied to the cost values to incentivize DMG to
provide Black Start Service.
Z = 10%
where:
Z is an incentive factor initially set to the above level and which will be
periodically reviewed by Illinois Power and DMG, but all revisions must be
mutually agreed. The defined black start costs are multiplied by the incentive
factor to determine the incentive.
D-2
[EXHIBIT G TO SPA]
ESCROW AGREEMENT
----------------
[Filed confidentially pursuant to Rule 104]
[EXHIBIT H TO SPA]
NEGOTIATED TIER 2 MEMORANDUM
This Negotiated Tier 2 Memorandum ("Agreement") is entered into between
Illinois Power Company ("IP") and Dynegy Power Marketing, Inc. ("DYPM")
effective ________, 2004. IP and DYPM are parties to that certain Power Purchase
Agreement ("PPA") dated __________, 2004. Upon execution and delivery hereof,
this Agreement shall constitute a Negotiated Tier 2 Memorandum as defined in the
PPA. Capitalized terms used but not defined herein shall have the same meanings
set forth in the PPA.
DYPM shall sell and deliver to IP Negotiated Tier 2 Capacity and Negotiated Tier
2 Energy, and IP shall receive and purchase from DYPM such Negotiated Tier 2
Capacity and Negotiated Tier 2 Energy, under the following terms and conditions:
Term: January 1, 2005 through December 31,
2006
Negotiated Tier 2 Capacity: DYPM agrees to provide 300 MW of
Negotiated Tier 2 Capacity in 2005 and
150 MW of Negotiated Tier 2 Capacity in
2006. These amounts of Negotiated Tier 2
Capacity shall provide IP with Capacity
in addition to, among other sources, the
Tier 1 Capacity provided by DYPM to IP
pursuant to the PPA.
Negotiated Tier 2 Capacity Price: $1.33 per kW-month
Negotiated Tier 2 Energy Quantity: Negotiated Tier 2 Energy, for any hour,
shall not exceed 300 MW in 2005 and 150
MW in 2006.
Day Ahead Negotiated Tier 2 Energy: DYPM agrees to provide Negotiated Tier 2
Energy scheduled by IP on a day ahead
basis by 7:30 AM CST. Day Ahead
Negotiated Tier 2 Energy shall be
scheduled in increments of 50 MW for a
total schedule of at least 4 consecutive
hours, with all scheduled hourly
increases or decreases equaling 50 MW.
In the event IP chooses to extend the
day ahead schedule on an intra-day
basis, IP shall notify DYPM no later
than 45 minutes prior to the top of the
delivery hour.
Intra-day Negotiated Tier 2 Energy: DYPM agrees to provide Negotiated Tier 2
Energy on an intra-day basis requested
by IP no later than 45 minutes prior to
the top of the delivery hour. Intra-day
Negotiated Tier 2 Energy shall be
scheduled in increments of 50 MW for no
less than one hour.
Negotiated Tier 2 Energy Price: The Price for Day Ahead Negotiated Tier
2 Energy shall be: (i) during On-Peak
Hours, the Shaped Daily On-Peak Index
for such hours of such day, and (ii)
during Off-Peak Hours, the "into
Cinergy" "off peak" index as published
in the ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.'s
Power Markets Week's Daily Price Report
- Daily Price Indexes, as such terms are
defined in such publication or, if such
index is not available for the
applicable Day, the comparable index
from the Day most recently-available.
The Price for Intra-day Negotiated Tier
2 Energy shall be at a price to be
negotiated by the Parties.
Congestion: IP shall be solely responsible for any
Congestion Costs and Transmission Losses
associated with transmission of
Negotiated Tier 2 Energy from the
Point(s) of Delivery to the IP Load.
Other Provisions: IP shall schedule Negotiated Tier 2
Energy only to the extent that Tier 1
Energy and any Qualified Purchases have
been fully scheduled for any hour for
such day. For purposes of the PPA, the
Negotiated Tier 2 Capacity and
Negotiated Tier 2 Energy provided under
this Agreement shall represent
"Negotiated Tier 2 Capacity" and
"Negotiated Tier 2 Energy." Except as
expressly modified by this Agreement,
all other provisions of the PPA shall
remain in full force and effect.
IN WITNESS WHEREOF the Parties hereto, by their duly authorized representatives,
have caused this Agreement to be executed on the date first written above.
ILLINOIS POWER COMPANY DYNEGY POWER MARKETING, INC.
By: By:
Name: Name:
Title: Title:
2
SCHEDULES
TO
STOCK PURCHASE AGREEMENT
The attached schedules (each, a "Schedule" and collectively, the
"Schedules") have been prepared and delivered in connection with the Stock
Purchase Agreement dated as of February 2, 2004 (as amended from time to time,
the "Agreement") by and among Ameren Corporation, a Missouri corporation
("Purchaser"), Illinova Corporation, an Illinois corporation ( "Seller"),
Illinova Generating Company, an Illinois corporation ("IGC") and Dynegy Inc., an
Illinois corporation ("Dynegy"). Capitalized terms used and not otherwise
defined in these Schedules have the meanings ascribed to such terms in the
Agreement. These Schedules are qualified in their entirety by reference to the
Agreement and are not intended to constitute, and shall not be construed as
constituting, any representations or warranties of Dynegy and Seller, except as
and to the extent provided in the Agreement.
The disclosure of any information shall not be deemed to constitute an
acknowledgment that such information is required to be disclosed in connection
with the representations and warranties made by Dynegy and Seller in the
Agreement or that it is material, nor shall such information be deemed to
establish a level or standard of materiality for purposes of the Agreement.
Headings have been inserted in the Schedules for convenience of reference only
and shall to no extent have the effect of amending or changing the express
description of the sections as set forth in the Agreement.
SCHEDULE 1.1(a)
---------------
REFERENCE BALANCE SHEET
See attached.
ILLINOIS POWER COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (IN MILLIONS, EXCEPT SHARE DATA) (UNAUDITED)
--------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
2003 2002
---------------- --------------
ASSETS
UTILITY PLANT:
Electric (includes construction work in progress of
$91 million and $98 million, respectively) $ 2,484 $ 2,410
Gas (includes construction work in progress of
$18 million and $18 million, respectively) 781 770
------------ ------------
3,265 3,180
Less -- accumulated depreciation 1,261 1,219
------------ ------------
2,004 1,961
------------ ------------
INVESTMENTS AND OTHER ASSETS 10 9
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents 23 117
Restricted cash 20 17
Accounts receivable, net 120 104
Accounts receivable, affiliates 71 22
Accrued unbilled revenue 63 78
Inventories, at average cost 64 44
Prepayments and other 42 20
------------ ------------
403 402
------------ ------------
NOTE RECEIVABLE FROM AFFILIATE 2,271 2,271
------------ ------------
DEFERRED DEBITS:
Transition period cost recovery 126 155
Other 134 143
------------ ------------
260 298
------------ ------------
$ 4,948 $ 4,941
============ ============
CAPITAL AND LIABILITIES
CAPITALIZATION:
Common stock -- no par value, 100,000,000 shares authorized:
75,643,937 shares issued, stated at $ 1,274 $ 1,274
Additional paid-in capital 9 9
Retained earnings - accumulated since 1/1/99 478 390
Accumulated other comprehensive income (loss), net of tax (13) (13)
Less -- Capital stock expense 7 7
Less -- 12,751,724 shares of common stock in treasury, at cost 287 287
------------ ------------
1,454 1,366
Preferred stock 46 46
Long-term debt 1,801 1,719
------------ ------------
3,301 3,131
------------ ------------
CURRENT LIABILITIES:
Accounts payable 41 66
Accounts payable, affiliates 11 18
Notes payable and current portion of long-term debt 86 376
Accrued liabilities 240 145
------------ ------------
378 605
------------ ------------
DEFERRED CREDITS:
Accumulated deferred income taxes 1,003 1,038
Accumulated deferred investment tax credits ▇▇ ▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇
------------ ------------
1,269 1,205
------------ ------------
$ 4,948 $ 4,941
============ ============
Above Financial Statements are not accompanied with Footnotes
SCHEDULE 1.1(b)
---------------
PERMITTED LIENS
1. Liens created under the General Mortgage Indenture and Deed of Trust dated
as of November 1, 1992.
2. Liens resulting from the creation and establishment of intangible
transition property pursuant to a transitional funding order by the
Illinois Commerce Commission dated September 10, 1998 (Docket 98-0488) and
the issuance of the Transitional Funding Trust Notes.
3. Ordinary course Liens in respect of the lease of equipment, the sale of
receivables, the 1992 Mortgage (as defined in Item 2 of Schedule 3.4(b)),
and the ▇▇▇▇▇▇ Assets as set forth on the UCC search results on the
attached Appendix A.
4. Items set forth on the attached Appendix B.
5. EEI Shares are pledged under (a) the Credit Agreement dated as of April 1,
2003, as amended through the date hereof, by and among Dynegy Holdings
Inc., Dynegy Inc., as the parent guarantor, Citibank, N.A. and Bank of
America, N.A., as administrative agents for the lenders, Bank One, NA (Main
Office Chicago), as collateral agent for the lenders, and the various
banks, financial institutions and other lenders parties thereto (the
"Dynegy Credit Agreement"), and (b) the Indenture dated as of August 11,
2003, as amended through the date hereof, by and among Dynegy Holdings Inc.
and Wilmington Trust Company, as indenture trustee. Dynegy will cause all
such Liens to be removed upon the purchase of the EEI Shares by Purchaser.
EEI Shares may also be subject to certain restrictions under EEI's
governing documents and shareholder agreement.
APPENDIX A TO SCHEDULE 1.1(b)
See attached.
APPENDIX B TO SCHEDULE 1.1(b)
See attached.
SCHEDULE 1.1(c)
---------------
[Filed confidentially pursuant to Rule 104]
SCHEDULE 1.1(d)
---------------
EXISTING IPC OBLIGATIONS AS OF SEPTEMBER 30, 2003
UNPAID
PRINCIPAL
NEW MORTGAGE BONDS ($ IN 000S)
------------------------------------------------------------------------ -------------
6 3/4% series due 2005 70,000
------------------------------------------------------------------------ -------------
7.5% series due 2009 250,000
------------------------------------------------------------------------ -------------
11 1/2% series due 2010 550,000
------------------------------------------------------------------------ -------------
5.70% series due 2024 (Pollution Control Series U) 35,615
------------------------------------------------------------------------ -------------
7.40% series due 2024 (Pollution Control Series V) 84,150
------------------------------------------------------------------------ -------------
7 1/2% series due 2025 65,630
------------------------------------------------------------------------ -------------
5.40% series due 2028 (Pollution Control Series S) 18,700
------------------------------------------------------------------------ -------------
5.40% series due 2028 (Pollution Control Series T) 33,755
------------------------------------------------------------------------ -------------
Adjustable rate series due 2032 (Pollution Control Series P) (note 1) 70,000
------------------------------------------------------------------------ -------------
Adjustable rate series due 2032 (Pollution Control Series Q) (note 1) 45,000
------------------------------------------------------------------------ -------------
Adjustable rate series due 2032 (Pollution Control Series R) (note 1) 35,000
------------------------------------------------------------------------ -------------
Adjustable rate series due 2028 (Pollution Control Series W) (note 1) 111,770
------------------------------------------------------------------------ -------------
Adjustable rate series due 2017 (Pollution Control Series X) (note 1) 75,000
------------------------------------------------------------------------ -------------
TOTAL NEW MORTGAGE BONDS 1,444,620
------------------------------------------------------------------------ -------------
TRANSITIONAL FUNDING TRUST NOTES ("TFT NOTES") (note 2) 452,400
------------------------------------------------------------------------ -------------
THE TOTAL LIQUIDATION PREFERENCE OF THE 249,751 SHARES OF PREFERRED
STOCK, $50 PAR VALUE PER SHARE, OF IPC NOT OWNED BY SELLER 12,488
------------------------------------------------------------------------ -------------
TOTAL AMOUNT OF EXISTING IPC OBLIGATIONS ($ in 000s) (note 3): 1,909,508
NOTES:
(1) Accrual based on reset and remarketing rates at September 2003. Series Q, W
and X reset weekly. Series P and R reset every five weeks.
(2) Net of accrual of $1,200,000. Series A-5 through A-7. By June 30, 2004,
balance expected to be amortized to $388.8 million. Receipts related to
principal obligations for TFT Notes from the last principal payment (25th day of
quarter-ending month) to the Closing Date will reduce the TFT Notes balance for
purposes of calculating Existing IPC Obligations. The IFC receipts are passed to
the Trustee within 48 hours of receipt.
(3) Does not include $66,400,000 principal balance on ▇▇▇▇▇▇ lease (accreted
value at the end of the term to be $80,990,000). IPC subleases the ▇▇▇▇▇▇
facility to DMG. DMG makes all lease payments directly to the banks. See Item 4
on Schedule 5.1.
SCHEDULE 1.1(e)
---------------
GENERATION ASSETS
1. All assets transferred pursuant to the Asset Transfer
Agreements and all assets transferred to DMG pursuant to the
Generation Agreement.
2. Coal Supply Agreement, dated June 19, 1999, between Dynegy Coal
Trading & Transportation, L.L.C. (as assignee of IPC) and
Peabody Coal Sales Company, as amended by First Amendment dated
December 4, 2002 (the "Coal Supply Agreement").
3. ▇▇▇▇▇▇ Assets.
SCHEDULE 1.1(f)
---------------
KNOWLEDGE OF PURCHASER AND SELLER
1. Purchaser
---------
▇▇▇▇▇▇ ▇▇▇▇▇▇ - EVP, CFO
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ - SVP
▇▇▇▇▇ ▇▇▇▇▇▇ - VP
▇▇▇▇ ▇▇▇▇▇▇▇▇ - SVP
▇▇▇▇▇▇ ▇▇▇▇▇ - VP, Controller
▇▇▇▇▇▇▇ ▇▇▇▇▇ - VP
▇▇▇▇▇ ▇▇▇▇▇▇ - VP
▇▇▇▇ ▇▇▇▇▇▇ - VP
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ - VP, Treasurer
▇▇▇ ▇▇▇▇▇▇▇ - General Manager
▇▇▇ ▇▇▇▇▇▇ - Manager
▇▇▇▇▇ ▇▇▇▇▇ - Principal Business Planner
2. Dynegy Parties
--------------
▇▇▇▇▇▇ ▇▇▇ SVP and Treasurer - Dynegy
▇▇▇▇ ▇▇▇▇▇▇▇▇ SVP, Planning - Dynegy
▇▇▇▇▇ ▇▇▇▇▇▇ Manager, Strategic Investments - Dynegy
▇▇▇▇▇ ▇▇▇▇▇▇ Managing Director, Planning - Dynegy
▇▇▇▇▇ ▇▇▇▇▇▇ VP, Tax - Dynegy
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. Director, Corporate Accounting - Dynegy
▇▇▇▇▇ ▇▇▇▇▇▇ Managing Director, Legal - Dynegy
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ VP, Risk Management & Insurance - Dynegy
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Director, HR Midstream Services - Dynegy
▇▇▇▇▇ ▇▇▇▇▇▇▇ SVP, Utility Operations
▇▇▇ ▇▇▇▇ Vice President, Asset Performance /
Compliance Management
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Vice President, Energy Supply &
Customer Management
▇▇▇▇▇ ▇ ▇▇▇▇▇▇ Managing Director - Controller
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Senior Corporate Counsel & CLO
▇▇▇▇▇ ▇▇▇▇▇ Director - IP Human Resources
▇▇▇▇▇ ▇▇▇▇▇▇ IP Environmental
▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Attorney
▇▇▇▇ ▇▇▇▇▇▇▇ DMG Environmental
SCHEDULE 3.2
------------
CAPITALIZATION OF SUBSIDIARIES
------------------------------
1. IP Gas Supply Company, an Illinois corporation
o 60,000 shares of Common Stock are authorized and 41,000 shares of
Common Stock are issued and outstanding.
2. Illinois Power Transmission Company, LLC, a Delaware limited liability
company
o Initial Member contribution of $1,000 by IPC. Records do not reflect
issuance of membership interest certificates.
3. Illinois Power Securitization Limited Liability Company, a Delaware
limited liability company ("Securitization LLC")
o Sole member is IPC. Initial capital contribution of $1,000 by IPC.
4. Illinois Power Special Purpose Trust, a Delaware business trust
o Sole beneficial owner is Securitization LLC.
5. Illinois Power Financing I, a Delaware statutory business trust
("Financing I")
o In January 1996, Financing I issued 124,000 common securities to IPC
(with a liquidation value of $25 per common security) and 4,000,000
preferred securities (with a liquidation value of $25 per preferred
security). The common and the preferred securities were redeemed in
September 2001.
6. Illinois Power Financing II, a Delaware statutory business trust
o No Equity Interests have been issued.
CONTRACTS RELATING TO REDEMPTION OF IPC CAPITAL STOCK:
1. Pursuant to the Restated Articles of Incorporation of IPC dated August 10,
1994, IPC has the right to redeem the preferred stock of IPC at any time.
SCHEDULE 3.4(a)
---------------
GOVERNMENTAL AUTHORITY CONSENTS AND APPROVALS
1. All approvals listed on Schedule 8.1(b).
2. Approvals to transfer the Permits listed on Schedule 3.12(a).
SCHEDULE 3.4(b)
---------------
NO VIOLATION
[Filed confidentially pursuant to Rule 104]
SCHEDULE 3.7
------------
ABSENCE OF CHANGES
[Filed confidentially pursuant to Rule 104]
SCHEDULE 3.8
------------
TAXES
[Filed confidentially pursuant to Rule 104]
SCHEDULE 3.9
------------
LITIGATION
[Filed confidentially pursuant to Rule 104]
SCHEDULE 3.10
-------------
EMPLOYEE BENEFIT PLANS
[Filed confidentially pursuant to Rule 104]
SCHEDULE 3.11
-------------
ENVIRONMENTAL MATTERS
[Filed confidentially pursuant to Rule 104]
SCHEDULE 3.12(a)
----------------
MATERIAL PERMITS AND COMPLIANCE WITH APPLICABLE LAW
1. Material Permits.
FCC LICENSES
------------
--------------------- ---------------------- --------------------------- ------------------------- ---------------
AREA OF FREQUENCY
CALL SIGN OPERATION DATE ISSUED EXPIRATION DATE SPECTRUM
--------------------- ---------------------- --------------------------- ------------------------- ---------------
852.33750,
855.38750,
855.66250,
856.33750,
857.33750,
858.33750,
859.33750,
WNMO496 Fairview Heights December 7, 1999 September 16, 2004 860.33750
--------------------- ---------------------- --------------------------- ------------------------- ---------------
855.38750,
856.31250,
858.31250,
859.31250,
WNMO496 Decatur December 7, 1999 September 16, 2004 860.31250
--------------------- ---------------------- --------------------------- ------------------------- ---------------
854.86250,
855.16250,
855.66250,
855.93750,
WNMO496 Rising December 7, 1999 September 16, 2004 856.28750
--------------------- ---------------------- --------------------------- ------------------------- ---------------
856.33750,
857.33750,
858.33750,
859.33750,
WNMO496 ▇▇▇▇▇▇ December 7, 1999 September 16, 2004 860.33750
--------------------- ---------------------- --------------------------- ------------------------- ---------------
856.33750,
857.33750,
WNMO496 Jacksonville December 7, 1999 September 16, 2004 858.33750
--------------------- ---------------------- --------------------------- ------------------------- ---------------
852.33750,
853.33750,
WNMO496 Bloomington December 7, 1999 September 16, 2004 857.31250
--------------------- ---------------------- --------------------------- ------------------------- ---------------
853.33750,
855.38750,
859.33750,
WPAR499 Galesburg October 9, 2002 September 29, 2012 860.33750
--------------------- ---------------------- --------------------------- ------------------------- ---------------
854.86250,
855.16250,
855.66250,
WPAR499 Raritan October 9, 2002 September 29, 2012 857.31250
--------------------- ---------------------- --------------------------- ------------------------- ---------------
--------------------- ---------------------- --------------------------- ------------------------- ---------------
AREA OF FREQUENCY
CALL SIGN OPERATION DATE ISSUED EXPIRATION DATE SPECTRUM
--------------------- ---------------------- --------------------------- ------------------------- ---------------
856.31250,
858.33750,
859.31250,
WPAR499 Aledo October 9, 2002 September 29, 2012 860.31250
--------------------- ---------------------- --------------------------- ------------------------- ---------------
855.93750,
856.93750,
857.93750,
WPAR499 Kewanee October 9, 2002 September 29, 2012 858.31250
--------------------- ---------------------- --------------------------- ------------------------- ---------------
855.16250,
858.33750,
859.31250,
WPAR499 Deer Park October 9, 2002 September 29, 2012 860.31250
--------------------- ---------------------- --------------------------- ------------------------- ---------------
855.38750,
856.33750,
857.33750,
858.33750,
859.33750,
860.33750,
WPAR507 Edwardsville August 15, 2002 September 29, 2012 860.96250
--------------------- ---------------------- --------------------------- ------------------------- ---------------
852.33750,
855.93750,
WPAR507 Mt. ▇▇▇▇▇▇ August 15, 2002 September 29, 2012 858.23750
--------------------- ---------------------- --------------------------- ------------------------- ---------------
855.16250,
855.16250,
WPAR507 Vandalia August 15, 2002 September 29, 2012 855.38750
--------------------- ---------------------- --------------------------- ------------------------- ---------------
855.38750,
855.73750,
WPAR507 Tamaroa August 15, 2002 September 29, 2012 856.28750
--------------------- ---------------------- --------------------------- ------------------------- ---------------
855.16250,
857.31250,
WPAR507 Sparta August 15, 2002 September 29, 2012 859.31250,
--------------------- ---------------------- --------------------------- ------------------------- ---------------
852.33750,
856.33750,
857.33750,
858.33750,
859.33750,
WPAR507 Waterloo August 15, 2002 September 29, 2012 860.33750
--------------------- ---------------------- --------------------------- ------------------------- ---------------
855.66250,
WPIG265 ▇▇▇▇▇▇ August 15, 2002 September 29, 2012 860.96250
--------------------- ---------------------- --------------------------- ------------------------- ---------------
856.31250,
858.31250,
WPIG265 ▇▇▇▇▇▇▇ August 15, 2002 September 29, 2012 860.31250
--------------------- ---------------------- --------------------------- ------------------------- ---------------
852.33750,
854.86250,
▇▇▇▇▇▇▇ ▇▇. Olive August 15, 2002 September 29, 2012 855.73750
--------------------- ---------------------- --------------------------- ------------------------- ---------------
859.33750,
WPIG265 Delwood August 15, 2002 September 29, 2012 860.33750
--------------------- ---------------------- --------------------------- ------------------------- ---------------
--------------------- ---------------------- --------------------------- ------------------------- ---------------
AREA OF FREQUENCY
CALL SIGN OPERATION DATE ISSUED EXPIRATION DATE SPECTRUM
--------------------- ---------------------- --------------------------- ------------------------- ---------------
806.00000,
WPAR503 IL. Statewide August 15, 2002 September 29, 2012 821.00000
--------------------- ---------------------- --------------------------- ------------------------- ---------------
WNPW436 Galesburg (NEW) September 2, 1999 September 26, 2004 153.65
--------------------- ---------------------- --------------------------- ------------------------- ---------------
KSA823 Decatur December 18, 2002 January 27, 2013 153.65
--------------------- ---------------------- --------------------------- ------------------------- ---------------
KBJ68 Central Illinois December 18, 2002 March 9, 2013 153.56000,
153.65000
--------------------- ---------------------- --------------------------- ------------------------- ---------------
KSC235 Jacksonville May 22, 2003 July 29, 2013 153.65
--------------------- ---------------------- --------------------------- ------------------------- ---------------
KRJ621 E. St. Louis April 17, 1997 April 21, 2012 456.12500,
451.12500
--------------------- ---------------------- --------------------------- ------------------------- ---------------
808.48750,
WPDB586 IL. Statewide July 29, 2003 September 8, 2013 853.48750
--------------------- ---------------------- --------------------------- ------------------------- ---------------
153.56000,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ September 10, 2003 November 16, 2013 153.65000
--------------------- ---------------------- --------------------------- ------------------------- ---------------
FCC ANTENNA STRUCTURE
---------------------
--------------------- -------------------------------------------------- ------------------------- ---------------
FCC REGISTRATION ANTENNA STRUCTURE LOCATION LATITUDE LONGITUDE
NUMBER
--------------------- -------------------------------------------------- ------------------------- ---------------
1007456 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇. ▇▇▇▇▇▇▇, ▇▇ 39-52-18.1N 88-57-2.3W
--------------------- -------------------------------------------------- ------------------------- ---------------
1007458 0.5 MI E. of I74 and US 34 Galesburg, IL 40-58-40N 90-19-40W
--------------------- -------------------------------------------------- ------------------------- ---------------
1050289 NE Corner Seyborn Ave/UPR T Hillsboro, IL 39-8-14.1N 89-29-15.3W
--------------------- -------------------------------------------------- ------------------------- ---------------
1050287 4.5KM WW of Raritan, IL 40-40-27.1N 90-52-16.4W
--------------------- -------------------------------------------------- ------------------------- ---------------
1007450 0.5 MI West of Rising, IL 40-09-28N 88-20-23W
--------------------- -------------------------------------------------- ------------------------- ---------------
1007453 Staunton, IL 39-2-37.1N 89-44-56.3W
--------------------- -------------------------------------------------- ------------------------- ---------------
HUMAN RESOURCES
---------------
ILLINOIS DEPARTMENT OF HUMAN RIGHTS ("IDHR") VENDOR NUMBERS
There is a requirement to be certified by the IDHR to do business with the State
of Illinois. The Bidder's Application Form and the IDHR Form must be completed,
approved, and on file with the State of Illinois before a contract can be
awarded to any vendor. IPC has complied with these requirements and received
facility numbers for each of its major facilities. This is not required yearly;
it is performed as required by the state.
CITY OF CHAMPAIGN ANNUAL CERTIFICATION OF COMPLIANCE
A City of Champaign ordinance requires vendors to provide necessary affirmative
action and equal employment opportunity-related documents annually to be
approved to do business with the City of Champaign for a period of one year.
IPC's current Certificate of Compliance expires on August 31, 2004.
OTHER
All certificates of public convenience and necessity issued by ICC to IPC.
ENVIRONMENTAL PERMITS (BY TYPE AND AREA)
----------------------------------------
-----------------------------------------------------------------------------------------
AIR
-----------------------------------------------------------------------------------------
Air Stripper Belleville MGP
-
Methanol Storage Tank Hillsboro Gas Storage Field
Shanghai Gas Storage Field
Boilers and Oxidizer Freeburg Gas Storage Field
Gasoline Storage Tank Belleville Service Area
Bloomington Service Area
Champaign Service Area
Danville Service Area
Headquarters - Decatur
Decatur Service Area
East St. Louis Service Area
Maryville Service Area
Sparta Service Area
Title V Permit for Diesel Generators - Permit is jointly Bloomington
owned with State Farm
WATER
Land Applicaton/Land Treatment of Hydrostatic Test Waters Various - Generic Permit
Treatment and Land Application of Formation Waters Shanghai Gas Storage Field
Storm Water during Construction Activities 27th St. Substation - Decatur
North Decatur Substation
WASTE
PCB Storage LaSalle Service Area
MISCELLANEOUS
Open Burning Permit for Fire Fighting Training #B0311043 Various locations where
training will occur
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
[Filed confidentially pursuant to Rule 104]
SCHEDULE 3.12(c)
----------------
MUNICIPAL FRANCHISE AGREEMENTS
See attached.
Page 1 of 12
ATTACHMENT TO SCHEDULE 3.12(c)
------------------------------
Electric and Gas Franchise Ordinance Report
(Sorted by Electric Franchise Expiration Date)
----------------------------------------------------------------------------------
EXPIRATION DATE
------------------------------------
MUNICIPALITY REGION ELECTRIC GAS
==================================================================================
Freeburg Belleville None 03/16/2010
----------------------------------------------------------------------------------
Mascoutah Belleville 00/00/2007 04/13/2010
----------------------------------------------------------------------------------
Alorton E. St. Louis None 08/24/2024
----------------------------------------------------------------------------------
Breese E. St. Louis None 01/01/2013
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. St. ▇▇▇▇▇ None 01/01/2008
----------------------------------------------------------------------------------
E. St. ▇▇▇▇▇ ▇. St. Louis None 05/05/2014
----------------------------------------------------------------------------------
Fairmont City E. St. Louis None 08/02/2016
----------------------------------------------------------------------------------
Sauget * E. St. Louis None 10/2/2026
----------------------------------------------------------------------------------
Washington Park E. St. Louis None 03/25/2015
----------------------------------------------------------------------------------
Maquon Galesburg None 10/01/2013
----------------------------------------------------------------------------------
Roseville Galesburg None 10/01/2016
----------------------------------------------------------------------------------
Andover Kewanee None 10/01/2016
----------------------------------------------------------------------------------
Matherville Kewanee None 10/01/2013
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ Kewanee None 10/01/2014
----------------------------------------------------------------------------------
Sherrard Kewanee None 10/01/2014
----------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇/Ottawa None 10/01/2009
----------------------------------------------------------------------------------
Lostant LaSalle/Ottawa None 10/01/2012
----------------------------------------------------------------------------------
Ogelsby LaSalle/Ottawa None 09/18/2030
----------------------------------------------------------------------------------
Peru LaSalle/Ottawa None 06/06/2010
----------------------------------------------------------------------------------
Rutland LaSalle/Ottawa None 10/01/2012
----------------------------------------------------------------------------------
Toluca LaSalle/Ottawa None 10/01/2012
----------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇/Ottawa None 10/01/2012
----------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇/Ottawa None 10/01/2012
----------------------------------------------------------------------------------
Hartford Maryville/River Bend None 11/01/2013
----------------------------------------------------------------------------------
Highland Maryville/River Bend None 05/25/2011
----------------------------------------------------------------------------------
Mt. ▇▇▇▇▇▇ Mt. ▇▇▇▇▇▇/Centralia 07/20/2048 04/17/2027
----------------------------------------------------------------------------------
St. Clair County Belleville 09/28/1997 None
----------------------------------------------------------------------------------
Normal Bloomington 11/21/1997 None
----------------------------------------------------------------------------------
Pinckneyville Sparta 04/28/2000 None
----------------------------------------------------------------------------------
Kappa Bloomington 11/25/2048 None
----------------------------------------------------------------------------------
Bluford Mt. ▇▇▇▇▇▇/ Centralia 07/28/2049 None
----------------------------------------------------------------------------------
* This community has adopted a new Electric and/or Gas Franchise Ordinance since
the beginning of the Franchise Renewal Program initiated in 1991.
Page 2 of 12
ATTACHMENT TO SCHEDULE 3.12(c)
------------------------------
Electric and Gas Franchise Ordinance Report
(Sorted by Electric Franchise Expiration Date)
----------------------------------------------------------------------------------
EXPIRATION DATE
------------------------------------
MUNICIPALITY REGION ELECTRIC GAS
==================================================================================
Vandalia Hillsboro 10/17/2025 None
----------------------------------------------------------------------------------
Dupo * E. St. Louis 01/08/2026 * None
----------------------------------------------------------------------------------
▇'▇▇▇▇▇▇ E. St. Louis 11/14/2026 * 12/31/2019
----------------------------------------------------------------------------------
▇▇▇▇▇* Bloomington 11/14/2026 * None
----------------------------------------------------------------------------------
New Bedford * Kewanee 01/26/2026 None
----------------------------------------------------------------------------------
Galva* Kewanee 04/02/2026 04/02/2026
----------------------------------------------------------------------------------
Lebanon * E. St. Louis 01/11/2026 04/01/2010
----------------------------------------------------------------------------------
Long Creek Decatur 05/04/2026 None
----------------------------------------------------------------------------------
Cambridge * Kewanee 05/29/2026 09/02/2020
----------------------------------------------------------------------------------
El Paso* Bloomington 09/11/2026 None
----------------------------------------------------------------------------------
Abingdon* Galesburg 09/11/2026 10/01/2004
----------------------------------------------------------------------------------
Wyanet* Kewanee 10/22/2026 10/01/2011
----------------------------------------------------------------------------------
New Athens* Belleville 05/06/2027 11/28/2010
----------------------------------------------------------------------------------
Mt. Olive Hillsboro 04/17/2027 04/17/2027
----------------------------------------------------------------------------------
Staunton Hillsboro 05/07/2027 04/13/2028
----------------------------------------------------------------------------------
Spring Valley LaSalle/Ottawa 06/10/2049 10/31/2027
----------------------------------------------------------------------------------
Oreana Decatur 10/1/2027 07/25/2016
----------------------------------------------------------------------------------
LaHarpe Galesburg 02/21/2028 None
----------------------------------------------------------------------------------
Oquawka Galesburg 02/07/2028 None
----------------------------------------------------------------------------------
Germantown E. St. Louis 04/15/2004 10/01/2012
----------------------------------------------------------------------------------
▇▇▇▇▇▇ E. St. Louis 12/10/2004 10/01/2013
----------------------------------------------------------------------------------
Bloomington Bloomington 08/10/2005 None
----------------------------------------------------------------------------------
Lynnville Jacksonville 05/16/2006 None
----------------------------------------------------------------------------------
Carlinville Hillsboro 07/13/2006 07/13/2006
----------------------------------------------------------------------------------
Salem Mt. ▇▇▇▇▇▇/ Centralia 08/17/2006 None
----------------------------------------------------------------------------------
Old Shawneetown Eldorado 10/12/2006 None
----------------------------------------------------------------------------------
Wapella Bloomington 01/29/2007 10/01/2013
----------------------------------------------------------------------------------
North ▇▇▇▇▇▇▇▇▇ Galesburg 04/03/2008 10/01/2015
----------------------------------------------------------------------------------
* This community has adopted a new Electric and/or Gas Franchise Ordinance since
the beginning of the Franchise Renewal Program initiated in 1991.
Page 3 of 12
ATTACHMENT TO SCHEDULE 3.12(c)
------------------------------
Electric and Gas Franchise Ordinance Report
(Sorted by Electric Franchise Expiration Date)
----------------------------------------------------------------------------------
EXPIRATION DATE
------------------------------------
MUNICIPALITY REGION ELECTRIC GAS
==================================================================================
Forsyth Decatur 05/29/2008 10/01/2012
----------------------------------------------------------------------------------
Goodfield Bloomington 11/12/2008 None
----------------------------------------------------------------------------------
Alpha Kewanee 03/26/2009 10/01/2012
----------------------------------------------------------------------------------
Rio Galesburg 04/02/2009 10/01/2015
----------------------------------------------------------------------------------
▇▇▇▇▇▇ Galesburg 06/17/2009 10/01/2016
----------------------------------------------------------------------------------
Keithsburg Galesburg 08/24/2009 10/01/2014
----------------------------------------------------------------------------------
Raritan Galesburg 08/24/2009 None
----------------------------------------------------------------------------------
Joy Kewanee 12/16/2009 10/01/2012
----------------------------------------------------------------------------------
▇▇▇▇▇▇ LaSalle/Ottawa 01/04/2010 10/01/2016
----------------------------------------------------------------------------------
New Boston Kewanee 02/02/2010 None
----------------------------------------------------------------------------------
Marseilles LaSalle/Ottawa 02/20/2010 None
----------------------------------------------------------------------------------
Congerville Bloomington 04/13/2010 None
----------------------------------------------------------------------------------
New Windsor Kewanee 04/25/2010 10/01/2012
----------------------------------------------------------------------------------
Carlock Bloomington 05/26/2010 None
----------------------------------------------------------------------------------
Decatur Decatur 08/22/2010 08/22/2010
----------------------------------------------------------------------------------
Alexis Galesburg 03/10/2011 10/01/2015
----------------------------------------------------------------------------------
Woodhull Kewanee 03/21/2011 10/01/2012
----------------------------------------------------------------------------------
▇▇▇▇▇ Kewanee 04/17/2011 04/21/2022
----------------------------------------------------------------------------------
Mackinaw Bloomington 11/03/2011 None
----------------------------------------------------------------------------------
Clinton Bloomington 01/03/2012 01/03/2012
----------------------------------------------------------------------------------
Monmouth Galesburg 01/09/2012 01/09/2012
----------------------------------------------------------------------------------
Wood River Maryville/River Bend 04/04/2013 04/04/2013
----------------------------------------------------------------------------------
Central City Mt. ▇▇▇▇▇▇/ Centralia 04/23/2013 04/23/2013
----------------------------------------------------------------------------------
Junction City Mt. ▇▇▇▇▇▇/ Centralia 04/23/2013 04/23/2013
----------------------------------------------------------------------------------
▇▇▇ Mt. ▇▇▇▇▇▇/ Centralia 05/15/2013 10/01/2017
----------------------------------------------------------------------------------
Knoxville Galesburg 06/21/2013 06/13/2013
----------------------------------------------------------------------------------
Shiloh Belleville 06/24/2013 07/02/2021
----------------------------------------------------------------------------------
* This community has adopted a new Electric and/or Gas Franchise Ordinance since
the beginning of the Franchise Renewal Program initiated in 1991.
Page 4 of 12
ATTACHMENT TO SCHEDULE 3.12(c)
------------------------------
Electric and Gas Franchise Ordinance Report
(Sorted by Electric Franchise Expiration Date)
----------------------------------------------------------------------------------
EXPIRATION DATE
------------------------------------
MUNICIPALITY REGION ELECTRIC GAS
==================================================================================
Alhambra Hillsboro 06/24/2013 10/01/2017
----------------------------------------------------------------------------------
▇▇▇▇▇▇ Jacksonville 07/23/2013 10/01/2016
----------------------------------------------------------------------------------
Tamaroa Sparta 07/23/2013 10/01/2015
----------------------------------------------------------------------------------
Venice Granite City 12/13/2013 12/13/2013
----------------------------------------------------------------------------------
▇▇▇▇▇ Maryville/River Bend 12/16/2013 12/17/2013
----------------------------------------------------------------------------------
▇▇▇▇▇▇ Maryville/River Bend 12/16/2013 12/18/2013
----------------------------------------------------------------------------------
Edwardsville Maryville/River Bend 02/28/2014 02/28/2014
----------------------------------------------------------------------------------
Good Hope Galesburg 03/14/2014 None
----------------------------------------------------------------------------------
National City Granite City 03/30/2014 03/31/2014
----------------------------------------------------------------------------------
Pontoon Beach Granite City 04/13/2014 04/13/2014
----------------------------------------------------------------------------------
Aledo Kewanee 05/14/2014 None
----------------------------------------------------------------------------------
Wilsonville Hillsboro 06/23/2014 10/01/2013
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇ Hillsboro 07/28/2014 07/28/2014
----------------------------------------------------------------------------------
Keyesport Hillsboro 07/28/2014 10/01/2016
----------------------------------------------------------------------------------
Gulfport Galesburg 08/05/2014 None
----------------------------------------------------------------------------------
Panama Hillsboro 08/05/2014 10/01/2017
----------------------------------------------------------------------------------
▇▇▇▇▇▇ Springs Hillsboro 08/12/2014 11/10/2019
----------------------------------------------------------------------------------
Coffeen Hillsboro 09/18/2014 10/01/2016
----------------------------------------------------------------------------------
Greenville Hillsboro 09/18/2014 08/25/2010
----------------------------------------------------------------------------------
▇▇▇▇▇▇ City Hillsboro 09/21/2014 03/08/2012
----------------------------------------------------------------------------------
Pocahontas Hillsboro 10/12/2014 09/06/2010
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇ Galesburg 10/27/2014 10/01/2016
----------------------------------------------------------------------------------
Wataga Galesburg 11/07/2014 10/01/2015
----------------------------------------------------------------------------------
▇▇▇▇▇▇ Hillsboro 11/16/2014 10/01/2016
----------------------------------------------------------------------------------
Irving Hillsboro 11/19/2014 10/01/2012
----------------------------------------------------------------------------------
Altona Kewanee 11/25/2014 10/01/2015
----------------------------------------------------------------------------------
▇▇▇▇▇▇ Hillsboro 11/30/2014 10/01/2016
----------------------------------------------------------------------------------
Oneida Kewanee 11/30/2014 10/01/2015
----------------------------------------------------------------------------------
▇▇▇▇▇ Galesburg 12/10/2014 None
----------------------------------------------------------------------------------
St. Augustine Galesburg 12/11/2014 10/01/2016
----------------------------------------------------------------------------------
* This community has adopted a new Electric and/or Gas Franchise Ordinance since
the beginning of the Franchise Renewal Program initiated in 1991.
Page 5 of 12
ATTACHMENT TO SCHEDULE 3.12(c)
------------------------------
Electric and Gas Franchise Ordinance Report
(Sorted by Electric Franchise Expiration Date)
----------------------------------------------------------------------------------
EXPIRATION DATE
------------------------------------
MUNICIPALITY REGION ELECTRIC GAS
==================================================================================
▇▇▇▇▇▇▇ Hillsboro 12/29/2014 10/01/2016
----------------------------------------------------------------------------------
Mansfield Champaign 12/30/2014 10/01/2008
----------------------------------------------------------------------------------
Kirkwood Galesburg 01/21/2015 10/01/2016
----------------------------------------------------------------------------------
Morrisonville Hillsboro 01/21/2015 10/01/2016
----------------------------------------------------------------------------------
▇▇▇▇▇▇ Hillsboro 01/22/2015 10/01/2016
----------------------------------------------------------------------------------
DePue LaSalle/Ottawa 02/12/2015 10/01/2012
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇ E. St. Louis 02/17/2015 05/01/2013
----------------------------------------------------------------------------------
St. ▇▇▇▇▇ Sparta 03/05/2015 03/05/2015
----------------------------------------------------------------------------------
Mahomet Champaign 03/17/2015 10/01/2008
----------------------------------------------------------------------------------
Monticello Champaign 03/19/2015 03/22/2015
----------------------------------------------------------------------------------
Prairie City Galesburg 03/19/2015 10/01/2016
----------------------------------------------------------------------------------
Sciota Galesburg 03/25/2015 None
----------------------------------------------------------------------------------
Royal Champaign 07/21/2015 10/01/2016
----------------------------------------------------------------------------------
▇. ▇▇▇▇▇▇▇▇▇ Hillsboro 08/23/2015 08/23/2015
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇ Sparta 08/23/2015 None
----------------------------------------------------------------------------------
Brighton Hillsboro 09/22/2015 06/14/2018
----------------------------------------------------------------------------------
▇▇▇▇ Sparta 10/09/2015 10/1/2017
----------------------------------------------------------------------------------
Arenzville Jacksonville 12/20/2015 10/01/2016
----------------------------------------------------------------------------------
▇▇▇▇▇ Grove Sparta 01/03/2016 10/01/2017
----------------------------------------------------------------------------------
Concord Jacksonville 01/05/2016 10/01/2016
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇ Sparta 01/11/2016 10/01/2017
----------------------------------------------------------------------------------
Sawyerville Hillsboro 03/16/2016 10/01/2012
----------------------------------------------------------------------------------
Smithboro Hillsboro 04/30/2016 10/01/2017
----------------------------------------------------------------------------------
▇▇▇▇▇▇ Hillsboro 05/10/2016 10/01/2017
----------------------------------------------------------------------------------
Mulberry Grove Hillsboro 05/18/2016 10/01/2017
----------------------------------------------------------------------------------
Fillmore Hillsboro 06/13/2016 10/01/2017
----------------------------------------------------------------------------------
Donnellson Hillsboro 06/24/2016 10/01/2017
----------------------------------------------------------------------------------
Fithian Danville 07/11/2016 10/01/2014
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇ Hillsboro 08/12/2016 10/01/2017
----------------------------------------------------------------------------------
* This community has adopted a new Electric and/or Gas Franchise Ordinance since
the beginning of the Franchise Renewal Program initiated in 1991.
Page 6 of 12
ATTACHMENT TO SCHEDULE 3.12(c)
------------------------------
Electric and Gas Franchise Ordinance Report
(Sorted by Electric Franchise Expiration Date)
----------------------------------------------------------------------------------
EXPIRATION DATE
------------------------------------
MUNICIPALITY REGION ELECTRIC GAS
==================================================================================
Blandinsville Galesburg 11/04/2016 None
----------------------------------------------------------------------------------
Cahokia E. St. Louis 11/14/2016 11/10/2016
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇ Sparta 11/17/2016 10/01/2013
----------------------------------------------------------------------------------
Media Galesburg 01/05/2017 None
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇ Sparta 02/27/2017 01/05/2011
----------------------------------------------------------------------------------
▇▇▇▇▇▇ Sparta 08/15/2017 10/01/2018
----------------------------------------------------------------------------------
Georgetown Danville 10/06/2017 10/06/2017
----------------------------------------------------------------------------------
▇▇▇▇▇▇ Danville 10/25/2017 10/25/2017
----------------------------------------------------------------------------------
South ▇▇▇▇▇▇ Maryville/River Bend 11/06/2017 10/03/2017
----------------------------------------------------------------------------------
Woodlawn Mt. ▇▇▇▇▇▇/ Centralia 11/29/2017 12/08/2025
----------------------------------------------------------------------------------
White City Hillsboro 12/15/2017 10/01/2018
----------------------------------------------------------------------------------
Sorento Hillsboro 01/02/2018 10/01/2018
----------------------------------------------------------------------------------
▇▇▇▇▇▇ Hillsboro 01/15/2018 10/01/2018
----------------------------------------------------------------------------------
Centreville E. St. Louis 03/14/2018 03/14/2018
----------------------------------------------------------------------------------
DeLand* Bloomington 04/08/2018 10/01/2012
----------------------------------------------------------------------------------
▇▇▇▇▇ Danville 04/09/2018 10/01/2011
----------------------------------------------------------------------------------
Irvington Mt. ▇▇▇▇▇▇/ Centralia 04/24/2018 10/01/2016
----------------------------------------------------------------------------------
Willisville Sparta 04/24/2018 10/01/2013
----------------------------------------------------------------------------------
Ava Sparta 05/15/2018 10/01/2013
----------------------------------------------------------------------------------
Coulterville Sparta 05/24/2018 10/01/2012
----------------------------------------------------------------------------------
▇▇▇▇▇▇ Sparta 06/24/2018 10/01/2013
----------------------------------------------------------------------------------
Percy Sparta 06/24/2018 10/01/2012
----------------------------------------------------------------------------------
Champaign Champaign 07/02/2018 09/07/2017
----------------------------------------------------------------------------------
New Baden Belleville 07/25/2018 03/30/2010
----------------------------------------------------------------------------------
Prairie du Rocher Sparta 08/22/2018 11/17/2010
----------------------------------------------------------------------------------
Eagarville Hillsboro 12/12/2018 06/21/2010
----------------------------------------------------------------------------------
Urbana Champaign 01/23/2019 08/19/2014
----------------------------------------------------------------------------------
▇▇▇▇▇▇ Mt. ▇▇▇▇▇▇/ Centralia 02/14/2019 06/26/2018
----------------------------------------------------------------------------------
Thomasboro Champaign 05/26/2019 None
----------------------------------------------------------------------------------
Madison Granite City 09/22/2019 02/28/2013
----------------------------------------------------------------------------------
* This community has adopted a new Electric and/or Gas Franchise Ordinance since
the beginning of the Franchise Renewal Program initiated in 1991.
Page 7 of 12
ATTACHMENT TO SCHEDULE 3.12(c)
------------------------------
Electric and Gas Franchise Ordinance Report
(Sorted by Electric Franchise Expiration Date)
----------------------------------------------------------------------------------
EXPIRATION DATE
------------------------------------
MUNICIPALITY REGION ELECTRIC GAS
==================================================================================
Kewanee Kewanee 01/02/2020 02/03/2027
----------------------------------------------------------------------------------
Harristown Decatur 01/12/2020 01/12/2020
----------------------------------------------------------------------------------
Bunker Hill Hillsboro 10/30/2020 10/01/2012
----------------------------------------------------------------------------------
Stronghurst Galesburg 11/21/2020 None
----------------------------------------------------------------------------------
Panola Bloomington 06/16/2021 None
----------------------------------------------------------------------------------
Bondville Champaign 10/18/2021 11/17/2021
----------------------------------------------------------------------------------
East ▇▇▇▇▇ Maryville/River Bend 03/10/2022 03/10/2022
----------------------------------------------------------------------------------
Gladstone Galesburg 03/28/2022 None
----------------------------------------------------------------------------------
Belleville Belleville 09/14/2022 11/06/2013
----------------------------------------------------------------------------------
Columbia E. St. Louis 11/27/2022 06/29/2026
----------------------------------------------------------------------------------
Jacksonville Jacksonville 02/13/2024 12/31/2024
----------------------------------------------------------------------------------
Savoy Champaign 05/02/2024 07/28/2010
----------------------------------------------------------------------------------
Biggsville Galesburg 03/25/2025 None
----------------------------------------------------------------------------------
▇▇▇▇ Mt. ▇▇▇▇▇▇/ Centralia 04/28/2025 10/01/2017
----------------------------------------------------------------------------------
LaFayette Kewanee 03/15/2026 None
----------------------------------------------------------------------------------
Damiansville E. St. Louis 12/08/2027 12/07/2027
----------------------------------------------------------------------------------
Granite City Granite City 01/23/2029 07/24/2028
----------------------------------------------------------------------------------
St. Jacob Maryville/River Bend 04/26/2029 11/28/2010
----------------------------------------------------------------------------------
New ▇▇▇▇▇▇▇ Hillsboro 07/02/2029 10/01/2018
----------------------------------------------------------------------------------
LaSalle LaSalle/Ottawa 12/14/2029 07/05/2033
----------------------------------------------------------------------------------
Grantfork Maryville/River Bend 12/19/2029 None
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇▇ Hillsboro 07/06/2033 10/01/2012
----------------------------------------------------------------------------------
Hillsboro Hillsboro 07/11/2033 06/08/2012
----------------------------------------------------------------------------------
Oakdale Sparta 08/02/2034 None
----------------------------------------------------------------------------------
Cedar Point LaSalle/Ottawa 07/10/2036 10/01/2012
----------------------------------------------------------------------------------
Addieville* Mt. ▇▇▇▇▇▇/ Centralia 10/01/2017
----------------------------------------------------------------------------------
Chenoa* Bloomington 07/22/2041 None
----------------------------------------------------------------------------------
Bureau* LaSalle/Ottawa 07/24/2041 10/01/2013
----------------------------------------------------------------------------------
Malden* LaSalle/Ottawa 07/25/2041 10/01/2015
----------------------------------------------------------------------------------
Ashley* Mt. ▇▇▇▇▇▇/ Centralia 07/25/2041 10/01/2016
----------------------------------------------------------------------------------
* This community has adopted a new Electric and/or Gas Franchise Ordinance since
the beginning of the Franchise Renewal Program initiated in 1991.
Page 8 of 12
ATTACHMENT TO SCHEDULE 3.12(c)
------------------------------
Electric and Gas Franchise Ordinance Report
(Sorted by Electric Franchise Expiration Date)
----------------------------------------------------------------------------------
EXPIRATION DATE
------------------------------------
MUNICIPALITY REGION ELECTRIC GAS
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇* ▇▇. ▇▇▇▇▇▇/ Centralia 07/25/2041 10/01/2018
----------------------------------------------------------------------------------
▇▇▇▇* LaSalle/Ottawa 07/26/2041 10/01/2012
----------------------------------------------------------------------------------
Dover* LaSalle/Ottawa 07/29/2041 10/01/2015
----------------------------------------------------------------------------------
Waltonville* Mt. ▇▇▇▇▇▇/ Centralia 08/06/2041 10/01/2018
----------------------------------------------------------------------------------
Hoyleton* Mt. ▇▇▇▇▇▇/ Centralia 08/07/2041 10/01/2015
----------------------------------------------------------------------------------
Venedy* Mt. ▇▇▇▇▇▇/ Centralia 08/12/2041 10/01/2017
----------------------------------------------------------------------------------
New Minden* Mt. ▇▇▇▇▇▇/ Centralia 08/13/2041 10/01/2016
----------------------------------------------------------------------------------
Bethalto* Maryville/River Bend 08/14/2041 08/14/2041
----------------------------------------------------------------------------------
Sparta* Sparta 08/19/2041 10/12/2010
----------------------------------------------------------------------------------
Cherry* LaSalle/Ottawa 08/20/2041 10/01/2012
----------------------------------------------------------------------------------
▇▇▇▇▇▇* Sparta 08/21/2041 11/28/2010
----------------------------------------------------------------------------------
Maroa* Bloomington 08/30/2041 10/01/2012
----------------------------------------------------------------------------------
Wamac* Mt. ▇▇▇▇▇▇/ Centralia 09/24/2041 03/21/2016
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇* Hillsboro 09/25/2041 None
----------------------------------------------------------------------------------
Richview* Mt. ▇▇▇▇▇▇/ Centralia 09/25/2041 10/01/2016
----------------------------------------------------------------------------------
Raleigh* Eldorado 10/07/2041 None
----------------------------------------------------------------------------------
South Jacksonville* Jacksonville 10/19/2041 07/07/2008
----------------------------------------------------------------------------------
Victoria* Kewanee 10/29/2041 10/01/2016
----------------------------------------------------------------------------------
Naplate* LaSalle/Ottawa 10/30/2041 None
----------------------------------------------------------------------------------
▇▇▇▇▇▇* Maryville/River Bend 11/01/2041 10/01/2012
----------------------------------------------------------------------------------
Sheridan* LaSalle/Ottawa 11/04/2041 None
----------------------------------------------------------------------------------
Patoka* Mt. ▇▇▇▇▇▇/ Centralia 11/05/2041 10/01/2012
----------------------------------------------------------------------------------
Newark* LaSalle/Ottawa 11/09/2041 None
----------------------------------------------------------------------------------
Odin* Mt. ▇▇▇▇▇▇/ Centralia 11/15/2041 10/01/2012
----------------------------------------------------------------------------------
Tiskilwa* LaSalle/Ottawa 11/18/2041 None
----------------------------------------------------------------------------------
Standard* LaSalle/Ottawa 12/04/2041 10/01/2012
----------------------------------------------------------------------------------
Nilwood* Hillsboro 12/05/2041 None
----------------------------------------------------------------------------------
Granville* LaSalle/Ottawa 12/06/2041 10/01/2012
----------------------------------------------------------------------------------
* This community has adopted a new Electric and/or Gas Franchise Ordinance since
the beginning of the Franchise Renewal Program initiated in 1991.
Page 9 of 12
ATTACHMENT TO SCHEDULE 3.12(c)
------------------------------
Electric and Gas Franchise Ordinance Report
(Sorted by Electric Franchise Expiration Date)
----------------------------------------------------------------------------------
EXPIRATION DATE
------------------------------------
MUNICIPALITY REGION ELECTRIC GAS
==================================================================================
Belgium* Danville 12/10/2041 10/01/2013
----------------------------------------------------------------------------------
▇▇▇▇* Maryville/River Bend 12/10/2041 12/10/2041
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇* Mt. ▇▇▇▇▇▇/ Centralia 12/10/2041 07/13/2017
----------------------------------------------------------------------------------
Brownstown* Hillsboro 12/12/2041 None
----------------------------------------------------------------------------------
▇▇▇▇* Mt. ▇▇▇▇▇▇/ Centralia 12/16/2041 None
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇* Bloomington 12/17/2041 None
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇* Bloomington 12/19/2041 None
----------------------------------------------------------------------------------
Indianola* Danville 12/21/2041 None
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇▇* Hillsboro 12/26/2041 10/01/2012
----------------------------------------------------------------------------------
Galesburg* Galesburg 01/03/2042 01/03/2042
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇* Danville 01/08/2042 None
----------------------------------------------------------------------------------
Hollowayville* LaSalle/Ottawa 01/08/2042 10/01/2013
----------------------------------------------------------------------------------
Arlington* LaSalle/Ottawa 01/13/2042 10/01/2012
----------------------------------------------------------------------------------
Muncie* Danville 01/17/2042 10/01/2014
----------------------------------------------------------------------------------
▇▇▇▇▇▇* Danville 01/20/2042 None
----------------------------------------------------------------------------------
Marine* Maryville/River Bend 01/22/2042 02/05/2042
----------------------------------------------------------------------------------
Stanford* Bloomington 01/24/2042 None
----------------------------------------------------------------------------------
Neponset* Kewanee 01/27/2042 10/01/2012
----------------------------------------------------------------------------------
Smithton* Belleville 01/31/2042 11/01/2010
----------------------------------------------------------------------------------
Fayetteville* Belleville 02/03/2042 10/01/2016
----------------------------------------------------------------------------------
Colfax* Bloomington 02/03/2042 None
----------------------------------------------------------------------------------
Brooklyn* Granite City 02/05/2042 02/05/2042
----------------------------------------------------------------------------------
Equality* Eldorado 02/06/2042 None
----------------------------------------------------------------------------------
Ridge Farm* Danville 02/07/2042 10/01/2012
----------------------------------------------------------------------------------
Ottawa* LaSalle/Ottawa 02/07/2042 None
----------------------------------------------------------------------------------
Walnut Hill* Mt. ▇▇▇▇▇▇/ Centralia 02/11/2042 10/01/2015
----------------------------------------------------------------------------------
Collinsville* Maryville/Ri ver Bend 02/14/2042 02/14/2042
----------------------------------------------------------------------------------
Swansea* Belleville 02/19/2042 02/05/2014
----------------------------------------------------------------------------------
Annawan* Kewanee 02/19/2042 10/02/2007
----------------------------------------------------------------------------------
▇▇▇▇▇▇* Bloomington 02/21/2042 10/01/2012
----------------------------------------------------------------------------------
* This community has adopted a new Electric and/or Gas Franchise Ordinance since
the beginning of the Franchise Renewal Program initiated in 1991.
Page 10 of 12
ATTACHMENT TO SCHEDULE 3.12(c)
------------------------------
Electric and Gas Franchise Ordinance Report
(Sorted by Electric Franchise Expiration Date)
----------------------------------------------------------------------------------
EXPIRATION DATE
------------------------------------
MUNICIPALITY REGION ELECTRIC GAS
==================================================================================
Manlius* Kewanee 02/27/2042 10/01/2013
----------------------------------------------------------------------------------
Cerro Gordo* Decatur 02/28/2042 10/01/2011
----------------------------------------------------------------------------------
Mt. Clare* Hillsboro 02/28/2042 10/01/2012
----------------------------------------------------------------------------------
Mt. Zion* Decatur 03/16/2042 10/06/2005
----------------------------------------------------------------------------------
Caseyville* Maryville/River Bend 03/16/2042 11/03/2015
----------------------------------------------------------------------------------
▇▇▇▇* Hillsboro 03/17/2042 10/01/2012
----------------------------------------------------------------------------------
Hennepin* LaSalle/Ottawa 03/26/2042 06/24/2015
----------------------------------------------------------------------------------
Millington* LaSalle/Ottawa 04/03/2042 None
----------------------------------------------------------------------------------
▇▇▇▇▇* Bloomington 04/09/2042 None
----------------------------------------------------------------------------------
▇▇▇▇▇▇ City* Decatur 04/22/2042 10/01/2013
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇* Kewanee 04/22/2042 10/01/2007
----------------------------------------------------------------------------------
Warrensburg* Decatur 04/27/2042 06/01/2042
----------------------------------------------------------------------------------
Westville* Danville 04/29/2042 None
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇* LaSalle/Ottawa 05/11/2042 10/01/2012
----------------------------------------------------------------------------------
Aviston* E. St. Louis 05/20/2042 06/01/2013
----------------------------------------------------------------------------------
Bartelso* E. St. Louis 05/20/2042 10/01/2013
----------------------------------------------------------------------------------
Summerfield* E. St. Louis 05/20/2042 05/20/2042
----------------------------------------------------------------------------------
▇▇▇▇▇▇* Belleville 05/26/2042 10/01/2016
----------------------------------------------------------------------------------
Valmeyer* E. St. Louis 05/26/2042 10/01/2015
----------------------------------------------------------------------------------
Millstadt* Belleville 05/27/2042 04/02/2020
----------------------------------------------------------------------------------
Mineral* Kewanee 06/02/2042 10/01/2012
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇* Bloomington 06/10/2042 None
----------------------------------------------------------------------------------
▇▇▇▇▇▇ Hill* Kewanee 06/10/2042 10/01/2017
----------------------------------------------------------------------------------
Magnolia* LaSalle/Ottawa 06/10/2042 10/01/2016
----------------------------------------------------------------------------------
Little York* Galesburg 06/12/2042 10/01/2016
----------------------------------------------------------------------------------
Niantic* Decatur 06/15/2042 10/01/2013
----------------------------------------------------------------------------------
Avon* Galesburg 06/17/2042 10/01/2016
----------------------------------------------------------------------------------
North Utica* LaSalle/Ottawa 06/17/2042 10/01/2011
----------------------------------------------------------------------------------
Evansville* Sparta 06/25/2042 10/01/2017
----------------------------------------------------------------------------------
* This community has adopted a new Electric and/or Gas Franchise Ordinance since
the beginning of the Franchise Renewal Program initiated in 1991.
Page 11 of 12
ATTACHMENT TO SCHEDULE 3.12(c)
------------------------------
Electric and Gas Franchise Ordinance Report
(Sorted by Electric Franchise Expiration Date)
----------------------------------------------------------------------------------
EXPIRATION DATE
------------------------------------
MUNICIPALITY REGION ELECTRIC GAS
==================================================================================
Seatonville* LaSalle/Ottawa 07/01/2042 10/01/2013
----------------------------------------------------------------------------------
Lenzburg* Belleville 07/14/2042 10/12/2010
----------------------------------------------------------------------------------
Cooksville* Bloomington 08/07/2042 None
----------------------------------------------------------------------------------
Standard City* Hillsboro 08/10/2042 None
----------------------------------------------------------------------------------
Steeleville* Sparta 08/10/2042 10/01/2012
----------------------------------------------------------------------------------
Centralia* Mt. ▇▇▇▇▇▇/ Centralia 08/11/2042 08/24/2014
----------------------------------------------------------------------------------
Litchfield* Hillsboro 08/12/2042 06/25/2013
----------------------------------------------------------------------------------
Nashville* Mt. ▇▇▇▇▇▇/ Centralia 08/21/2042 None
----------------------------------------------------------------------------------
Dorchester* Hillsboro 08/24/2042 11/30/2031
----------------------------------------------------------------------------------
Danvers* Bloomington 08/25/2042 None
----------------------------------------------------------------------------------
▇▇▇▇▇▇* Bloomington 08/25/2042 None
----------------------------------------------------------------------------------
Danville* Danville 08/27/2042 01/21/2008
----------------------------------------------------------------------------------
Cisco* Decatur 09/10/2042 10/01/2016
----------------------------------------------------------------------------------
E. Galesburg* Galesburg 09/15/2042 09/15/2042
----------------------------------------------------------------------------------
▇▇▇▇ Grove* LaSalle/Ottawa 09/30/2042 None
----------------------------------------------------------------------------------
Argenta* Decatur 10/07/2042 10/01/2012
----------------------------------------------------------------------------------
▇▇▇▇▇▇* Decatur 10/09/2042 10/01/2014
----------------------------------------------------------------------------------
Maryville* Maryville/River Bend 10/30/2042 11/01/2010
----------------------------------------------------------------------------------
Fairview Hts.* E. St. Louis 11/06/2042 01/15/2021
----------------------------------------------------------------------------------
LaMoille* LaSalle/Ottawa 11/09/2042 10/01/2012
----------------------------------------------------------------------------------
Enfield* Eldorado 11/13/2042 None
----------------------------------------------------------------------------------
Mechanicsburg* Decatur 12/11/2042 10/01/2014
----------------------------------------------------------------------------------
Mt. Auburn* Decatur 12/18/2042 10/01/2012
----------------------------------------------------------------------------------
▇▇▇▇ Carbon* Maryville/River Bend 12/24/2042 12/24/2042
----------------------------------------------------------------------------------
▇▇▇▇▇▇* Bloomington 12/28/2042 10/01/2016
----------------------------------------------------------------------------------
Buffalo* Decatur 03/02/2043 06/01/2043
----------------------------------------------------------------------------------
Trenton* E. St. Louis 04/01/2043 06/01/2013
----------------------------------------------------------------------------------
Maeystown* E. St. Louis 04/05/2043 None
----------------------------------------------------------------------------------
Benld* Hillsboro 04/06/2043 12/02/2003
----------------------------------------------------------------------------------
* This community has adopted a new Electric and/or Gas Franchise Ordinance since
the beginning of the Franchise Renewal Program initiated in 1991.
Page 12 of 12
ATTACHMENT TO SCHEDULE 3.12(c)
------------------------------
Electric and Gas Franchise Ordinance Report
(Sorted by Electric Franchise Expiration Date)
----------------------------------------------------------------------------------
EXPIRATION DATE
------------------------------------
MUNICIPALITY REGION ELECTRIC GAS
==================================================================================
▇▇▇▇▇▇▇* Eldorado 06/14/2043 None
----------------------------------------------------------------------------------
Illiopolis* Decatur 06/24/2043 10/01/2013
----------------------------------------------------------------------------------
Junction* Eldorado 08/11/2043 None
----------------------------------------------------------------------------------
Lexington* Bloomington 09/13/2043 None
----------------------------------------------------------------------------------
Shawneetown* Eldorado 01/07/2044 None
----------------------------------------------------------------------------------
E. Carondelet* E. St. Louis 01/27/2044 10/01/2013
----------------------------------------------------------------------------------
St. ▇▇▇▇▇▇* Belleville 05/17/2044 10/01/2016
----------------------------------------------------------------------------------
Pierron* Hillsboro 05/17/2044 02/22/2033
----------------------------------------------------------------------------------
Downs* Bloomington 07/14/2044 None
----------------------------------------------------------------------------------
▇▇▇▇▇* Mt. ▇▇▇▇▇▇/ Centralia 11/02/2044 None
----------------------------------------------------------------------------------
Sheffield* Kewanee 02/20/2045 10/01/2007
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇* Mt. ▇▇▇▇▇▇/ Centralia 08/09/2045 03/25/2029
----------------------------------------------------------------------------------
Eldorado* Eldorado 11/13/2045 None
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇* Bloomington 08/09/2046 None
----------------------------------------------------------------------------------
Buda* Kewanee 12/23/2046 10/01/2012
----------------------------------------------------------------------------------
DuQuoin* Sparta 05/07/2047 05/07/2047
----------------------------------------------------------------------------------
SCHEDULE 3.13(a)
----------------
EMPLOYEE MATTERS
[Filed confidentially pursuant to Rule 104]
SCHEDULE 3.14
-------------
MATERIAL CONTRACTS
[Filed confidentially pursuant to Rule 104]
SCHEDULE 3.15
-------------
INTELLECTUAL PROPERTY
[Filed confidentially pursuant to Rule 104]
SCHEDULE 3.16
-------------
REAL PROPERTY
None.
SCHEDULE 3.18
-------------
PERSONAL PROPERTY
[Filed confidentially pursuant to Rule 104]
SCHEDULE 3.19
-------------
AFFILIATE TRANSACTIONS
[Filed confidentially pursuant to Rule 104]
SCHEDULE 3.21
-------------
[Filed confidentially pursuant to Rule 104]
SCHEDULE 3.23
-------------
REGULATORY PROCEEDINGS
1. In orders issued on November 17, 2003, and December 17, 2003, FERC directed
the transmission providers, including IPC, to eliminate the charge for
through-and-out transmission service as applied to requests made on or
after November 17, 2003, for service that commences on or after April 1,
2004, when the power being delivered over IPC's transmission system
ultimately sinks in the region comprised of PJM, the Midwest ISO, AEP,
AMEREN, Dayton P&L, ComEd, or IP. The revenues lost due to the elimination
of this charge can be recovered from the loads that benefit by the
elimination of such charge via a "lost revenue recovery mechanism." This
proceeding is on-going. IPC submitted the first of two required compliance
filings on January 2, 2004 and will submit the second required compliance
filing by February 13, 2004. FERC's decision in this proceeding is subject
to requests for rehearing and appeal.
2. The ICC has been petitioned to investigate the financial and operating
condition of IPC, pursuant to the action captioned Petition for an
investigation into the conditions of Illinois Power Company, No. 03-0673,
the People of the State of Illinois, by and through ▇▇▇▇ ▇▇▇▇▇▇▇, Attorney
General of the State of Illinois, the ▇▇▇▇ County State's Attorney Office
ex rel. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, State's Attorney of ▇▇▇▇ County, American
Association of Retired Persons, Citizen Action/Illinois, Citizens Utility
Board, Environmental Law and Policy Center, Illinois State Public Interest
Research Group, Inc., Petitioners.
3. IPC filed a notice with the ICC under Section 16-111(g) of the IPUA with
respect to a proposed amendment to the sublease between IPC and DMG
relating to the ▇▇▇▇▇▇ Assets, as a result of which the ICC initiated an
investigation. IPC subsequently filed a notice of withdrawal of the Section
16-111(g) notice and request for dismissal of the ICC investigation, which
notice of withdrawal has not yet been acted upon by the ICC.
4. Pursuant to a letter dated January 30, 2004, FERC notified IPC that IPC had
been selected, along with other companies, for inclusion in an
industry-wide audit of Account 154 (Plant Materials and Operating Supplies)
and Account 163 (Stores Expense Undistributed) to be conducted by the
Office of the Executive Director, Division of Regulatory Audits.
SCHEDULE 3.24
-------------
HEDGING
None.
SCHEDULE 3.27
-------------
CLINTON NUCLEAR POWER STATION
[Filed confidentially pursuant to Rule 104]
SCHEDULE 4.3(a)
---------------
PURCHASER APPROVALS
1. Expiration of waiting period pursuant to HSR Act.
2. Approval by SEC pursuant to Section 9 of PUHCA. (Approval(s) by SEC
pursuant to (i) Sections 6 and 7 of PUHCA, to the extent Purchaser intends
to issue securities in connection with the transactions contemplated by the
Agreement, and (ii) Section 13 of PUHCA, to the extent Purchaser plans to
incorporate IPC into the services covered by Purchaser's service company.)
3. Approvals by ICC as described in Item I of Schedule 8.2(b).
4. Approval by the Federal Communications Commission pursuant to Section 310
of the Communications Act of 1934.
5. Receipt by Seller of a Final Order of FERC under Section 203 of the FPA for
the transfer of IPC's jurisdictional facilities to Purchaser and for the
transfer of the EEI Shares to Ameren Energy Resources Company.
6. Receipt by Seller of a Final Order of FERC under Section 205 of the FPA for
approval of the PPA.
SCHEDULE 4.3(b)
---------------
PURCHASER CONFLICTS
The transactions contemplated by Section 5.15 may require a waiver under
Purchaser's credit agreements.
SCHEDULE 5.1
------------
CONDUCT OF BUSINESS
[Filed confidentially pursuant to Rule 104]
SCHEDULE 5.1(f)
---------------
CAPITAL EXPENDITURES
[Filed confidentially pursuant to Rule 104]
SCHEDULE 5.3(b)
---------------
POTENTIAL REGULATORY COMMITMENTS AND CONDITIONS TO BE ACCEPTED BY PURCHASER
Purchaser shall make the following commitments in its application with ICC:
1. Purchaser will recapitalize IPC pursuant to the following steps:
a. Purchaser will cause an aggregate of at least $750 million principal
amount of IPC long-term debt to be repurchased or retired on or before
December 31, 2006.
b. Purchaser will cause IPC's common equity to total capitalization ratio
to range between 50%-60% by December 31, 2006.
c. To the extent necessary to accomplish the above, Purchaser will cause
IPC to repurchase its 11.50% first mortgage bonds by December 31,
2006.
2. Purchaser will cause IPC to expend between $275 million and $325 million on
capital projects during Purchaser's first two years of ownership of IPC;
3. Purchaser will maintain the IPC headquarters in Decatur, Illinois for not
less than five years following closing;
4. IPC workforce reductions resulting from the acquisition will not exceed 25
employees for a period of four years following Closing, except to the
extent additional reductions occur through attrition or voluntary
separation programs;
5. IPC will honor all existing labor agreements;
6. IPC employees, retirees and retirees' surviving dependents will remain in
their current IPC benefit plans or be moved into appropriate Purchaser
plans; and
7. IPC will establish a dividend policy comparable to the dividend policy of
Purchaser's other Illinois utilities consistent with achieving and
maintaining a common equity ratio between 50% and 60%.
SCHEDULE 5.7
------------
PERMITTED INTERCOMPANY ARRANGEMENTS
[Filed confidentially pursuant to Rule 104]
SCHEDULE 5.15
-------------
INTERCOMPANY NOTE
No more than two days prior to the Closing and no later than immediately prior
to the Closing, Dynegy and Seller will cause the principal of and all accrued
and unpaid interest on the Intercompany Note to be eliminated pursuant to the
following steps:
o First, the principal amount of the Intercompany Note will be reduced
in consideration of the assumption by Dynegy or Seller of (i) the
recorded net deferred tax obligation of IPC and (ii) certain
intercompany payables of IP, with the principal amount to be reduced
by the amount of such assumed obligations.
o Second, Dynegy and Seller will cause IPC, immediately following such
reduction, to distribute the remaining Intercompany Note (and all
obligations associated therewith, including the remaining principal
and any accrued and unpaid interest amount) to Seller.
The result of the foregoing transactions shall be the elimination of the
receivable and payable associated with the Intercompany Note.
SCHEDULE 5.19
-------------
CONSENT SOLICITATION
[Filed confidentially pursuant to Rule 104]
SCHEDULE 5.24
-------------
SELLER'S IMPLEMENTATION PLAN OF SECTION 404 OF THE ▇▇▇▇▇▇▇▇-▇▇▇▇▇ ACT
[Filed confidentially pursuant to Rule 104]
SCHEDULE 6.1(c)
---------------
EMPLOYMENT AGREEMENT (▇▇▇▇▇▇▇▇▇▇▇)
[Filed confidentially pursuant to Rule 104]
SCHEDULE 6.1(d)
---------------
EMPLOYMENT AGREEMENT (▇▇▇▇▇▇▇)
[Filed confidentially pursuant to Rule 104]
SCHEDULE 6.1(e)
---------------
SELLER BONUS PLANS
[Filed confidentially pursuant to Rule 104]
SCHEDULE 6.1(g)
---------------
AFFILIATE EMPLOYEES
[Filed confidentially pursuant to Rule 104]
SCHEDULE 6.2(a)
---------------
SELLER PENSION PLANS
1. Dynegy Inc. Retirement Plan as Amended and Restated Effective December 1,
2001 (formerly known as the Illinois Power Company Retirement Income Plan
for Salaried Employees)
2. Illinois Power Company Retirement Income Plan for Employees Covered Under a
Collective Bargaining Agreement As Amended and Restated Effective December
1, 2001
SCHEDULE 6.2(b)
---------------
SELLER SAVINGS PLANS
1.
Illinois Power Company Incentive Savings Plan As Amended and Restated
Effective January 1, 2002, as further amended effective October 1, 2003 and
January 1, 2004
2. Illinois Power Company Incentive Savings Plan for Employees Covered Under a
Collective Bargaining Agreement As Amended and Restated Effective January
1, 2002, as further amended effective October 1, 2003 and January 1, 2004
SCHEDULE 7.7
------------
PURCHASE PRICE ALLOCATION
Dynegy and Purchaser have agreed that $125,000,000 of the Purchase Price
will be allocated to the EEI Shares and the balance of the Purchase Price will
be allocated to the capital stock of IPC purchased from Seller.
SCHEDULE 8.1(b)
---------------
REQUIRED SELLER REGULATORY APPROVALS
1. A Final Order of the FERC under Section 203 of the FPA for the transfer of
IPC's jurisdictional facilities to Purchaser and for the transfer of the
EEI Shares to Ameren Energy Resources Company.
2. A Final Order of the FERC under Section 205 of the FPA for approval of the
PPA.
3. A Final Order of the FERC under Section 203 of the FPA for approval of the
Generation Agreement (to the extent the Generation Agreement involves the
transfer of FERC-jurisdictional facilities).
4. A Final Order of the FERC under Section 205 of the FPA for approval of the
Blackstart Agreement.
5. Any approvals of ICC necessary in connection with transactions necessary to
fulfill IPC's obligations under Section 8.2(j).
6. A Final Order of ICC approving, pursuant to Sections 7-204 and 7-204A of
the IPUA, of the acquisition by Purchaser of the Common Shares and of the
Preferred Shares of IPC in accordance with the Agreement.
7. Approval of ICC pursuant to Section 7-101 of the IPUA for IPC to cancel the
Intercompany Note in accordance with Section 5.15 of the Agreement.
8. Approval of ICC pursuant to Section 7-101 of the IPUA for the termination
at Closing of (i) the Services and Facilities Agreement among IPC, Dynegy
and other affiliates of Dynegy and (ii) Netting Agreement among IPC, Dynegy
and other affiliates of Dynegy.
9. Receipt by the parties of all necessary approvals under the Public Utility
Holding Company Act.
10. The waiting period applicable to the purchases of the Shares under the HSR
Act shall have expired or been terminated.
11. Receipt from the FCC of authority to transfer radio, microwave and other
private wireless telecommunications licenses from IPC to Purchaser.
SCHEDULE 8.1(e)
---------------
REQUIRED DYNEGY CONSENTS
1. Consents required under Dynegy's Credit Agreement.
SCHEDULE 8.2(b)
---------------
REQUIRED PURCHASER REGULATORY APPROVALS
I. ICC APPROVALS
(i) Approval of Purchaser's proposed recapitalization of IPC pursuant
to Section 6-103 of the Illinois Public Utility Act ("IPUA"), including the
elimination of all payables and receivables associated with the Intercompany
Note;
(ii) Approval of IPC's entry into agreements with Affiliates of
Purchaser, pursuant to Section 7-101 of the IPUA, for the provision of general
services and fuel procurement services, for the allocation of tax liability, and
for participation in a money pool;
(iii) Approval of Purchaser's acquisition of the Common Shares and of
the Preferred Shares and of the transactions contemplated by the Agreement
pursuant to Sections 7-204 and 7-204A of the IPUA and, to the extent required by
ICC, pursuant to Section 7-102 of the IPUA;
(iv) A finding by ICC that Purchaser's acquisition of the Common
Shares and the Preferred Shares is prudent and reasonable, and that the public
will benefit thereby, taking into consideration the effect of the purchase on
IPC's deferred tax balances and rate-base valuation; a finding and approval of
Purchaser's proposed IPC accounting entries associated with the acquisition,
including the entries associated with the changes in the deferred tax balances;
(v) A finding by ICC, pursuant to Section 7-204(c) of the IPUA, that
IPC should be allowed to amortize ratably over the period 2005-2010 no less than
$100 million of costs incurred in accomplishing the reorganization of IPC, and
to recover the unamortized portion over the period 2007-2010;
(vi) Termination of ICC's restriction on IPC's ability to declare and
pay dividends on its common stock, imposed in ICC Docket 02-0561, and approval
for IPC to declare and pay dividends when its first mortgage bonds are rated
either: (i) at least BBB- by Standard & Poors or (ii) at least BAA3 by ▇▇▇▇▇'▇
Investor Services;
(vii) Approval, pursuant to Section 9-201 of the IPUA, of electric
automatic adjustment clause tariff riders not materially and adversely different
than as proposed by Purchaser, to become effective on January 2, 2007, under
which IPC may recover the prudent costs, net of insurance recoveries and other
contributions, associated with any claims or damages related to asbestos
exposure.
II. FERC
(i) Receipt by Seller of a Final Order of FERC under Section 203 of
the FPA for the transfer of IPC's jurisdictional facilities to Purchaser and for
the transfer of the EEI Shares to Ameren Energy Resources Company.
(ii) Receipt by Seller of a Final Order of FERC under Section 205 of
the FPA for approval of the PPA.
III. SEC
The parties shall have received all necessary approvals under the
Public Utility Holding Company Act without any requirement relating to the
divestiture of assets.
IV. DOJ/FTC
The waiting period applicable to the purchase of the Shares under the
HSR ACT shall have expired or been terminated.
V. FCC
Receipt from the FCC of authority to transfer radio, microwave and
other private wireless telecommunications licenses from IPC to Purchaser.
SCHEDULE 8.2(e)
---------------
REQUIRED PURCHASER CONSENTS
None.