EXHIBIT 99.1
DYNEGY INC.
0000 XXXXXXXXX, XXXXX 0000
XXXXXXX, XXXXX 00000
March 16, 2000
To the parties listed
on Schedule I hereto:
Reference is made to that certain Registration Rights Agreement, dated as
of June 14, 1999 (the "Registration Rights Agreement"), by and among Dynegy
Inc., an Illinois corporation (formerly Energy Convergence Holding Company and
referred to herein as the "Company"), British Gas Atlantic Holdings BV, a
Netherlands corporation ("BG"), and NOVA Gas Services (U.S.) Inc., a Delaware
corporation ("NOVA"). Following the request of each of BG and NOVA under
Section 3 of the Registration Rights Agreement, the Company filed a universal
shelf registration statement with the Securities and Exchange Commission on
March 1, 2000 to register, among other things, 6,455,065 shares of the Company's
Class A common stock, par value $.01 per share (the "Underlying Common Stock"),
representing shares of common stock into which BG and NOVA's shares of the
Company's Series A Convertible Preferred Stock (the "Preferred Stock") were
convertible as of March 1, 2000. This letter serves to confirm the mutual
understanding of the Company, BG and NOVA with respect to the registration of
the Underlying Common Stock and certain other matters. The obligations of the
Company set forth herein are subject to approval by the Company's board of
directors no later than March 24, 2000. To the extent that the terms of this
letter conflict with the Registration Rights Agreement and other prior
agreements among the parties, this letter shall supersede any such prior
agreements. Otherwise, the terms of the Registration Rights Agreement and such
other agreements shall apply to the matters addressed in this letter.
Subject to the conditions set forth below and to the execution of a
customary underwriting agreement, BG and NOVA hereby agree to convert their
respective shares of Preferred Stock and sell all of the shares of the
Underlying Common Stock issuable upon such conversion in the equity offering
(the "Offering") of the Company which is expected to occur prior to May 15,
2000. BG's and NOVA's obligation to convert their shares of Preferred Stock and
participate in the Offering is conditioned upon an offering price to the public
in the Offering of at least $45 per share. Simultaneously with executing the
underwriting agreement relating to the Offering, BG and NOVA will evidence their
intention to convert their shares of Preferred Stock by executing and delivering
the notice of conversion (the "Notice") in the form attached hereto as Exhibit
A. As provided in the Notice, the conversion will be effective simultaneous
with the closing of the Offering.
The Company hereby agrees to pay to each of BG and NOVA in consideration of
the difference between the fair market value of the Preferred Stock and the fair
market value of the Underlying Common Stock and their agreement to participate
in the Offering $4.75 in cash upon consummation of the Offering for each share
of Preferred Stock they convert. The shares of BG and NOVA to be offered in the
Offering will be subject to the "claw-back" provisions contained in Section 3.2
of the Registration Rights Agreement. In the event the underwriters engaged by
the Company in connection with the Offering advise the Company that more than
80% of the
shares of the Underlying Common Stock issuable upon conversion of the shares of
Preferred Stock of BG and NOVA may be sold in the Offering, each of BG and NOVA
hereby agree to convert all of their shares of Preferred Stock into shares of
the Underlying Common Stock. In the event that less than 80% of their respective
shares of the Underlying Common Stock issuable upon conversion of their shares
of Preferred Stock are sold in the Offering, BG and NOVA may elect not to
convert the shares of Preferred Stock relating to the shares of the Underlying
Common Stock owned by each of BG and NOVA that are not sold in the Offering. The
Company agrees that it will use its best efforts to maintain the effectiveness
of the registration statement relating to the Offering through October 27, 2000
to permit BG and NOVA to sell any shares of Underlying Common Stock that are
issued upon conversion of the Preferred Stock but not sold in the Offering. BG
and NOVA hereby acknowledge their approval of the underwriters selected by the
Company to participate in the Offering, the structure of the underwriting group
and the related fee arrangements as described to them by the Company on the date
hereof.
From the date hereof through May 15, 2000, BG and NOVA each agree (on
behalf of themselves and their affiliates) not to (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of the
Underlying Common Stock or Preferred Stock, or enter into any discussions
relating to any of the foregoing or (ii) enter into any swap or other
arrangement that transfers all or a portion of the economic consequences
associated with the ownership of any such securities, except pursuant to the
Offering, without the prior written consent of the Company. During the period
specified in the preceding sentence, each of BG and NOVA further authorize the
Company to cause the transfer agent to decline to transfer and/or to note stop
transfer restrictions on the transfer books and records of the Company with
respect to any securities of the Company for which the undersigned is the record
holder.
This letter and the obligations of the parties hereunder shall terminate if
the Offering does not close on or before May 15, 2000.
This letter may not be amended or waived except by an instrument in writing
signed by each of the parties hereto. This letter shall be governed by, and
construed in accordance with, the laws of the State of Delaware. This letter
may be executed in any number of counterparts, each of which shall be an
original, and all of which, when taken together, shall constitute one agreement.
Delivery of an executed signature page of this letter by facsimile transmission
shall be effective as delivery of a manually executed counterpart hereof.
Please confirm that the foregoing represents our mutual understanding by
signing and returning to the undersigned an executed counterpart of this letter.
Sincerely,
Xxxxxx X. Xxxx, Xx.
Senior Vice President
ACCEPTED AND AGREED TO
AS OF MARCH 17, 2000:
BRITISH GAS GLOBAL HOLDINGS BV NOVA GAS SERVICES (U.S.) INC.
By: /s/ L.M.O.C. de Preter By: /s/ Xxxx X. Xxxxxx
---------------------- -----------------------
L.M.O.C. de Xxxxxx Xxxx X. Xxxxxx
Director Director
By: /s/ X.X. Xxxxxxxxxx
----------------------------
X.X. Xxxxxxxxxx
Director
SCHEDULE I
British Gas Global Holdings B.V.
Xxxxxxxxxxxxxxx 00, 0xx Xxxxx
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Facsimile: + 31 10 290 6581
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Xx.
Facsimile: (000) 000-0000
NOVA Gas Services (U.S.) Inc.
000 Xxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Facsimile: (000) 000-0000
NOVA Chemicals Corporation
0000 Xxxxxxxxxx Xxxxxxx Xxxx
Xxxx Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
Xxxxxx Xxxxxxxxxx & Sutcliffe
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
EXHIBIT A
NOTICE OF CONVERSION
To be executed by the registered holder in order to exercise conversion
rights under Section 5 of the Statement of Resolution Establishing Series of
Series A Convertible Preferred Stock of Dynegy Inc. (the "Statement of
Resolutions")
Date of this Notice:_______________________
To: Dynegy Inc.
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Corporate Secretary
Gentlemen:
The undersigned hereby irrevocably elects to convert ___________________ (____)*
shares of Series A Convertible Preferred Stock of Dynegy Inc. (the "Preferred
Stock"), into such number of shares of Dynegy Inc.'s Class A common stock, par
value $.01 per share (the "Common Stock"), as are issuable upon the conversion
of such shares of Preferred Stock in accordance with Section 5 of the Statement
of Resolutions. This Notice of Conversion shall be deemed to have been
delivered simultaneous with the closing (the "Closing") of the public offering
of Common Stock scheduled to occur on __________, 2000. The certificate or
certificates representing the shares of Preferred Stock to be converted will be
delivered at the Closing. In the event that such Closing does not occur on or
before May 15, 2000, this notice of conversion shall have no effect. The
undersigned hereby requests that certificates for such shares (together with a
new certificate for such number of shares of Preferred Stock, if any, with
respect to which this Notice of Conversion does not apply) shall be issued in
the name of:
______________________________
(Print Name)
______________________________
(Tax ID No.)
______________________________
(Address)
______________________________
(City, State, Zip)
Signature**of Holder: By:_______________________
Name:_____________________
Title:____________________
*Insert a number of shares provided that if the underwriting agreement being
signed concurrently with this Notice of Conversion relates to the sale of more
than 80% of the shares registered on behalf of such holder, then the number
should be 100% of such shares.
**The signature on this Notice of Conversion must correspond to the holder's
name as specified on the face of the attached certificate in every particular
without alteration or enlargement or any other change whatever. If signing on
behalf of a corporation, partnership, trust or other entity, please indicate
your position(s) or title(s) with such entity.
BLANK STOCK POWER
For value received, the undersigned hereby sells, assigns and transfers
unto _________________________________, __________________________ (_____)
shares of Class A common stock, par value $.01 per share, of Dynegy Inc., an
Illinois corporation (the "Company") standing in the undersigned's name on the
books of the Corporation, represented by Certificate No. ____ herewith and does
hereby irrevocably constitute and appoint ________________ of the Corporation to
transfer the said stock on the books of the Corporation with full power of
substitution in the premises.
Date:_______________________
By:_________________________
Name:_______________________
Title:______________________
WITNESS:
Printed Name:
