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SUBSCRIPTION AGREEMENT
BY AND BETWEEN
CHEVRON U.S.A. INC.
AND
ENERGY CONVERGENCE HOLDING COMPANY
DATED: JUNE 14, 1999
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SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT (this "AGREEMENT") is entered into on June
14, 1999, by and between Energy Convergence Holding Company, an Illinois
corporation (the "COMPANY") and Chevron U.S.A. Inc., a Pennsylvania corporation
(the "BUYER").
WHEREAS, the Buyer desires to purchase from the Company, and the
Company desires to sell to the Buyer, the Shares (as defined herein), in
accordance with the terms and conditions of this Agreement; and
WHEREAS, this Agreement is being entered into in connection with the
Merger Agreement (as defined herein) and is an integral part of the transactions
contemplated thereby;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
"ACTION" means any action, lawsuit, proceeding, hearing, notice,
investigation, mediation, arbitration, complaint, claim or demand.
"AFFILIATE" means a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with another Person.
"BGAH" means British Gas Atlantic Holdings, BV, a Netherlands
corporation.
"BG AND NOVA SHORTFALL AMOUNT" means the amount of cash, in addition to
the $200,000,000 required to be paid pursuant to this Agreement, that would be
required to be added to the Cash Consideration under the Merger Agreement such
that NOVA (through the Merger Agreement) and BGAH (through the BG Stock Purchase
Agreement) will receive Cash Consideration for at least 75% of their shares of
Common Stock held (in the case of BGAH, held by BG Holdings) as of the date
hereof. Notwithstanding the foregoing, the BG and NOVA Shortfall Amount will not
exceed $40,000,000.
"BG HOLDINGS" means BG Holdings, Inc., a Delaware corporation.
"BG STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement
between BGAH and the Company dated the date hereof.
"BUYER" is defined in the preamble.
"BUYER SHARES NOTIONAL AMOUNT" shall mean that number which is the same
as the Purchase Price.
"CLASS A COMMON STOCK" means the Class A Common Stock, no par value, of
the Company.
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"CLASS B COMMON STOCK" means the Class B Common Stock, no par value, of
the Company.
"CLOSING" is defined in Section 2.3.
"CLOSING DATE" is defined in Section 2.3.
"COMMON STOCK" means the Class A Common Stock and the Class B Common
Stock.
"COMPANY" is defined in the preamble.
"DYNEGY" means Dynegy Inc., a Delaware corporation.
"GOVERNMENTAL AUTHORITY" means any governmental or regulatory authority
or agency, court or similar entity.
"MERGER AGREEMENT" is defined in Section 6.1.
"MERGERS" means the mergers contemplated under the Merger Agreement.
"NOVA" means NOVA Gas Services (U.S.) Inc., a Delaware corporation.
"PERSON" means a natural person, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a Governmental Authority.
"PREFERRED STOCK" is defined in Section 3.8.
"PURCHASE PRICE" means $200,000,000, provided that such amount shall be
increased by an amount equal to the BG and Nova Shortfall Amount, but the
aggregate amount of the Purchase Price shall not exceed $240,000,000.
"SHAREHOLDER AGREEMENT" means that certain Shareholder Agreement dated
June 14, 1999 among the Buyer, the Company, Dynegy and Illinova Corporation.
"SHARES" means the number of shares of Class B Common Stock which is
equal to the quotient of the Buyer Shares Notional Amount divided by the lesser
of (i) $16.50 or (ii) the mean average of the closing prices on the New York
Stock Exchange, Inc. of the common stock of Dynegy Inc. over the 20 consecutive
trading days ending immediately prior to two business days prior to the
Effective Time (as such term is defined in the Merger Agreement), in either case
divided by 0.69.
ARTICLE II
SUBSCRIPTION
2.1 PURCHASE AND SALE OF SHARES. On and subject to the terms and
conditions of this Agreement and subject to the terms and conditions of the
Shareholder Agreement, Buyer agrees
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to buy and the Company agrees to issue and deliver to the Buyer, the Shares at
the Closing for the consideration specified in this Article 2.
2.2 PURCHASE PRICE. The Buyer agrees to pay to the Company the Purchase
Price in cash at the Closing.
2.3 THE CLOSING. The closing of the purchase and sale of the Shares
(the "CLOSING") shall take place immediately after the closing of the Mergers at
the same place as the closing of the Mergers, subject to the satisfaction or
waiver of all conditions to the obligations of the parties to consummate the
transactions to take place at the Closing (other than conditions with respect to
actions the respective parties will take at the Closing itself). The date of the
Closing is referred to as the "CLOSING DATE."
2.4 DELIVERIES AT THE CLOSING. At the Closing:
(a) The Company will deliver to the Buyer the stock
certificates representing the Shares duly registered in the name of
Buyer; and
(b) The Buyer will deliver to the Company the Purchase Price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyer that the statements
contained in this Article 3 are correct and complete as of the date of this
Agreement (unless stated to relate to a specific date, in which case such
representations and warranties shall be correct and complete as of such specific
date) and will be correct and complete as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article 3).
3.1 ORGANIZATION OF THE COMPANY. The Company is a corporation, duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization.
3.2 DUE AUTHORIZATION. The execution, delivery, and performance by the
Company of this Agreement:
(a) has been duly authorized by all necessary internal action
and does not require any consent, waiver, approval, order,
authorization or permit of, or registration, filing with or
notification to any Person; and
(b) does not conflict with or result in any violation of or
the breach of or constitute a default (with notice or lapse of time or
both) under, or give rise to any right of termination, purchase, first
refusal, cancellation or acceleration or guaranteed payments or a loss
of a material benefit under, any of the Company's organizational
documents, any order or judgment of any Governmental Authority or any
law or regulation, or any note, lease, mortgage, license, agreement or
other instrument or obligation to which the Company is a party or by
which it or its properties or assets may be bound.
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3.3 DUE EXECUTION. This Agreement has been duly executed and delivered
by a duly authorized officer of the Company.
3.4 LEGAL, VALID AND BINDING OBLIGATIONS. This Agreement constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as such enforcement may be limited
by applicable bankruptcy, insolvency, moratorium and other laws affecting the
rights of creditors generally and by general principles of equity.
3.5 NO LITIGATION. There is no pending or, to the knowledge of the
Company, threatened action or proceeding before any court or other governmental
entity, or arbitrator by or against, or involving the Company or its Affiliates,
which questions or challenges the validity or enforceability of this Agreement
or any action taken or to be taken by the Company pursuant to this Agreement or
in connection with the transactions contemplated hereby.
3.6 BROKERS' FEE. The Company does not have any liability or obligation
to pay any fees or commissions to any broker, finder or agent with respect to
the transactions contemplated hereby for which the Buyer could become liable.
3.7 ORGANIZATIONAL DOCUMENTS. True and correct copies of the
Certificate of Incorporation and Bylaws of the Company have heretofore been
delivered by the Company to the Buyer.
3.8 CAPITALIZATION. At the time of the Closing, the authorized capital
stock of the Company will consist of 420,000,000 shares of Common Stock, of
which 300,000,000 are shares of Class A Common Stock and 120,000,000 are shares
of Class B Common Stock, and 70,000,000 shares of preferred stock, no par value
(the "PREFERRED STOCK"). As of the date hereof, (i) 1,000 shares of Class A
Common Stock were issued and outstanding, (ii) no shares of Class B Common Stock
were issued and outstanding and (iii) no shares of Preferred Stock were issued
and outstanding. All such shares are duly authorized, and if issued are validly
issued, fully paid and nonassessable, and free of preemptive rights. Except as
set forth in the Merger Agreement or the Disclosure Schedules related thereto,
there are no outstanding subscriptions, options, rights, warrants, convertible
securities, stock appreciation rights, phantom equity, or other agreements or
commitments obligating the Company to issue, transfer, sell, redeem, repurchase
or otherwise acquire any shares of its capital stock of any class. Buyer
acknowledges that the Company contemplates instituting an employee stock option
plan prior to the Closing (such plan to be approved by the Company's Board of
Directors constituted in accordance with Section 3.3(C) of the Merger Agreement)
and designating the Series A Convertible Preferred Stock as contemplated by the
Merger Agreement.
3.9 COMMON STOCK. The Shares to be issued and sold by the Company to
the Buyer hereunder have been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be duly and validly
issued and fully paid and nonassessable.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Company that the statements
contained in this Article 4 are correct and complete as of the date of this
Agreement (unless stated to relate to a specific date, in which case such
representations and warranties shall be correct and complete as of such specific
date) and will be correct and complete as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article 4).
4.1 ORGANIZATION OF BUYER. The Buyer is a corporation, duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
organization.
4.2 DUE AUTHORIZATION. The execution, delivery, and performance by the
Buyer of this Agreement:
(a) has been duly authorized by all necessary internal action
and does not require any consent, waiver, approval, order,
authorization or permit of or registration, filing with or notification
to any Person; and
(b) does not conflict with or result in any violation of or
the breach of or constitute a default (with notice or lapse of time or
both) under, the Buyer's organizational documents, any order or
judgment of any Governmental Authority or any law or regulation
applicable to Buyer.
4.3 DUE EXECUTION. This Agreement has been duly executed and delivered
by a duly authorized officer of the Buyer.
4.4 LEGAL, VALID AND BINDING OBLIGATIONS. This Agreement constitutes
the legal, valid and binding obligation of the Buyer, enforceable against the
Buyer in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium and other laws affecting the
rights of creditors generally and by general principles of equity.
4.5 NO LITIGATION. There is no pending or, to the knowledge of the
Buyer, threatened action or proceeding before any court or other governmental
entity, or arbitrator by or against, or involving Buyer or its Affiliates, which
questions or challenges the validity or enforceability of this Agreement or any
action taken or to be taken by Buyer pursuant to this Agreement or in connection
with the transactions contemplated hereby.
4.6 BROKERS' FEES. The Buyer does not have any liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated hereby for which the Company could become liable.
4.7 SECURITIES LAWS. The Buyer:
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(a) has been furnished with such information about the Company
and the Shares as it has requested and with such information as
necessary to comply with any and all applicable securities laws;
(b) has made its own independent inquiry and investigation
into, and based thereon, has formed an independent judgment concerning
the Company and the Shares;
(c) has adequate means of providing for its current needs and
possible contingencies and is able to bear the economic risks of this
investment and has a sufficient net worth to sustain a loss of its
entire investment in the Company in the event such loss should occur;
(d) has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of
an investment in the Company;
(e) is an "accredited" investor within the meaning of
"accredited investor" under Regulation D of the Securities Act of 1933,
as currently in effect;
(f) is not an issuer or an Affiliate of the Company, an
underwriter or dealer; and
(g) is not acquiring the Shares with a view to distribution.
ARTICLE V
CONDITIONS TO OBLIGATION TO CLOSE
5.1 CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of the Buyer
to consummate the transactions contemplated by this Agreement and to perform its
obligations under this Agreement in connection with the Closing is subject to
satisfaction of the following conditions:
(a) the representations and warranties set forth in Article 3
shall be true and correct in all material respects at and as of the
Closing Date; the Company shall have performed and complied with all of
its covenants hereunder in all material respects prior to the Closing;
and the Buyer shall have received a certificate from a duly authorized
officer of the Company as to the satisfaction of this condition;
(b) the Company will be prepared to make the deliveries
contemplated by Section 2.4;
(c) the Buyer shall have received a certificate from the
secretary of Energy Convergence, certifying that the articles of
incorporation and bylaws of Energy Convergence have not been amended
(other than an amendment to change the name of Energy Convergence),
since the date hereof;
(d) the Buyer shall have received a certificate from an
executive officer of the Company, certifying that all of the conditions
precedent to the closing of the transactions
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contemplated by the Merger Agreement have been satisfied or waived as
contemplated by the Merger Agreement; and
(e) the Registration Rights Agreement, by and between the
Company and Buyer, dated the date hereof, and the Shareholder Agreement
shall be in full force and effect.
The Buyer may waive any condition specified in this Section 5.1 if it
executes a writing expressly so stating at or prior to the Closing.
5.2 CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the
Company to consummate the transactions contemplated hereby and to perform its
obligations under this Agreement in connection with the Closing is subject to
satisfaction of the following conditions:
(a) the representations and warranties set forth in Article 4
shall be true and correct in all material respects at and as of the
Closing Date; the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects prior to the Closing;
and the Company shall have received a certificate from a duly
authorized officer of the Buyer as to the satisfaction of this
condition;
(b) the Buyer will be prepared to tender the Purchase Price
against receipt of the Shares; and
The Company may waive any condition specified in this Section 5.2 if it
executes a writing expressly so stating at or prior to the Closing.
ARTICLE VI
MISCELLANEOUS
6.1 TERMINATION OF AGREEMENT. If the Merger Agreement (the "MERGER
AGREEMENT") among the Company, Dynegy, Energy Convergence Acquisition
Corporation, Dynegy Acquisition Corporation and Illinova Corporation, dated as
of the date hereof, is terminated, this Agreement shall terminate and all rights
and obligations of the parties hereunder shall terminate without any liability
of any party to any other party.
6.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each representation,
warranty and covenant of the parties contained in this Agreement shall survive
the Closing.
6.3 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified, or supplemented only by written agreement of BG Holdings, NOVA,
Illinova Corporation, Dynegy and the parties hereto.
6.4 WAIVER OF COMPLIANCE; CONSENTS. Any failure of a party to comply
with any obligation, covenant, agreement, or condition herein may be waived by
the other party; provided, however, that any such waiver may be made only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits
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consent by or on behalf of any party hereto, such consent shall be given in
writing in a manner consistent with the requirements for a waiver of compliance
as set forth in this Section 6.4, with appropriate notice in accordance with
Section 6.8.
6.5 ASSIGNMENT; THIRD PARTY BENEFICIARIES. This Agreement and all of
the provisions hereof shall be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement,
expressed or implied, is intended or shall be construed to confer upon any
Person other than the parties hereto, and their respective successors and
assigns any right, remedy, or claim under or by reason of this Agreement or any
provision herein contained, except that the parties hereto acknowledge that BG
Holdings, NOVA, Dynegy and Illinova Corporation are third party beneficiaries of
this Agreement. The Buyer has the right to assign (and each successive assignee
may further assign) its rights under this Agreement to any Person, which such
Person by acceptance of such assignment shall be deemed to assume all
liabilities, indebtedness and obligations included in the rights assigned. The
Company may not assign its rights or obligations under this Agreement.
6.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of Delaware (without regard to its conflicts of law
doctrines).
6.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and shall become a binding
agreement when one or more of the counterparts have been signed by each of the
parties and delivered to the other party.
6.8 NOTICES. All notices or communications hereunder shall be in
writing (including facsimile or similar writing) addressed as follows:
If to the Company:
Dynegy Inc.
0000 Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with copies to (such copy not to constitute notice):
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxxx Xxxxx, Xxxxx Tower
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
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and
Xxxxxxxx Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx X.X., Xxxxx 0000
Xxxxxxx, XX 00000
Attention: X. Xxxxxxxx Xxxxxxxxx, Jr.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Buyer:
Chevron U.S.A. Inc.
0000 XxXxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: President of Chevron U.S.A.
Production Company
Tel: (000) 000-0000
Fax: (000) 000-0000
with copies to (such copies not to constitute notice):
Xxxxxx X. Xxxxxx, Esq.
Vice President and General Counsel
Chevron Corporation
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
and:
Xxxxx Xxxxxxx Xxx, Esq. and
Xxxxxx X. Xxxx, Esq.
Pillsbury, Madison & Sutro L.L.P.
235 Xxxxxxxxxx Street, Suit 0000
Xxxx Xxxxxx Xxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Any such notice or communication shall be deemed given (i) when made, if made by
hand delivery, and upon confirmation of receipt, if made by facsimile, (ii) one
business day after being deposited with a next-day courier, postage prepaid, or
(iii) three business days after being sent certified or registered mail, return
receipt requested, postage prepaid, in each case addressed as above (or to such
other address as such party may designate in writing from time to time).
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6.9 HEADINGS. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
6.10 ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
6.11 SEVERABILITY. If any one or more provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or, unenforceability shall not
affect any other provision of this Agreement, but this Agreement shall be
construed as if such invalid, illegal, or unenforceable provision had never been
contained herein.
6.12 FURTHER ASSURANCES. Each party to this Agreement agrees to execute
such documents or instruments, and to take such action, as the other party may
reasonably request after the date hereof in order to effectuate and perfect the
agreements contemplated hereby.
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
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IN WITNESS WHEREOF, the parties hereto have executed this Subscription
Agreement on the date first written above.
ENERGY CONVERGENCE HOLDING COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
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Title: President
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CHEVRON U.S.A. INC.
By: /s/ X.X. Xxxxxxxxx
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Name: X.X. Xxxxxxxxx
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Title: Executive Vice President
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