EXHIBIT 1.1
CONFORMED COPY
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ILLINOIS POWER COMPANY
(an Illinois corporation)
$550,000,000
Mortgage Bonds, 11.5% Series due 2010
PURCHASE AGREEMENT
Dated: December 17, 2002
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Table of Contents
PURCHASE AGREEMENT
SECTION 1. Representations and Warranties by the Company.......................................... 3
(a) Representations and Warranties............................................................ 3
(i) Offering Memorandum........................................................... 3
(ii) Incorporated Documents........................................................ 3
(iii) Independent Accountants....................................................... 3
(iv) Financial Statements.......................................................... 3
(v) No Material Adverse Change in Business........................................ 4
(vi) Good Standing of the Company.................................................. 4
(vii) No Significant Subsidiaries................................................... 4
(viii) Capitalization................................................................ 4
(ix) Authorization of Agreement.................................................... 4
(x) Authorization of Mortgage and Supplemental Indenture.......................... 4
(xi) Authorization of the Securities............................................... 5
(xii) Valid Lien of the Mortgage.................................................... 5
(xiii) Description of the Securities and the Mortgage................................ 5
(xiv) Absence of Defaults and Conflicts............................................. 6
(xv) Absence of Labor Dispute...................................................... 6
(xvi) Absence of Proceedings........................................................ 6
(xvii) Possession of Intellectual Property........................................... 7
(xviii) Absence of Further Requirements............................................... 7
(xix) Possession of Licenses and Permits............................................ 7
(xx) Authorization of, and Compliance with, Contracts and Agreements............... 8
(xxi) Environmental Laws............................................................ 8
(xxii) Investment Company Act........................................................ 9
(xxiii) Public Utility Holding Company Act............................................ 9
(xxiv) Illinois Commerce Commission Approval......................................... 9
(xxv) Similar Offerings............................................................. 9
(xxvi) Rule 144A Eligibility......................................................... 9
(xxvii) No General Solicitation....................................................... 10
(xxviii) No Registration Required...................................................... 10
(xxix) Reporting Company............................................................. 10
(b) Officer's Certificates.................................................................... 10
SECTION 2. Sale and Delivery to Initial Purchasers; Closing....................................... 10
(a) Securities................................................................................ 10
(b) Payment................................................................................... 10
(c) Denominations; Registration............................................................... 11
SECTION 3. Covenants of the Company............................................................... 11
(a) Offering Memorandum....................................................................... 11
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(b) Notice and Effect of Material Events....................................................... 11
(c) Amendment to Offering Memorandum and Supplements........................................... 12
(d) Qualification of Securities for Offer and Sale............................................. 12
(e) DTC........................................................................................ 12
(f) Use of Proceeds............................................................................ 12
(g) Restriction on Sale of Securities.......................................................... 12
(h) PORTAL Designation......................................................................... 13
(i) Reporting Requirements..................................................................... 13
(j) Filings and Recordings..................................................................... 13
SECTION 4. Payment of Expenses..................................................................... 13
(a) Expenses................................................................................... 13
(b) Termination of Agreement................................................................... 13
SECTION 5. Conditions of Initial Purchasers' Obligations........................................... 13
(a) Opinion of Counsel for Company............................................................. 14
(b) Opinion of Counsel for Initial Purchasers.................................................. 14
(c) Officers' Certificate...................................................................... 14
(d) Accountants' Comfort Letter and the Company's Certificate.................................. 14
(e) Bring-down Comfort Letter and Company's Certificate........................................ 14
(f) Maintenance of Rating...................................................................... 15
(g) PORTAL..................................................................................... 15
(h) Escrow Agreement; Fee, Indemnification and Refunding Agreement and Registration
Rights Agreement........................................................................ 15
(i) Additional Documents....................................................................... 15
(j) Termination of Agreement................................................................... 15
SECTION 6. Subsequent Offers and Resales of the Securities......................................... 16
(a) Offer and Sale Procedures.................................................................. 16
(i) Offers and Sales only to Qualified Institutional Buyers.......................... 16
(ii) No General Solicitation.......................................................... 16
(iii) Purchases by Non-Bank Fiduciaries................................................ 16
(iv) Subsequent Purchaser Notification................................................ 16
(v) Minimum Principal Amount......................................................... 16
(vi) Restrictions on Transfer......................................................... 16
(vii) Delivery of Offering Memorandum.................................................. 16
(b) Covenants of the Company................................................................... 17
(i) Integration...................................................................... 17
(ii) Rule 144A Information............................................................ 17
(iii) Restriction on Repurchases....................................................... 17
(c) Qualified Institutional Buyer.............................................................. 17
SECTION 7. Indemnification......................................................................... 17
(a) Indemnification of the Initial Purchasers.................................................. 17
(b) Indemnification of Company and Directors................................................... 18
(c) Actions against Parties; Notification...................................................... 19
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(d) Settlement without Consent if Failure to Reimburse........................................ 19
SECTION 8. Contribution......................................................................... 19
SECTION 9. Representations, Warranties and Agreements to Survive Delivery....................... 21
SECTION 10. Termination of Agreement............................................................. 21
(a) Termination; General...................................................................... 21
(b) Liabilities............................................................................... 21
(c) Delayed Delivery Bonds.................................................................... 21
SECTION 11. Default by One of the Initial Purchasers............................................. 22
SECTION 12. Notices.............................................................................. 23
SECTION 13. Parties.............................................................................. 23
SECTION 14. GOVERNING LAW AND TIME............................................................... 23
SECTION 15. Effect of Headings................................................................... 23
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SCHEDULES
Schedule A - List of Initial Purchasers Sch A-1
Schedule B - Form of Escrow Agreement Sch B-1
Schedule C - Form of Fee, Indemnification and Refunding Agreement Sch C-1
Schedule D - Pricing Information Sch D-1
EXHIBITS
Exhibit A - Form of Opinion of Company's Counsel A-1
Exhibit B - Form of Opinion of Company's Special Securities Counsel B-1
Exhibit C - Form of Opinion of Assistant General Counsel
of the Company C-1
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ILLINOIS POWER COMPANY
(an Illinois corporation)
$550,000,000
Mortgage Bonds, 11.5% Series due 2010
PURCHASE AGREEMENT
December 17, 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Credit Suisse First Boston Corporation
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Illinois Power Company, an Illinois corporation (the "Company"),
confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other Initial Purchasers
named in Schedule A hereto (collectively, the "Initial Purchasers", which term
shall also include any initial purchaser substituted as hereinafter provided in
Section 11 hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇ is acting as representative (in such
capacity, the "Representative"), with respect to the issue and sale by the
Company and the purchase by the Initial Purchasers, acting severally and not
jointly, of the respective principal amounts set forth in said Schedule A of
$550,000,000 aggregate principal amount of the Company's Mortgage Bonds, 11.5%
Series due 2010 (the "Securities"), consisting of $400,000,000 aggregate
principal amount of Securities to be issued at the Closing Time (as defined
below) (the "Initial Delivery Bonds") and $150,000,000 aggregate principal
amount of Securities to be issued at the Delayed Closing Time (as defined below)
(the "Delayed Delivery Bonds"). The consideration paid with respect to the
Delayed Delivery Bonds will be paid into escrow pursuant to the terms of an
Escrow Agreement substantially in the form attached hereto as Schedule B, by and
among ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, as representative of
the Initial Purchasers, BNY Midwest Trust Company, as trustee under the Mortgage
(as defined below), and BNY Midwest Trust Company, as escrow agent (the "Escrow
Agreement"). The Securities will be issued under the Company's General Mortgage
Indenture and Deed of Trust, dated as of November 1, 1992 (the "Mortgage"), and
supplemental indentures thereto, including a supplemental indenture dated as of
December 15, 2002 (the "Supplemental Indenture") specifically relating to the
Securities, between the Company and BNY Midwest Trust Company, as successor
trustee (the "Trustee"). The Securities will be secured primarily by the lien of
the Mortgage on the Company's properties used or to be used in the generation,
purchase, transmission, distribution and sale of electricity or gas. Securities
issued in book-entry
form will be issued to Cede & Co. as nominee of The Depository Trust Company
("DTC") pursuant to a letter agreement, to be dated as of the Closing Time (as
defined in Section 2(b)) (the "DTC Agreement"), among the Company, the Trustee
and DTC.
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers whom they
reasonably believe to be "qualified institutional buyers" within the meaning of
Rule 144A ("Rule 144A") of the rules and regulations promulgated under the
Securities Act of 1933, as amended (the "1933 Act"), by the Securities and
Exchange Commission (the "Commission") in accordance with the terms of Section 6
hereof ("Subsequent Purchasers") at any time after this Agreement has been
executed and delivered. The Securities are to be offered and sold through the
Initial Purchasers without being registered under the 1933 Act in reliance upon
exemptions therefrom. Pursuant to the terms of the Securities, the Mortgage and
the Supplemental Indenture, investors that acquire Securities may only resell or
otherwise transfer such Securities if such Securities are hereafter registered
under the 1933 Act or if an exemption from the registration requirements of the
1933 Act is available (including the exemption afforded by Rule 144A).
The Company has prepared and delivered to each Initial Purchaser copies
of a preliminary offering memorandum dated December 11, 2002 (the "Preliminary
Offering Memorandum"), together with copies of the Company's annual report on
Form 10-K for the year ended December 31, 2001 and the Company's quarterly
report on Form 10-Q for the quarter ended September 30, 2002, and has prepared
and will deliver to each Initial Purchaser, on the date hereof or the next
succeeding day, copies of a final offering memorandum dated December 17, 2002
(the "Final Offering Memorandum"), together with copies of the Company's annual
report on Form 10-K for the year ended December 31, 2001 and the Company's
quarterly report on Form 10-Q for the quarter ended September 30, 2002, each for
use by such Initial Purchaser in connection with its solicitation of purchases
of, or offering of, the Securities. "Offering Memorandum" means, with respect to
any date or time referred to in this Agreement, the most recent offering
memorandum (whether the Preliminary Offering Memorandum or the Final Offering
Memorandum, or any amendment or supplement to either such document), including
exhibits thereto and any documents incorporated therein by reference, which has
been prepared and delivered by the Company to the Initial Purchasers in
connection with their solicitation of purchases of, or offering of, the
Securities.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information
which are incorporated by reference in the Offering Memorandum; and all
references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934 (the "1934 Act") which is incorporated by
reference in the Offering Memorandum.
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SECTION 1. Representations and Warranties by the Company.
(a) Representations and Warranties. The Company represents and warrants to
each Initial Purchaser as of the date hereof and as of the Closing Time referred
to in Section 2(b) hereof, and agrees with each Initial Purchaser, as follows:
(i) Offering Memorandum. The Offering Memorandum does not, and at
the Closing Time will not, include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that this representation, warranty and agreement
shall not apply to statements in or omissions from the Offering Memorandum
made in reliance upon and in conformity with information furnished to the
Company in writing by any Initial Purchaser through ▇▇▇▇▇▇▇ ▇▇▇▇▇
expressly for use in the Offering Memorandum.
(ii) Incorporated Documents. The Offering Memorandum as delivered
from time to time shall incorporate by reference the most recent Annual
Report of the Company on Form 10-K filed with the Commission and each
Quarterly Report of the Company on Form 10-Q and each Current Report of
the Company on Form 8-K filed with the Commission since the filing of the
end of the fiscal year to which such Annual Report relates. The documents
incorporated or deemed to be incorporated by reference in the Offering
Memorandum at the time they were or hereafter are filed with the
Commission complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read
together with the other information in the Offering Memorandum, at the
time the Offering Memorandum was issued and at the Closing Time, did not
and will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(iii) Independent Accountants. The accountants who certified the
financial statements and any supporting schedules thereto included in the
Offering Memorandum were, at the time of such certification, independent
public accountants with respect to the Company and its subsidiaries within
the meaning of Regulation S-X under the 1933 Act.
(iv) Financial Statements. The financial statements of the Company
included in the Offering Memorandum, together with the related schedules
and notes, present fairly, in all material respects, the financial
position of the Company and its consolidated subsidiaries at the dates
indicated and the statements of operations, stockholders' equity and cash
flows of the Company and its consolidated subsidiaries for the periods
specified. Such financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved (except as noted therein). The
selected financial data included in the Offering Memorandum presents
fairly, in all material respects, the information shown therein and has
been compiled on a basis consistent with that of the audited financial
statements included in the Offering Memorandum (except as noted therein).
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(v) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (A) there has been no
material adverse change which, individually or in the aggregate,
materially affects the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise or of Dynegy Inc. and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business (a "Material Adverse Effect"), (B)
there have been no transactions entered into by the Company or any of
its subsidiaries, other than those arising in the ordinary course of
business, which are material with respect to the Company and its
subsidiaries considered as one enterprise, and (C) except for regular
dividends on the Company's common stock or preferred stock, in amounts
that are consistent with past practice or the applicable charter
document or supplement thereto, respectively, there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Illinois and has full power and
authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum and to enter into and
perform its obligations under, or as contemplated under, this Purchase
Agreement and the Mortgage. The Company is not required to be qualified
as a foreign corporation in any jurisdiction.
(vii) No Significant Subsidiaries. The Company does not have
any "significant subsidiary" as such term is defined in Rule 1-02 of
Regulation S-X promulgated under the 1933 Act.
(viii) Capitalization. The authorized, issued and outstanding
shares of capital stock of the Company is as set forth in the financial
statements of the Company included in the Offering Memorandum. Such
shares of capital stock have been duly authorized and validly issued by
the Company and are fully paid and non-assessable, and none of such
shares of capital stock was issued in violation of preemptive or other
similar rights of any securityholder of the Company.
(ix) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(x) Authorization of Mortgage and Supplemental Indenture.
The Mortgage has been duly authorized, executed and delivered by the
Company and the Supplemental Indenture has been duly authorized by the
Company. The Mortgage constitutes and, upon execution and delivery of
the Supplemental Indenture by the parties thereto, the Supplemental
Indenture will constitute, the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally or by general
equitable principles (regardless of whether enforcement is considered
in a proceeding in equity or at law) and except that no representation
is expressed with respect to the enforceability of the lien of
4
the Mortgage on chattels as against third parties (other than chattels
delivered in pledge to the Trustee) or with respect to the
enforceability of the lien of the Mortgage on after-acquired property
(in respect of which a supplemental indenture shall not have been
executed, delivered and recorded) as against purchasers for value and
without notice.
(xi) Authorization of the Securities. The Securities have
been duly authorized by the Company for issuance and sale pursuant to
this Agreement. When (1) the Initial Delivery Bonds are issued and
authenticated in the manner provided for in the Mortgage and the
Supplemental Indenture and delivered against payment of the
consideration therefor specified in this Agreement, and (2) the Delayed
Delivery Bonds, if any, are issued and authenticated in the manner
provided for in the Escrow Agreement, the Mortgage and the Supplemental
Indenture and delivered against payment of the consideration therefore
specified in the Escrow Agreement, such Securities will have been
validly issued and delivered, free of any preemptive or similar rights
to subscribe to or purchase the same arising by operation of law or
under the charter or by-laws of the Company or otherwise, and will
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally or by general equitable
principles (regardless of whether enforcement is considered in a
proceeding in equity or at law). Such Securities will be in the form
contemplated by, and each registered holder thereof is entitled to the
benefits of, the Mortgage.
(xii) Valid Lien of the Mortgage. The Mortgage constitutes a
valid and legally effective mortgage creating a valid first lien for
the security of all bonds duly issued thereunder upon substantially all
of the Company's properties used or to be used in the generation,
purchase, transmission, distribution and sale of electricity or gas,
subject only to the exceptions, reservations, encumbrances and
restrictions recited in the granting and habendum clauses of, and as
provided in, the Mortgage, or referred to in the Offering Memorandum
under said subcaption "Security" under the caption "Description of the
Offered Bonds." Except as to after-acquired property, and except as to
property sold, or under contract to be sold, or otherwise disposed of
by the Company and released from the lien of the Mortgage, or
abandoned, pursuant to the provisions thereof, the Company has good and
sufficient title to all the properties described in, and conveyed or
pledged under, the Mortgage subject only to the exceptions,
reservations, encumbrances and restrictions recited in the granting and
habendum clauses of, and as provided in, the Mortgage, or referred to
in the Offering Memorandum under the subcaption "Security" under the
caption "Description of the Offered Bonds." The description of such
properties set forth in the Mortgage is adequate to constitute the
Mortgage as a lien thereon. The Mortgage has been duly filed and
recorded in such manner and in such places as is required by law in
order to give constructive notice of, establish, preserve and protect
the lien of the Mortgage.
(xiii) Description of the Securities and the Mortgage. The
Securities and the Mortgage will conform in all material respects to
the respective statements relating thereto contained in the Offering
Memorandum.
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(xiv) Absence of Defaults and Conflicts. Neither the Company
nor any of its subsidiaries is in violation of its charter or by-laws
or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Company or any of its subsidiaries
is a party or by which it or any of them may be bound, or to which any
of the assets, properties or operations of the Company or any of its
subsidiaries is subject (collectively, "Agreements and Instruments"),
except for such defaults that would not result in a Material Adverse
Effect. Except as otherwise described in the Offering Memorandum,
neither the Company nor any of its subsidiaries is in violation of any
applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their assets, properties or operations, except
for any such violation that would not, individually or in the
aggregate, result in a Material Adverse Effect. Except as otherwise
described in the Offering Memorandum, the execution, delivery and
performance of this Agreement, the Mortgage, the Supplemental Indenture
and any other agreement or instrument entered into or issued or to be
entered into or issued by the Company in connection with the
transactions contemplated hereby or thereby or in the Offering
Memorandum and the consummation of the transactions contemplated herein
and in the Offering Memorandum (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities
as described under the caption "Use of Proceeds") and compliance by the
Company with its obligations hereunder and thereunder have been duly
authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition
of any lien, charge or encumbrance upon any assets, properties or
operations of the Company or any of its subsidiaries (except under the
Mortgage) pursuant to, any Agreements and Instruments, nor will such
action result in any violation of the provisions of the charter or
by-laws of the Company or any of its subsidiaries or any applicable
law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any
of their assets, properties or operations. As used herein, a "Repayment
Event" means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company or
any of its subsidiaries.
(xv) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the
knowledge of the Company, is imminent, and none of the Company's
executive officers has personal knowledge of any existing or imminent
labor disturbance by the employees of any of its principal suppliers,
manufacturers, customers or contractors, which, in either case, may
reasonably be expected to result in a Material Adverse Effect.
(xvi) Absence of Proceedings. Except as described in the
Offering Memorandum, there is no action, suit, proceeding, inquiry or
investigation before or
6
brought by any court or governmental agency or body, domestic or
foreign, now pending, or to the knowledge of the Company threatened,
against or affecting the Company or any of its subsidiaries which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the
assets, properties or operations thereof or the consummation of the
transactions contemplated under the Offering Memorandum, this
Agreement, the Mortgage or the Supplemental Indenture or the
performance by the Company of its obligations hereunder and thereunder.
The aggregate of all pending legal or governmental proceedings to which
the Company or any of its subsidiaries is a party or of which any of
their respective assets, properties or operations is the subject which
are not described in the Offering Memorandum, including ordinary
routine litigation incidental to the business, could not reasonably be
expected to result in a Material Adverse Effect.
(xvii) Possession of Intellectual Property. The Company and
its subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, and neither the Company
nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others
with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xviii) Absence of Further Requirements. Except as otherwise
described in the Offering Memorandum, no filing with, or authorization,
approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency, domestic or
foreign, is necessary or required for the due authorization, execution
and delivery by the Company of this Agreement or for the performance by
the Company of the transactions contemplated under the Offering
Memorandum, this Agreement, the Mortgage or the Supplemental Indenture,
except such as have been already made, obtained or rendered, as
applicable.
(xix) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them, except
where the failure to possess such Governmental Licenses, singly or in
the aggregate, would not result in a Material Adverse Effect. The
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, result in a
Material Adverse Effect. All of the Governmental Licenses are valid and
in full force and effect, except where the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to
be in full force and effect would not result in a Material Adverse
Effect. Neither the Company nor any of its subsidiaries has received
7
any notice of proceedings relating to the revocation or modification
of any such Governmental Licenses which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would
result in a Material Adverse Effect.
(xx) Authorization of, and Compliance with, Contracts and
Agreements. Each contract, agreement or arrangement to which the
Company or any of its subsidiaries is a party or by which it or any of
them may be bound, or to which any of the property or assets of the
Company or any of its subsidiaries is subject, which is material to the
condition (financial or other), results of operations, business or
prospects of the Company and its subsidiaries taken as a whole, has
been duly and validly authorized, executed and delivered by the Company
or its subsidiary, as applicable; except as contemplated in connection
with the sale of the Company's electric transmission assets to
Trans-Elect, Inc. as described in the Offering Memorandum, none of such
contracts, agreements or arrangements has been assigned by the Company
or any of its subsidiaries to any non-affiliated party other than in
the ordinary course of business, and the Company knows of no present
condition or fact which would prevent compliance by the Company or any
of its subsidiaries or any other party thereto with the terms of any
such contract, agreement or arrangement in accordance with its terms in
all material respects, except for any such failures to comply that
would not, individually or in the aggregate, have a Material Adverse
Effect; except as contemplated in connection with the sale of the
Company's electric transmission assets to Trans-Elect, Inc. as
described in the Offering Memorandum, neither the Company nor any of
its subsidiaries has any present intention to exercise any right that
it may have to cancel any such contract, agreement or arrangement or
otherwise to terminate its rights and obligations thereunder, and none
of them has any knowledge that any other party to any such contract,
agreement or arrangement has any intention not to render full
performance in all material respects as contemplated by the terms
thereof, except for any such cancellations, terminations or failures to
perform that would not, individually or in the aggregate, result in a
Material Adverse Effect.
(xxi) Environmental Laws. Except as otherwise stated in the
Offering Memorandum and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries is in violation of any federal, state,
local or foreign statute, law, rule, regulation, ordinance, code,
policy or rule of common law or any judicial or administrative
interpretation thereof including any judicial or administrative order,
consent, decree or judgment, relating to pollution or protection of
human health, the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum
or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) neither the Company nor any of its
subsidiaries fails to possess any permit, authorization or approval
required under any applicable Environmental Laws or to be in material
compliance with their requirements, (C) there are no pending or, to the
Company's knowledge, threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims,
8
liens, notices of noncompliance or violation, investigation or
proceedings relating to any Environmental Law against the Company or
any of its subsidiaries and (D) there are no events or circumstances
that might reasonably be expected to form the basis of an order for
clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to Hazardous Materials or
any Environmental Laws.
(xxii) Investment Company Act. The Company is not, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Offering
Memorandum will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(xxiii) Public Utility Holding Company Act. The Company's
parent is exempt from registration and all other regulations and
requirements of the Public Utility Holding Company Act of 1935, as
amended (the "1935 Act"), and the rules and regulations promulgated
thereunder, other than from Section 9(a)(2) thereof, pursuant to
Section 3(a)(1)of the 1935 Act. The Company is exempt from registration
and all other regulations and requirements of the 1935 Act, and the
rules and regulations promulgated thereunder, other than from Section
9(a)(2) thereof.
(xxiv) Illinois Commerce Commission Approval. The Illinois
Commerce Commission has entered orders (a) permitting the execution and
delivery of the Mortgage and the Supplemental Indenture, respectively,
and (b) approving the issuance of the Initial Delivery Bonds; said
orders are valid and in effect and no further approval, authorization,
consent or order of, or action by, any other regulatory authority is
necessary with respect to the execution and delivery of the Mortgage or
the Supplemental Indenture or the issuance and sale of the Initial
Delivery Bonds, each as contemplated by this Agreement. The issuance
and sale of the Initial Delivery Bonds, as contemplated by this
Agreement, are in conformity with the terms of said orders of the
Illinois Commerce Commission.
(xxv) Similar Offerings. Neither the Company nor any of its
affiliates, as such term is defined in Rule 501(b) under the 1933 Act
(each, an "Affiliate"), has, directly or indirectly, solicited any
offer to buy, sold or offered to sell or otherwise negotiated in
respect of, or will solicit any offer to buy, sell or offer to sell or
otherwise negotiate in respect of, in the United States or to any
United States citizen or resident, any security which is or would be
integrated with the sale of the Securities in a manner that would
require the Securities to be registered under the 1933 Act.
(xxvi) Rule 144A Eligibility. Assuming the accuracy of the
Initial Purchasers' representations contained in Sections 2 and 6
hereof and compliance by the Initial Purchasers with the agreements and
procedures set forth in Section 6 hereof, the Securities are eligible
for resale pursuant to Rule 144A and will not be, at the Closing Time
or the Delayed Closing Time, of the same class as securities listed on
a national securities exchange registered under Section 6 of the 1934
Act, or quoted in a U.S. automated interdealer quotation system.
9
(xxvii) No General Solicitation. None of the Company, its
Affiliates or any person acting on its or any of their behalf (other
than the Initial Purchasers, as to whom the Company makes no
representation) has engaged or will engage, in connection with the
offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the 1933
Act.
(xxviii) No Registration Required. Assuming the accuracy of the
Initial Purchasers' representations contained in Sections 2 and 6
hereof and compliance by the Initial Purchasers with the agreements and
procedures set forth in Section 6 hereof, it is not necessary in
connection with the offer, sale and delivery of the Securities to the
Initial Purchasers and to each Subsequent Purchaser in the manner
contemplated by this Agreement and the Offering Memorandum to register
the Securities under the 1933 Act or to qualify the Indenture under the
Trust Indenture Act of 1939, as amended (the "1939 Act").
(xxix) Reporting Company. The Company is subject to the
reporting requirements of Section 13 or Section 15(d) of the 1934 Act.
(b) Officer's Certificates. Any certificate signed by any officer of
the Company or any of its subsidiaries delivered to the Representative or to
counsel for the Initial Purchasers shall be deemed a representation and warranty
by the Company to each Initial Purchaser as to the matters covered thereby.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
(a) Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Initial Purchaser, severally and not jointly, and
each Initial Purchaser, severally and not jointly, agrees to purchase from the
Company, at the price set forth in Schedule D, (i) the aggregate principal
amount of Initial Delivery Bonds set forth in Schedule A opposite the name of
such Initial Purchaser and (ii) the aggregate principal amount of Delayed
Delivery Bonds set forth in Schedule A opposite the name of such Initial
Purchaser, plus, in each case, any additional principal amount of Securities
which such Initial Purchaser may become obligated to purchase pursuant to the
provisions of Section 11 hereof.
(b) Payment. Payment of the purchase price for, and delivery of one or
more certificates for, the Initial Delivery Bonds shall be made at the office of
Schiff, Hardin & ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such
other place as shall be agreed upon by the Representative and the Company, at
9:00 A.M. (Central time) on December 20, 2002 (unless postponed in accordance
with the provisions of Section 11), or such other time not later than ten
business days after such date as shall be agreed upon by the Representative and
the Company (such time and date of payment and delivery being herein called the
"Closing Time").
Deposit of the purchase price for the Delayed Delivery Bonds shall be
made at the Closing Time by wire transfer of immediately available funds to the
escrow account maintained by BNY Midwest Trust Company as Escrow Agent under the
Escrow Agreement dated as of the Closing Date under which the Escrow Agent and
the Representative are parties, for distribution, as the case may be, to the
Company following ICC Approval (as defined in the Escrow
10
Agreement), or to the Initial Purchasers in connection with the Mandatory Refund
(as defined in the Escrow Agreement) all in accordance with the terms of the
Escrow Agreement.
Following ICC Approval, distribution of the funds held in the escrow
account by the Escrow Agent for, and delivery of one or more certificates for,
the Delayed Delivery Bonds shall be made at the office of Schiff, Hardin &
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as
shall be agreed upon by the Representative and the Company, at 9:00 A.M.
(Central time) on the third business day after ICC Approval (such time and date
of distribution and delivery being herein called the "Delayed Closing Time").
Payment of the purchase price for the Securities shall be made to the
Company by wire transfer of immediately available funds to a bank account
designated by the Company, against delivery, through the facilities of DTC, to
the Representative for the respective accounts of the Initial Purchasers of the
Securities to be purchased by them at the Closing Time or the Delayed Closing
Time, as the case may be.
It is understood that each Initial Purchaser has authorized the
Representative, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Securities which it has agreed to
purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative of the Initial
Purchasers, may (but shall not be obligated to) make payment of the purchase
price for the Securities to be purchased by any Initial Purchaser whose funds
have not been received by the Closing Time or the Delayed Closing Time, as the
case may be, but such payment shall not relieve such Initial Purchaser from its
obligations hereunder.
(c) Denominations; Registration. Certificates for the Securities shall be
delivered in global form, registered in the name of Cede & Co., to the Trustee
as custodian for the DTC.
SECTION 3. Covenants of the Company. The Company covenants with each
Initial Purchaser as follows:
(a) Offering Memorandum. The Company, as promptly as possible, will
furnish to each Initial Purchaser, without charge, such number of copies of the
Preliminary Offering Memorandum, the Final Offering Memorandum and any
amendments and supplements thereto and documents incorporated by reference
therein as such Initial Purchaser may reasonably request.
(b) Notice and Effect of Material Events. The Company will immediately
notify each Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the
Securities with any securities exchange or any other regulatory body in the
United States or any other jurisdiction, (y) prior to the completion of the
placement of the Securities by the Initial Purchasers as evidenced by a notice
in writing from the Initial Purchasers to the Company, any material changes in
or affecting the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise or Dynegy Inc. and its consolidated subsidiaries considered as
one entity which (i) make any statement in the Offering Memorandum false or
misleading or (ii) are not disclosed in the Offering Memorandum and, as a
result, make the statements therein, in light of the circumstances in which they
were made, misleading, and (z) of the issuance by any governmental or regulatory
authority of any order preventing or suspending
11
the use of the Preliminary Offering Memorandum or the Final Offering Memorandum
or suspending the qualification of the Securities for offer and sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. In such event or if during such time any event shall occur as a result
of which it is necessary, in the reasonable opinion of any of the Company, its
counsel, the Initial Purchasers or counsel for the Initial Purchasers, to amend
or supplement the Final Offering Memorandum in order that the Final Offering
Memorandum not include any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein not misleading
in the light of the circumstances then existing, the Company will forthwith
amend or supplement the Final Offering Memorandum by preparing and furnishing to
each Initial Purchaser an amendment or amendments of, or a supplement or
supplements to, the Final Offering Memorandum (in form and substance
satisfactory in the reasonable opinion of counsel for the Initial Purchasers) so
that, as so amended or supplemented, the Final Offering Memorandum will not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a Subsequent Purchaser,
not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company will
advise each Initial Purchaser promptly of any proposal to amend or supplement
the Offering Memorandum and will not effect such amendment or supplement without
the consent of the Initial Purchasers, which consent shall not be unreasonably
withheld. Neither the consent of the Initial Purchasers, nor the Initial
Purchasers' delivery of any such amendment or supplement, shall constitute a
waiver of any of the conditions set forth in Section 5 hereof.
(d) Qualification of Securities for Offer and Sale. The Company will use
its reasonable best efforts, in cooperation with the Initial Purchasers, to
qualify the Securities for offering and sale under applicable securities laws of
such states and other jurisdictions as the Representative may reasonably
designate and to maintain such qualifications in effect for such period as is
reasonably requested by the Representative on behalf of the Initial Purchasers;
provided, however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject.
(e) DTC. The Company will cooperate with the Representative and use its
reasonable best efforts to permit the Securities to be eligible for clearance
and settlement through the facilities of DTC.
(f) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Offering
Memorandum under "Use of Proceeds".
(g) Restriction on Sale of Securities. Until 3 days after the first to
occur of (i) the Delayed Closing Time or (ii) January 31, 2003, the Company will
not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or indirectly,
issue, sell, offer or agree to sell, grant any option for the sale of, or
otherwise dispose of, any other long-term debt securities of the Company or
securities of the Company that are convertible into, or exchangeable for, the
Securities or such other debt securities, except pursuant to a bank credit
facility.
12
(h) PORTAL Designation. The Company will use its best efforts to permit
the Securities to be designated PORTAL securities in accordance with the rules
and regulations adopted by the National Association of Securities Dealers, Inc.
("NASD") relating to trading in the PORTAL Market.
(i) Reporting Requirements. The Company, during the period when the
Offering Memorandum is required to be delivered pursuant to Section 6(a)(vii)
hereof, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act and
the 1934 Act Regulations (including permitted extensions thereunder).
(j) Filings and Recordings. As soon as practicable after the Closing
Time, the Company will make all recordings, registrations and filings necessary
to perfect and preserve the lien of the Mortgage and the rights under the
Supplemental Indenture.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing, delivery to the Initial Purchasers and any filing of the
Offering Memorandum (including financial statements and any schedules or
exhibits and any document incorporated therein by reference) and of each
amendment or supplement thereto, (ii) the preparation, printing and delivery to
the Initial Purchasers of this Agreement, any Agreement among Initial
Purchasers, the Mortgage, the Supplemental Indenture and such other documents as
may be required in connection with the offering, purchase, sale, issuance or
delivery of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Initial Purchasers, (iv) the fees and
disbursements of the Company's counsel, accountants and other advisors, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Initial Purchasers in connection therewith,
(vi) the fees and expenses of the Trustee and Escrow Agent, including the fees
and disbursements of counsel for the Trustee and Escrow Agent in connection with
the Mortgage, the Supplemental Indenture, the Escrow Agreement, the Fee,
Indemnification and Refunding Agreement and the Securities, (vii) any fees
payable in connection with the rating of the Securities, and (viii) any fees and
expenses payable in connection with the initial and continued designation of the
Securities as PORTAL securities under the PORTAL Market Rules pursuant to NASD
Rule 5322. Except as provided in this Section 4, the Initial Purchasers shall
pay all of their own costs and expenses, including the fees of their counsel and
any advertising or other expenses incurred in connection with any offers they
make.
(b) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Initial Purchasers.
SECTION 5. Conditions of Initial Purchasers' Obligations. The obligations
of the several Initial Purchasers hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any of its subsidiaries
delivered pursuant to the provisions hereof, to the
13
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:
(a) Opinion of Counsel for Company. At the Closing Time, the
Representative shall have received the favorable opinions, dated as of the
Closing Time, of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. and the Assistant
General Counsel of the Company, in each case in form and substance satisfactory
to counsel for the Initial Purchasers, together with signed or reproduced copies
of such letter for each of the other Initial Purchasers, to the effect set forth
in Exhibit A, Exhibit B and Exhibit C, respectively, hereto and to such further
effect as counsel to the Initial Purchasers may reasonably request.
(b) Opinion of Counsel for Initial Purchasers. At the Closing Time, the
Representative shall have received the favorable opinion, dated as of the
Closing Time, of ▇▇▇▇▇ ▇▇▇▇▇ L.L.P., counsel for the Initial Purchasers,
together with signed or reproduced copies of such letter for each of the other
Initial Purchasers with respect to the matters set forth in (1), (2), (3), the
first sentence of (4), (6) and (8) and the penultimate paragraph of Exhibit A
hereto and in the first paragraph of Exhibit B hereto. In giving such opinion
such counsel may rely, as to all matters governed by the laws of jurisdictions
other than the law of the State of New York, the federal law of the United
States and the General Corporation Law of the State of Delaware, upon the
opinions of counsel satisfactory to the Representative and for purposes of the
first sentence of (3) may assume that the laws of the State of Illinois are the
same as the laws of the State of New York. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and its
subsidiaries and certificates of public officials.
(c) Officers' Certificate. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise or of Dynegy Inc. and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the
Representative shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of the Closing Time, to the effect that (i) there has
been no such material adverse change, (ii) the representations and warranties in
Section 1 hereof are true and correct with the same force and effect as though
expressly made at and as of the Closing Time, and (iii) the Company has complied
with all agreements and satisfied all conditions contained in this Agreement on
its part to be performed or satisfied at or prior to the Closing Time.
(d) Accountants' Comfort Letter and the Company's Certificate. At the
time of the execution of this Agreement, the Representative shall have received
from PricewaterhouseCoopers LLP a letter dated such date, and a certificate of
the Company, signed by its chief accounting officer dated such date, in
substantial form and substance satisfactory to the Representative, together with
signed or reproduced copies of such letter for each of the other Initial
Purchasers.
(e) Bring-down Comfort Letter and Company's Certificate. At the Closing
Time, the Representative shall have received from PricewaterhouseCoopers LLP a
letter, dated as of the
14
Closing Time, and a certificate of the Company signed by its chief accounting
officer, date as of the Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (d) of this
Section, except that the specified date referred to shall be a date not more
than three business days prior to the Closing Time.
(f) Maintenance of Rating. At the Closing Time, the Securities or the
Company's outstanding Mortgage Bonds shall be rated at least B3 by ▇▇▇▇▇'▇
Investors Service, Inc. ("Moody's") and B by Standard and Poor's Ratings Service
("S&P") and neither of such rating organizations shall have downgraded their
outlook or watch status of the Securities or the Company's outstanding Mortgage
Bonds since the date hereof, and the Company shall have delivered to the
Representative a letter dated the Closing Time, from each such rating agency, or
other evidence satisfactory to the Representative, confirming that the
Securities or the Company's outstanding Mortgage Bonds have such ratings; and
since the date hereof, there shall not have occurred a downgrading in, or
withdrawal of, the rating assigned to the Securities or any of the Company's
outstanding Mortgage Bonds or any of Dynegy Inc.'s other securities by Moody's
or S&P.
(g) PORTAL. At the Closing Time, the Securities shall have been
designated for trading on PORTAL.
(h) Escrow Agreement; Fee, Indemnification and Refunding Agreement and
Registration Rights Agreement. At the Closing Time, the Representative shall
have received (i) the Escrow Agreement duly executed by BNY Midwest Trust
Company, as trustee and BNY Midwest Trust Company, as escrow agent, (ii) a Fee,
Indemnification and Refunding Agreement, substantially in the form of Schedule C
hereto, duly executed by the Company and BNY Midwest Trust Company, as escrow
agent and (iii) a Registration Rights Agreement duly executed by the Company
containing substantially the terms thereof described in the Offering Memorandum.
(i) Additional Documents. At the Closing Time, counsel for the Initial
Purchasers shall have been furnished with such documents and opinions as they
may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be reasonably satisfactory in form and substance to
the Representative and counsel for the Initial Purchasers.
(j) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representative by notice to the Company at
any time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 7, 8 and 9 shall survive any such termination and remain
in full force and effect. The conditions specified in this Section 5 shall not
be conditions to the closing of the Delayed Delivery Bonds at the Delayed
Closing Time, provided that the Initial Delivery Bonds have been delivered. The
issuance and delivery of the Delayed Delivery Bonds shall be governed by the
Escrow Agreement.
15
SECTION 6. Subsequent Offers and Resales of the Securities.
(a) Offer and Sale Procedures. Each of the Initial Purchasers and the
Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) Offers and Sales only to Qualified Institutional Buyers.
Offers and sales of the Securities shall only be made to persons whom the
offeror or seller reasonably believes to be qualified institutional
buyers, as defined in Rule 144A under the 1933 Act ("Qualified
Institutional Buyers").
(ii) No General Solicitation. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the ▇▇▇▇ ▇▇▇) will
be used in the United States in connection with the offering or sale of
the Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
Subsequent Purchaser of a Security acting as a fiduciary for one or more
third parties, each third party shall, in the judgment of the applicable
Initial Purchaser, be a Qualified Institutional Buyer.
(iv) Subsequent Purchaser Notification. Each Initial Purchaser
will take reasonable steps to inform, and cause each of its U.S.
Affiliates to take reasonable steps to inform, persons acquiring
Securities from such Initial Purchaser or affiliate, as the case may be,
in the United States that the Securities (A) have not been and will not
be registered under the 1933 Act, (B) are being sold to them without
registration under the 1933 Act in reliance on Rule 144A or in accordance
with another exemption from registration under the 1933 Act, as the case
may be, and (C) may not be offered, sold or otherwise transferred except
(1) to the Company, or (2) in accordance with (x) Rule 144A to a person
whom the seller reasonably believes is a Qualified Institutional Buyer
that is purchasing such Securities for its own account or for the account
of a Qualified Institutional Buyer to whom notice is given that the
offer, sale or transfer is being made in reliance on Rule 144A or (y)
pursuant to another available exemption from registration under the 1933
Act.
(v) Minimum Principal Amount. No sale of the Securities to any
one Subsequent Purchaser will be for less than U.S. $100,000 principal
amount and no Security will be issued in a smaller principal amount. If
the Subsequent Purchaser is a non-bank fiduciary acting on behalf of
others, each person for whom it is acting must purchase at least U.S.
$100,000 principal amount of the Securities.
(vi) Restrictions on Transfer. The transfer restrictions and the
other provisions set forth in the Offering Memorandum under the heading
"Notices to Investors", including the legend required thereby, shall
apply to the Securities except as otherwise agreed by the Company and the
Initial Purchasers.
(vii) Delivery of Offering Memorandum. Each Initial Purchaser will
deliver to each purchaser of the Securities from such Initial Purchaser,
in connection with its original distribution of the Securities, a copy of
the Offering Memorandum, as amended
16
and supplemented at the date of such delivery, together with copies of
the Company's annual report on Form 10-K for the year ended December 31,
2001 and the Company's quarterly report on Form 10-Q for the quarter
ended September 30, 2002.
(b) Covenants of the Company. The Company covenants with each Initial
Purchaser as follows:
(i) Integration. The Company agrees that it will not and will
cause its Affiliates not to, directly or indirectly, solicit any offer to
buy, sell or make any offer or sale of, or otherwise negotiate in respect
of, securities of the Company of any class if, as a result of the
doctrine of "integration" referred to in Rule 502 under the 1933 Act,
such offer or sale would render invalid (for the purpose of (i) the sale
of the Securities by the Company to the Initial Purchasers, (ii) the
resale of the Securities by the Initial Purchasers to Subsequent
Purchasers or (iii) the resale of the Securities by such Subsequent
Purchasers to others) the exemption from the registration requirements of
the 1933 Act provided by Section 4(2) thereof or by Rule 144A thereunder
or otherwise.
(ii) Rule 144A Information. The Company agrees that, in order to
render the Securities eligible for resale pursuant to Rule 144A under the
1933 Act, while any of the Securities remain outstanding, it will make
available, upon request, to any holder of Securities or prospective
purchasers of Securities the information specified in Rule 144A(d)(4),
unless the Company furnishes information to the Commission pursuant to
Section 13 or 15(d) of the 1934 Act.
(iii) Restriction on Repurchases. Until the expiration of two
years after the original issuance of the Securities, the Company will
not, and will cause its Affiliates not to, resell any Securities which
are "restricted securities" (as such term is defined under Rule 144(a)(3)
under the 1933 Act), whether as beneficial owner or otherwise (except as
agent acting as a securities broker on behalf of and for the account of
customers in the ordinary course of business in unsolicited broker's
transactions).
(c) Qualified Institutional Buyer. Each Initial Purchaser severally and
not jointly represents and warrants to, and agrees with, the Company that it is
a "qualified institutional buyer" within the meaning of Rule 144A under the 1933
Act (a "Qualified Institutional Buyer") and an "accredited investor" within the
meaning of Rule 501(a) under the 1933 Act (an "Accredited Investor").
SECTION 7. Indemnification.
(a) Indemnification of the Initial Purchasers. The Company agrees to
indemnify and hold harmless each Initial Purchaser and each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:
(1) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Memorandum or the
Final Offering Memorandum (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a
material fact
17
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading;
(2) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency
or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any
such alleged untrue statement or omission; provided that
(subject to Section 7(d) below) any such settlement is
effected with the written consent of the Company; and
(3) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by
▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably incurred in investigating,
preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based
upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any
such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Initial Purchaser through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Offering
Memorandum (or any amendment thereto); provided, further, that with respect to
any untrue statement or omission or alleged untrue statement or omission made in
any Preliminary Offering Memorandum which untrue statement or omission or
alleged untrue statement or omission in such Preliminary Offering Memorandum was
corrected in the Final Offering Memorandum, the indemnity language contained in
this paragraph 7(a) shall not inure to the benefit of any Initial Purchaser (or
any other person controlling such Initial Purchaser) to the extent that any such
loss, liability, claim, damage or expense results from the fact that a copy of
the Final Offering Memorandum was not sent or given to the person asserting any
such loss, liability, claim, damage or expense at or prior to the written
confirmation of the sale of the Offered Bonds to such person by such Initial
Purchaser (provided that the Company shall have complied with the provisions of
Section 3(a) hereof and such Initial Purchaser shall have been provided with the
number of copies of such Final Offering Memorandum requested by such Initial
Purchaser in a timely manner).
(b) Indemnification of Company and Directors. Each Initial Purchaser
severally agrees to indemnify and hold harmless the Company, its directors and
executive officers and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any
and all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the Preliminary Offering Memorandum or the Final Offering Memorandum in
reliance upon and in conformity with written information furnished to the
Company by such Initial Purchaser through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Preliminary Offering Memorandum or the Final Offering Memorandum, as the case
may be.
18
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) above,
counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in
the case of parties indemnified pursuant to Section 7(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section or Section 8
hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 7(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 8. Contribution. If the indemnification provided for in Section 7
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Initial Purchasers on the other hand from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Initial Purchasers on the other hand in connection with
19
the statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities.
The relative fault of the Company on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section were determined by pro
rata allocation (even if the Initial Purchasers were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities purchased and sold by it hereunder exceeds
the amount of any damages which such Initial Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such Initial
Purchaser, and each director or executive officer of the Company and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company. The Initial Purchasers' respective obligations to
contribute pursuant to this Section are several in proportion to the principal
amount of Securities set forth opposite their respective names in Schedule A
hereto and not joint.
20
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any Initial
Purchaser or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Initial Purchasers.
SECTION 10. Termination of Agreement.
(a) Termination; General. The Representative may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the Offering
Memorandum, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise or Dynegy Inc. and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representative, impracticable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii) if trading in any securities of the Company or Dynegy Inc. has been
suspended or materially limited by the Commission or the New York Stock
Exchange, or if trading generally on the American Stock Exchange or the New York
Stock Exchange or in the NASDAQ System has been suspended or materially limited,
or minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 7, 8 and 9 shall survive such termination and remain in full force and
effect.
(c) Delayed Delivery Bonds. After the Closing Time, the termination
provisions hereof shall not apply to the issuance and delivery of the Delayed
Delivery Bonds which shall be governed by the terms of the Escrow Agreement.
21
SECTION 11. Default by One of the Initial Purchasers. If one of the
Initial Purchasers shall fail at the Closing Time to purchase the Securities
which it is obligated to purchase under this Agreement (the "Defaulted
Securities"), then the Representative shall have the right, within 24 hours
thereafter, to make arrangements for the non-defaulting Initial Purchaser, or
any other initial purchasers, to purchase all, but not less than all of the
Defaulted Securities in such amounts as may be agreed upon and upon the terms
herein set forth; if, however, the Representative shall not have completed such
arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted Securities
does not exceed 10% of the aggregate principal amount of Offered Bonds to
be purchased on such date pursuant to this Agreement, the
non-defaulting Initial Purchaser shall be obligated to purchase the
full amount thereof, or
(b) if the aggregate principal amount of Defaulted Securities
exceeds 10% of the aggregate principal amount of Offered Bonds to be
purchased on such date pursuant to this Agreement, this Agreement shall
terminate without liability on the part of any non-defaulting Initial
Purchaser.
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Representative or the Company shall have the right
to postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Offering Memorandum or in any other documents
or arrangements.
22
SECTION 12. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to the Representative at ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇ ▇. ▇▇▇▇▇, notices
to the Company shall be directed to it at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of the General Counsel.
SECTION 13. Parties. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchasers and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchasers and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Initial Purchaser shall be deemed to be a successor by reason merely of such
purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 15. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
23
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
ILLINOIS POWER COMPANY
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and
General Counsel
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Managing Director
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Managing Director
24
SCHEDULE A
Initial Purchaser Principal Amount Principal Amount
----------------- Initial Delivery Bonds Delayed Delivery
▇▇▇▇▇
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ $ 224,000,000 $ 84,000,000
Incorporated
Credit Suisse First Boston Corporation $ 176,000,000 $ 66,000,000
-------------- --------------
Total $ 400,000,000 $ 150,000,000
A-1
SCHEDULE B
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, dated as of December 20, 2002 (this
"Agreement"), is by and among ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED, as representative of the several initial purchasers under the
Purchase Agreement (collectively, the "Initial Purchasers" or the "Depositor"),
BNY MIDWEST TRUST COMPANY, a national banking association, as trustee under the
Indenture ("Trustee"), and BNY MIDWEST TRUST COMPANY, an Illinois trust company,
as Escrow Agent under this Agreement ("Escrow Agent").
RECITALS
Whereas, this Agreement is being entered into in connection with the
Purchase Agreement dated December 17, 2002, between Illinois Power Company, an
Illinois corporation (the "Company"), and the Initial Purchasers (the "Purchase
Agreement"), and the General Mortgage Indenture and Deed of Trust dated as of
November 1, 1992 (the "Mortgage"), between the Company and Trustee, as
supplemented by various supplemental indentures, including the Supplemental
Indenture dated as of December 15, 2002 (the "Supplemental Indenture", and
together with the Mortgage, the "Indenture") governing the Company's Mortgage
Bonds, 11.5% Series due 2010 (the "Bonds"); and
Whereas, the Escrow Funds (as defined herein) will be released either
to the Company or to the Initial Purchasers as provided in Section 4 of this
Agreement.
STATEMENT OF AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Definitions. The following terms have the following meanings
when used in this Agreement:
"Approval Certificate" means an officers' certificate certifying as to
ICC Approval (which will be concurrently delivered to Trustee) substantially in
the form of Exhibit A to this Agreement, signed by any of the Chief Executive
Officer, President, Chief Financial Officer or Principal Accounting Officer of
the Company, certifying to Escrow Agent as to the matters specified in Exhibit
A, directing Escrow Agent to disburse the Escrow Funds in accordance with the
payment instructions contained in the certificate.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions are not required to be open in the State of New
York.
"Delayed Delivery Bonds" means $150,000,000 aggregate principal amount
of the Bonds to be issued by the Company on a delayed delivery basis subject to
the delivery of the Approval Certificate to Escrow Agent and the release of the
Escrow Funds to the Company.
B-1
"Escrow Funds" means the net proceeds of the private placement of the
Delayed Delivery Bonds, which will be deposited by the Depositor with Escrow
Agent under this Agreement, together with any interest and other income thereon,
which funds will include, without limitation, the initial sum to be deposited by
the Depositor of $142,470,000. The Escrow Funds are held for the benefit of the
Initial Purchasers and do not constitute property or an asset of the Company,
and the Company has only a contingent right to receive payment of the Escrow
Funds on the terms and subject to the conditions set forth in this Agreement.
"ICC Approval" means an order or orders entered by the Illinois
Commerce Commission approving the issuance of the Delayed Delivery Bonds and the
use of the net proceeds thereof to repay all of the Company's outstanding 6.50%
Mortgage Bonds and a portion of the Company's $90 million 6.00% Mortgage Bonds
due September 15, 2003.
"Mandatory Refund" means the mandatory refund by the Initial Purchasers
of the purchase price of the Delayed Delivery Bonds to the purchasers of the
Delayed Delivery Bonds.
2. Appointment of and Acceptance by Escrow Agent. Trustee hereby
appoints Escrow Agent to serve as escrow agent hereunder. Escrow Agent hereby
accepts such appointment and, upon receipt by wire transfer of the initial
Escrow Funds in accordance with Section 3 below, agrees to hold, invest and
disburse the Escrow Funds in accordance with this Agreement.
3. Creation of Escrow Funds. On December 20, 2002, the Initial
Purchasers will transfer the sum of $142,470,000 to Escrow Agent, by wire
transfer of immediately available funds, to the following account:
[ ]
ABA # [ ]
Account # [ ]
Account Name: [ ]
Attn: [ ]
4. Disbursement of Escrow Funds.
a. ICC Approval. If, on or prior to January 31,
2003, the Company delivers to Escrow Agent
an Approval Certificate and the Escrow Agent
receives notice from the Initial Purchasers
to disburse the Escrow Funds, Escrow Agent
will disburse the Escrow Funds according to
the payment instructions contained in the
Approval Certificate.
b. Mandatory Refund. The Escrow Funds will be
disbursed directly to the Initial Purchasers
to effect the Mandatory Refund if Escrow
Agent has not received an Approval
Certificate on or prior to January 31, 2003.
If Escrow Agent does not receive an Approval
Certificate on or prior to January 31, 2003,
it will disburse all the Escrow Funds
directly to the Initial Purchasers no later
than 11:00 a.m., New York City time, on
February 3, 2003.
B-2
5. Suspension of Performance; Disbursement Into Court. If, at any time,
there exists any dispute with respect to the holding or disposition of any
portion of the Escrow Funds or any other obligations of Escrow Agent hereunder,
or if at any time Escrow Agent is unable to determine, to Escrow Agent's sole
satisfaction, the proper disposition of any portion of the Escrow Funds or
Escrow Agent's proper actions with respect to its obligations hereunder, or if
the Initial Purchasers have not within 30 days of the furnishing by Escrow Agent
of a notice of resignation under Section 7 hereof, appointed a successor Escrow
Agent to act hereunder, then Escrow Agent may, in its sole discretion, take
either or both of the following actions:
a. suspend the performance of any of its obligations (including
without limitation any disbursement obligations) under this
Agreement until such dispute or uncertainty has been resolved to the
sole satisfaction of Escrow Agent or until a successor Escrow Agent has
been appointed (as the case may be); provided however, that Escrow
Agent will continue to invest the Escrow Funds in accordance with
Section 6 hereof; and/or
b. petition (by means of an interpleader action or any other
appropriate method) any court of competent jurisdiction, in any venue
convenient to Escrow Agent, for instructions with respect to such
dispute or uncertainty, and, to the extent required by law, pay into
such court, for holding and disposition in accordance with the
instructions of such court, all Escrow Funds held by it.
Escrow Agent will have no liability to the Depositor, the Company, the holders
of the Bonds or any other person with respect to any such suspension of
performance or disbursement into court, specifically including any liability or
claimed liability that may arise, or be alleged to have arisen, out of or as a
result of any delay in the disbursement of Escrow Funds or any delay in or with
respect to any other action required or requested of Escrow Agent.
6. Investment of Funds. Escrow Agent will invest and reinvest the
Escrow Funds in the [___________________________________]. The foregoing
investments will be made in the name of Escrow Agent on behalf of the Initial
Purchasers. Notwithstanding anything to the contrary contained herein, Escrow
Agent may, without notice to any person, sell or liquidate any of the foregoing
investments at any time if the proceeds thereof are required for any release of
funds permitted or required hereunder, and Escrow Agent will not be liable or
responsible for any loss, cost or penalty resulting from any such sale or
liquidation.
7. Resignation of Escrow Agent. Escrow Agent may resign from the
performance of its duties hereunder at any time by giving ten days' prior
written notice to Trustee. Such resignation will take effect upon the
appointment of a successor Escrow Agent as provided herein below. Upon any such
notice of resignation, the Initial Purchasers will appoint a successor Escrow
Agent hereunder, which shall be a commercial bank, trust company or other
financial institution with a combined capital and surplus in excess of
$50,000,000. On the acceptance in writing of any appointment as Escrow Agent
hereunder by a successor Escrow Agent, such successor Escrow Agent will succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Escrow Agent, and the retiring Escrow Agent will be discharged from its
duties and obligations under this Agreement, but will not be discharged from any
liability for actions taken as Escrow Agent hereunder prior to such succession.
After any retiring Escrow Agent's resignation, the provisions of this Agreement
will inure to its benefit as
B-3
to any actions taken or omitted to be taken by it while it was Escrow Agent
under this Agreement. The retiring Escrow Agent will transmit all records
pertaining to the Escrow Funds and will pay the Escrow Funds to the successor
Escrow Agent, after making copies of such records as the retiring Escrow Agent
deems advisable.
8. Liability of Escrow Agent.
(a) Escrow Agent will have no liability or obligation with respect to
the Escrow Funds except for Escrow Agent's willful misconduct or gross
negligence. Escrow Agent's sole responsibility will be for the safekeeping,
investment and disbursement of the Escrow Funds in accordance with the terms of
this Agreement. Escrow Agent will have no implied duties or obligations and will
not be charged with knowledge or notice of any fact or circumstance not
specifically set forth herein. Escrow Agent may rely upon any instrument, not
only as to its due execution, validity and effectiveness, but also as to the
truth and accuracy of any information contained therein, which Escrow Agent
shall in good faith believe to be genuine, to have been signed or presented by
the person or parties purporting to sign the same and to conform to the
provisions of this Agreement. In no event will Escrow Agent be liable for
incidental, indirect, special, consequential or punitive damages. Escrow Agent
will not be obligated to take any legal action or commence any proceeding in
connection with the Escrow Funds, any account in which Escrow Funds are
deposited, this Agreement, or to appear in, prosecute or defend any such legal
action or proceeding. Escrow Agent may consult legal counsel selected by it in
the event of any dispute or question as to the construction of any of the
provisions hereof or of any other agreement or of its duties hereunder, or
relating to any dispute involving any party hereto, and will incur no liability
in acting in accordance with the opinion or instruction of such counsel.
(b) Escrow Agent is authorized, in its sole discretion, to comply with
orders issued or process entered by any court with respect to the Escrow Funds,
without determination by Escrow Agent of such court's jurisdiction in the
matter. If any portion of the Escrow Funds is at any time attached, garnished or
levied upon under any court order, or in case the payment, assignment, transfer,
conveyance or delivery of any of the Escrow Funds shall be stayed or enjoined by
any court order, or in case any order, judgment or decree shall be made or
entered by any court affecting the Escrow Funds or any part thereof, then and in
any such event, Escrow Agent is authorized, in its sole discretion, to rely upon
and comply with any such order, writ, judgment or decree which it is advised by
legal counsel selected by it is binding upon it without the need for appeal or
other action; and if Escrow Agent complies with any such order, writ, judgment
or decree, it will not be liable to any of the parties hereto or to any other
person or entity by reason of such compliance even though such order, writ,
judgment or decree may be subsequently reversed, modified, annulled, set aside
or vacated.
9. Indemnification of Escrow Agent. The Company has agreed to
indemnify Escrow Agent under the terms of a Fee, Indemnification and Refunding
Agreement dated as of the date of this Agreement (the "Fee Agreement").
10. Fees and Expenses of Escrow Agent. The Company has agreed to pay
the fees and expenses of Escrow Agent for its services hereunder in accordance
with the Fee Agreement.
11. Notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been validly served, given or delivered
three days after deposit in the
B-4
United States mails, by certified mail with return receipt requested and postage
prepaid, when delivered personally, one day after delivery to any overnight
courier, or when transmitted by facsimile transmission facilities, and addressed
to the party to be notified as follows:
If to Trustee, at:
BNY Midwest Trust Company,
as Trustee
Corporate Trust Administration
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇, Managing Director
Facsimile Number:
And:
Illinois Power Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile:
And:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
3500 First City Tower
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
B-5
If to Escrow Agent, at:
BNY Midwest Trust Company,
as Trustee
Corporate Trust Administration
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by like notice.
12. Third-Party Beneficiary; Amendment or Waiver. The Company, the
Initial Purchasers and their respective successors are intended third-party
beneficiaries of this Agreement. This Agreement may be changed, waived,
discharged or terminated only by a writing signed by Trustee, the Initial
Purchasers and Escrow Agent; provided, that any amendment to Section 4 also will
require the consent of the Initial Purchasers and the Company. No delay or
omission by any party in exercising any right with respect to this Agreement
will operate as a waiver. A waiver on any one occasion will not be construed as
a bar to, or waiver of, any right or remedy on any future occasion.
13. Severability. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
14. Governing Law. This Agreement shall be construed and interpreted in
accordance with the internal laws of the State of New York without giving effect
to the conflict of laws principles thereof.
15. Entire Agreement. This Agreement constitutes the entire agreement
between the parties relating to the holding, investment and disbursement of the
Escrow Funds and sets forth in their entirety the obligations and duties of
Escrow Agent with respect to the Escrow Funds.
16. Binding Effect. All of the terms of this Agreement, as amended from
time to time, shall be binding upon, inure to the benefit of and be enforceable
by the respective successors and assigns of Depositor and Escrow Agent.
17. Execution in Counterparts. This Agreement may be executed in two or
more counterparts, which when so executed shall constitute one and the same
agreement or direction.
18. Termination. Upon the first to occur of the disbursement of all
amounts in the Escrow Funds under Section 4 of this Agreement or the
disbursement of all amounts in the Escrow Funds into court under Section 5 of
this Agreement, this Agreement will terminate and Escrow Agent will have no
further obligation or liability whatsoever with respect to this Agreement or the
Escrow Funds.
B-6
19. Dealings. Escrow Agent and any stockholder, director, officer or
employee of Escrow Agent may buy, sell, and deal in any of the securities of the
Company and become pecuniarily interested in any transaction in which the
Company may be interested, and contract and lend money to the Company and
otherwise act as fully and freely as though it were not Escrow Agent under this
Agreement. Nothing in this Agreement will preclude Escrow Agent from acting in
any other capacity for the Company or for any other entity.
20. No Depositor Liability or Further Obligation. Escrow Agent and
Trustee each acknowledges and agrees that depositing the Escrow Funds with
Escrow Agent is the only obligation of the Depositor under this Agreement.
Escrow Agent and Trustee each agrees to hold the Depositor harmless with respect
to any claim, liability or cause of action under this Agreement.
B-7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal as of the date first above written.
Depositor
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
---------------------------------------------------
By: ▇▇▇ ▇▇▇▇▇
Title: Managing Director
BNY Midwest Trust Company,
as Trustee
---------------------------------------------------
By:
Title:
BNY Midwest Trust Company,
as Escrow Agent
---------------------------------------------------
By:
Title:
B-8
Exhibit A
Form of Officer's Certificate
of
Illinois Power Company
This Certificate is being delivered to Escrow Agent under Section 4(a)
of the Escrow Agreement, dated as of December 20, 2002 (the "Agreement"), among
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED, as representative of the
several initial purchasers under the Purchase Agreement, BNY MIDWEST TRUST
COMPANY, as trustee under the Indenture ("Trustee"), and BNY MIDWEST TRUST
COMPANY, as escrow agent ("Escrow Agent"). Concurrently, this Certificate also
is being delivered to Trustee. Capitalized terms used but not defined in this
Certificate have the respective meanings specified in the Agreement. The
undersigned officer of the Company hereby certifies that:
The Illinois Commerce Commission has entered an order or orders
approving the issuance of the Delayed Delivery Bonds and the use of the net
proceeds thereof to repay all of the Company's $100 million 6.50% Mortgage Bonds
due August 1, 2003 and a portion of the Company's $90 million 6.00% Mortgage
Bonds due September 10, 2003; said order or orders are valid and in effect and
no further approval, authorization, consent or order of, or action by, any other
regulatory authority is necessary with respect to the issuance and sale of the
Delayed Delivery Bonds, as contemplated by the Purchase Agreement. The issuance
and sale of the Delayed Delivery Bonds, as contemplated by the Purchase
Agreement, are in conformity with the terms of said orders of the Illinois
Commerce Commission; and
Escrow Agent is hereby directed to disburse immediately all Escrow
Funds to, or for the account of the Company, as follows:
[ ___________________ *insert payment instructions]
IN WITNESS WHEREOF, Illinois Power Company, through the undersigned
officer, has signed this Certificate this _____ day of ________________, 2002.
ILLINOIS POWER COMPANY
By:_____________________________________
Name:
Title:
B-9
SCHEDULE C
FEE, INDEMNIFICATION AND REFUNDING AGREEMENT
THIS FEE, INDEMNIFICATION AND REFUNDING AGREEMENT, dated as of December
[ ], 2002 (this "Agreement"), is by and between ILLINOIS POWER Company, an
Illinois corporation (the "Company"), BNY MIDWEST TRUST COMPANY, an Illinois
trust company, as escrow agent under the Escrow Agreement ("Escrow Agent"), and
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED, as representative of the
several initial purchasers (the "Initial Purchasers") under that certain
Purchase Agreement dated December, 2002 by and between the Initial Purchasers
and the Company.
RECITALS
Whereas, this Agreement is being entered into to provide for (1)
payment of fees by the Company to Escrow Agent (2) indemnification of Escrow
Agent by the Company in connection with an Escrow Agreement dated as of the date
of this Agreement by and among the Initial Purchasers, BNY Midwest Trust
Company, a national banking association, as trustee under the Indenture, and
Escrow Agent (the "Escrow Agreement"); (3) payment by the Company to the Initial
Purchasers of Deemed Interest (as defined below) on the Delayed Delivery Bonds;
and (4) the Mandatory Refund by the Initial Purchasers to the purchasers of the
Delayed Delivery Bonds.
STATEMENT OF AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, for themselves
and their successors and assigns, hereby agree as follows:
1. Definitions.
"Deemed Interest" means the amount of interest that would have accrued
on the Delayed Delivery Bonds through January 31, 2003 had they been issued on
December 20, 2002, minus any amount by which the Escrow Funds exceed $97,500,000
on January 31, 2003.
"Mandatory Refund" has the meaning specified in Section 7.
Other capitalized terms used but not defined in this Agreement shall
have the respective meanings set forth in the Escrow Agreement.
2. Liability of Escrow Agent. Escrow Agent will have no liability or
obligation with respect to the Escrow Funds except for Escrow Agent's own
willful misconduct or gross negligence. Escrow Agent's sole responsibility will
be for the safekeeping, investment and disbursement of the Escrow Funds in
accordance with the terms of the Escrow Agreement. Escrow Agent will have no
implied duties or obligations and will not be charged with knowledge or notice
of any fact or circumstance not specifically set forth in this Agreement or the
Escrow Agreement. Escrow Agent may rely upon any instrument, not only as to its
due execution, validity and effectiveness, but also as to the truth and accuracy
of any information contained
C-1
therein, which Escrow Agent shall in good faith believe to be genuine, to have
been signed or presented by the person or parties purporting to sign the same
and to conform to the provisions of this Agreement or the Escrow Agreement. In
no event will Escrow Agent be liable for incidental, indirect, special,
consequential or punitive damages. Escrow Agent will not be obligated to take
any legal action or commence any proceeding in connection with the Escrow Funds,
any account in which Escrow Funds are deposited, this Agreement or the Escrow
Agreement, or to appear in, prosecute or defend any such legal action or
proceeding. Escrow Agent may consult legal counsel selected by it in the event
of any dispute or question as to the construction of any of the provisions of
this Agreement or the Escrow Agreement or of any other agreement or of its
duties under the Escrow Agreement, or relating to any dispute involving any
party or beneficiary to this Agreement or the Escrow Agreement, and will incur
no liability and shall be fully indemnified from any liability whatsoever in
acting in accordance with the opinion or instruction of such counsel. The
Company will promptly pay, upon demand, the reasonable fees and expenses of any
such counsel.
3. Indemnification of Escrow Agent. From and at all times after the
date of this Agreement, the Company shall, to the fullest extent permitted by
law and to the extent provided in this Agreement, indemnify and hold harmless
Escrow Agent and each director, officer, employee, attorney, agent and affiliate
of Escrow Agent (collectively, the "Indemnified Parties") against any and all
actions, claims (whether or not valid), losses, damages, liabilities, costs and
expenses of any kind or nature whatsoever (including without limitation
reasonable attorneys' fees, costs and expenses) incurred by or asserted against
any of the Indemnified Parties from and after the date of this Agreement,
whether direct, indirect or consequential, as a result of or arising from or in
any way relating to any claim, demand, suit, action or proceeding (including any
inquiry or investigation) by any person, including without limitation the
Company, whether threatened or initiated, asserting a claim for any legal or
equitable remedy against any person under any statute or regulation, including,
but not limited to, any federal or state securities laws, or under any common
law or equitable cause or otherwise, arising from or in connection with the
negotiation, preparation, execution, performance or failure of performance of
the Escrow Agreement or any transactions contemplated by the Escrow Agreement,
whether or not any such Indemnified Party is a party to any such action,
proceeding, suit or the target of any such inquiry or investigation; provided,
however, that no Indemnified Party shall have the right to be indemnified
hereunder for any liability finally determined by a court of competent
jurisdiction, subject to no further appeal, to have been caused by the gross
negligence or willful misconduct of such Indemnified Party. If any such action
or claim shall be brought or asserted against any Indemnified Party, such
Indemnified Party shall promptly notify the Company in writing, and the Company
shall assume the defense thereof, including the employment of counsel and the
payment of all expenses. Such Indemnified Party shall, in its sole discretion,
have the right to employ separate counsel (who may be selected by such
Indemnified Party in its sole discretion) in any such action and to participate
in the defense thereof, and the fees and expenses of such counsel shall be paid
by such Indemnified Party, except that the Company shall be required to pay such
fees and expenses if (a) the Company agrees to pay such fees and expenses, (b)
the Company shall fail to assume the defense of such action or proceeding, (c)
the Company is the plaintiff in any such action or proceeding or (d) the named
or potential parties to any such action or proceeding (including any potentially
impleaded parties) include both such Indemnified Party and the Company, and such
Indemnified Party shall have been advised by counsel that there may
C-2
be one or more legal defenses available to it which are different from or
additional to those available to the Company. The Company shall be liable to pay
fees and expenses of counsel pursuant to the preceding sentence, except that any
obligation to pay under clause (a) shall apply only to the party so agreeing.
All such fees and expenses payable by the Company pursuant to the foregoing
sentence shall be paid from time to time promptly after being invoiced therefor,
both in advance of and after the final disposition of such action or claim. All
of the foregoing losses, damages, costs and expenses of the Indemnified Parties
shall be payable by the Company upon demand by such Indemnified Party. The
obligations of the Company under this Section 3 shall survive any termination of
this Agreement or the Escrow Agreement, and any resignation of Escrow Agent
under the Escrow Agreement.
4. Fees and Expenses of Escrow Agent. The Company shall compensate
Escrow Agent for its services under the Escrow Agreement in accordance with
Exhibit A attached to this Agreement and, in addition, shall reimburse Escrow
Agent for all of its reasonable out-of-pocket expenses incurred in its capacity
as Escrow Agent under the Escrow Agreement, including attorneys' fees, travel
expenses, telephone and facsimile transmission costs, postage (including express
mail and overnight delivery charges), copying charges and the like. All of the
compensation and reimbursement obligations set forth in this Section 4 shall be
payable by the Company promptly after being invoiced therefor. The obligations
of the Company under this Section 4 shall survive any termination of this
Agreement or the Escrow Agreement and any resignation of Escrow Agent under the
Escrow Agreement.
5. Representations and Warranties.
a. The Company makes the following representations and
warranties to Escrow Agent:
(i) the Company is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Illinois and has full power and authority to
execute and deliver this Agreement and to perform its
obligations hereunder;
(ii) this Agreement has been duly approved by all necessary
corporate action of the Company, has been executed by a
duly authorized officer of the Company and constitutes
a valid and binding agreement of the Company,
enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or
affecting creditors' rights and to general equity
principles;
(iii) the execution, delivery and performance by the Company
of this Agreement will not violate, conflict with or
cause a default under the certificate of incorporation
or bylaws of the Company, any applicable law or
regulation, any court order or administrative ruling or
decree to which the Company is a party or any of its
property is subject, or any agreement, contract,
indenture or other
C-3
binding arrangement to which the Company is a party or
any of its property is subject; and
(iv) all of the representations and warranties of the
Company contained in this Agreement are true and correct
as of the date of this Agreement and will be true and
correct at the time of any disbursement of Escrow Funds.
6. Payment of Deemed Interest. Concurrent with the distribution of the
Escrow Funds to the Initial Purchasers pursuant to the terms of the Escrow
Agreement, the Company shall pay Deemed Interest to the Initial Purchasers.
7. Mandatory Refund by Initial Purchasers. Upon distribution of the
Escrow Funds to the Initial Purchasers pursuant to the Mandatory Refund
provisions in Section 4(b) of the Escrow Agreement and payment of Deemed
Interest to the Initial Purchasers pursuant to Section 6 hereof, the Initial
Purchasers shall refund all such amounts, together with $3,750,000 representing
the Initial Purchasers' discount, pro rata to the purchasers of the Delayed
Delivery Bonds (the "Mandatory Refund").
8. Consent to Jurisdiction and Venue. If any party to this Agreement
commences a lawsuit or other proceeding relating to or arising from this
Agreement, the parties hereto agree that the United States District Court for
the Southern District of New York shall have the sole and exclusive jurisdiction
over any such proceeding. If all such courts lack federal subject matter
jurisdiction, the parties agree that the courts of the State of New York shall
have the sole and exclusive jurisdiction. Any of these courts shall be proper
venue for any such lawsuit or judicial proceeding and the parties hereto waive
any objection to such venue. The parties hereto consent to and agree to submit
to the jurisdiction of any of the courts specified in this Section 8 and agree
to accept service of process to vest personal jurisdiction over them in any of
these courts.
9. Notice. All notices and other communications under this Agreement
shall be in writing and shall be deemed to have been validly served, given or
delivered three days after deposit in the United States mails, by certified mail
with return receipt requested and postage prepaid, when delivered personally,
one day after delivery to any overnight courier, or when transmitted by
facsimile transmission facilities, and addressed to the party to be notified as
follows:
If to the Company at:
Illinois Power Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ________________
Facsimile: ________________
C-4
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
3500 First City Tower
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Escrow Agent at:
BNY Midwest Trust Company,
as Escrow Agent
Corporate Trust Administration
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by like notice.
10. Amendment or Waiver. This Agreement may be changed, waived,
discharged or terminated only by a writing signed by the Company and Escrow
Agent. No delay or omission by any party in exercising any right with respect
hereto shall operate as a waiver. A waiver on any one occasion shall not be
construed as a bar to, or waiver of, any right or remedy on any future occasion.
11. Severability. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
12. Governing Law. This Agreement shall be construed and interpreted in
accordance with the internal laws of the State of New York without giving effect
to the conflict of laws principles thereof.
13. Entire Agreement. This Agreement constitutes the entire agreement
between the parties relating to payment of fees of Escrow Agent by the Company
and indemnification of Escrow Agent by the Company, as contemplated by this
Agreement and the Escrow Agreement.
14. Binding Effect. All of the terms of this Agreement, as amended from
time to time, shall be binding upon, inure to the benefit of and be enforceable
by the respective successors and assigns of the Company and Escrow Agent.
15. Execution in Counterparts. This Agreement may be executed in
counterparts, which when so executed shall constitute one and the same agreement
or direction.
c-5
16. Dealings. Escrow Agent and any stockholder, director, officer or
employee of Escrow Agent may buy, sell, and deal in any of the securities of the
Company and become pecuniarily interested in any transaction in which the
Company may be interested, and contract and lend money to the Company and
otherwise act as fully and freely as though it were not Escrow Agent under the
Escrow Agreement. Nothing in this Agreement shall preclude Escrow Agent from
acting in any other capacity for the Company or for any other entity.
17. Limited Company Liability to the Initial Purchasers. Escrow Agent
and the Initial Purchasers each acknowledge that the payment of Deemed Interest
to the Initial Purchasers is the only obligation of the Company to the Initial
Purchasers or the subsequent purchasers of the Delayed Delivery Bonds under this
Agreement.
C-6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal as of the date first above written.
ILLINOIS POWER COMPANY
----------------------------------
By:----------------------
Title:-------------------
BNY MIDWEST TRUST COMPANY,
as Escrow Agent
----------------------------------
By:----------------------
Title:-------------------
C-7
Exhibit A
FEE SCHEDULE
C-8
SCHEDULE D
ILLINOIS POWER COMPANY
$550,000,000
Mortgage Bonds, 11.5% Series due 2010
1. The initial public offering price of the Securities shall be 97.48% of the
principal amount thereof plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by Initial Purchasers for the Securities shall
be 94.98% of the principal amount thereof plus an amount equal to all net
earnings on (or minus an amount equal to all net losses on) the funds escrowed
under the Escrow Agreement.
3. The interest rate on the Securities shall be 11.5% per annum and shall accrue
from December 20, 2002.
D-1
Exhibit A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)
(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Illinois, with
corporate power and authority to own its properties and conduct its business as
described in the Offering Memorandum, and the Company is not required to be
qualified as a foreign corporation in any jurisdiction.
(2) The Initial Delivery Bonds have been duly authorized, executed,
authenticated, issued and delivered, and constitute the valid and binding
obligations of the Company enforceable in accordance with their terms, except as
the same may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting the enforcement of creditors'
rights, and (b) general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law), and (subject
to the qualifications mentioned in paragraph 3 below with respect to the
enforceability of the Mortgage and to the provisions of any purchase or sinking
fund or analogous provisions for any particular series of bonds established by
any indenture supplemental to the Mortgage) are entitled to the benefit and
security of the Mortgage in accordance with the terms thereof equally and
ratably with all other bonds issued under the Mortgage.
(3) The Delayed Delivery Bonds have been duly authorized and will be,
when issued, duly executed, authenticated, issued and delivered, and will
constitute the valid and binding obligations of the Company enforceable in
accordance with their terms, except as the same may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting the enforcement of creditors' rights, and (b) general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law), and (subject to the qualifications mentioned in
paragraph 4 below with respect to the enforceability of the Mortgage and to the
provisions of any purchase or sinking fund or analogous provisions for any
particular series of bonds established by any indenture supplemental to the
Mortgage) are entitled to the benefit and security of the Mortgage in accordance
with the terms thereof equally and ratably with all other bonds issued under the
Mortgage.
(4) The Mortgage and the Supplemental Indenture have each been duly
authorized, executed and delivered and are valid and binding instruments
enforceable in accordance with their terms, except as the same may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or other laws relating to
or affecting the enforcement of creditors' rights or the enforcement of the
security provided by the Mortgage, and (b) general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law), and except that no opinion is expressed with respect to the
enforceability of the lien of the Mortgage on chattels as against third parties
(other than chattels delivered in pledge to the Mortgage Trustee) or with
respect to the enforceability of the lien of the Mortgage on after-acquired
property (in respect of which a supplemental indenture shall not have been
executed, delivered and recorded) as against purchasers for value and without
notice. The laws of the State of Illinois provide that no real estate in the
State of Illinois shall be sold by virtue of any power of sale
D-2
contained in any mortgage, but that all such mortgages shall be foreclosed only
in the manner provided for foreclosing mortgages containing no power of sale,
and that no real estate shall be sold to satisfy any mortgage except as
authorized under the Illinois Mortgage Foreclosure Law. Such laws, however,
provide for the foreclosing of mortgages by judicial proceedings and, in our
judgment, provide adequate remedies for the realization of the benefits of the
security provided in the Mortgage.
(5) The Mortgage constitutes a valid and legally effective mortgage
creating a valid first lien for the security of all bonds duly issued thereunder
upon substantially all of the Company's properties used or to be used in the
generation, purchase, transmission, distribution and sale of electricity or gas,
with the exceptions, and subject to the reservations, encumbrances and
restrictions recited in the granting and habendum clauses of, and as provided
in, the Mortgage, or referred to in the Offering Memorandum under the subcaption
"Security" under the caption "Description of the Offered Bonds." Except as to
after-acquired property, and except as to property sold, or under contract to be
sold, or otherwise disposed of by the Company and released from the lien of the
Mortgage, or abandoned, pursuant to the provisions thereof, the Company has good
and sufficient title to all the properties described in, and conveyed or pledged
by, the Mortgage with the exceptions and subject to the reservations,
encumbrances and restrictions recited in the granting and habendum clauses of,
and as provided in, the Mortgage, or referred to in the Offering Memorandum
under the subcaption "Security" under the caption "Description of the Offered
Bonds."
(6) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(7) The ICC has entered an order approving the issuance of the Initial
Delivery Bonds under the Mortgage and the Supplemental Indenture. The ICC order
is valid and in effect. No further approval, authorization, consent or order of,
or action by, any other governmental or regulatory authority is necessary with
respect to the issuance and sale of the Initial Delivery Bonds; it being
understood that in giving such opinion we are not passing upon the
authorizations or approvals which may be necessary under the securities or blue
sky laws of any jurisdiction other than the State of Illinois or the United
States of America. When appropriate approval of the ICC in accordance with
Illinois law, rules and regulations is obtained with respect to the Delayed
Delivery Bonds and bonds issued in exchange for the Initial Delivery Bonds or
the Delayed Delivery Bonds, no further approval, authorization, consent or order
of, or action by, any other governmental or regulatory authority is necessary
with respect to the issuance and sale of the Delayed Delivery Bonds; it being
understood that in giving such opinion we are not passing upon the
authorizations or approvals which may be necessary under the securities or blue
sky laws of any jurisdiction other than the United States of America. The
issuance and sale of the Initial Delivery Bonds, as contemplated by the Purchase
Agreement, are in conformity with the terms of the ICC order.
(8) The statements made in the Offering Memorandum under the caption
"Description of the Offered Bonds" and "Offering Memorandum Summary" insofar as
they purport to summarize provisions of the documents specifically referred to
under said caption, has been reviewed by us and is correct in all material
respects.
D-3
(9) The documents incorporated by reference in the Offering Memorandum
(other than the financial statements and supporting schedules therein, as to
which no opinion need be rendered), when they were filed with the Commission
complied as to form in all material respects with the requirements of the 1934
Act and the rules and regulations of the Commission thereunder.
(10) The execution, delivery and performance by the Company of the
Purchase Agreement and the Supplemental Indenture and the compliance by the
Company with its obligations and the consummation of the transactions
contemplated by the Purchase Agreement and the Supplemental Indenture will not
violate the Restated Articles of Incorporation or By-Laws of the Company or any
law, administrative regulation or, to our knowledge, any administrative,
arbitration or court order.
(11) The Company is not, and upon the issuance and sale of the Mortgage
Bonds as contemplated by the Purchase Agreement and the application of the net
proceeds therefrom as described in the Offering Memorandum will not be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
We do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Offering Memorandum (except for
those statements covered by our opinions in paragraphs 4, 5 and 8 above) or in
the documents incorporated by reference in the Offering Memorandum, including
statements therein with respect to Dynegy, Inc., the indirect parent company of
the Company. In passing upon the forms of the Offering Memorandum, we have,
therefore, assumed the accuracy, completeness and fairness of such statements.
However, within the scope of our representation of the Company, nothing has come
to our attention to cause us to believe that the Offering Memorandum, as of its
date and on the date hereof, contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; it being understood that we express no opinion as to the
financial statements or other financial information contained in the Offering
Memorandum or as to the information contained in the Offering Memorandum under
the subcaption "Book-Entry Delivery and Form" under the caption "Description of
the Offered Bonds."
In rendering such opinion, such counsel may rely, as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
D-4
Exhibit B
FORM OF OPINION OF COMPANY'S SPECIAL SECURITIES COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)
It is not necessary in connection with the offer, sale and delivery of
the Securities to the Initial Purchasers and to each Subsequent Purchaser in the
manner contemplated by the Purchase Agreement and the Offering Memorandum to
register the Securities under the 1933 Act or to qualify the Indenture under the
Trust Indenture Act.
We do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Offering Memorandum or in the
documents incorporated by reference in the Offering Memorandum, including
statements therein with respect to Dynegy, Inc., the indirect parent company of
the Company. However, within the scope of our representation of the Company,
nothing has come to our attention to cause us to believe that the Offering
Memorandum, as of its date and on the date hereof, contained or contains any
untrue statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; it being understood that we express
no opinion as to the financial statements or other financial information
contained in the Offering Memorandum, as to the information contained in the
Offering Memorandum under the subcaption "Book-Entry Delivery and Form" under
the caption "Description of the Offered Bonds" or with respect to Illinois
regulatory law.
Such counsel may also state that it is making no statement with respect
to the documents incorporated by reference.
In rendering such opinion, such counsel may rely, as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
D-5
Exhibit C
FORM OF OPINION OF THE ASSISTANT GENERAL COUNSEL
OF ILLINOIS POWER COMPANY
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Illinois.
(2) The Company has the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the Offering
Memorandum and to enter into and perform its obligations under, or as
contemplated under, the Purchase Agreement and the Mortgage.
(3) The Company is not required to be qualified as a foreign
corporation in any jurisdiction.
(4) The authorized, issued and outstanding shares of capital stock of
the Company are as set forth in the financial statements of the Company included
in the Offering Memorandum. Such shares of capital stock have been duly
authorized and validly issued by the Company and are fully paid and
non-assessable, and none of such shares of capital stock was issued in violation
of preemptive or other similar rights of any securityholder of the Company.
(5) To the best of my knowledge, (i) the Company is not in violation of
its charter or by-laws and no default by the Company exists in the due
performance or observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument that is described or referred to in the
Offering Memorandum or filed or incorporated by reference as an exhibit to the
Registration Statement and (ii) the Company is not in violation of any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its assets, properties or operations,
except, in each case, for any such violation or default that would not,
individually or in the aggregate, result in a Material Adverse Effect.
(6) The execution, delivery and performance of the Purchase Agreement,
the Mortgage, the Supplemental Indenture and any other agreement or instrument
entered into or issued or to be entered into or issued by the Company in
connection with the transactions contemplated in the Offering Memorandum and the
consummation of the transactions contemplated in the Purchase Agreement and in
the Offering Memorandum (including the issuance and sale of the Securities and
the use of the proceeds from the sale of the Securities as described under the
caption "Use of Proceeds") and compliance by the Company with its obligations
thereunder do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or default or
Repayment Event under, or result in the creation or imposition of any lien,
charge or encumbrance upon any assets,
D-6
properties or operations of the Company or any of its subsidiaries (except under
the Mortgage) pursuant to, any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or any other agreement or instrument,
known to me, to which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or to which any of the assets, properties
or operations of the Company or any of its subsidiaries is subject, nor will
such action result in any violation of the provisions of the charter or by-laws
of the Company or any of its subsidiaries or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to me, of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any of its subsidiaries or any of their assets, properties
or operations.
(7) To the best of my knowledge, except as described in the Offering
Memorandum, there is not pending or threatened any action, suit, proceeding,
inquiry or investigation to which the Company or any of its subsidiaries thereof
is a party or to which the assets, properties or operations of the Company or
any of its subsidiaries thereof is subject, before or by any court or
governmental agency or body, domestic or foreign, which might reasonably be
expected to result in a Material Adverse Effect or which might reasonably be
expected to materially and adversely affect the assets, properties or operations
thereof or the consummation of the transactions contemplated under the Purchase
Agreement, the Mortgage or the Supplemental Indenture or the performance by the
Company of its obligations thereunder.
(8) All descriptions in the Offering Memorandum of contracts and other
documents to which the Company or its subsidiaries are a party are accurate in
all material respects. To the best of my knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Offering Memorandum
or other than those described or referred to therein or filed or incorporated by
reference as exhibits thereto, and the descriptions thereof or references
thereto are correct in all material respects.
(9) To the best of my knowledge, there are no statutes or regulations
that are required to be described in the Offering Memorandum that are not
described as required.
(10) The Company's parent is exempt from registration and all other
regulations and requirements of the Public Utility Holding Company Act of 1935,
as amended (the "1935 Act"), and the rules and regulations promulgated
thereunder, other than from Section 9(a)(2) thereof, pursuant to Section
3(a)(1)of the 1935 Act. The Company is exempt from registration and all other
regulations and requirements of the 1935 Act, and the rules and regulations
promulgated thereunder, other than from Section 9(a)(2) thereof.
Nothing has come to my attention that would lead me to believe that the
Offering Memorandum or any amendment or supplement thereto (except for financial
statements and supporting schedules and other financial data included therein or
omitted therefrom, as to which I make no statement), at the time the Offering
Memorandum was issued, at the time any such amended or supplemented offering
memorandum was issued or at the Closing Time, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
D-7
In rendering such opinion, such counsel may rely, as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
D-8