1
STOCK PURCHASE AGREEMENT
BY AND AMONG
ENERGY CONVERGENCE HOLDING COMPANY
("BUYER")
AND
BRITISH GAS ATLANTIC HOLDINGS BV
("SELLER")
DATED: JUNE 14, 1999
2
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is entered into on
June 14, 1999, by and between Energy Convergence Holding Company, an Illinois
corporation ("Buyer"), and British Gas Atlantic Holdings BV, a Netherlands
corporation ("Seller").
RECITALS:
1. Seller owns 1,802 shares of common stock of BG Holdings, Inc., a
Delaware corporation and a wholly owned subsidiary of Seller (the "Company"),
which represent all of the outstanding shares of common stock of the Company.
2. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, all of the outstanding shares of common stock of the Company (the
"Shares"), in accordance with terms and conditions of this Agreement.
3. To induce Buyer to purchase the Shares, simultaneously herewith,
British Gas Overseas Holdings, a United Kingdom company ("Guarantor" and,
together with Seller, the "Seller Parties"), has executed and delivered a
guaranty (the "Guaranty") in favor of Buyer.
4. This Agreement is being entered into in connection with the Merger
Agreement (as defined) and is an integral part of the transactions contemplated
thereby.
5. Undefined capitalized terms herein are defined in the Merger
Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, Buyer and Seller agree as follows:
ARTICLE I.
DEFINITIONS
"Action" means any action, lawsuit, proceeding, hearing, notice,
investigation, mediation, arbitration, complaint, claim or demand.
"Additional Cash Consideration" is defined in Section 2.2.
"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.
3
"After-Tax Basis" means, with respect to an indemnity payment, the
amount necessary to hold the indemnified party harmless on an after-tax basis,
after taking into account in the taxable year of payment any Taxes deemed
payable (as provided below) by the indemnified party as a result of such
indemnification payment, and any Tax benefits deemed realized (as provided
below) by the indemnified party (or any of its Affiliates) in respect of, or as
a result of a deduction or credit for, any indemnified Taxes or Damages required
to be paid by the indemnified party. The amount of any payment in the preceding
sentence (to the extent taxable) as well as the amount of any indemnified Tax,
and Tax benefits shall be determined as if the relevant indemnified party (and
any combined or consolidated group of which it is a member) were taxed at the
highest marginal rate applicable to corporations in such jurisdiction.
"Agreement" is defined in the preface to this Agreement.
"Balance Sheet" is defined in Section 3.10.
"Buyer" is defined in the preface to this Agreement.
"Buyer Common Stock" means the Class A common stock of Buyer, no par
value per share, to be issued pursuant to the Amended and Restated Newco
Articles.
"Closing" is defined in Section 2.3.
"Closing Date" is defined in Section 2.3.
"Company" is defined in the recitals to this Agreement.
"Contest" is defined in Section 6.3(b).
"Damages" is defined in Section 7.1.
"Dynegy" means Dynegy Inc., a Delaware corporation.
"Dynegy Stock" is defined in Section 3.8.
"Governmental Authority" means any governmental or regulatory authority
or agency, court or similar entity.
"Material Adverse Effect" means, with respect to a particular Person,
any event, circumstance, condition, development or occurrence causing, resulting
in or having (or with the passage of time likely to cause, result in or have) a
material adverse effect on the financial condition, business, assets,
properties, or results of operations of such Person and its subsidiaries, taken
as a whole
"Merger Agreement" is defined in Section 8.2.
2
4
"Mergers" means the mergers contemplated under the Merger Agreement.
"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.
"Post-Closing Period" is defined in Section 6.2(b).
"Pre-Closing Period" is defined in Section 6.1(a).
"Preferred Stock" means the Series A Convertible Preferred Stock to be
issued pursuant to the Statement of Resolutions Establishing Series of Series A
Convertible Stock of Buyer, in the form of Exhibit B to the Merger Agreement.
"Purchase Price" is defined in Section 2.2.
"Seller" is defined in the preface to this Agreement.
"Seller Parties" is defined in the recitals to this Agreement.
"Shares" is defined in the recitals to this Agreement.
"Stock Consideration" is defined in Section 2.2.
"Stockholders Agreement" is defined in Section 3.6.
"Straddle Period" is defined in Section 6.1(c).
"Tax Indemnification Event" is defined in Section 6.3(a).
"Tax Returns" means all originally filed or amended federal, state and
local tax returns, declarations, statements, certifications, notices, reports,
schedules, forms and information returns relating to Taxes.
"Third Party Claim" is defined in Section 7.4(a).
"Voting Agreement" is defined in Section 3.6.
3
5
ARTICLE II.
BASIC TRANSACTION
2.1 PURCHASE AND SALE OF THE SHARES. On and subject to the terms and
conditions of this Agreement, Buyer agrees to purchase from Seller, and Seller
agrees to sell, grant, transfer, convey, assign, and deliver, and agrees to
cause to be sold, granted, transferred, conveyed, assigned and delivered to
Buyer, the Shares at the Closing for the consideration specified in this Article
II.
2.2 PURCHASE PRICE. Buyer agrees to pay to Seller at the Closing (the
"Purchase Price"), consideration consisting of (a) that number of shares of
Preferred Stock (the "Stock Consideration") equal to the product of (i) the
quotient of the Illinova Average Price and $50.00, and (ii) the number of shares
of Buyer Common Stock that the Company would have received pursuant to the
Merger Agreement had it elected to receive only the Cash Consideration with
respect to all of the Dynegy Stock, plus (b) the amount of cash (the "Additional
Cash Consideration") that the Company would have received pursuant to the Merger
Agreement had it elected to receive only the Cash Consideration with respect to
all of the Dynegy Stock.
2.3 THE CLOSING. The closing of the purchase and sale of the Shares
(the "Closing") shall take place (i) at the offices of Akin, Gump, Strauss,
Hauer & Feld, L.L.P. at 1900 Pennzoil Place, South Tower, 711 Louisiana,
Houston, Texas, or such other location at which the closing of the Mergers
occurs, immediately prior to the closing of the Mergers, or (ii) or at such
other time or place or on such other date as the parties hereto shall agree,
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) Seller will deliver to Buyer all of the certificates,
instruments, and documents listed below:
(i) the stock certificates representing the Shares
duly endorsed in blank, or accompanied by stock powers duly
executed in blank, and otherwise in form reasonably acceptable
to Buyer for transfer on the books of the Company;
(ii) the corporate records of the Company as of the
Closing Date;
(iii) the written resignation of (A) each member of
the board of directors of the Company and (B) each officer of
the Company, such resignations to be effective on the Closing
Date;
4
6
(iv) the bank accounts of the Company and any funds
therein;
(v) a statement, issued by the Company pursuant to
the requirements of Treas. Reg. Sec. 1.897-2(h), and dated no
more than 30 days prior to the Closing, certifying that the
Shares do not constitute a U.S. real property interest
(USRPI), as that term is defined in Section 897(c) of the Code
(a copy of which will have been filed with the Internal
Revenue Service prior to Closing pursuant to the requirements
of Treas. Reg. Sec. 1.897-2(h)(2)) (the "Statement"). If such
Statement is not received, Buyer shall be entitled to withhold
10% of the Purchase Price as required by Section 1445 of the
Code; and
(vi) such other documents and instruments as are
required to be delivered pursuant to the terms hereof, or that
Buyer may reasonably request to effect the transactions
contemplated hereby.
(b) Buyer will deliver to Seller:
(i) the Purchase Price in the form of:
(A) certificates for the Stock Consideration; and
(B) the Additional Cash Consideration, in immediately
available funds, by wire transfer to an account, which account
shall be specified by Seller no later than two business days
prior to the Closing Date; and
(ii) such other documents and instruments as are required to
be delivered pursuant to the terms hereof, or that Seller may
reasonably request to effect the transactions contemplated hereby.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that the statements contained
in this Article III are correct and complete as of the date of this Agreement
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 III).
3.1 ORGANIZATION OF SELLER. Each Seller Party 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
Seller of this Agreement and by Guarantor of the Guaranty:
(a) has been duly authorized by all necessary internal action
of Seller and Guarantor, as applicable, and does not require any
consent, waiver, approval,
5
7
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, either Seller Party'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 either Seller Party is a party
or by which it or its properties or assets may be bound.
3.3 DUE EXECUTION. This Agreement and the Guaranty have been duly
executed and delivered by a duly authorized officer of Seller and Guarantor, as
applicable.
3.4 LEGAL, VALID AND BINDING OBLIGATIONS. This Agreement and the
Guaranty constitutes a legal, valid and binding obligation of the applicable
Seller Party, enforceable against the applicable Seller Party 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 Seller
or Guarantor, threatened action or proceeding before any court or other
Governmental Authority, or arbitrator by or against, or involving any Seller
Party or its Affiliates, which questions or challenges the validity or
enforceability of this Agreement, the Guaranty or any action taken or to be
taken by any Seller Party pursuant to this Agreement or the Guaranty or in
connection with the transactions contemplated hereby or thereby.
3.6 CAPITALIZATION OF THE COMPANY; AGREEMENTS PERTAINING TO STOCK. The
Company's authorized capital stock consists of 20,000 shares of common stock,
par value $1.00 per share. None of such capital stock is outstanding or has been
authorized for issuance other than the Shares. The Shares have been validly
issued and are fully paid and nonassessable, and other than pursuant to (i) the
Stockholders Agreement dated May 22, 1996, by and among the Company, NOVA Gas
Services (U.S.) Inc., and Chevron U.S.A., Inc., as amended (the "Stockholders
Agreement"), (ii) the Voting Agreement dated the date hereof, by and between the
Company and Illinova Corporation (the "Voting Agreement"), (iii) this Agreement
or (iv) with respect to the Dynegy Stock, the Merger Agreement, neither the
Shares nor the Dynegy Stock are subject to any agreements or understandings
among any Persons with respect to the voting or transfer of the Shares or the
Dynegy Stock.
3.7 BROKERS' FEES. No Seller Party has 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 Buyer or the Company could become
liable.
6
8
3.8 THE COMPANY'S ASSETS AND LIABILITIES. Except as disclosed on
Schedule 3.8, the Company's sole assets other than cash and cash equivalents are
38,789,876 shares of common stock of Dynegy, par value $.01 per share (the
"Dynegy Stock"). Seller is, and at the Closing will be, the record and
beneficial owner of, and upon the Closing Buyer will acquire, good, valid, and
marketable title to, the Shares, free and clear of all liens, encumbrances and
restrictions on transferability, other than (i) those that may arise because of
any actions taken by or on behalf of Buyer or its Affiliates or (ii)
restrictions on transfer that may be imposed by federal, state or other
securities laws. There are no preemptive or similar rights with respect to the
Company's capital stock and the Shares were issued without violation of any such
rights. Other than this Agreement, the Stockholders Agreement and the Voting
Agreement, there are no subscriptions, options, warrants, calls, rights,
commitments or any other agreements of any character obligating a Person to
purchase, sell or issue any shares of the capital stock of the Company
(including the Shares) or the Dynegy Stock or any other securities convertible
into, exchangeable or exercisable for, or evidencing the right to subscribe for,
any such Shares or the Dynegy Stock. Except as contemplated by (i) the Merger
Agreement, (ii) the Stockholders Agreement, or (iii) the Voting Agreement,
neither the Company nor Seller is a party to any voting agreements, voting
trusts, proxies or any other agreements, instruments or understandings with
respect to the voting of any shares of the Company's capital stock, the Shares
or the Dynegy Stock, or any agreement with respect to the transferability,
purchase or redemption of any shares of capital stock of the Company, the Shares
or the Dynegy Stock. Except as contemplated by this Agreement, the Company has
no liabilities, obligations, costs or expenses of any nature whatsoever, whether
now known or unknown, asserted or unasserted, accrued or unaccrued, liquidated,
unliquidated or due or to become due, (including, without limitation, other than
as a result of the transactions contemplated hereby, any liability in respect of
Taxes of any kind whatsoever) in excess of amounts reserved therefor that affect
the Company or its ownership of the Dynegy Stock.
3.9 COMPANY ACTIVITIES. Since March 26, 1999, the Company has not
engaged in any business or other activity (other than the ownership of the
Dynegy Stock) that will have an adverse effect on the Company's properties,
assets, operations, business or prospects. Other than the Dynegy Stock, the
Company has no subsidiaries or equity investments in any Person or enterprise.
Prior to March 26, 1999, the Company did not engage in any activities other than
as a holding company for, and owning stock and other interests and investments
in, the following entities, among others: Dynegy (formerly NGC Corp.); Itron,
Inc.; British Gas Americas, Inc. (formerly British Gas Delaware, Inc. and
British Gas Technology, Inc.); British Gas Capital, Inc.; BG Exploration
America, Inc.; British Gas Services, Inc. (formerly BG US Services, Inc.; and
British Gas Exploration and Production, Inc.); British Gas Finance, Inc.;
British Gas Financial Products, Inc.; British Gas General Partner, Inc.; British
Gas Global Services, Inc.; British Gas Inspection Services, Inc. (formerly BG
Inspection Services, Inc.); British Gas Limited Partner, Inc.; British Gas
Methane Arctic, Inc.; British Gas Methane Polar, Inc.; British Gas NGC LP; BG
Tunisia, Inc. (formerly Freeway Housing, Inc. and Houston Oil & Minerals of
Tunisia, Inc.).
7
9
3.10 BALANCE SHEET. At or prior to the Closing, the Company shall
deliver to Buyer accurate and complete copies of the Company's audited balance
sheet as of the date of the most recently completed audit of the Company prior
to the Closing Date (the "Balance Sheet"), and the related statements of income
and stockholders' equity, for the period since March 26, 1999. The Balance Sheet
(i) shall be prepared from the books and records of the Company and (ii) shall
accurately and fairly present the Company's financial position as of its date.
The Balance Sheet (including the notes thereto) will have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis throughout the period covered thereby, and present fairly
the Company's financial condition as of the applicable audit period. At the
Closing, Seller shall deliver to Buyer accurate and complete copies of the
Company's unaudited balance sheet (including notes) as of the Closing Date, and
the related statements of income and stockholders' equity, since the date of the
Balance Sheet. Such unaudited balance sheet (including the notes thereto) shall
reflect that the Company has net assets (determined without regard to the Dynegy
Stock) having a fair market value of at least $800,000.
3.11 TAXES.
(a) The Company has timely filed (or will timely file) all Tax
Returns required to be filed by it in, or with respect to Taxes for,
any period ending before the Closing Date. All Tax Returns filed by the
Company prior to the Closing Date or for any period ending before the
Closing Date correctly reflect the applicable facts regarding the
income, business, assets, operations, activities, status or other
matters of the Company or any other information required to be shown
thereon. The foregoing Tax Returns are not subject to penalties under
Section 6662 of the Code relating to accuracy-related penalties, or any
other provision of the Code (or any corresponding provisions of state,
local or foreign Tax law) or any predecessor provision of law. No
extension of time within which to file any Tax Return that has not been
filed has been requested or granted, by, or on behalf of, the Company.
(b) The Company is not a party to or bound by any current Tax
indemnity, Tax sharing or Tax allocation agreement (and any such
agreements to which the Company was previously a party have been
cancelled or otherwise terminated.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that the statements contained
in this Article IV are correct and complete as of the date of this Agreement 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 IV).
4.1 ORGANIZATION OF BUYER. Buyer is a corporation, duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
organization.
8
10
4.2 DUE AUTHORIZATION. The execution, delivery, and performance by
Buyer of this Agreement:
(a) has been duly authorized by all necessary internal action
of Buyer 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, Buyer'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 Buyer is a party or by which it or
its properties or assets may be bound.
4.3 DUE EXECUTION. This Agreement has been duly executed and delivered
by a duly authorized officer of Buyer.
4.4 LEGAL, VALID AND BINDING OBLIGATIONS. This Agreement constitutes a
legal, valid and binding obligation of Buyer, enforceable against 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 Buyer,
threatened action or proceeding before any court or other Governmental
Authority, 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. 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 either Seller or Guarantor could
become liable.
ARTICLE V.
CONDITIONS TO OBLIGATION TO CLOSE
5.1 CONDITIONS TO OBLIGATION OF BUYER. The obligation of 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
III shall be true and correct in all material respects at and as of the
Closing Date (provided that any breach or misrepresentation resulting
in a liability for which Seller
9
11
acknowledges in writing that it will indemnify Buyer shall not be
deemed to be a breach of this section); Seller shall have performed and
complied with all of its covenants hereunder in all material respects
prior to the Closing Date; and Buyer shall have received a certificate
from a duly authorized officer of Seller as to the satisfaction of this
condition;
(b) Seller will have made the deliveries contemplated by
Section 2.4;
(c) since the date of this Agreement there must not have been
any change in law which, or announced contemplated change in law the
passage of which, could reasonably be expected to have, as a result of
the consummation of the transactions contemplated by this Agreement, a
Material Adverse Effect on the Company; and
(d) all of the conditions precedent to the closing of the
transactions contemplated by the Merger Agreement have been satisfied
or waived as contemplated by the Merger Agreement.
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 SELLER. The obligation of Seller to
consummate the transactions contemplated hereby and to perform its respective
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 IV
shall be true and correct in all material respects at and as of the
Closing Date (provided that any breach or misrepresentation resulting
in a liability for which Buyer acknowledges in writing that it will
indemnify Seller shall not be deemed to be a breach of this section);
Buyer shall have performed and complied with all of its covenants
hereunder in all material respects prior to the Closing; and Seller
shall have received a certificate from a duly authorized officer of
Buyer as to the satisfaction of this condition;
(b) Buyer will have made the deliveries contemplated by
Section 2.4;
(c) since the date of this Agreement there must not have been
any change in law which, or announced contemplated change in law the
passage of which, could reasonably be expected to have, as a result of
the consummation of the transactions contemplated by this Agreement, a
Material Adverse Effect on Seller;
(d) Buyer will have provided to Seller a certificate from a
duly authorized officer of Buyer certifying that all of the conditions
precedent to the closing of the transactions contemplated by the Merger
Agreement have been satisfied or waived as contemplated by the Merger
Agreement; and
10
12
(e) Dynegy will have delivered to the Company a statement,
dated no more than 30 days prior to the Closing, certifying that the
Dynegy Stock is not a USRPI.
Seller 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.
TAX MATTERS
6.1 TAX INDEMNITIES.
(a) Seller shall indemnify Buyer and hold it harmless from and
against any liability for Taxes (i) imposed on the Company in respect
of its income, business or operations for any period prior to the
Closing Date (a "Pre-Closing Period"), (ii) imposed on the Company
pursuant to Section 1.1502-6 of the Treasury Regulations promulgated
under the Code (or pursuant to any analogous provision of state or
local law) as a result of the affiliation of any company with the
Company during a Pre-Closing Period or (iii) attributable to any change
in accounting method employed by the Company prior to the Closing Date
(but only to the extent that the amount of such Taxes is in excess of
the amount accrued for Taxes in the books and records of the Company as
of the Closing Date); provided, however, that no indemnity shall be
provided under this Article VI for (x) any Taxes resulting from a
breach by Buyer of its representations, warranties and obligations
under this Agreement, (y) Taxes attributable to, or arising as a result
of, any transactions contemplated by this Agreement or (z) any
liability for Taxes resulting from elections under Section 338 of the
Code with respect to the Company (or any comparable elections under the
state or local Tax laws). Indemnity payments under this Article VI
shall be made on an After-Tax Basis.
(b) From and after the Closing Date (a "Post Closing Period"),
Buyer shall indemnify Seller and hold it harmless from and against all
Taxes imposed on the Company that are not subject to indemnification
pursuant to Section 6.1(a) or Article VII.
(c) Any Taxes (other than U.S. federal income taxes) of the
Company not otherwise indemnified under this Article VI for a period
beginning before the Closing Date and ending after the Closing Date (a
"Straddle Period") shall be apportioned between Seller and Buyer, in
the case of real and personal property taxes and franchise taxes not
based on gross or net income or capital (including net worth or
long-term debt) or gross or net assets, on a per diem basis and, in the
case of other Taxes (including sale and transfer Taxes), shall be
determined based on the actual activities and operations of the Company
during the portion of such period that is a Pre-Closing Period and the
portion of such period that is a Post-Closing Period. Notwithstanding
the foregoing, in the case of any Tax based upon or measured by capital
(including net worth or long-term debt) or gross or net
11
13
assets or intangibles, the amount of such Tax allocated to the
Pre-Closing Period shall be computed by reference to the average level
of such items during the Pre-Closing Period.
(d) Payment by an indemnitor of any amount due under this
Section 6.1 shall be made within 30 days following written notice by
the indemnitee that payment of such amount to the appropriate Tax
authority is due, provided that the indemnitor shall not be required to
make any payment earlier than two days before it is due to the
appropriate Tax authority. If Seller receives an assessment or other
notice of Taxes due with respect to the Company for any Pre-Closing
Period for which Seller is not responsible, in whole or in part,
pursuant to Section 6.1(a) and Seller pays such Tax, then Buyer shall
pay Seller, in accordance with the first sentence of this Section
6.1(d), the amount of such Tax for which Seller is not responsible
under Section 6.1(a). In the case of a Tax that is contested in
accordance with the provisions of Section 6.3, payment of such Tax to
the appropriate Tax authority will not be considered to be due earlier
than the date of a final determination with respect to such Tax.
Failure to pay amounts when due pursuant to this Section 6.1(d) shall
result in the imposition of an interest charge at the applicable rate
prescribed under Section 6621(a)(1) of the Code (but only to the extent
that (i) such interest does not constitute a Tax (as defined herein) or
(ii) the indemnitee is not otherwise indemnified therefor).
Notwithstanding anything herein to the contrary, the indemnified party
may make more than one request for payment under this Agreement with
respect to any indemnifiable Tax imposed by a Tax jurisdiction to the
extent the amount of such indemnifiable Tax is adjusted or redetermined
from time to time.
6.2 REFUNDS AND TAX BENEFITS.
(a) Buyer shall promptly pay to Seller any refund or credit
(including any interest paid or credited with respect thereto) received
by Buyer or the Company of Taxes relating to Pre-Closing Periods or
attributable to an amount paid by or on behalf of Seller under Section
6.1; provided, however, that payments with respect to credits shall be
made no earlier than the time as such credit reduces or could reduce
the Tax liability of Buyer and its Affiliates, including the Company.
If any refund or credit of Taxes for which a payment has been made
pursuant to Section 6.2 is subsequently reduced or disallowed, Seller
shall indemnify and hold harmless payor for any Tax liability assessed
against such payor because of the reduction or disallowance. Buyer
shall, if Seller so requests and at Seller's expense, cause the
relevant entity to file for and obtain any refund to which Seller is
entitled under this Section 6.2. Subject to Section 6.3, Buyer shall
permit Seller to control (at Seller's expense) the prosecution of any
such refund claim, and shall cause the relevant entity to authorize by
appropriate power of attorney such persons as Seller shall designate to
represent such entity with respect to such refund claim.
(b) If and to the extent that Seller receives a refund or
credit of federal, state or local Taxes for any Pre-Closing Period
attributable solely to the carryback
12
14
of losses, credits or similar items arising in any Post-Closing Period
and attributable to the Company, Seller shall promptly pay to Buyer the
amount of such refund or credit, together with any interest paid or
credited with respect thereto. If any refund or credit of Taxes for
which a payment has been made pursuant to this Section 6.2(b) is
subsequently reduced or disallowed, Buyer shall indemnify and hold
harmless payor for any Tax liability, including interest, assessed by
reason of the reduction or disallowance.
6.3 CONTESTS.
(a) After the Closing Date, Buyer shall notify Seller promptly
(and in any event within 15 business days) of the commencement of any
Tax audit or administrative or judicial proceeding, or of any demand or
claim on Buyer or the Company, with respect to the Company or its
subsidiaries for any period beginning before Closing or the receipt of
any notice of proposed adjustment by Buyer or the Company (a "Tax
Indemnification Event"), which could give rise to a claim for
indemnification under Section 6.1 or, in the case of the breach of a
representation in Section 3.11, Article VII. Such notice shall contain
factual information (to the extent known to Buyer or the Company) with
respect to the Tax Indemnification Event in reasonable detail and shall
include copies of any notice or other document received from any Taxing
authority in respect thereof. If Buyer fails to give Seller notice
within a reasonable period of time or in sufficient detail to apprise
Seller of the nature of the claim (in each instance taking into account
the facts and circumstances of such claim), Seller shall not be liable
under this Agreement for such claim to the extent, if any, that the
rights of Seller with respect to such claim are actually prejudiced.
(b) Subject to Section 6.3(d), Seller may elect to direct,
through counsel of its own choosing and at its own expense, any audit,
claim for refund or administrative or judicial proceeding involving any
Pre-Closing Tax Periods with respect to which (and to the extent that)
indemnity may be sought from Seller, under Section 6.1 or, in the case
of the breach of a representation in Section 3.11, Article VII (any
such audit, claim for refund or proceeding is referred to herein as a
"Contest"). If Seller elects to direct a Contest it shall within 15
business days of receipt of the notice of the Tax Indemnification Event
relating to such Contest notify Buyer of its intent to do so and, if
requested by Buyer, Seller shall furnish to Buyer in due course, as a
condition to further pursuing such Contest, an opinion of Seller's
independent Tax counsel to the effect that Seller has a reasonable
basis to pursue such Contest. If Buyer is requested (or, if an election
by Seller is not timely made, shall determine) to pay the Tax claimed
and sue for a refund, Seller shall make a tentative indemnity payment
to the party making such payment. In the case of any Contest, Buyer or
the Company, as the case may be, shall not make payment of the Tax in
question for at least 30 days (or such shorter time period as may be
required by applicable law) after the giving of notice to Seller of its
intention to do so (and if Seller has elected to direct the Contest
shall not make payment unless requested by Seller), shall give to
Seller any information reasonably requested by Seller relating to such
Contest and otherwise shall
13
15
cooperate with Seller in good faith in order to contest effectively any
such Contest and, to the extent not inconsistent with Buyer's or the
Company's control over the portion of proceedings that relate to issues
other than those subject to this indemnity (as described below), shall
permit Seller to control such proceedings relating to any Contest.
Buyer or its duly appointed representatives shall be allowed to attend
all meetings between Seller and the Taxing authority in question and
shall be provided with copies of all correspondence and documents
relating to such Contest (other than internal correspondence and
documents that are privileged or confidential). If Seller fails to
notify Buyer of its election as herein provided, then until receiving
notification as to Seller's intentions, each of Buyer and the Company
shall take such reasonable steps as may be prudent and within its
capacity to preserve the right of the relevant entity to contest such
asserted Tax liability and may pay, compromise or contest such asserted
Tax liability. However, in each such case, neither Buyer nor the
Company may settle or compromise any asserted Tax liability over the
objection of Seller; provided, however, that consent to settlement or
compromise shall not be unreasonably withheld. If Buyer or the Company
assumes control of a Contest with respect to Taxes pursuant to the
foregoing, provided that Seller has acted in good faith, Seller shall
retain the right at any time thereafter and immediately upon notice to
the entity that shall have assumed control of such Contest, to assume
itself, at Seller's expense, sole direction and control of such
Contest, as set forth above. If Seller chooses to direct the Contest,
Buyer shall promptly empower and shall cause the Company promptly to
empower (by power of attorney and such other documentation as may be
necessary and appropriate) such representatives of Seller as it may
designate to represent Buyer and/or the Company in the Contest insofar
as the Contest involves an asserted Tax liability for which Seller
could be liable under Section 6.1 or, in the case of a breach of a
representation in Section 3.11, Article VII.
(c) If, after actual receipt by Buyer or the Company of an
amount paid by Seller as a tentative adjustment pursuant to paragraph
(b), the extent of the liability of Buyer or the Company with respect
to the indemnified matter for which Seller is liable under this
Agreement shall be established by final determination to be a lesser
amount, Buyer or the Company, as the case may be, shall promptly pay to
Seller the amount of such difference, including all or the portion of
any refund received by or credited to Buyer or the Company with respect
to the indemnified matter (together with any interest paid or credited
thereon by the Taxing authority) plus (i) the amount of the Tax
savings, if any, realized by Buyer or the Company as a result of such
payment, and (ii) interest at the rate which shall be applicable under
section 6621(a)(1) of the Code in respect of federal income taxes and
at the rate provided by applicable law in respect of other Taxes from
time to time from the date of actual collection by Buyer or the Company
of such refund (and any such interest thereon) to the date of payment
to Seller thereunder.
(d) Nothing contained herein shall require Buyer or the
Company (i) to contest a Contest which it would otherwise be required
to contest pursuant to
14
16
this Agreement or (ii) to permit Seller control any such Contest, if
Buyer shall waive the payment by Seller of any amount that might
otherwise be payable by Seller hereunder (or under Article VII) by way
of indemnity with respect to such Contest. Upon any such waiver, Buyer
or its Affiliates, as the case may be, shall repay to Seller any
payments made with respect to such Contest pursuant to Section 6.3(b)
together with interest at the rate which shall be applicable under
Section 6621(a)(1) of the Code from time to time from the date the
payment was paid by Seller to the date of repayment by Buyer or its
Affiliate.
6.4 PREPARATION OF TAX RETURNS. Seller shall prepare and timely file,
or cause to be prepared and timely filed, all Tax Returns relating to the
Company and its subsidiaries that are due (taking into account any applicable
extension periods) not more than 30 days after the Closing Date. Buyer shall
prepare and timely file or cause the Company to prepare and timely file all Tax
Returns relating to the Company and its subsidiaries that are due (taking into
account any applicable extension periods) more than 30 days after the Closing
Date. Returns required to be filed by Buyer in respect of a period beginning
prior to the Closing Date shall be prepared on a basis consistent with those
prepared for prior Tax years unless a different treatment of an item is required
by an intervening change in law. Buyer shall furnish Seller with a copy of any
Tax Return so prepared by it for a period beginning prior to the Closing Date at
least 30 days before the anticipated filing date thereof and, in preparing such
Tax Returns, shall accept any comments made by Seller with respect to any issue
or item which could give rise to a claim for indemnification; provided, however,
that this sentence shall not apply in respect of any comments for which Seller
does not provide Buyer, if so requested in writing to do so, with an opinion of
nationally recognized counsel, obtained at Seller's expense, to the effect that
there is a more likely than not basis for Seller's comment.
6.5 COOPERATION AND EXCHANGE OF INFORMATION. Following the Closing,
Seller and Buyer shall provide each other, and Buyer shall cause its Affiliates
to provide Seller, with such cooperation and information as reasonably may be
requested in filing any Tax Return, amended return or claim for refund,
determining a liability for Taxes or a right to a refund of Taxes or
participating in or conducting any audit or other proceeding in respect of
Taxes. Such cooperation and information shall include providing copies of
relevant Tax Returns or portions thereof, together with accompanying schedules
and related work papers and documents relating to rulings or other
determinations by Tax authorities. Each of Seller, Buyer and their Affiliates
shall make its employees available on a mutually convenient basis to provide
explanations of any documents or information provided hereunder. Each of Seller,
Buyer and the Company shall retain all Tax Returns, schedules and work papers
and all material records or other documents that are in its possession
immediately following the Closing, or created by or on behalf of it thereafter,
relating to Tax matters of the Company for the taxable period of each relevant
jurisdiction first ending after the Closing Date and for all prior taxable
periods until the later of (i) the expiration of the statute of limitations of
the taxable periods to which such returns and other documents relate, without
regard to extensions except to the extent notified by the other party in writing
of such extensions for the respective Tax periods, or (ii) six years following
the due date (without extension) for such returns. Any information obtained
under this Article VI shall be confidential, except as may be otherwise
necessary in
15
17
connection with the filing of Tax Returns or claims for refund or in
conducting an audit or other proceeding.
6.6 MISCELLANEOUS.
(a) The parties agree that all payments made under this
Article VI, under any other indemnity provision contained in this
Agreement, and for any misrepresentations or breach of warranties or
covenants shall constitute adjustments to the Purchase Price and that
they shall report all such payments on that basis in all Tax Returns
filed with any taxation authority for purposes hereof. If, contrary to
the intent of the parties as expressed in the foregoing sentence, any
indemnity payment made pursuant to this Agreement is treated as taxable
income of the recipient, then the payor shall indemnify and hold
harmless the recipient for any liability for Taxes attributable to the
receipt of such payment.
(b) Except in the case of a breach of a representation in
Section 3.11, this Article VI shall be the sole provisions governing
indemnities and claims for Taxes under this Agreement.
(c) For purposes of this Article VI, all references to Buyer,
Seller or the Company include successors in interest, whether by
operation of law or otherwise.
(d) The covenants and agreements of the parties hereto
contained in this Article VI shall survive the Closing and shall remain
in full force and effect until the expiration of all statutes of
limitations with respect to any Taxes that would be indemnifiable by
Seller under Section 6.1(a) or Article VII, or by Buyer under Section
6.1(b).
16
18
ARTICLE VII.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each representation,
warranty and covenant of the parties contained in this Agreement shall survive
the Closing until the expiration of the applicable statute of limitations.
Seller shall be liable and shall indemnify and hold Buyer harmless from, any
losses, damages (including incidental and consequential damages), liabilities,
payments, obligations, penalties, costs, expenses (including reasonable fees and
expenses of attorneys, accountants and other professional advisors and of expert
witnesses and costs of investigation and preparation in connection with any
Action or threatened Action) of any kind or nature whatsoever ("Damages")
related to any breaches of representations, warranties and covenants of Seller
contained in this Agreement; provided, however, that no indemnification shall be
provided under this Article VII for any Damages for which Buyer is indemnified
pursuant to Article VI. Buyer shall be liable and shall indemnify and hold
Seller harmless from any Damages related to any breaches of representations,
warranties and covenants of Buyer contained in this Agreement. Payments under
this Article VII shall be made on an After-Tax Basis.
7.2 INDEMNIFICATION OBLIGATION ABSOLUTE. The right to indemnification,
payment of Damages or other remedy under this Agreement will not be affected by
any investigation conducted with respect to, or any knowledge acquired or
capable of being acquired, at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or the compliance with, any such representation, warranty,
covenant or obligation; provided however, that any party claiming the right to
indemnification, payment of Damages or other remedy hereunder shall provide
notice to the indemnifying party of any Damage that becomes known to such
indemnified party after the Closing, and the indemnifying party shall not be
obligated to make any payments related to additional Damage incurred directly as
a result of a failure by the indemnified party to deliver such a notice if such
failure materially prejudices the indemnifying party's ability to mitigate the
Damage. The negligence of the party demanding indemnification, regardless of
whether such negligence is alleged or proven, will not serve as a bar to, or be
a defense to, any claim arising from any breach of this Agreement. Unless
expressly specified, the waiver of any condition based on the accuracy of any
representation or warranty, or of the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages or other remedy based on such representations, warranties, covenants and
obligations.
7.3 LIMITATIONS ON SELLERS' INDEMNIFICATION LIABILITY. Seller will have
no liability under this Article VII for Damages related to breaches of the
representations, warranties and covenants contained in this Agreement unless and
until the aggregate Damages claimed under this Article VII exceeds $50,000 (the
"THRESHOLD AMOUNT"); provided, that once such amount exceeds the Threshold
Amount, the Damages payable hereunder shall relate back to the first dollar and
Buyer will be entitled to recover all amounts to which they are entitled as a
result thereof; provided further that Seller's
17
19
liability under this Article VII for Damages shall not exceed the Purchase Price
(with the value of the Stock Consideration being valued immediately following
the Closing).
7.4 THIRD PARTY CLAIM PROCEDURES.
(a) If any third party shall notify any of the parties hereto
with respect to the commencement of any Action (a "Third Party Claim")
which may give rise to a claim for indemnification against any other
party under Section 7.2, then the indemnified party shall promptly give
notice to the indemnifying party. Failure to notify the indemnifying
party will not relieve the indemnifying party of any liability or
obligation that it may have to the indemnified party, except to the
extent the defense of such Action is materially prejudiced by the
indemnified party's failure to give such notice.
(b) An indemnifying party will have the right to defend
against a Third Party Claim with counsel of its choice reasonably
satisfactory to the indemnified party if (i) within 15 days following
the receipt of notice of the Third Party Claim the indemnifying party
notifies the indemnified party in writing that the indemnifying party
will indemnify the indemnified party from and against the entirety of
any Damages the indemnified party may suffer resulting from, relating
to, arising out of, or attributable to the Third Party Claim, (ii) the
Third Party Claim involves only money Damages and does not seek an
injunction or other equitable relief, and (iii) the indemnifying party
continuously conducts the defense of the Third Party Claim actively and
diligently.
(c) So long as the indemnifying party is conducting the
defense of the Third Party Claim in accordance with Section 7.4(b), (i)
the indemnified party may retain separate co-counsel at its sole cost
and expense and participate in the defense of the Third Party Claim,
(ii) the indemnified party will not consent to the entry of any order,
decree or judgment with respect to the Third Party Claim without the
prior written consent of the indemnifying party (not to be withheld
unreasonably), and (iii) the indemnifying party will not consent to the
entry of any order, decree or judgment with respect to the Third Party
Claim without the prior written consent of the indemnified party (not
to be withheld unreasonably, provided that it will not be deemed to be
unreasonable for an indemnified party to withhold its consent (A) with
respect to any finding of or admission of any violation of any law,
order, decree, judgment or permit, or (B) if any portion of such order,
decree or judgment would not remain sealed).
(d) If any condition in Section 7.4(b) is or becomes
unsatisfied, (i) the indemnified party may defend with attorneys of its
choice against, and consent (with the consent of the indemnifying
party, such consent not to be unreasonably withheld or delayed) to the
entry of any order, decree or judgment with respect to a Third Party
Claim in any manner it may deem appropriate, (ii) the indemnifying
party will be obligated to reimburse the indemnified party promptly and
periodically for Damages related to defending against the Third Party
Claim, and (iii) each indemnifying party will remain liable for any
Damages the indemnified
18
20
party may suffer relating to the Third Party Claim to the fullest
extent provided in this Article VII.
7.5 MISCELLANEOUS. Seller shall (and shall cause its affiliates to)
hold the Company and Buyer harmless from any rights of contribution or
indemnification it or its affiliates may have against the Company as a result of
Damages Seller or its affiliates may incur under this Agreement or as a result
of owning the Company or otherwise.
7.6 ARBITRATION. Any dispute, controversy or claim arising out of or in
connection with this Agreement, or the breach thereof, shall be finally settled
under the Rules of Arbitration of the American Arbitration Association. The
arbitration proceeding shall be held in Wilmington, Delaware. The arbitral award
shall be in writing, shall be rendered within three months after submission of
the matter, and shall be final and binding on the parties. The arbitration shall
be before a single arbitrator with prior professional experience as a lawyer,
accountant or investment banker with corporate acquisitions with values in
excess of $500 million. Except to the extent determined by the arbitrator, his
decision shall be based solely upon written submissions. In the absence of any
award, each party shall bear its own costs and the parties shall share equally
the fees and expenses of the arbitrator. In the event of an award, the
arbitrator may elect to award a prevailing party its reasonable costs attendant
to the arbitration if he determines that the losing party's position was
unreasonable or without significant merit. Judgment upon the award (for purposes
of enforcement) may be entered by any court having jurisdiction thereof or
having jurisdiction over the parties or their assets.
ARTICLE VIII.
MISCELLANEOUS
8.1 ADDITIONAL COVENANTS.
(a) Except as expressly permitted by this Agreement, from the
date hereof to and including the Closing Date, Seller will not, and
will cause the Company not to, take any action, or fail to take any
reasonable action (in each case consistent with the terms of this
Agreement), as a result of which Seller would not be reasonably likely
to be able to deliver the certificate contemplated by Section 5.1(a).
Prior to Closing, Seller will provide Buyer with such information as
Buyer reasonably requests concerning the status of the business,
operations and finances of the Company.
(b) Seller has provided Buyer with accurate and complete
copies of Guarantor's most recently completed audited balance sheet
prior to the date hereof, and prior to Closing will provide Buyer with
accurate and complete copies of Guarantor's most recently completed
balance sheet prior to the Closing Date, such balance sheets to be
prepared consistent with Guarantor's past accounting practices.
Guarantor has no plan or intent to, and after the date hereof Guarantor
will not, take any action which could have a Material Adverse Effect on
Guarantor. Guarantor has no plan or intent to, and after the date
hereof Guarantor
19
21
will not, materially alter its assets and/or liabilities so as to
impair Guarantor's ability to satisfy its obligations under the
Guaranty.
(c) From the day before the Closing Date until the Closing,
Seller will not, and will cause the Company not to, take any
affirmative action, or fail to take any reasonable action (in each case
consistent with the terms of this Agreement), as a result of which a
Material Adverse Effect could occur with respect to Taxes of any kind
whatsoever that affect the Company or its assets.
8.2 TERMINATION OF AGREEMENT. If the Merger Agreement (the "Merger
Agreement") among Illinova Corporation, Buyer, Energy Convergence Acquisition
Company, Dynegy Acquisition Company and Dynegy, dated 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.
8.3 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified, or supplemented only by written agreement of Dynegy and the parties
hereto.
8.4 WAIVER OF COMPLIANCE; CONSENTS. Any failure of a party to comply
with any obligation, covenant, agreement, or condition herein may be waived by
the parties hereto; provided, however, that any such waiver may be made only by
a written instrument signed by the parties hereto and Dynegy 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 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 8.4, with appropriate
notice in accordance with Section 8.8.
8.5 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
Dynegy is a third party beneficiary of this Agreement. No party may assign its
rights or obligations under this Agreement to any Person without the written
consent of the other parties hereto, such consent not to be unreasonably
withheld.
8.6 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).
8.7 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.
20
22
8.8 NOTICES. All notices or communications hereunder shall be in
writing (including facsimile or similar writing) addressed as follows:
If to Buyer:
Energy Convergence Holding Company
1000 Louisiana
Suite 6700
Houston, TX 77002
Attention: Kenneth Randolph
Telecopy: (713) 507-6808
with copies to (such copy not to constitute notice):
Illinova Corporation
500 South 27th Street,
Decatur, Illinois 62521
Attention: President
Telecopy: (217) 362-7458
and:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1900 Pennzoil Place, South Tower
711 Louisiana Street
Houston, Texas 77002
Attn: Robert B. Allen
Telecopy: (713) 236-0822
If to Seller:
British Gas Atlantic Holdings BV
3032 AC Rotterdam
Wilhelminaplein 14
3072 DE Rotterdam
The Netherlands
Attn: Loek de Preter
Telecopy: 3110 290 6581
with a copy to (such copy not to constitute notice):
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Alfred J. Ross, Jr. and Douglas McFadyen
21
23
Telecopy: (212) 848-7179
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)
three business days 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).
8.9 SERVICE OF PROCESS. Seller hereby irrevocably appoints The
Corporation Trust Company located at 1209 Orange Street in Wilmington, Delaware,
as its lawful agent in Delaware to receive and forward on their behalf service
of all necessary processes in any action, suit, or proceeding arising under this
Agreement that may be brought against Seller in any court (including federal
courts) in Delaware. Such service of process or notice received thereof by the
agent will have the same force and effect as if served upon Seller. Seller will
pay all costs and expense and circulate forms as may be required by The
Corporation Trust Company in this capacity.
8.10 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.
8.11 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.
8.12 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.
8.13 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
indemnification contemplated hereby.
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
22
24
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement on the date first written above.
ENERGY CONVERGENCE HOLDING
COMPANY
By: /s/ Charles E. Bayless
--------------------------
Name: Charles E. Bayless
--------------------------
Title: President
--------------------------
BRITISH GAS ATLANTIC
HOLDINGS BV
By: /s/ L.M.O.C. de Preter
--------------------------
Name: L.M.O.C. de Preter
--------------------------
Title: Director
--------------------------
25
GUARANTY
WHEREAS, British Gas Atlantic Holdings BV, a Dutch corporation
("Seller"), is a wholly owned subsidiary of BG Overseas Holdings Limited, a
company incorporated under the laws of England and Wales ("Parent"); and
WHEREAS, Parent is directly and indirectly benefiting from the
consummation of the transactions contemplated in the Stock Purchase Agreement,
dated the date hereof, by and between Energy Convergence Holding Company and
Seller, and any amendments or supplements thereto (the "Purchase Agreement").
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Parent hereby unconditionally, absolutely and continuously
guarantees Seller's payment and performance of its liabilities and obligations
under the Purchase Agreement. Parent hereby waives any right to require Buyer to
(a) proceed against Seller, (b) have Parent joined with Seller in any suit or
proceeding arising out of this Guaranty, or (c) pursue any other remedy in
Buyer's power whatsoever.
Any dispute, controversy or claim arising out of or in connection with
this Guaranty, or the breach thereof, shall be finally settled under the Rules
of Arbitration of the American Arbitration Association. The arbitration
proceeding shall be held in Wilmington, Delaware. The arbitral award shall be in
writing, shall be rendered within three months after submission of the matter,
and shall be final and binding on the parties. The arbitration shall be before a
single arbitrator with prior professional experience as a lawyer, accountant or
investment banker with corporate acquisitions with values in excess of $500
million. Except to the extent determined by the arbitrator, his decision shall
be based solely upon written submissions. In the absence of any award, each
party shall bear its own costs and the parties shall share equally the fees and
expenses of the arbitrator. In the event of an award, the arbitrator may elect
to award a prevailing party its reasonable costs attendant to the arbitration if
he determines that the losing party's position was unreasonable or without
significant merit. Judgment upon the award (for purposes of enforcement) may be
entered by any court having jurisdiction thereof or having jurisdiction over the
parties or their assets.
Guarantor hereby irrevocably appoints CT Corporation System in
Wilmington, Delaware, as its lawful agent in Delaware to receive and forward on
their behalf service of all necessary processes in any action, suit, or
proceeding arising under this Agreement that may be brought against Guarantor in
any court (including federal courts) in Delaware. Such service of process or
notice received thereof by the agent will have the same force and effect as if
served upon Guarantor. Guarantor will pay all costs and expense and circulate
forms as may be required by CT Corporation System in this capacity.
This Guaranty shall be governed by and construed in accordance with the
laws of Delaware (without regard to its conflicts of law doctrines).
26
IN WITNESS WHEREOF, Parent has caused this Guaranty to be duly executed
as of the 14th day of June, 1999.
BG OVERSEAS HOLDINGS LIMITED
By: /s/ Tom Melvin
----------------------------------------
Name: Tom Melvin
----------------------------------------
Title: Director
----------------------------------------