EXHIBIT 10.1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
THE AES CORPORATION
AND
AMEREN CORPORATION
DATED AS OF APRIL 28, 2002
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF SHARES................................................................1
SECTION 1.1 SALE AND TRANSFER OF SHARES.....................................................1
SECTION 1.2 THE PURCHASE PRICE..............................................................1
SECTION 1.3 ADDITIONAL PURCHASE PRICE ADJUSTMENT............................................4
ARTICLE II THE CLOSING...............................................................................4
SECTION 2.1 CLOSING.........................................................................4
SECTION 2.2 DELIVERIES BY THE SELLER........................................................4
SECTION 2.3 DELIVERIES BY THE PURCHASER.....................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER.............................................5
SECTION 3.1 ORGANIZATION AND QUALIFICATION..................................................5
SECTION 3.2 SUBSIDIARIES; CAPITALIZATION....................................................6
SECTION 3.3 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS; COMPLIANCE...................7
SECTION 3.4 COMPANY SEC REPORTS; FINANCIAL STATEMENTS.......................................9
SECTION 3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS; ABSENCE OF UNDISCLOSED LIABILITIES.......10
SECTION 3.6 LITIGATION.....................................................................10
SECTION 3.7 TAX MATTERS....................................................................10
SECTION 3.8 EMPLOYEE BENEFITS; ERISA.......................................................11
SECTION 3.9 LABOR AND EMPLOYEE RELATIONS...................................................14
SECTION 3.10 ENVIRONMENTAL PROTECTION......................................................14
SECTION 3.11 REGULATION AS A UTILITY.......................................................15
SECTION 3.12 INSURANCE.....................................................................15
SECTION 3.13 REAL PROPERTY.................................................................16
SECTION 3.14 AFFILIATE CONTRACTS...........................................................16
SECTION 3.15 BROKERS OR FINDERS............................................................16
SECTION 3.16 CONTRACTS.....................................................................16
SECTION 3.17 REGULATORY PROCEEDINGS........................................................17
SECTION 3.18 LIMITATION ON REPRESENTATIONS AND WARRANTIES..................................17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..........................................17
SECTION 4.1 ORGANIZATION AND QUALIFICATION.................................................17
SECTION 4.2 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS; COMPLIANCE..................18
SECTION 4.3 PURCHASER SEC REPORTS; FINANCIAL STATEMENTS....................................19
SECTION 4.4 LITIGATION.....................................................................20
SECTION 4.5 INVESTIGATION BY THE PURCHASER; THE SELLER'S LIABILITY.........................20
SECTION 4.6 ACQUISITION OF SHARES FOR INVESTMENT; ABILITY TO EVALUATE AND BEAR RISK........21
SECTION 4.7 FINANCING......................................................................21
SECTION 4.8 BROKERS OR FINDERS.............................................................21
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ARTICLE V CONDUCT OF BUSINESS PENDING THE CLOSING...................................................22
SECTION 5.1 COVENANTS OF THE SELLER........................................................22
SECTION 5.2 NO SOLICITATION AND CONFIDENTIALITY............................................25
ARTICLE VI ADDITIONAL AGREEMENTS....................................................................26
SECTION 6.1 ACCESS TO COMPANY INFORMATION..................................................26
SECTION 6.2 REGULATORY MATTERS.............................................................26
SECTION 6.3 CONSENTS.......................................................................28
SECTION 6.4 DIRECTORS' AND OFFICERS' INDEMNIFICATION.......................................28
SECTION 6.5 PUBLIC ANNOUNCEMENTS...........................................................29
SECTION 6.6 WORKFORCE MATTERS..............................................................29
SECTION 6.7 TAX MATTERS....................................................................30
SECTION 6.8 FINANCIAL INFORMATION..........................................................38
SECTION 6.9 TERMINATION OF AFFILIATE CONTRACTS.............................................38
SECTION 6.10 LOCAL PRESENCE; CHARITABLE GIVING.............................................38
SECTION 6.11 SELLER'S NAME.................................................................39
SECTION 6.12 COOPERATION...................................................................39
SECTION 6.13 FURTHER ASSURANCES............................................................39
ARTICLE VII CONDITIONS..............................................................................39
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE CLOSING....................39
SECTION 7.2 CONDITIONS TO OBLIGATION OF THE PURCHASER TO EFFECT THE CLOSING................40
SECTION 7.3 CONDITIONS TO OBLIGATION OF THE SELLER TO EFFECT THE CLOSING...................41
ARTICLE VIII TERMINATION............................................................................42
SECTION 8.1 TERMINATION....................................................................42
SECTION 8.2 EFFECT OF TERMINATION..........................................................43
ARTICLE IX GENERAL PROVISIONS.......................................................................43
SECTION 9.1 SURVIVAL OF OBLIGATIONS........................................................43
SECTION 9.2 AMENDMENT AND MODIFICATION.....................................................43
SECTION 9.3 EXTENSION; WAIVER..............................................................43
SECTION 9.4 EXPENSES.......................................................................43
SECTION 9.5 NOTICES........................................................................44
SECTION 9.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.................................45
SECTION 9.7 SEVERABILITY...................................................................45
SECTION 9.8 GOVERNING LAW..................................................................45
SECTION 9.9 VENUE..........................................................................45
SECTION 9.10 WAIVER OF JURY TRIAL AND CERTAIN DAMAGES......................................45
SECTION 9.11 SPECIFIC PERFORMANCE..........................................................46
SECTION 9.12 ASSIGNMENT....................................................................46
SECTION 9.13 INTERPRETATION................................................................46
SECTION 9.14 COUNTERPARTS; EFFECT..........................................................46
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INDEX OF DEFINED TERMS
TERM PAGE
4.50% Series Preferred...............................................................................7
4.64% Series Preferred...............................................................................7
5.85% Series Class A Preferred.......................................................................7
Action..............................................................................................29
Affected Employee...................................................................................30
Affiliate Contracts.................................................................................16
Agreement............................................................................................1
Assumed Obligations..................................................................................2
Audit...............................................................................................12
Base Working Capital.................................................................................2
CapEx Adjustment Amount.............................................................................23
CILCO............................................................................................... 1
CILCO Class A Preferred Stock........................................................................7
CILCO Preference Stock...............................................................................7
CILCO Preferred Stock................................................................................7
CILCORP Inc..........................................................................................1
Closing..............................................................................................4
Closing Date.........................................................................................4
COBRA...............................................................................................30
Code.................................................................................................5
Common Stock.........................................................................................1
Company..............................................................................................1
Company Financial Statements........................................................................10
Company Material Adverse Effect......................................................................6
Company Plans.......................................................................................12
Company Properties..................................................................................16
Company SEC Reports..................................................................................5
Company Subsidiary...................................................................................7
Confidentiality Agreement...........................................................................27
Encumbrances.........................................................................................6
Environmental Laws..................................................................................15
ERISA ...........................................................................................12
ERISA Affiliate.....................................................................................12
Estimated Purchase Price.............................................................................3
Exchange Act........................................................................................10
FCC..................................................................................................9
FERC.................................................................................................9
Final Order.........................................................................................40
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TERM PAGE
Final Purchase Price.................................................................................3
Flexible Auction Rate Series Class A Preferred.......................................................7
GAAP................................................................................................10
Governmental Authority...............................................................................9
Hazardous Substances................................................................................16
HSR Act.............................................................................................27
IBEW Local 51.......................................................................................30
ICC..................................................................................................4
Indemnified Parties.................................................................................28
Indemnified Party...................................................................................28
Initial Termination Date............................................................................42
Material Contracts..................................................................................17
Objection Letter.....................................................................................3
PBGC................................................................................................13
Permits..............................................................................................9
Person..............................................................................................15
Proposed Acquisition Transaction....................................................................26
Proposed Final Purchase Price Statement..............................................................3
PUHCA................................................................................................7
Purchaser............................................................................................1
Purchaser Disclosure Schedule.......................................................................18
Purchaser Material Adverse Effect...................................................................18
Purchaser Required Consents.........................................................................19
Purchaser Required Statutory Approvals..............................................................19
Purchaser SEC Reports...............................................................................18
Purchaser Subsidiary................................................................................18
Representatives.....................................................................................26
Restraints..........................................................................................40
SEC..................................................................................................9
Securities Act......................................................................................10
Seller...............................................................................................1
Seller Disclosure Schedule...........................................................................5
Seller Required Consents.............................................................................8
Seller Required Statutory Approvals..................................................................9
Shares...............................................................................................1
Straddle Period.....................................................................................31
Subsidiary...........................................................................................6
Tax.................................................................................................11
Tax Benefit.........................................................................................33
Tax Indemnitee......................................................................................37
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TERM PAGE
Tax Indemnitor......................................................................................37
Tax Return..........................................................................................12
Termination Date....................................................................................42
Title IV Company Plan...............................................................................13
Transaction Price....................................................................................2
Trigger Date.........................................................................................4
Undesignated Series Class A Preferred................................................................7
Undesignated Series Preferred........................................................................7
Violation............................................................................................8
WARN Act ...........................................................................................30
Working Capital......................................................................................2
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STOCK PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT, dated as of April 28, 2002 (this
"AGREEMENT"), is entered into by and between The
AES Corporation, a
Delaware
corporation (the "SELLER"), and Ameren Corporation, a Missouri corporation (the
"PURCHASER").
W I T N E S S E T H :
WHEREAS, the Seller owns all of the issued and outstanding shares (the
"SHARES") of common stock, without par value (the "COMMON STOCK"), of CILCORP
Inc. (the "COMPANY"), an Illinois corporation and the parent company of Central
Illinois Light Company, an Illinois corporation ("CILCO"); and
WHEREAS, each of the Boards of Directors of the Purchaser and the
Seller has approved the acquisition of the Company by the Purchaser, which
acquisition is to be effected by the purchase of all the Shares by the Purchaser
upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
Section 1.1 SALE AND TRANSFER OF SHARES. Subject to the terms and
conditions of this Agreement, at the Closing (as defined below), the Seller
agrees to sell, convey, assign, transfer and deliver to the Purchaser, and the
Purchaser agrees to purchase and accept from the Seller, all of the Seller's
rights, title and interest in and to the Shares. Subject to the terms and
conditions of this Agreement, the Purchaser agrees to deliver to the Seller, and
the Seller agrees to accept, the Purchase Price (as defined below), in cash,
without deduction or setoff of any kind (other than any transfer Taxes described
in Section 6.7(m)), which delivery will be made by wire transfer in immediately
available funds to the bank account or accounts designated by the Seller, in
writing, prior to the Closing.
Section 1.2 THE PURCHASE PRICE.
(a) Subject to the terms and conditions of this Agreement, in
consideration of the aforesaid sale, conveyance, assignment, transfer and
delivery to the Purchaser of the Shares, the Purchaser shall pay to the Seller
in cash the sum of (v) $1,340,000,000 (the "TRANSACTION PRICE"); (w) less an
amount equal to Assumed Obligations (as defined below); (x) increased by the
amount, if any, by which Working Capital (as defined
below) as of the Closing Date exceeds the Base Working Capital (as defined
below), (y) decreased by the amount, if any, by which Working Capital as of the
Closing Date is less than the Base Working Capital, and (z) increased by the
amount of the CapEx Adjustment Amount (as defined in Section 5.1(e)) under
Section 5.1(e)(i) of this Agreement or decreased by the amount of the CapEx
Adjustment Amount under Section 5.1(e)(ii) of this Agreement (the net of such
amounts (v) through (z) being, the "PURCHASE PRICE"). An example of the Purchase
Price calculation is set forth in Section 1.2(a) of the Seller Disclosure
Schedule (as defined below).
(b) The term "ASSUMED OBLIGATIONS" as used herein shall mean
amounts required to be included on the consolidated balance sheets of the
Company in accordance with GAAP (as defined in Section 3.4) as of the Closing
Date for long-term indebtedness (including current portion), short-term
indebtedness, capital lease obligations, preferred stock of subsidiaries and any
other obligation for borrowed money. Assumed Obligations shall be determined on
a basis consistent with past practice and consistent with the items outstanding
as of December 31, 2001 set forth on Section 1.2(a) of the Seller Disclosure
Schedule but including any other outstanding obligation meeting the definition
of the preceding sentence at the applicable date set forth herein.
(c) The term "WORKING CAPITAL" as used herein shall mean current
assets less current liabilities (not counting in current liabilities any
short-term indebtedness or current maturity of long-term debt included in
Assumed Obligations) of the Company as of the applicable date set forth herein
determined in accordance with GAAP on a basis consistent with past practice and
consistent with the calculation on Section 1.2(a) of the Seller Disclosure
Schedule, provided, however, that for the purposes of this definition, current
liabilities as of any date shall not include any Income Taxes payable, and
current assets shall not include receivables from any Income Tax assets. "INCOME
TAXES" shall mean any federal, state, local, or foreign Tax (as defined below)
determined by reference to net income, net worth, or any Tax imposed in lieu of
such a Tax. All intercompany (between the Company and its Subsidiaries on one
hand, and the Seller and its Subsidiaries, other than the Company and its
Subsidiaries, on the other hand) payables and all intercompany receivables shall
be paid down to zero prior to the date the Estimated Purchase Price is
calculated and shall be zero as of the Closing Date.
(d) The term "BASE WORKING CAPITAL" as used herein means the
amount shown on Section 1.2(a) of the Seller Disclosure Schedule. The Working
Capital as of the Closing Date shall be calculated in the same manner as the
Working Capital was calculated as set out on Section 1.2(a) of the Seller
Disclosure Schedule.
(e) At the Closing, the Purchaser shall pay to the Seller a cash
amount (the "ESTIMATED PURCHASE PRICE") consisting of the sum of (i) the
Transaction Price, (ii) less the estimated Assumed Obligations, (iii) increased
by the amount, if any, by which the estimated Working Capital exceeds the Base
Working Capital, (iv) decreased by the amount, if any, by which estimated
Working Capital is less than the Base Working Capital and (v) increased or
decreased by the CapEx Adjustment Amount, all determined in good faith by the
Seller on the basis hereinabove set forth using the unaudited consolidated
balance sheets of the Company as of
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the last day of the month which precedes the month of the Closing Date by no
more than 45 days. The Seller shall provide to the Purchaser a written
calculation in reasonable detail of the Estimated Purchase Price on or prior to
the fifth business day preceding the Closing Date.
(f) As promptly as practical, but in no event more than sixty
(60) days after the Closing, the Purchaser shall cause the Company to prepare
and deliver to the Seller and the Purchaser a draft of a statement prepared in
good faith setting forth the relevant calculations resulting in the final
Purchase Price (the "PROPOSED FINAL PURCHASE PRICE STATEMENT") which shall show,
as of the Closing Date, the actual Assumed Obligations and variance, if any,
from the Base Working Capital. During the thirty (30) day period following the
delivery by the Company of the Proposed Final Purchase Price Statement, the
Seller and its auditors may review such statement and the working papers of the
Company's auditors relating to the Proposed Final Purchase Price Statement and
shall have such access to the Purchaser's and the Company's personnel as may be
reasonably necessary to permit the Seller and its auditors to review in detail
the manner in which the Proposed Final Purchase Price Statement was prepared.
The Purchaser shall and shall cause the Company, as well as their advisors, to
cooperate with the Seller and the Seller's auditors in facilitating such review.
Upon completion of such review, the Seller shall give any comments or objections
it has with respect to the Proposed Final Purchase Price Statement to the
Purchaser and the Company in writing within such thirty (30) day period (the
"OBJECTION LETTER"). The Purchaser and the Seller shall attempt in good faith to
resolve any differences and issues as set forth in the Objection Letter. If no
Objection Letter is delivered or the matters set forth in the Objection Letter
are so resolved, then the Proposed Final Purchase Price Statement, as adjusted
for any changes as are agreed upon by the Seller and the Purchaser, shall be
final and binding upon the Seller and the Purchaser and shall constitute the
final Purchase Price (the "FINAL PURCHASE PRICE"). If the matters raised by the
Seller in the Objection Letter cannot be resolved between the Purchaser and the
Seller within ten (10) days of the date of the Objection Letter, the question or
questions in dispute shall then be promptly submitted to any "big five"
accounting firm mutually agreeable to the Seller and the Purchaser (other than
the Seller's auditors, the Purchaser's auditors and Xxxxxx Xxxxxxxx LLP), or if
such accounting firm cannot or refuses to serve in such capacity, a mutually
acceptable firm of independent public accountants of recognized standing, the
decision of which as to such question or questions in dispute shall be final and
binding upon the Seller and the Purchaser and the determination of the purchase
price pursuant thereto shall be considered to be the Final Purchase Price. The
accounting firm shall be instructed to resolve solely the question or questions
in dispute within twenty (20) days of submission.
(g) In the event the Final Purchase Price is greater than the
Estimated Purchase Price paid at the Closing by the Purchaser, then the
Purchaser shall promptly (within five (5) business days of the determination of
the Final Purchase Price) pay to the Seller an amount equal to the difference
between the Final Purchase Price and the Estimated Purchase Price. In the event
the Final Purchase Price is less than the Estimated Purchase Price paid at the
Closing by the Purchaser, then the Seller shall promptly (within five (5)
business days of the determination of the Final Purchase Price) pay to the
Purchaser an amount equal to the difference between the Estimated Purchase Price
and the Final Purchase Price.
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(h) The fees of the Company's auditors incurred in connection
with the preparation of the Proposed Final Purchase Price Statement shall be
borne by the Purchaser, and the fees of the Seller's auditors incurred in
connection with their review of the Proposed Final Purchase Price Statement
shall be borne by the Seller. The fees of any independent accounting firm
appointed pursuant to this Section shall be borne equally by the Seller and the
Purchaser.
Section 1.3 ADDITIONAL PURCHASE PRICE ADJUSTMENT. In the event the
Closing occurs after the Trigger Date (as defined below), then the Purchase
Price shall be increased by $33,699 per day from the Trigger Date through the
Closing Date; provided, however, no amount shall be due and payable under this
Section 1.3 with respect to any day that is more than 365 days following the
Trigger Date or if this Agreement is terminated under Section 8.1 hereof. For
purposes of this Agreement, the "TRIGGER DATE" shall be the later of (i)
December 31, 2002, (ii) the date on which Seller is capable (without further
action by any third party) of completing performance in all material respects of
its agreements and covenants contained in or contemplated by this Agreement
which are required to be performed by it at or prior to the Closing and (iii)
the date which is ninety (90) days following the date on which the Illinois
Commerce Commission ("ICC") grants its approval of the transaction contemplated
by this Agreement.
ARTICLE II
THE CLOSING
Section 2.1 CLOSING. The consummation of the sale and transfer of the
Shares by the Seller to the Purchaser (the "CLOSING") shall take place at the
offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 0000 Xxx Xxxx Xxxxxx, XX,
Xxxxxxxxxx, XX 00000 at 10:00 a.m., local time, on the second business day
immediately following the date on which the last of the conditions set forth in
Article VII hereof is fulfilled or waived (except for those conditions which by
their nature can only be fulfilled at the Closing), or at such other time, date
and place as the Seller and the Purchaser shall mutually agree (the "CLOSING
DATE").
Section 2.2 DELIVERIES BY THE SELLER. At the Closing, the Seller shall
deliver to the Purchaser:
(a) A certificate or certificates representing the Shares, duly
and validly endorsed in favor of the Purchaser or accompanied by a separate
stock power duly and validly executed by the Seller and otherwise sufficient to
vest in the Purchaser good title to the Shares;
(b) The resignations of the members of the Board of Directors of
the Company and each Company Subsidiary (as hereinafter defined);
(c) The stock books, stock ledgers, minute books, corporate seal
or their functional equivalent of the Company and each Company Subsidiary;
PROVIDED, that any of the foregoing items shall be deemed to have been delivered
pursuant to this Section 2.2(c) if such item has been delivered to, or is
otherwise located at, the offices of the Company;
4
(d) A certificate of the Seller's non-foreign status for purposes
of Section 1445 of the Internal Revenue Code of 1986, as amended (the "CODE");
and
(e) Any other documents, instruments and writings required to be
delivered by the Seller to the Purchaser pursuant to this Agreement.
Section 2.3 DELIVERIES BY THE PURCHASER. At the Closing, the Purchaser
shall deliver to the Seller:
(a) The Estimated Purchase Price, in cash, which will be made by
wire transfer in immediately available funds to the bank account or accounts
designated by the Seller, in writing, prior to the Closing; and
(b) Any other documents, instruments and writings required to be
delivered by the Purchaser to the Seller pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser that except as set
forth in the reports, schedules, registration statements and definitive proxy
statements and all amendments thereto filed publicly not earlier than January 1,
2001 and not later than the close of business on the day prior to the date of
this Agreement with the SEC by the Company or any Company Subsidiary (or their
predecessors) pursuant to the requirements of the Securities Act or the Exchange
Act (each as defined in Section 3.4) (as such documents have since the time of
their filing been amended publicly not earlier than January 1, 2001 and not
later than the close of business on the day prior to the date of this Agreement,
the "COMPANY SEC REPORTS") or as set forth in the schedule delivered by the
Seller on the date hereof (the "SELLER DISCLOSURE SCHEDULE"):
Section 3.1 ORGANIZATION AND QUALIFICATION. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of
Delaware. The Company and each Company Subsidiary (as defined in
Section 3.2) is a corporation or other entity duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization, has all requisite power and authority to own, lease and operate
its assets and properties to the extent owned, leased and operated and to carry
on its business as it is now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its business
or the ownership or leasing of its assets and properties makes such
qualification necessary other than in such jurisdictions where the failure to be
so qualified or in good standing would not have a Company Material Adverse
Effect (as defined below). As used in this Agreement, the term "COMPANY MATERIAL
ADVERSE EFFECT" shall mean any material adverse effect on the business, assets,
financial condition or results of operations of the Company and the Company
Subsidiaries, taken as a whole; PROVIDED, HOWEVER, that the term "Company
Material Adverse Effect" shall not include effects that result from or are
consequences of (i) any such effect resulting from any change in law, rule, or
regulation of any
5
Governmental Authority (as defined in Section 3.3(c)) that applies generally to
similarly situated Persons (as defined in Section 3.10(a)(ii)), (ii) changes or
developments in international, national, regional, state or local wholesale or
retail markets for electric power or fuel or related products, including those
due to actions by competitors, (iii) changes or developments in national,
regional, state or local electric transmission or distribution systems, (iv)
changes or developments in financial or securities markets or the economy in
general or effects of weather or meteorological events, (v) events or changes
that are consequences of terrorist activity, acts of war or acts of public
enemies (other than any such event or consequence affecting only the Company or
a Company Subsidiary) or (vi) the negotiation, announcement, execution,
delivery, consummation or anticipation of the transactions contemplated by, or
in compliance with, this Agreement. As used in this Agreement, the term
"knowledge" (i) when referring to the knowledge of the Seller shall mean the
actual knowledge of an executive officer of the Seller, and (ii) when referring
to the knowledge of the Company or CILCO shall mean the actual knowledge after
reasonable due inquiry of an executive officer of the Company or CILCO, as the
case may be.
Section 3.2 SUBSIDIARIES; CAPITALIZATION.
(a) Section 3.2 of the Seller Disclosure Schedule sets forth a
complete list, as of the date hereof, of all of the Company Subsidiaries and
their respective jurisdictions of incorporation or organization. All of the
issued and outstanding shares of capital stock of each Company Subsidiary have
been duly authorized and are validly issued, fully paid and nonassessable, and
are owned, directly or indirectly, by the Company free and clear of any liens,
claims, security interests and other encumbrances of any nature whatsoever
("ENCUMBRANCES"). As used in this Agreement, the term "SUBSIDIARY" of a Person
shall mean any corporation or other entity (including partnerships and other
business associations and joint ventures) of which at least a majority of the
voting power represented by the outstanding capital stock or other voting
securities or interests having voting power under ordinary circumstances to
elect directors or similar members of the governing body of such corporation or
entity (or, if there are no such voting interests, 50% or more of the equity
interests in such corporation or entity) shall at the time be held, directly or
indirectly, by such Person. The term "COMPANY SUBSIDIARY" shall mean a
Subsidiary of the Company. The Company is an exempt "public utility holding
company" (as defined in the Public Utility Holding Company Act of 1935, as
amended ("PUHCA")). CILCO is a public utility company within the meaning of
Section 2(a)(5) of PUHCA. With the exception of the Company and CILCO, no
Company Subsidiary is a "holding company" or a "public utility company" within
the meaning of Sections 2(a)(7) and 2(a)(5) of PUHCA, respectively.
(b) The authorized capital stock of the Company consists of
10,000 shares of Common Stock, of which 1,000 Shares are issued and outstanding.
As of the date hereof, all Shares have been duly authorized and are validly
issued, fully paid and nonassessable and free of preemptive rights, and are
owned, directly or indirectly, by the Seller free and clear of any Encumbrances,
except for any Encumbrances created by this Agreement, and there are no options,
warrants, calls, rights, commitments or agreements of any character to which the
Seller
6
is a party or by which it is bound obligating the Seller to issue, deliver or
sell, pledge, grant a security interest or encumber or cause to be issued,
delivered or sold, pledged or encumbered or a security interest to be granted
on, any shares of capital stock of the Company or obligating the Seller to
grant, extend or enter into any such option, warrant, call, right, commitment or
agreement.
(c) The authorized capital stock of CILCO consists as of the date
hereof of 20,000,000 shares of common stock, no par value; 1,500,000 shares of
preferred stock, par value $100 per share ("CILCO PREFERRED STOCK"), consisting
of 111,264 shares of 4.50 percent Series CILCO Preferred Stock ("4.50% SERIES
PREFERRED"), 79,940 shares of 4.64 percent Series CILCO Preferred Stock ("4.64%
SERIES PREFERRED"), and 1,308,796 shares of Undesignated Series CILCO Preferred
Stock ("UNDESIGNATED SERIES PREFERRED"); 3,500,000 shares of Class A preferred
stock, no par value ("CILCO CLASS A PREFERRED STOCK"), consisting of 220,000
shares of 5.85 percent Series CILCO Class A Preferred Stock ("5.85% SERIES CLASS
A PREFERRED"), 250,000 shares of Flexible Auction Rate Series CILCO Class A
Preferred Stock ("FLEXIBLE AUCTION RATE SERIES CLASS A PREFERRED"), and
3,030,000 shares of Undesignated Series CILCO Class A Preferred Stock
("UNDESIGNATED SERIES CLASS A PREFERRED"); and 2,000,000 shares of Undesignated
Series CILCO Preference Stock, no par value ("CILCO PREFERENCE STOCK"). With
respect to the capital stock of CILCO, (i) 13,563,871 shares of CILCO Common
Stock are issued and outstanding, all of which are owned by the Company free and
clear of any Encumbrances and (ii) 111,264 shares of 4.50% Series Preferred,
79,940 shares of 4.64% Series Preferred, no shares of Undesignated Series
Preferred, 220,000 shares of 5.85% Class A Series Preferred, no shares of
Flexible Auction Rate Series Class A Preferred, no shares of Undesignated Series
Class A Preferred and no shares of CILCO Preference Stock are issued and
outstanding. All of the issued and outstanding shares of CILCO capital stock are
validly issued, fully paid, nonassessable and free of preemptive rights. There
are no options, warrants, calls, rights, commitments or agreements of any
character to which the Company or any Company Subsidiary is a party or by which
it is bound obligating the Company or any Company Subsidiary to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of capital
stock of the Company or any Company Subsidiary or obligating the Company to
grant, extend or enter into any such option, warrant, call, right, commitment or
agreement.
Section 3.3 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.
(a) AUTHORITY. The Seller has all requisite corporate power and
authority to enter into this Agreement and, subject to the receipt of the
applicable Seller Required Statutory Approvals (as defined in Section 3.3(c)),
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation by the Seller of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Seller. No vote of, or consent by, the holders of any class
or series of stock issued by the Seller is necessary to authorize the execution
and delivery by the Seller of this Agreement or the consummation by it of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Seller and, assuming the due authorization, execution and
delivery hereof by the Purchaser, constitutes the valid and binding obligation
of
7
the Seller enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(b) NON-CONTRAVENTION. The execution and delivery of this
Agreement by the Seller does not, and the consummation of the transactions
contemplated hereby will not, violate or result in a breach of any provision of,
constitute a default (with or without notice or lapse of time or both) under,
result in the termination or modification of, accelerate the performance
required by, result in a right of termination, cancellation or acceleration of
any obligation or the loss of a benefit under, or result in the creation of any
Encumbrance upon any of the properties or assets of the Company or any Company
Subsidiary (any such violation, breach, default, right of termination,
modification, cancellation or acceleration, loss or creation, is referred to
herein as a "VIOLATION" with respect to the Seller and the Company and such term
when used in Article IV has a correlative meaning with respect to the Purchaser)
pursuant to any provisions of (i) the articles of incorporation, by-laws or
similar governing documents of the Seller, the Company or any Company
Subsidiary, (ii) subject to obtaining the Seller Required Statutory Approvals,
any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any Governmental Authority (as defined in
Section 3.3(c)) applicable to the Seller, the Company or any Company Subsidiary
or any of their respective properties or assets, or (iii) subject to obtaining
the third-party consents set forth in Section 3.3(b)(iii) of the Seller
Disclosure Schedule (the "SELLER REQUIRED CONSENTS"), any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which the
Seller, the Company or any Company Subsidiary is a party or by which they or any
of their respective properties or assets may be bound or affected, except in the
case of clause (ii) or (iii) for any such Violation which would not have a
Company Material Adverse Effect or prevent, materially delay or materially
impair the Seller's ability to consummate the transactions contemplated by this
Agreement.
(c) STATUTORY APPROVALS. Except for (i) the filings by the
Seller, the Company and/or the Purchaser, as applicable, required under the HSR
Act (as defined in Section 6.2(a)), (ii) the applicable requirements of the
Exchange Act and the rules and regulations promulgated thereunder, (iii) any
filings with or approvals from (v) the Federal Energy Regulatory Commission (the
"FERC"), (w) the Securities and Exchange Commission (the "SEC") under PUHCA, (x)
the ICC, (y) the Federal Communications Commission (the "FCC"), and (z) the
other Governmental Authorities set forth on Section 3.3(c) of the Seller
Disclosure Schedule (the filings and approvals referred to in clauses (i)
through (iii) collectively referred to as the "SELLER REQUIRED STATUTORY
APPROVALS"), no declaration, filing or registration with, or notice to or
authorization, consent or approval of, any court, federal, state, local or
foreign governmental or regulatory body (including a national securities
exchange or other self-regulatory body) or authority (each, a "GOVERNMENTAL
AUTHORITY") is necessary for the execution and delivery of this Agreement by the
Seller or the consummation by the Seller of the transactions contemplated
hereby, except those which the failure to obtain would not result in a Company
Material Adverse Effect or would not prevent, materially delay or materially
impair the Seller's ability to consummate the transactions contemplated by this
Agreement (it being
8
understood that references in this Agreement to "obtaining" such Seller Required
Statutory Approvals shall mean making such declarations, filings or
registrations; giving such notices; obtaining such authorizations, consents or
approvals; and having such waiting periods expire as are necessary to avoid a
violation of law).
(d) COMPLIANCE. To the knowledge of the Seller or the Company,
neither the Company nor any Company Subsidiary is in violation of, is under
investigation with respect to any violation of, or has been given notice of or
been charged with any violation of, any law, statute, order, rule, regulation,
ordinance or judgment of any Governmental Authority, except for possible
violations which would not have a Company Material Adverse Effect or would not
prevent, materially delay or materially impair the ability of the Seller to
consummate the transactions contemplated by this Agreement. To the knowledge of
the Seller and the Company, the Company and each Company Subsidiary have all
material permits, licenses, franchises and other governmental authorizations,
consents and approvals (collectively, "PERMITS") necessary to conduct their
businesses as presently conducted except those that the absence of which would
not have a Company Material Adverse Effect or would not prevent, materially
delay or materially impair the ability of the Seller to consummate the
transactions contemplated by this Agreement. Except as would not have a Company
Material Adverse Effect, (i) each Permit is in full force and effect in
accordance with its terms, (ii) there is no outstanding written notice, or to
the knowledge of the Seller or the Company, any other notice of revocation, and
there are no proceedings pending or, to the knowledge of the Seller or the
Company, threatened that seek the revocation, cancellation or termination of any
Permit. Neither the Company nor any Company Subsidiary is in breach or violation
of or in default in the performance or observance of any term or provision of,
and no event has occurred which, with lapse of time or action by a third party,
could result in a default by the Company or any Company Subsidiary under, (i)
their respective articles of incorporation or by-laws or (ii) any contract,
commitment, agreement, indenture, mortgage, loan agreement, note, lease, bond,
license, approval or other instrument to which it is a party or by which it is
bound or to which any of its property is subject, except in the case of clause
(ii) for possible violations, breaches or defaults which would not have a
Company Material Adverse Effect or would not prevent, materially delay or
materially impair the ability of the Seller to consummate the transactions
contemplated by this Agreement.
Section 3.4 COMPANY SEC REPORTS; FINANCIAL STATEMENTS. The filings
required to be made by the Company and the Company Subsidiaries under the
Securities Act of 1933, as amended (the "SECURITIES ACT") and the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), PUHCA, the Federal Power
Act and applicable state municipal, local and other laws, including franchise
and public utility laws and regulations, have been filed with the SEC, the FERC,
the ICC or any other applicable Governmental Authority, as the case may be, and
complied, as of their respective dates, in all material respects with all
applicable requirements of the appropriate statutes and the rules and
regulations thereunder. As of their respective dates, the Company SEC Reports
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated
9
financial statements and unaudited interim financial statements of the Company
and CILCO included in the Company SEC Reports (collectively, the "COMPANY
FINANCIAL STATEMENTS") have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the period involved (except as may be stated in the notes thereto) and
fairly present the consolidated financial position and the consolidated results
of operations and cash flows (and changes in financial position, if any) of the
Company and the Company Subsidiaries as of the time and for the period referred
to therein, subject, in the case of unaudited interim financial statements, to
normal, recurring audit adjustments.
Section 3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS; ABSENCE OF
UNDISCLOSED LIABILITIES.
(a) Since December 31, 2001 through the date hereof, the Company
and each of the Company Subsidiaries has conducted its businesses only in the
ordinary course of business consistent with past practice and there has not been
any development or combination of developments affecting the Company or any
Company Subsidiary, of which the Seller or the Company has knowledge, that would
have a Company Material Adverse Effect.
(b) Neither the Company nor any of the Company Subsidiaries has
any liabilities or obligations (whether absolute, accrued, contingent or
otherwise) of any nature, except those which (i) are accrued or reserved against
in the most recent audited financial statements or reflected in the notes
thereto, (ii) were incurred in the ordinary course of business and would not
have a Company Material Adverse Effect, (iii) have been discharged or paid in
full prior to the date hereof, or (iv) are of a nature not required to be
reflected in the consolidated financial statements of the Company and its
Subsidiaries prepared in accordance with GAAP consistently applied.
Section 3.6 LITIGATION. There are no claims, suits, actions or
proceedings before any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator pending or, to the knowledge of
the Seller or the Company, threatened against, relating to or affecting the
Company or any Company Subsidiary which would have a Company Material Adverse
Effect or would prevent, materially delay or materially impair the Purchaser's
ability to consummate the transactions contemplated by this Agreement. There are
no judgments, decrees, injunctions, rules or orders of any court, governmental
department, commission, agency, instrumentality or authority or any arbitrator
applicable to the Company or any Company Subsidiary except for such that would
not have a Company Material Adverse Effect or would prevent, materially delay or
materially impair the Purchaser's ability to consummate the transactions
contemplated by this Agreement.
Section 3.7 TAX MATTERS.
(a) (i) Each of the Seller, the Company and each Company
Subsidiary has timely filed (or has had filed on its behalf) with appropriate
taxing authorities all material Tax Returns required to be filed by it, such Tax
Returns are correct, complete and accurate in all material respects, and all
Taxes shown as due on such Tax Returns have been paid; (ii) all
10
material Tax withholding and deposit requirements imposed on or with respect to
the Seller, the Company and each Company Subsidiary (including any withholding
with respect to wages or other amounts paid to employees) have been satisfied in
full; (iii) there are no outstanding requests, agreements, consents or waivers
to extend the statutory period of limitations applicable to the assessment or
collection of any material Taxes or deficiencies against the Seller, the Company
or any Company Subsidiary; (iv) no federal, state, local, or foreign Audits for
which the Seller, the Company, or any Company Subsidiary has received written
notification are presently pending with regard to any material Taxes or material
Tax Returns filed by or on behalf of the Seller, the Company or any Company
Subsidiary; (v) neither the Company nor any Company Subsidiary is a party to any
agreement providing for the allocation or sharing of Taxes; and (vi) none of the
Seller, the Company or any Company Subsidiary has been a member of any
affiliated group filing a consolidated federal income Tax Return (other than a
group the common parent of which is the Seller or the Company).
(b) As used in this Agreement: (i) the term "TAX" means all
federal, state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severance, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect thereto; (ii) the term "TAX RETURN" means all returns and reports
(including elections, declarations, disclosures, schedules, estimates,
information returns, and amended returns and reports) required to be supplied to
a Tax authority relating to Taxes; and (iii) the term "AUDIT" means any audit,
assessment of Taxes, reassessment of Taxes, or other examination by any
Governmental Authority or any judicial or administrative proceedings or appeal
of such proceedings.
Section 3.8 EMPLOYEE BENEFITS; ERISA.
(a) COMPANY PLANS. Section 3.8(a) of the Seller Disclosure
Schedule contains a true and complete list of each deferred compensation and
each bonus or other incentive compensation, stock purchase, stock option and
other equity compensation plan, program, agreement or arrangement; each
severance or termination pay, medical, surgical, hospitalization, life insurance
and other "welfare" plan, fund or program (within the meaning of Section 3(1) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")); each
profit-sharing, stock bonus or other "pension" plan, fund or program (within the
meaning of Section 3(2) of ERISA); each employment, termination,
change-of-control, or severance agreement; and each other employee benefit plan,
fund, program, agreement or arrangement, in each case, that is sponsored,
maintained or contributed to or required to be contributed to by the Company, a
Company Subsidiary, or by any trade or business, whether or not incorporated,
that together with the Company, or a Company Subsidiary, would be deemed a
"single employer" within the meaning of Section 414(b), (c), (m) or (o) of the
Code (an "ERISA AFFILIATE"), or to which the Company, a Company Subsidiary or an
ERISA Affiliate is a party in each case for the benefit of any current or former
employee, officer or director of the Company or a Company Subsidiary (the
"COMPANY PLANS").
11
(b) DELIVERIES. With respect to each Company Plan, the Seller has
heretofore delivered or made available to the Purchaser true and complete copies
of, as applicable, (i) the Company Plan and any amendments thereto; (ii) if the
Company Plan is funded through a trust or any third party funding vehicle, a
copy of the trust or other funding agreement; and (iii) the most recent
determination letter received from the Internal Revenue Service with respect to
each Company Plan intended to qualify under Section 401 of the Code, and the
most recent letter of recognition of exemption with respect to any Company Plan
or related trust that is intended to meet the requirements of Section 501(c)(9)
of the Code; (iv) the most recent summary plan description and subsequent
summaries of material modifications; (v) the most recently filed Form 5500; and
(vi) the most recently prepared actuarial valuation report.
(c) ABSENCE OF LIABILITY. No material liability under Title IV of
ERISA has arisen with respect to the Company, a Company Subsidiary or any ERISA
Affiliate that has not been satisfied in full and which would cause the Company
or any Company Subsidiary to incur any material liability, and, to the knowledge
of the Seller or the Company, no condition exists that presents a material risk
to the Company or any Company Subsidiary of incurring any such liability, other
than liability for premiums due the Pension Benefit Guaranty Corporation
("PBGC") (which premiums have been paid when due).
(d) FUNDING. No Company Plan subject to Title IV of ERISA (a
"TITLE IV COMPANY PLAN"), Section 302 of ERISA or Section 412 of the Code, or
any trust established thereunder and no other plan subject to Title IV of ERISA,
Section 302 of ERISA or Section 412 of the Code maintained or contributed to by
any ERISA Affiliate has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of such plan ended
prior to the Closing Date which deficiency could cause the Company or any
Company Subsidiary to incur any material liability. All contributions or
payments required to be made by the Company, any Company Subsidiary or any ERISA
Affiliate with respect to any Company Plan have been timely made. The aggregate
accumulated benefit obligations of each Title IV Company Plan (as of the most
recent actuarial valuation date) do not exceed the fair market value of the
assets of such plan (as of the date of such valuation).
(e) MULTIEMPLOYER PLAN. No Title IV Company Plan is a
"multiemployer plan," as defined in Section 4001(a)(3) of ERISA, nor is any
Title IV Company Plan a plan described in Section 4063(a) of ERISA.
(f) NO VIOLATIONS. Each Company Plan has been operated and
administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code. No
investigation, audit or dispute relating to any Company Plan is pending or, to
the knowledge of the Seller and the Company, threatened before any governmental
agency. None of the Seller, the Company, the Company Subsidiaries nor, to the
knowledge of the Seller or the Company, any other "disqualified person" (within
the meaning of Section 4975 of the Code) or "party in interest" (within the
meaning of Section 3(14) of ERISA) has taken or omitted to take any action with
respect to any Company Plan which would
12
subject any such plan (or its related trust), the Company or any Company
Subsidiary or any officer, director or employee of any of the foregoing to any
penalty or tax under Section 502(i) of ERISA or Section 4975 of the Code or
material liability for breach of fiduciary responsibility under ERISA. Neither
the Company nor any Company Subsidiary has agreed to indemnify any other party
for any liabilities or expenses which have been or may in the future be incurred
by or asserted against such person with respect to any Company Plan, which
indemnification would have a Company Material Adverse Effect.
(g) SECTION 401(A) QUALIFICATION; EXEMPTION. Each Company Plan
intended to be "qualified" within the meaning of Section 401(a) of the Code is
so qualified except where the failure to be so qualified would not have a
Company Material Adverse Effect and has received a determination letter from the
Internal Revenue Service to the effect that it is so qualified. To the knowledge
of the Seller and the Company, nothing has occurred since the issuance of such
letter which would affect such Company Plan's qualification. Each Company Plan
or related trust intended to meet the requirements of Section 501(c)(9) of the
Code meets such requirements and has received a letter of recognition of
exemption from the Internal Revenue Service to that effect. To the knowledge of
the Seller and the Company, nothing has occurred since the issuance of such
letter which could affect such Company Plan's or related trust's exemption under
Section 501(a) of the Code by reason of Section 501(c)(9) of the Code.
(h) POST-EMPLOYMENT BENEFITS. No Company Plan provides medical,
surgical, hospitalization, death or similar benefits (whether or not insured)
for employees or former employees of the Company or any Company Subsidiary for
periods extending beyond their respective dates of retirement or other
termination of service, other than (i) coverage mandated by applicable law, (ii)
death benefits under any "pension plan," or (iii) benefits the full cost of
which is borne by the current or former employee (or his beneficiary).
(i) DEDUCTIBILITY. No amounts payable under the Company Plans
will fail to be deductible for federal income tax purposes by virtue of Section
280G of the Code.
(j) EFFECT OF CHANGE OF CONTROL. The consummation of the
transactions contemplated by this Agreement will not, either alone or in
combination with another related event, (i) entitle any current or former
employee, officer or director of the Company to severance pay, unemployment
compensation or any other payment, except as expressly provided in this
Agreement, or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee, officer or director.
(k) CLAIMS. There are no pending or, to the knowledge of the
Seller or the Company, threatened claims by or on behalf of any Company Plan, by
any current or former employee, officer or director or beneficiary thereof
covered under any such Company Plan, or otherwise involving any such Company
Plan (other than routine claims for benefits), and neither the Seller nor the
Company has knowledge of facts which would form a reasonable basis for any such
claim.
13
Section 3.9 LABOR AND EMPLOYEE RELATIONS. Neither the Company nor the
Company Subsidiaries are party to any collective bargaining agreement or other
labor agreement with any union or labor organization. Except to the extent as
would not have a Company Material Adverse Effect, as of the date hereof, there
is no strike, lockout, slowdown or work stoppage pending or, to the knowledge of
the Seller or the Company, threatened against the Company or any of the Company
Subsidiaries.
Section 3.10 ENVIRONMENTAL PROTECTION.
(a) To the knowledge of the Seller or the Company, the Company
and each Company Subsidiary are in compliance with all applicable Environmental
Laws, including, but not limited to, possessing all permits and other
governmental authorizations required for their operations under applicable
Environmental Laws, except for such noncompliance that would not have a Company
Material Adverse Effect.
(i) To the knowledge of the Seller or the Company, there is
no pending or threatened written claim, lawsuit, or administrative
proceeding against the Company or any Company Subsidiary under or pursuant
to any Environmental Law that would have a Company Material Adverse Effect.
Neither the Company nor any Company Subsidiary is subject to any
administrative or judicial consent order or decree in connection with any
Environmental Laws or the release of Hazardous Substances that is having or
would have a Company Material Adverse Effect. Neither the Company nor any
Company Subsidiary has received written notice from any Person, including
but not limited to any Governmental Authority, alleging that the Company or
any Company Subsidiary is in violation or potentially in violation of any
applicable Environmental Law or otherwise may be liable under any
applicable Environmental Law, which violation or liability is unresolved
and which would have a Company Material Adverse Effect. As used in this
Agreement, the term "PERSON" shall mean any natural person, corporation,
general or limited partnership, limited liability company, joint venture,
trust, association or entity of any kind.
(ii) To the knowledge of the Seller or the Company, with
respect to the real property that was formerly or is currently owned or
leased by the Company or any Company Subsidiary, there have been no spills
or discharges of Hazardous Substances on or underneath any of such real
property that would result in a Company Material Adverse Effect.
(iii) Notwithstanding anything else to the contrary in this
Agreement, including, without limitation, Sections 3.10(a)(i) and (ii) of
this Agreement, the Seller expressly makes no representation and warranty
with respect to compliance by the Company and the Company Subsidiaries with
Environmental Laws relating to the construction of new, or modification of
existing, sources of air emissions, except that, the Company and the
Company
14
Subsidiaries are not subject to any judicial or administrative proceeding
or the subject of any state or Federal information request relating to the
construction of new, or modification of existing, sources of air emissions,
other than such proceedings or information requests as would not have a
Company Material Adverse Effect.
(b) For purposes of this Agreement:
(i) "ENVIRONMENTAL LAWS" shall mean all foreign, federal,
state and local laws, regulations, rules and ordinances relating to
pollution or protection of the environment, including, without limitation,
laws relating to releases or threatened releases of Hazardous Substances
into the environment (including, without limitation, ambient air, surface
water, groundwater, land, surface and subsurface strata). Such laws include
the common law to the extent that it relates to injuries caused by the
release or presence of Hazardous Substances.
(ii) "HAZARDOUS SUBSTANCES" shall mean any chemicals,
materials or substances defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials",
"hazardous constituents", "restricted hazardous materials", "extremely
hazardous substances", "toxic substances", "contaminants", "pollutants",
"toxic pollutants", or words of similar meaning and regulatory effect under
any applicable Environmental Law including, without limitation, petroleum
and asbestos.
(c) The representations and warranties set forth in this Section
3.10 are the sole and exclusive representations and warranties relating to
environmental matters made by the Seller in this Agreement.
Section 3.11 REGULATION AS A UTILITY. CILCO is regulated as a public
utility by the FERC and in the State of Illinois and in no other state. Except
as set forth in the preceding sentence, as of the date hereof, neither the
Company nor any "subsidiary company" or "affiliate" (as each such term is
defined in PUHCA) of the Company (other than CILCO and Central Illinois
Generation, Inc.) is subject to regulation as a public utility or public service
company (or similar designation) by the FERC or any municipality, locality or
state in the United States or any foreign country.
Section 3.12 INSURANCE. Each of the Company and the Company
Subsidiaries is insured and has been continuously insured since January 1, 1997
with financially responsible or nationally recognized insurers in such amounts
and against such types of risks as is customary and appropriate in its industry
or otherwise deemed reasonable by the Seller. The Seller has not received any
written notice of cancellation or termination with respect to any insurance
policy of the Company or the Company Subsidiaries except as would not have a
Company Material Adverse Effect.
15
Section 3.13 REAL PROPERTY. Except as would not have a Company
Material Adverse Effect: (a) the Company or a Company Subsidiary has good and
valid title to, or a valid leasehold interest in, all of the real property used
by the Company or the Company Subsidiaries or otherwise reflected in the Company
SEC Reports or financial statements (collectively, the "COMPANY PROPERTIES"), in
each case free and clear of any Encumbrances and (b) the Company Properties
(taking into account, without limitation, all Encumbrances related thereto, all
zoning and other restrictions applicable thereto and the condition thereof) are
suitable and adequate for the conduct of the businesses of the Company and the
Company Subsidiaries as currently conducted.
Section 3.14 AFFILIATE CONTRACTS. Section 3.14 of the Seller
Disclosure Schedule contains a true and complete list of each agreement or
contract as of the date hereof between (i) the Company and its Subsidiaries, on
one hand, and (ii) the Seller and any affiliate thereof (other than the Company
and its Subsidiaries) on the other (collectively, the "AFFILIATE CONTRACTS").
Section 3.15 BROKERS OR FINDERS. Neither the Seller nor the Company
has entered into any agreement or arrangement entitling any agent, broker,
investment banker, financial advisor or other firm or Person to any broker's or
finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, except Xxxxxx Brothers Inc.,
whose fees and expenses will be paid by the Seller in accordance with the
Seller's agreements with such firm.
Section 3.16 CONTRACTS.
(a) Section 3.16(a) of the Seller Disclosure Schedule contains a
complete and correct list of all contracts relating to the business of the
Company and the Company Subsidiaries as of the date hereof which (i) have a term
in excess of one year and (ii) provide for aggregate consideration in an amount
in excess of $10 million (the "MATERIAL CONTRACTS"). There are no defaults under
any Material Contracts which have or would have a Company Material Adverse
Effect. As of the date hereof, the Seller has not received any written notice of
cancellation relating to a Material Contract and has no knowledge of facts that
a Material Contract is likely to be cancelled, except for such cancellations
which would not have a Company Material Adverse Effect. The Seller has provided
or made available to the Purchaser true, correct and complete copies by their
terms of all Material Contracts, including all amendments thereto except for
such contracts that by their terms prohibit disclosure to third parties. The
Seller shall cause CILCO to arrange and maintain an adequate supply for meeting
CILCO's native electric load and off-system retail sales load.
(b) Each Material Contract is a valid and binding agreement and
is in full force and effect except to the extent such contract has expired by
its own terms without penalty, and enforceable by the Company or any of the
Company Subsidiaries in accordance with its terms, and none of the Company and
the Company Subsidiaries or, to the knowledge of the Seller or the Company, any
other party thereto is in default or breach under the terms of any such
contracts and, to the knowledge of the Seller or the Company, no event or
circumstance has
16
occurred that, with notice or lapse of time or both, would constitute any event
of default thereunder, other than in each case defaults or breaches that would
not have a Company Material Adverse Effect.
Section 3.17 REGULATORY PROCEEDINGS. Neither the Company nor any of
the Company Subsidiaries all or part of whose rates or services are regulated by
a Governmental Authority (a) has rates that have been or are being collected
subject to refund (other than purchase gas adjustment provisions, fuel
adjustment clauses and purchase fuel adjustment provisions), pending final
resolution of any rate proceeding pending before a Governmental Authority or on
appeal to the courts, or (b) is a party to any rate proceeding before a
Governmental Authority that in each case would result in orders having a Company
Material Adverse Effect.
Section 3.18 LIMITATION ON REPRESENTATIONS AND WARRANTIES. Except for
the representations and warranties contained in this Article III, neither the
Seller nor any other Person or entity acting on behalf of the Seller makes any
representation or warranty, express or implied, concerning the Shares or the
business, finances, operations, assets, liabilities, prospects or any other
aspect of the Company and the Company Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller that except as set
forth in the reports, schedules, registration statements and definitive proxy
statements and all amendments thereto filed publicly not earlier than January 1,
2001 and not later than the close of business on the day prior to the date of
this Agreement with the SEC by the Purchaser or any Purchaser Subsidiary (or
their predecessors) pursuant to the requirements of the Securities Act or the
Exchange Act (as such documents have since the time of their filing been amended
publicly not earlier than January 1, 2001 and not later than the close of
business on the day prior to the date of this Agreement, the "PURCHASER SEC
REPORTS") or in the schedule delivered by the Purchaser on the date hereof (the
"PURCHASER DISCLOSURE SCHEDULE"):
Section 4.1 ORGANIZATION AND QUALIFICATION. The Purchaser and each of
the Purchaser Subsidiaries (as defined below) is a corporation or other entity
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has all requisite power and
authority to own, lease and operate its assets and properties to the extent
owned, leased and operated and to carry on its business as it is now being
conducted and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its assets and properties makes such qualification necessary other than in such
jurisdictions where the failure to be so qualified or in good standing would not
have a Purchaser Material Adverse Effect (as defined below) or prevent,
materially delay or materially impair the Purchaser's ability to consummate the
transactions contemplated by this Agreement. As used in this Agreement, the term
"PURCHASER MATERIAL ADVERSE EFFECT" shall mean any material adverse effect on
the business, assets, financial condition or results of
17
operations of the Purchaser and the Purchaser Subsidiaries, taken as a whole;
provided, however, that the term "Purchaser Material Adverse Effect" shall not
include effects that result from or are consequences of (i) any such effect
resulting from any change in law, rule, or regulation of any Governmental
Authority (as defined in Section 3.3(c)) that applies generally to similarly
situated Persons (as defined in Section 3.10(a)(ii)), (ii) changes or
developments in international, national, regional, state or local wholesale or
retail markets for electric power or fuel or related products, including those
due to actions by competitors, (iii) changes or developments in national,
regional, state or local electric transmission or distribution systems, (iv)
changes or developments in financial or securities markets or the economy in
general or effects of weather or meteorological events, (v) events or changes
that are consequences of terrorist activity, acts of war or acts of public
enemies (other than any such event or consequence affecting only the Purchaser
or a Purchaser Subsidiary) or (vi) the negotiation, announcement, execution,
delivery, consummation or anticipation of the transactions contemplated by, or
in compliance with, this Agreement. The term "PURCHASER SUBSIDIARY" shall mean a
Subsidiary of the Purchaser.
Section 4.2 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.
(a) AUTHORITY. The Purchaser has all requisite corporate power
and authority to enter into this Agreement and, subject to the receipt of the
applicable Purchaser Required Statutory Approvals (as defined in Section
4.2(c)), to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation by the Purchaser of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Purchaser. No vote of, or consent by, the
holders of any class or series of stock issued by the Purchaser is necessary to
authorize the execution and delivery by the Purchaser of this Agreement or the
consummation by it of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Purchaser and, assuming the due
authorization, execution and delivery hereof by the Seller, constitutes the
valid and binding obligation of the Purchaser enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
(b) NON-CONTRAVENTION. The execution and delivery of this
Agreement by the Purchaser does not, and the consummation of the transactions
contemplated hereby will not, result in a Violation pursuant to any provisions
of (i) the certificate of incorporation, by-laws or similar governing documents
of the Purchaser or any of the Purchaser Subsidiaries, (ii) subject to obtaining
the Purchaser Required Statutory Approvals, any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
Governmental Authority applicable to the Purchaser or any of the Purchaser
Subsidiaries or any of their respective properties or assets, or (iii) subject
to obtaining the third-party consents set forth in Section 4.2(b)(iii) of the
Purchaser Disclosure Schedule (the "PURCHASER REQUIRED CONSENTS"), any material
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which the Purchaser or any of the Purchaser Subsidiaries is a party or
by which they or any of their
18
respective properties or assets may be bound or affected, except in the case of
clause (ii) or (iii) for any such Violation which would not prevent, materially
delay or materially impair the Purchaser's ability to consummate the
transactions contemplated by this Agreement.
(c) STATUTORY APPROVALS. Except for (i) the filings by the
Seller, the Company and/or the Purchaser, as applicable, required under the HSR
Act (as defined below), (ii) the applicable requirements of the Exchange Act and
the rules and regulations promulgated thereunder, and (iii) any filings with or
approvals from (v) the FERC, (w) the SEC under PUHCA, (x) the ICC, (y) the FCC
and (z) the other Governmental Authorities set forth on Section 4.2(c) of the
Purchaser Disclosure Schedule (the filings and approvals referred to in clauses
(i) through (iii) collectively referred to as the "PURCHASER REQUIRED STATUTORY
APPROVALS"), no declaration, filing or registration with, or notice to or
authorization, consent or approval of, any Governmental Authority is necessary
for the execution and delivery of this Agreement by the Purchaser or the
consummation by the Purchaser of the transactions contemplated hereby, except
those which the failure to obtain would not prevent, materially delay or
materially impair the Purchaser's ability to consummate the transactions
contemplated by this Agreement (it being understood that references in this
Agreement to "obtaining" such Purchaser Required Statutory Approvals shall mean
making such declarations, filings or registrations; giving such notices;
obtaining such authorizations, consents or approvals; and having such waiting
periods expire as are necessary to avoid a violation of law).
(d) COMPLIANCE. Neither the Purchaser nor any of the Purchaser
Subsidiaries is under investigation with respect to any violation of, or has
been given notice of or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance or judgment of any Governmental Authority,
except for possible violations which would not prevent, materially delay or
materially impair the Purchaser's ability to consummate the transactions
contemplated by this Agreement. The Purchaser and the Purchaser Subsidiaries
have all permits, licenses, franchises and other governmental authorizations,
consents and approvals necessary to conduct their businesses as presently
conducted except those that the absence of which would not prevent, materially
delay or materially impair the Purchaser's ability to consummate the
transactions contemplated by this Agreement. Neither the Purchaser nor any of
the Purchaser Subsidiaries is in breach or violation of or in default in the
performance or observance of any term or provision of, and no event has occurred
which, with lapse of time or action by a third party, could result in a default
by the Purchaser or any Purchaser Subsidiary under (i) their respective
certificates of incorporation or by-laws or (ii) any contract, commitment,
agreement, indenture, mortgage, loan agreement, note, lease, bond, license,
approval or other instrument to which they are a party or by which the Purchaser
or any Purchaser Subsidiary is bound or to which any of their property is
subject, except for possible violations, breaches or defaults which would not
prevent, materially delay or materially impair the Purchaser's ability to
consummate the transactions contemplated by this Agreement.
Section 4.3 PURCHASER SEC REPORTS; FINANCIAL STATEMENTS. The filings
required to be made by the Purchaser under the Securities Act and the Exchange
Act have been filed with the SEC and complied, as of their respective dates, in
all material respects with all applicable
19
requirements of the appropriate statutes and the rules and regulations
thereunder. As of their respective dates, none of the Purchaser SEC Reports
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim financial
statements of the Purchaser included in the Purchaser SEC Reports have been
prepared in accordance with GAAP applied on a consistent basis during the period
involved (except as may be stated in the notes thereto) and fairly present the
consolidated financial position and the consolidated results of operations and
cash flows (and changes in financial position, if any) of the Purchaser as of
the time and for the period referred to therein, subject, in the case of
unaudited interim financial statements, to normal, recurring audit adjustments.
Section 4.4 LITIGATION. There are no claims, suits, actions or
proceedings by any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator, pending or, to the knowledge of
the Purchaser, threatened against, relating to or affecting the Purchaser or any
Purchaser Subsidiaries which would prevent, materially delay or materially
impair the Purchaser's ability to consummate the transactions contemplated by
this Agreement. There are no judgments, decrees, injunctions, rules or orders of
any court, governmental department, commission, agency, instrumentality or
authority or any arbitrator applicable to the Purchaser or any Purchaser
Subsidiaries except for such that would not prevent, materially delay or
materially impair the Purchaser's ability to consummate the transactions
contemplated by this Agreement.
Section 4.5 INVESTIGATION BY THE PURCHASER; THE SELLER'S LIABILITY.
The Purchaser has conducted its own independent investigation, review and
analysis of the business, operations, assets, liabilities, results of
operations, financial condition, software, technology and prospects of the
Company and the Company Subsidiaries, which investigation, review and analysis
was done by the Purchaser and its affiliates and, to the extent the Purchaser
deemed appropriate, by the Purchaser's representatives. The Purchaser
acknowledges that it and its representatives have been provided adequate access
to the personnel, properties, premises and records of the Company and the
Company Subsidiaries for such purpose. In entering into this Agreement, the
Purchaser acknowledges that it has relied solely upon the aforementioned
investigation, review and analysis and not on any factual representations of the
Seller or its representatives (except the specific representations and
warranties of the Seller set forth in Article III of this Agreement), and the
Purchaser:
(a) acknowledges that none of the Seller or any of its directors,
officers, shareholders, employees, affiliates, controlling Persons, agents,
advisors or representatives makes or has made any representation or warranty,
either express or implied, as to the accuracy or completeness of any of the
information (including materials furnished in the Company's data room,
presentations by the Company's management, financial projections or otherwise)
provided or made available to the Purchaser or its directors, officers,
employees, affiliates, controlling Persons, agents or representatives, and
20
(b) agrees, to the fullest extent permitted by law, that none of
the Seller, the Company, the Company Subsidiaries or any of their respective
directors, officers, employees, shareholders, affiliates, controlling Persons,
agents, advisors or representatives shall have any liability or responsibility
whatsoever to the Purchaser or its directors, officers, employees, affiliates,
controlling Persons, agents or representatives on any basis (including in
contract or tort, under federal or state securities laws or otherwise) based
upon any information provided or made available, or statements made (including
materials furnished in the Company's data room, presentations by the Company's
management, financial projections or otherwise) to the Purchaser or its
directors, officers, employees, affiliates, controlling Persons, advisors,
agents or representatives (or any omissions therefrom), including in respect of
the specific representations and warranties of the Seller set forth in this
Agreement, except that the foregoing limitations shall not apply to the Seller
insofar as the Seller makes the specific representations and warranties set
forth in Article III of this Agreement, but always subject to the limitations
and restrictions contained in Article IX.
Section 4.6 ACQUISITION OF SHARES FOR INVESTMENT; ABILITY TO EVALUATE
AND BEAR RISK.
(a) The Purchaser is an "accredited investor" as such term is
defined in Regulation D promulgated under the Securities Act. The Purchaser is
acquiring the Shares for investment and not with a view toward, or for sale in
connection with, any distribution thereof, nor with any present intention of
distributing or selling the Shares. The Purchaser agrees that the Shares may not
be sold, transferred, offered for sale, pledged, hypothecated or otherwise
disposed of without registration under the Securities Act and any applicable
state securities laws, except pursuant to an exemption from such registration
under such Act and such laws.
(b) The Purchaser is able to bear the economic risk of holding
the Shares for an indefinite period, and has knowledge and experience in
financial and business matters such that it is capable of evaluating the risks
of the investment in the Shares.
(c) The Purchaser acknowledges that the By-Laws of the Company
contain certain provisions relating to the separateness of the Company from its
parent company, including, without limitation, certain provisions in Articles
III and VII thereof.
Section 4.7 FINANCING. The Purchaser will have as of the Closing
sufficient cash in immediately available funds to pay the Estimated Purchase
Price pursuant to Article I hereof and to consummate the transactions
contemplated hereby.
Section 4.8 BROKERS OR FINDERS. The Purchaser has not entered into any
agreement or arrangement entitling any agent, broker, investment banker,
financial advisor or other firm or Person to any broker's or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except Xxxxxxx, Xxxxx & Co., whose fees and
expenses will be paid by the Purchaser in accordance with the Purchaser's
agreement with such firm.
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ARTICLE V
CONDUCT OF BUSINESS PENDING THE CLOSING
Section 5.1 COVENANTS OF THE SELLER. After the date hereof and prior
to the Closing or earlier termination of this Agreement, the Seller agrees that,
except as set forth in Section 5.1 of the Seller Disclosure Schedule and except
(i) as contemplated in or permitted by this Agreement, (ii) as provided for in
the annual budgets or capital budgets (copies of which, in their current form,
have been made available to the Purchaser and included in the Seller Disclosure
Schedules) for the Company and each Company Subsidiary, (iii) in connection with
necessary repairs due to breakdown or casualty, or other actions taken in
response to a business emergency or other unforeseen operational matters, (iv)
as required by law, rule or regulation, or (v) to the extent the Purchaser shall
otherwise consent, which decision regarding consent shall be made promptly and
which consent shall not be unreasonably withheld, conditioned or delayed:
(a) the business of the Company and each Company Subsidiary shall
be conducted in the ordinary and usual course in substantially the same manner
as heretofore conducted and, to the extent consistent therewith, the Company and
each Company Subsidiary shall use its respective commercially reasonable efforts
to preserve its business organization intact and maintain its existing relations
and goodwill with customers, suppliers, creditors, lessors and business
associates;
(b) the Company shall not, nor shall the Company permit any of
the Company Subsidiaries to, (i) amend their articles of incorporation or
by-laws other than amendments which are ministerial in nature or otherwise
immaterial; (ii) split, combine or reclassify their outstanding shares of
capital stock; (iii) declare, set aside or pay any dividend payable in cash,
stock or property in respect of any capital stock other than (A) dividends paid
to the Company or its wholly-owned Subsidiaries, (B) dividends required to be
paid on any CILCO Preferred Stock, CILCO Class A Preferred Stock or CILCO
Preference Stock in accordance with the terms thereof, or (C) dividends in
respect of earnings of the Company for the period between December 31, 2001 and
the Closing Date to the extent permitted by applicable loan agreements and
indentures of the Company; or (iv) repurchase, redeem or otherwise acquire any
shares of its capital stock or any securities convertible into or exchangeable
or exercisable for any shares of its capital stock, other than redemptions,
purchases or acquisitions required by the respective terms of any series of
CILCO Preferred Stock or CILCO Class A Preferred Stock;
(c) neither the Company nor any Company Subsidiary shall issue,
sell, or dispose of any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of its capital stock of any class or
any other property or assets;
(d) neither the Company nor any Company Subsidiary shall incur
any indebtedness except for indebtedness that is incurred in the ordinary and
usual course of business and complies with the restrictions of Section 5.1(d) of
the Seller Disclosure Schedule;
22
(e) the Company shall not make in the aggregate more than 110% of
its capital expenditures budgeted for the year 2002 and the year 2003 in
accordance with and at the approximate times as provided in the capital
expenditures budgets for those years provided in Section 5.1(e) of the Seller
Disclosure Schedule and shall use best efforts to meet the milestones related to
the selective catalytic reduction technology at the times and in the manner set
forth in Section 5.1(e) of the Seller Disclosure Schedule; (i) to the extent
that the Company does not make expenditures up to the amounts and by the dates
set forth in Section 5.1(e) of the Seller Disclosure Schedule, the difference
shall be referred to as the "CAPEX ADJUSTMENT AMOUNT" for purposes of this
Agreement and shall result in reduction in Purchase Price for purposes of
Section 1.2(a); and (ii) to the extent the Company, with the consent of the
Purchaser, accelerates the scheduled capital expenditures related to selective
catalytic reduction technology or incurs capital expenditures related to plant
outages that were unforeseen and such expenditures are considered by the
Purchaser to be advisable or appropriate, the CapEx Adjustment Amount shall be
reduced by such accelerated amount and shall result in an increase in Purchase
Price for purposes of Section 1.2(a);
(f) neither the Company nor any Company Subsidiary shall make any
acquisition of, or investment in, assets or stock of any other Person or entity,
other than in the ordinary and usual course of business and not to exceed
singularly or in the aggregate $10 million in any calendar year and no
acquisition or investment shall be of any public utility company (as defined in
PUHCA) or in a business or any interest in a business which would not be
retainable by the Purchaser under PUHCA following the Closing;
(g) neither the Company nor any Company Subsidiary shall sell,
lease, license, encumber or otherwise dispose of any of its assets, other than
in the ordinary and usual course of business, and in an amount not to exceed
singularly or in the aggregate $10 million in any calendar year;
(h) neither the Company nor any Company Subsidiary shall
terminate, establish, adopt, enter into, make any new grants or awards of
stock-based compensation or other benefits under, amend or otherwise materially
modify any Company Plan or increase the salary, wage, bonus or other
compensation of any directors, officers or employees except (i) for grants or
awards to directors, officers and employees under existing Company Plans in such
amounts and on such terms as are consistent with past practice, (ii) in the
normal and usual course of business (which shall include normal periodic
performance reviews and related plans and the provision of individual Company
Plans consistent with past practice for newly hired, appointed or promoted
officers and employees), or (iii) for actions necessary to satisfy existing
contractual obligations under Company Plans existing as of the date hereof or to
comply with applicable law;
(i) the Company and each Company Subsidiary shall maintain
insurance with financially responsible or nationally recognized insurers in such
amounts and against such risks and losses as are consistent with the insurance
maintained by the Company and each Company Subsidiary, respectively, in the
ordinary and usual course of business;
23
(j) the Company shall not, nor shall it permit any of the Company
Subsidiaries to, change any material financial or Tax accounting method,
policies, practices or election, except as required by GAAP or SEC accounting
regulations or guidelines or applicable law;
(k) the Seller and the Company shall promptly provide the
Purchaser with copies of all filings made by the Seller, the Company or any
Company Subsidiary with, and inform the Purchaser of any communications received
from, any state or federal court, administrative agency, commission or other
Governmental Authority in connection with this Agreement and the transactions
contemplated hereby;
(l) the Seller, the Company and each Company Subsidiary shall use
their respective best efforts to promptly obtain all of the Seller Required
Consents and the Seller Required Statutory Approvals. The Seller shall promptly
notify the Purchaser of any failure or prospective failure to obtain any such
consents or approvals and, if requested by the Purchaser, shall provide copies
of all of the Seller Required Consents and the Seller Required Statutory
Approvals obtained by the Seller, the Company and each Company Subsidiary to the
Purchaser;
(m) the Company shall not, nor shall it permit any of the Company
Subsidiaries to, enter into any material agreement or arrangement with any other
person that, directly or indirectly, controls or is under common control with or
is controlled by the Seller, or any of its respective subsidiaries on terms to
the Company or the Company Subsidiaries materially less favorable than could be
reasonably expected to have been obtained with an unaffiliated third party on an
arm's-length basis;
(n) the Company shall not, nor shall it permit any Company
Subsidiary to, take any action that would likely jeopardize the exclusion from
gross income, for purposes of federal income taxation, of the interest on the
outstanding revenue bonds issued for the benefit of the Company or any Company
Subsidiary, which qualify on the date hereof under Code Section 142(a) as
"exempt facility bonds" or as tax-exempt industrial development bonds under
Section 103(b)(4) of the Code;
(o) the Company shall, and shall cause the Company Subsidiaries
to, use commercially reasonable efforts to maintain in effect or renew all
existing material governmental franchises or Permits pursuant to which the
Company or any of the Company Subsidiaries operate;
(p) the Company shall, or shall cause CILCO to, provide the
Purchaser with information reasonably requested by the Purchaser from time to
time regarding the contracts entered into, progress of work on, material
problems encountered with, projected completion date of, expected operational
levels of, or any other relevant information requested, with respect to the
installation and operation of the selective catalytic reduction technology
described in Section 5.1(e) of the Seller's Disclosure Schedule;
24
(q) the Company shall not, nor shall it permit any Company
Subsidiary to, (i) engage in any sale, transfer, trading, sale of options, calls
or other derivatives, or disposition of emission allowances for sulfur dioxide
or nitrogen oxide which has the result of reducing available emission allowances
of the Company and the Company Subsidiaries, except as required by law, (ii)
enter into or commit to any new or material amendment to any fuel supply
contract except for those spot and short-term coal purchases made in the
ordinary course of business which are less than six (6) months in term or (iii)
enter into any new or material amendment to any power purchase or gas supply
transactions with a term greater than six months;
(r) the Seller shall not, nor shall it permit any Subsidiary of
the Seller to, directly or indirectly, solicit for employment by such persons
any of the current officers, managers or employees of the Company or any Company
Subsidiary except for those persons specified on Section 5.1(r) of the Seller
Disclosure Schedule; provided that the Seller and the Subsidiaries of the Seller
shall not be prohibited from employing any such person who contacts the Seller
or any Subsidiary of the Seller on his or her own initiative or who responds to
a general solicitation through the use of media advertisements, the Internet or
professional search firms;
(s) the Company shall not, nor shall it permit any Company
Subsidiary to, enter into any agreement with any party involving power line
carrier or other communications technology involving CILCO's utility assets.
Section 5.2 NO SOLICITATION AND CONFIDENTIALITY.
(a) From the date hereof through the Closing, none of the parties
nor their representatives (including, without limitation, investment bankers,
attorneys and accountants) shall, directly or indirectly, enter into, solicit,
initiate or continue any discussions or negotiations with, or encourage or
respond to any inquiries or proposals by, or participate in any negotiations
with, or provide any information to, or otherwise cooperate in any other way
with, any person or other entity or group, concerning any sale of all or a
portion of the Company, or of any shares of capital stock of the Company or any
Company Subsidiary or any merger, consolidation, liquidation, dissolution or
similar transaction involving the Company or any Company Subsidiary (each such
transaction being referred to herein as a "Proposed Acquisition Transaction")
other than with (i) the Purchaser and its representatives, or (ii) as required
by law. Neither the Seller nor the Company shall, directly or indirectly,
through any officer, director, employee, representative, agent or otherwise,
solicit, initiate or encourage the submission of any proposal or offer from any
person (including, without limitation, a "person" as defined in Section 13(d)(3)
of the Exchange Act) or entity relating to any Proposed Acquisition Transaction.
The Seller and the Company represent that they are not now engaged in
discussions or negotiations with any party other than the Purchaser with respect
to any of the foregoing.
(b) NOTIFICATION. The Seller and the Company shall promptly
notify the Purchaser if any discussions or negotiations are sought to be
initiated, any inquiry or proposal is
25
made, or any information is requested with respect to any Proposed Acquisition
Transaction and notify the Purchaser of the identity of the prospective
purchaser or soliciting party and any other information relating to such inquiry
or proposal known to the Seller, the Company or any Company Subsidiary.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 ACCESS TO COMPANY INFORMATION. Upon reasonable notice, the
Seller shall, and shall cause the Company and each Company Subsidiary to, afford
to the officers, directors, employees, accountants, counsel, investment bankers,
financial advisors and other representatives (collectively, "REPRESENTATIVES")
of the Purchaser reasonable access, during normal business hours throughout the
period prior to the Closing Date, to all of the Company's and the Company
Subsidiaries' properties, books, contracts, commitments and records and, during
such period, the Seller shall, and shall cause the Company and each Company
Subsidiary to, furnish promptly to the Purchaser and its Representatives, (i)
access to each report, schedule and other document filed or received by the
Company, each Company Subsidiary pursuant to the requirements of federal or
state securities laws or filed with or sent to any federal or state regulatory
agency or commission and (ii) access to all information concerning the Company,
each Company Subsidiary and its respective directors and officers and such other
matters as may be reasonably requested by the Purchaser or its Representatives
in connection with any filings, applications or approvals required or
contemplated by this Agreement or for any other reason related to the
transactions contemplated by this Agreement. The Purchaser agrees to indemnify
and hold the Seller, the Company and the Company Subsidiaries harmless from any
and all claims and liabilities, including costs and expenses for loss, injury to
or death of any Representative of the Purchaser, and any loss, damage to or
destruction of any property owned by the Seller, the Company or the Company
Subsidiaries or others (including claims or liabilities for loss of use of any
property) resulting directly or indirectly from the action or inaction of any of
the Representatives of the Purchaser during any visit to the business or
property sites of the Company or the Company Subsidiaries prior to the Closing
Date, whether pursuant to this Section 6.1 or otherwise. None of the Purchaser
nor any of its Representatives shall conduct any environmental testing or
sampling on any of the business or property sites of the Company or the Company
Subsidiaries prior to the Closing Date. Each party shall, and shall cause its
Subsidiaries and Representatives to, hold in strict confidence all documents and
information concerning the other furnished to it in connection with the
transactions contemplated by this Agreement in accordance with the
Confidentiality Agreement, dated November 15, 2001, as amended, entered into by
and between the Seller and the Purchaser (the "CONFIDENTIALITY AGREEMENT").
Section 6.2 REGULATORY MATTERS.
(a) HSR FILINGS. Each party hereto shall, as soon as practicable
as mutually agreed by the parties, file or cause to be filed with the Federal
Trade Commission and the Department of Justice any notifications required to be
filed under the Xxxx-Xxxxx-Xxxxxx
26
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), and the rules
and regulations promulgated thereunder with respect to the transactions
contemplated hereby. Such parties shall use all best efforts to respond on a
timely basis to any requests for additional information made by either of such
agencies.
(b) OTHER REGULATORY APPROVALS. Each party hereto shall cooperate
and use best efforts to prepare and file as soon as practicable all necessary
documentation, to effect all necessary applications, notices, petitions, filings
and other documents, and to use best efforts to obtain all necessary permits,
consents, approvals and authorizations of all Governmental Authorities necessary
or advisable to obtain the Seller Required Statutory Approvals and the Purchaser
Required Statutory Approvals. The parties further agree to use best efforts (i)
to take any act, make any undertaking or receive any clearance or approval
required by any Governmental Authority or applicable law and (ii) to satisfy any
conditions imposed by any Governmental Authority in all Final Orders (as defined
in and for purposes of Section 7.1(b)). Each of the parties shall (i) respond as
promptly as practicable to any inquiries or requests received from any
Governmental Authority for additional information or documentation, and (ii) not
enter into any agreement with any Governmental Authority not to consummate the
transactions contemplated by this Agreement, except with the prior consent of
the other party hereto (which shall not be unreasonably withheld or delayed).
Each of the parties shall make best efforts to avoid or eliminate each and every
impediment under any antitrust, competition, or trade or energy regulation law
(including the Federal Power Act, as amended, and the FERC's regulations
thereunder) that may be asserted by any Governmental Authority with respect to
the transactions contemplated hereby so as to enable the Closing Date to occur
as soon as reasonably possible. The steps involved in the preceding sentence
shall include proposing, negotiating, committing to and effecting, by consent
decree, hold separate order or otherwise, the sale, divestiture or disposition
of such assets or businesses of the Purchaser or its affiliates (including their
respective Subsidiaries) or agreeing to such limitations on its or their conduct
or actions as may be required in order to obtain the Seller Required Statutory
Approvals and the Purchaser Required Statutory Approvals as soon as reasonably
possible, to avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order in any suit or
proceeding, which would otherwise have the effect of preventing or delaying the
Closing Date, and defending through litigation on the merits, including appeals,
any claim asserted in any court by any party.
(c) EXCEPTION. Notwithstanding anything to the contrary in
Section 6.2, neither party shall be required to take any actions that would have
a Company Material Adverse Effect or a Purchaser Material Adverse Effect, and,
further, any terms or conditions imposed by the FERC, the Federal Trade
Commission or the Antitrust Division of the United States Department of Justice
relating to market power, including but not limited to, divestiture of
generation or transmission improvements, shall not constitute a Company Material
Adverse Effect or a Purchaser Material Adverse Effect.
(d) RESPONSIBILITIES. The Seller and the Purchaser agree that (i)
the Purchaser shall have primary responsibility for the preparation and filing
of any applications
27
with or notifications to the FERC, the FTC and/or the DOJ and the SEC under
PUHCA and (ii) the Seller and the Purchaser shall have joint responsibility for
the preparation and filing of any applications with or notifications to the ICC.
Each party shall have the right to review and approve in advance drafts of all
such necessary applications, notices, petitions, filings and other documents
made or prepared in connection with the transactions contemplated by this
Agreement, which approval shall not be unreasonably withheld or delayed.
Section 6.3 CONSENTS. The Seller and the Purchaser agree to use
reasonable best efforts to obtain the Seller Required Consents and the Purchaser
Required Consents, respectively, and to cooperate with each other in connection
with the foregoing.
Section 6.4 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) INDEMNIFICATION. From and after the Closing Date, the
Purchaser shall cause the Company, to the fullest extent permitted under
applicable law, to indemnify and hold harmless (and advance funds in respect of
each of the foregoing) each present and former employee, agent, director or
officer of the Company and the Company Subsidiaries (each, together with such
person's heirs, executors or administrators, an "INDEMNIFIED PARTY" and
collectively, the "INDEMNIFIED PARTIES") against any costs or expenses
(including advancing attorneys' fees and expenses in advance of the final
disposition of any claim, suit, proceeding or investigation to each Indemnified
Party to the fullest extent permitted by law), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
actual or threatened claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative (an "ACTION"), arising out of,
relating to or in connection with any action or omission by such Indemnified
Party in his or her capacity as an employee, agent, director or officer
occurring or alleged to have occurred whether before or after the Closing Date
(including acts or omissions in connection with such person's service as an
officer, director or other fiduciary in any entity if such service was at the
request or for the benefit of the Company or any of the Company Subsidiaries) or
this Agreement or the transactions contemplated hereby. In the event of any such
Action, the Purchaser shall cooperate with the Indemnified Party in the defense
of any such Action.
(b) SURVIVAL OF INDEMNIFICATION. To the fullest extent not
prohibited by law, from and after the Closing Date, all rights to
indemnification now existing in favor of the Company Indemnified Parties with
respect to their activities as such prior to or on the Closing Date, as provided
in the Company's and each Company Subsidiary's respective articles of
incorporation, by-laws, other organizational documents or indemnification
agreements in effect on the date of such activities or otherwise in effect on
the date hereof, shall survive the Closing and shall continue in full force and
effect for a period of not less than six years from the Closing Date, PROVIDED
that, in the event any claim or claims are asserted or made within such six-year
period, all such rights to indemnification in respect of any claim or claims
shall continue until final disposition of such claim or claims.
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(c) INSURANCE. For a period of six years after the Closing Date,
the Purchaser shall or the Purchaser shall cause the Company to maintain in
effect policies of directors' and officers' liability insurance equivalent to
those maintained by the Seller on behalf of the Company prior to the Closing
Date for the benefit of those persons who are currently covered by such policies
on terms no less favorable than the terms of such current insurance coverage;
provided, however, that the Purchaser will not be required to expend in any year
an amount in excess of 200% of the annual aggregate premiums currently paid by
the Seller or the Company, as the case may be, for such insurance; provided,
further, that if the annual premiums of such insurance coverage exceed such
amount, the Purchaser shall cause the Company to obtain a policy with the best
coverage available, in the reasonable judgment of the board of directors of the
Purchaser for a cost not exceeding such amount.
(d) SUCCESSORS. In the event that, after the Closing Date, the
Company or the Purchaser or any of their respective successors or assigns (i)
consolidates with or merges into any other Person or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or a substantial portion of its properties and assets to any
Person or entity, then and in either such case, proper provisions shall be made
so that the successors and assigns of the Company or the Purchaser, as the case
may be, shall assume the obligations set forth in this Section 6.4.
(e) BENEFIT. The provisions of this Section 6.4 are intended to
be for the benefit of, and shall be enforceable by, each Company Indemnified
Party, his or her heirs, executors or administrators and his or her other
representatives.
Section 6.5 PUBLIC ANNOUNCEMENTS. Except as may be required by law or
by obligations pursuant to any listing agreement with or rules of any national
securities exchange, the Seller and the Purchaser shall use reasonable efforts
to consult with each other prior to issuing any press releases or otherwise
making public announcements with respect to this Agreement and the transactions
contemplated hereby and the parties shall consult with each other regarding any
press releases initially announcing the execution of this Agreement.
Section 6.6 WORKFORCE MATTERS.
(a) If any employee of the Company or any Company Subsidiary who
was an employee immediately prior to the Closing (an "AFFECTED EMPLOYEE") is
discharged by the Company or any Company Subsidiary as of or after the Closing,
then the Purchaser shall be responsible for any and all severance costs for such
Affected Employee, including payments owing under those agreements, plans or
arrangements listed in Section 3.8(a) of the Seller Disclosure Schedule. The
Purchaser shall be responsible for providing any continuation coverage required
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA") in respect of Affected Employees who experience or have experienced a
qualifying event (within the meaning of COBRA) prior to, on or after the Closing
Date including, without limitation, all other employees of the Company or any
Company Subsidiary who experience such a qualifying event before the Closing
Date but who do not provide notice of
29
the qualifying event until on or after the Closing Date. The Purchaser shall be
responsible and assume all liability for all notices or payments due to any
Affected Employees under the Worker Adjustment and Retraining Notification Act
and regulations promulgated thereunder (the "WARN ACT") or to any employee of
the Company or any Company Subsidiary who becomes entitled to receive notice as
required under the WARN Act on account of the aggregation of "employment losses"
in accordance with the WARN Act, and all notices, payments, fines or assessments
due to any Governmental Authority, pursuant to any applicable foreign, federal,
state or local law, common law, statute, rule or regulation with respect to the
employment, discharge or layoff of employees by the Company or any Company
Subsidiary after the Closing Date, including the WARN Act, and any comparable
state or local law.
(b) Following the Closing, the Purchaser shall cause CILCO to
honor its collective bargaining agreement with Local Union 51 of the
International Brotherhood of Electrical Workers ("IBEW LOCAL 51") in effect
immediately prior to the Closing, as well as the Letter Agreement dated as of
February 11, 2001 between CILCO and IBEW Local 51.
Section 6.7 TAX MATTERS.
(a) TAX RETURNS.
(i) The Seller shall file or cause to be filed when due all
Tax Returns that are required to be filed by or with respect to the Company
and each Company Subsidiary for taxable years or periods ending on or
before the Closing Date. The Seller shall include the income of the Company
and each Company Subsidiary (including any deferred intercompany income
triggered under Treasury Regulation Section 1.1502-13 or its predecessors
and any excess loss account taken into income under Treasury Regulation
Section 1.1502-19) on the AES consolidated U.S. federal Tax Returns for all
periods ending on or before the Closing Date.
(ii) The Purchaser shall file or cause to be filed when due
all Tax Returns that are required to be filed by or with respect to the
Company and each Company Subsidiary for taxable years or periods ending
after the Closing Date.
(iii) Any Tax Return required to be filed by the Purchaser
relating to any taxable year or period that includes but does not end on
the Closing Date (a "STRADDLE PERIOD") shall be prepared in accordance with
past practice (to the extent permitted under applicable law) and submitted
(with copies of any relevant schedules, work papers and other documentation
then available) to the Seller for the Seller's approval not less than
forty-five (45) days prior to the due date (including extensions) for the
filing of such Tax Return. The Seller's approval shall not be unreasonably
withheld.
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(iv) Upon the written request of the Purchaser setting forth
in detail the computation of the amount owed, the Seller shall pay to the
Purchaser, no later than two (2) days prior to the due date for the
applicable Tax Return, the Taxes for which the Seller is liable pursuant to
Section 6.7(b) and that are payable with any Tax Return to be filed by the
Purchaser with respect to any Straddle Period.
(v) Within thirty (30) days after the Closing Date (and from
time to time thereafter if the Seller reasonably requests), the Seller
shall provide to the Purchaser a list of the specific Tax information
materials required to enable Seller to prepare and file all Tax Returns
required to be prepared and filed by Seller pursuant to Section 6.7(a)(i).
Within sixty (60) days after receiving any such list, the Purchaser shall
cause the Company and each Company Subsidiary to prepare and provide to the
Seller a package containing the Tax information materials identified in any
such list. The Purchaser shall prepare such package in good faith in a
manner substantially consistent with the Seller's past practice.
(b) LIABILITY FOR TAXES.
(i) The Seller shall be liable for all Taxes with respect to
Tax Returns described in Section 6.7(a)(i), for all Taxes apportioned to
the Seller under Section 6.7(b)(iii), and for 50% of the Taxes described in
Section 6.7(m). Notwithstanding the foregoing, the Seller shall not be
liable for Taxes that are not Income Taxes ("Non-Income Taxes") with
respect to Tax Returns described in Section 6.7(a)(i) and for all
Non-Income Taxes apportioned to the Seller under Section 6.7(b)(iii) to the
extent that Non-Income Taxes reduce Working Capital.
(ii) The Purchaser shall be liable for all Taxes with
respect to Tax Returns described in Section 6.7(a)(ii), for all Taxes
apportioned to the Purchaser under Section 6.7(b)(iii), for 50% of the
Taxes described in Section 6.7(m) and for Non-Income Taxes to the extent
that Non-Income Taxes reduce Working Capital.
(iii) For purposes of this Section 6.7, where it is
necessary to apportion between the Seller and the Purchaser the Tax
liability of an entity for a Straddle Period (which is not treated under
Treasury Regulation Section 1.1502-76(b) or similar provisions of state,
local, or other law as closing on the Closing Date), such liability shall
be apportioned between the period deemed to end at the close of the Closing
Date, and the period deemed to begin at the beginning of the day following
the Closing Date on the basis of an interim closing of the books, except
that Taxes (such as real property Taxes) imposed on a periodic basis shall
be allocated on a daily basis.
(iv) In determining the Seller's liability for Taxes
pursuant to this Agreement, the Seller shall be credited with the amount of
estimated Taxes
31
and any Taxes under the United States Federal Unemployment Tax Act or the
United States Federal Insurance Contributions Act that are paid by or on
behalf of the Company or any Company Subsidiary prior to the Closing. To
the extent that the Seller's liability for Taxes for a taxable year or
period is less than the amount of such Taxes previously paid by or on
behalf of the Company or any Company Subsidiary with respect to all or a
portion of such taxable year or period, the Purchaser shall pay the Seller
the difference within two (2) days of filing the Tax Return relating to
such Taxes. To the extent that Non-Income Taxes paid by the Company or any
Company Subsidiary with respect to any pre-Closing period are less than the
amount of such Non-Income Taxes that reduce Working Capital, the Purchaser
shall pay the Seller the difference within two (2) days of filing each Tax
Return relating to such Non-Income Taxes.
(c) REFUNDS.
(i) Any Tax refund (including any interest in respect
thereof) received by the Purchaser, the Company, or any Company Subsidiary,
and any amounts credited against Taxes to which the Purchaser or a
Purchaser Subsidiary (including the Company, or any Company Subsidiary)
becomes entitled (including by way of any amended Tax Returns but excluding
Tax Returns from a carryback filing), that relate to any taxable period, or
portion thereof of the Company or a Company Subsidiary ending on or before
the Closing Date, shall be for the account of the Seller, and the Purchaser
shall pay over to the Seller any such refund or the amount of any such
credit within fifteen (15) days after receipt of such refund or utilization
of such credit. Any Tax refund from a carryback filing not prohibited under
Section 6.7(e)(iii) shall be for the account of the Purchaser.
(ii) The Purchaser shall pay the Seller interest at the rate
prescribed under Section 6621(a)(1) of the Code, compounded daily, on any
amount not paid when due under this Section 6.7(c). For purposes of this
Section 6.7(c), where it is necessary to apportion a refund or credit
between the Purchaser and the Seller for a Straddle Period, such refund or
credit shall be apportioned between the period deemed to end at the close
of the Closing Date and the period deemed to begin at the beginning of the
day following the Closing Date on the basis of an interim closing of the
books of the Company and any Company Subsidiary, except that Taxes (such as
real property Taxes) imposed on a periodic basis shall be allocated on a
daily basis.
(iii) The Purchaser shall cooperate, and shall cause the
Company and any Company Subsidiary to cooperate, in obtaining, at the
Seller's expense, any Tax refund (other than a refund based on a carryback
from a taxable year or period beginning after the Closing Date) that the
Seller reasonably
32
believes is available based on substantial authority, including through
filing appropriate forms with the applicable Tax authority.
(d) CERTAIN POST-CLOSING SETTLEMENT PAYMENTS.
(i) If the examination of any federal, state, local or other
Tax Return of the Seller for any taxable period ending on or before the
Closing Date shall result (by settlement or otherwise) in any adjustment
that permits the Purchaser, the Company, or any Company Subsidiary to
increase deductions, losses or tax credits or decrease the income, gains or
recapture of tax credits which would otherwise (but for such adjustments)
have been reported or taken into account (including by way of any increase
in basis) by the Purchaser, the Company, or any Company Subsidiary for one
or more periods beginning and ending within ten (10) years after the
Closing Date, the Seller shall notify the Purchaser and provide it with
adequate information so that the Purchaser can reflect on its, the
Company's, or Company Subsidiary's Tax Returns such increases in
deductions, losses or tax credits or decreases in income, gains or
recapture of tax credits. The Purchaser shall pay to the Seller, within
thirty (30) days of the filing of the Tax Returns for the taxable year in
which the Tax Benefit was realized, the amount of any resulting Tax
Benefit. "Tax Benefit" shall mean the amount of any refund, credit or
reduction in otherwise required Tax payments, including any interest
payable thereon, actually realized, PROVIDED, that, for these purposes, Tax
items shall be taken into account in accordance with the ordering
principles of the Code or other applicable law. For purposes of this
Section 6.7(d)(i), estimated Tax payments shall not be considered Tax
Returns and Tax Benefits shall be based on Tax Returns as filed.
(ii) If the examination of any federal, state, local or
other Tax Return of the Purchaser, the Company, or any Company Subsidiary
for any taxable period ending after the Closing Date shall result (by
settlement or otherwise) in any adjustment that permits the Seller to
increase deductions, losses or tax credits or decrease the income, gains or
recapture of tax credits which would otherwise (but for such adjustments)
have been reported or taken into account (including by way of any increase
in basis) by the Seller for one or more periods ending on or before the
Closing Date, the Purchaser shall notify the Seller and provide it with
adequate information so that the Seller can reflect on its Tax Returns such
increases in deductions, losses or tax credits or decreases in income,
gains or recapture of tax credits. The Seller shall pay to the Purchaser,
within thirty (30) days of the receipt of such information, fifty percent
(50%) of the amount of any resulting Tax Benefits.
(e) POST-CLOSING ACTIONS THAT AFFECT THE SELLER'S LIABILITY FOR
TAXES.
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(i) The Purchaser shall not take, or cause or permit the
Company or any Company Subsidiary (or any of their affiliates) to take, any
action, with respect to the taxable year or period of the Purchaser, the
Company, any Company Subsidiary, or affiliate, as applicable, which
includes the Closing Date, which would be reasonably likely to increase the
Seller's or any of its affiliates' liability for Taxes (including any
liability of the Seller to indemnify the Purchaser for Taxes pursuant to
this Agreement) including, for example, any action that would be reasonably
likely to, result in, or change the character of, any income or gain that
the Seller or any Seller affiliate must report on any Tax Return.
(ii) None of the Purchaser or any affiliate of the Purchaser
shall (or shall cause or permit the Company or any of the Company
Subsidiaries to) amend, refile or otherwise modify any Tax Return relating
in whole or in part to the Company or any of the Company Subsidiaries with
respect to any taxable year or period ending on or before the Closing Date
(or with respect to any Straddle Period) without the prior written consent
of the Seller, which consent may be withheld in the sole discretion of the
Seller; provided, that the Seller's consent shall not be required for
modifications that relate exclusively to the post-Closing Date portion of a
Straddle Period and that would not be reasonably likely to increase the
Seller's liability for Taxes under Section 6.7(i) of this Agreement.
(iii) Except to the extent otherwise required by law, none
of the Purchaser or any affiliate of the Purchaser shall (or shall cause or
permit the Company or any of the Company Subsidiaries to) carry back for
federal, state, local or foreign tax purposes to any taxable period, or
portion thereof, of the Company or any of the Company Subsidiaries or the
Seller or any affiliate of the Seller ending on or before, or which
includes, the Closing Date any operating losses, net operating losses,
capital losses, tax credits or similar items arising in, resulting from, or
generated in connection with a taxable year of the Purchaser or any
affiliate of the Purchaser, or portion thereof, ending after the Closing
Date.
(f) TAX PAYMENTS. The Purchaser agrees that, pursuant to any Tax
sharing, Tax allocation, or Tax indemnity agreements between the Seller or any
Seller affiliate on the one hand, and the Company or any Company Subsidiary on
the other hand, the Company or any Company Subsidiary may make tax sharing
payments to the Seller on any date or dates up to and including the Closing
Date. Any payment made pursuant to this Section 6.7(f) shall comply with the
terms of the agreement to which it relates (other than terms requiring payment
on a specified date or dates). Payments to the Seller pursuant to this Section
6.7(f) shall reduce the cash component of Working Capital as of the Closing
Date.
(g) ASSISTANCE AND COOPERATION. After the Closing Date, each of
the Seller and the Purchaser shall, and shall cause their respective affiliates
to, execute any forms necessary to filing a Tax Return and provide information
to the other party regarding the
34
Company or any Company Subsidiary in connection with (i) the other party
preparing any Tax Returns that such other party is responsible for preparing and
filing, and (ii) the other party preparing for any audits of, or disputes with
any Tax authority regarding, any Tax Returns of the Company or any Company
Subsidiary. In connection therewith, the Seller and the Purchaser shall not
dispose of any Tax work papers, books or records relating to the Company or any
Company Subsidiary during the six-year period following the Closing Date, and
thereafter shall give the other parties reasonable written notice before
disposing of such items.
(h) SECTION 338 ELECTIONS. Neither the Seller nor the Purchaser
shall make or file any election under Section 338 of the Code (or any similar
provision of the law of any state or other taxing jurisdiction) with respect to
the Company or any Company Subsidiary in connection with the transactions
contemplated by this Agreement. For purposes of all Tax Returns and other
applicable filings, the Purchaser and the Seller shall each report the stock
purchase as a purchase and sale, respectively, of the Shares.
(i) INDEMNIFICATION BY THE SELLER. Notwithstanding any other
provision of this Agreement other than Section 6.7(b)(iv), the Seller shall
indemnify the Purchaser from and against and in respect of:
(i) any liability for Taxes imposed on the Company or any
Company Subsidiary as members of the "affiliated group" (within the meaning
of Section 1504(a) of the Code) of which the Seller (or any predecessor or
successor) is the common parent that arises under Treasury Regulation
Section 1.1502-6(a) or any comparable provision of foreign, state or local
law;
(ii) any liability for Taxes imposed on the Company or any
Company Subsidiary for any taxable year or period that ends on or before
the Closing Date and, with respect to any Straddle Period, the portion of
such Straddle Period deemed to end on and include the Closing Date;
provided, that any indemnification for Non-Income Tax liabilities under
this Section 6.7(i)(ii) shall apply only to the extent such Non-Income Tax
liabilities exceed the amount by which Non-Income Taxes reduce Working
Capital;
(iii) any liability for Taxes for which the Seller is
responsible under Section 6.7(m); and
(iv) and for payments made to satisfy the indemnity to
MACTEC, Inc. under the agreement described in Section 3.7(a)(v) of the
Seller Disclosure Schedule; PROVIDED that any indemnification for such
MACTEC, Inc. payments that are accrued as Non-Income Taxes for purposes of
determining Working Capital shall apply only to the extent that such
payments exceed the amount by which Non-Income Taxes reduce Working
Capital; PROVIDED, further that any payments received from MACTEC, Inc.
under the agreement described in Section 3.7(a)(v) of the Seller Disclosure
Schedule shall be for the Seller's account.
35
Any indemnification under this Section 6.7(i) shall give effect to any related
Tax Benefit and be net of any reserves and amounts recovered from third parties,
including amounts recovered through utility rate increases. The indemnification
pursuant to this Section 6.7(i) shall be the sole and exclusive remedy of the
Purchaser against the Seller with respect to any liability for Taxes in
connection with this Agreement.
(j) INDEMNIFICATION BY THE PURCHASER. Notwithstanding any other
provision of this Agreement, the Purchaser shall indemnify the Seller from and
against and in respect of:
(i) any liability for Taxes imposed on any of the Company or
any Company Subsidiary for any taxable year or period that begins after the
Closing Date and, with respect to any Straddle Period, the portion of such
Straddle Period beginning the day after the Closing Date; and
(ii) any liability for Taxes for which the Purchaser is
responsible under Section 6.7(m).
Any indemnification under this Section 6.7(j) shall give effect to any related
Tax Benefit and be net of any reserves and amounts recovered from third parties,
including amounts recovered through utility rate increases. The indemnification
pursuant to this Section 6.7(j) shall be the sole and exclusive remedy of the
Seller against the Purchaser with respect to any liability for Taxes in
connection with this Agreement.
(k) CONTESTS.
(i) NOTICE. After the Closing Date, the Seller and the
Purchaser each shall notify the other party in writing within fifteen (15)
days of the commencement of any Tax audit or administrative or judicial
proceeding affecting the Taxes of any of the Company or any Company
Subsidiary that, if determined adversely to the taxpayer ( the "TAX
INDEMNITEE") or after the lapse of time would be grounds for
indemnification under this Section 6.7 by the other party (the "TAX
INDEMNITOR"). Such notice shall contain factual information describing any
asserted Tax liability in reasonable detail and shall include copies of any
notice or other document received from any Tax authority in respect of any
such asserted Tax liability. If either the Seller or the Purchaser fails to
give the other party prompt notice of an asserted Tax liability as required
under this Agreement, then (A) if the Tax Indemnitor is precluded by the
failure to give prompt notice from contesting the asserted Tax liability in
any judicial forum, then such party shall not have any obligation to
indemnify the other party for any Losses arising out of such asserted Tax
liability and (B) if the Tax Indemnitor is not so precluded from
contesting, if such failure to give prompt notice results in a detriment to
the Tax Indemnitor, then any amount which the Tax Indemnitor is otherwise
required to pay pursuant to this Section 6.7 with respect to such liability
shall be reduced by the amount of such detriment.
36
(ii) CONTROL OF CONTESTS INVOLVING PRE-CLOSING PERIODS OR
STRADDLE PERIODS. In the case of an audit or administrative or judicial
proceeding involving any asserted liability for Taxes relating to any
taxable years or periods ending on or before the Closing Date or any
Straddle Period of the Company or any Company Subsidiary, the Seller shall
have the right, at its expense, to control the conduct of such audit or
proceeding; PROVIDED, HOWEVER, that (i) the Seller shall keep the Purchaser
reasonably informed with respect to the status of such audit or proceeding
and provide the Purchaser with copies of all written correspondence with
respect to such audit or proceeding in a timely manner and (ii) if such
audit or proceeding would be reasonably expected to result in a material
increase in Tax liability of the Company or any Company Subsidiary for
which the Purchaser would be liable under this Section 6.7, (A) the
Purchaser may participate in the conduct of such audit or proceeding at its
own expense and (B) the Seller shall not settle any such audit or
proceeding without the consent of Purchaser, which consent shall not be
unreasonably withheld.
(iii) CONTROL OF CONTESTS INVOLVING POST-CLOSING PERIODS. In
the case of an audit or administrative or judicial proceeding involving any
asserted liability for Taxes relating to any taxable years or periods
beginning after the Closing Date, the Purchaser shall have the right, at
its expense, to control the conduct of such audit or proceeding; PROVIDED,
HOWEVER, that if such audit or proceeding would be reasonably expected to
result in a material increase in Tax liability of the Company or any
Company Subsidiary for which the Seller would be liable under this Section
6.7, (A) the Seller may participate in the conduct of such audit or
proceeding at its own expense and (B) the Purchaser shall not settle any
such audit or proceeding without the consent of the Seller, which consent
shall not be unreasonably withheld.
(l) TERMINATION TAX SHARING AGREEMENTS. On or before the Closing
Date, the Seller shall cause all Tax sharing, Tax allocation, or Tax indemnity
agreements between the Seller or any Seller affiliate on the one hand, and the
Company or any Company Subsidiary on the other hand, to be terminated as of the
Closing Date (or an earlier date) and the agreements will have no further effect
for any taxable year (current, future, or past).
(m) TRANSFER TAXES. Notwithstanding any other provision of this
Agreement to the contrary, the Purchaser and the Seller shall each pay 50% of
(i) all transfer (including real property transfer and documentary transfer)
Taxes and fees imposed with respect to the sale and transfer of Shares
contemplated hereby and (ii) all sales, use, gains (including state and local
transfer gains), excise and other transfer or similar Taxes imposed with respect
to the sale and transfer of Shares contemplated hereby. The Seller shall execute
and deliver to the Purchaser at the Closing any certificates or other documents
as the Purchaser may reasonably request to perfect any exemption from any such
transfer, documentary, sales, use, gains, excise or other Taxes, or to otherwise
comply with any applicable reporting requirements with respect to any such
Taxes.
37
(n) RETENTION OF TAX ATTRIBUTES. The Seller may elect to retain
the Tax attributes of the Company or any Company Subsidiary, including net
operating losses and capital loss carryovers of such entities, to the extent
permitted under the Code, Treasury Regulations, other pronouncements of the
Internal Revenue Service, or other applicable law. At the Seller's request, the
Purchaser will, and will cause any Purchaser Subsidiary, the Company, and any
Company Subsidiary to, take any actions necessary to effect such elections of
the Seller.
(o) TREATMENT OF PURCHASE PRICE. The Seller, the Purchaser and
their respective Subsidiaries shall treat the Final Purchase Price as the
purchase price for the sale, conveyance, assignment, transfer and delivery to
the Purchaser of the Shares in preparing and filing their Tax Returns and shall
take no position inconsistent therewith in any proceeding before any taxing
authority or otherwise unless otherwise required pursuant to a final resolution
of any Tax for a taxable year that, under applicable law, is not subject to
further appeal, review or modification through proceedings or otherwise.
Section 6.8 FINANCIAL INFORMATION.
(a) After the Closing, upon reasonable written notice, the
Purchaser and the Seller shall furnish or cause to be furnished to each other
and their respective accountants, counsel and other representatives, during
normal business hours, such information (including records pertinent to the
Company) as is reasonably necessary for financial reporting and accounting
matters.
(b) The Purchaser shall retain all of the books and records of
the Company and the Company Subsidiaries after the Closing Date for so long as
required by law. After the end of such period, before disposing of such books or
records, the Purchaser shall give notice to such effect to the Seller and give
the Seller an opportunity to remove and retain all or any part of such books or
records as the Seller may select.
Section 6.9 TERMINATION OF AFFILIATE CONTRACTS. Except as set forth on
Section 6.9 of the Seller Disclosure Schedule and except as agreed to in writing
by the Seller and the Purchaser, all Affiliate Contracts, including any
agreements or understandings (written or oral) with respect thereto, shall
terminate simultaneously with the Closing without any further action or
liability on the part of the parties thereto. Notwithstanding the foregoing, in
the absence of a written agreement, the provision of any services (similar to
those contemplated by the preceding sentence) by the Seller to the Company or
any Company Subsidiary from and after the Closing, which services may be
provided by the Seller in its sole discretion, shall be for the convenience, and
at the expense, of the Purchaser, upon mutually agreed terms.
Section 6.10 LOCAL PRESENCE; CHARITABLE GIVING.
(a) After the Closing, the Purchaser shall cause the Company and
CILCO to maintain for a period of at least three (3) years following the Closing
(i) CILCO's corporate headquarters in Peoria, Illinois or other significant
local presence, and (ii) the name of
38
CILCO; provided that CILCO may be referred to as "AmerenCILCO" or as an "Ameren
Company".
(b) After the Closing, the Purchaser shall cause the Company and
CILCO to maintain, for a period of at least three (3) years following the
Closing, a commitment to local social responsibility, community involvement and
charitable giving at its current levels in accordance with its current
practices.
Section 6.11 SELLER'S NAME. The Purchaser shall not acquire, nor shall
the Company and its Subsidiaries retain, any rights to the name "AES" (or any
derivation thereof) or any trademark, trade name or symbol related thereto. As
soon as reasonably practicable after the Closing but not later than sixty (60)
days after the Closing Date, the Purchaser shall cause the Company and its
Subsidiaries to remove the name "AES" (or any derivation thereof) and all
trademarks, trade names or symbols related thereto from the properties and
assets of the Company and its Subsidiaries.
Section 6.12 COOPERATION. The Seller shall, and shall cause the
Company and each Company Subsidiary to, cooperate with the Purchaser in
integration opportunities and in planning for the integration of the Company and
the Company Subsidiaries into the Purchaser's corporate family and systems and
in preparation for Closing and the period thereafter.
Section 6.13 FURTHER ASSURANCES. Each party shall, and shall cause its
Subsidiaries to, execute such further documents or instruments and take such
further actions as may reasonably be requested by the other party in order to
consummate the transaction in accordance with the terms hereof.
ARTICLE VII
CONDITIONS
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
CLOSING. The respective obligations of each party to effect the Closing shall be
subject to the satisfaction on or prior to the Closing Date of the following
conditions, except, to the extent permitted by applicable law, that such
conditions may be waived in writing pursuant to Section 9.3 by the joint action
of the parties hereto:
(a) NO INJUNCTION. No temporary restraining order or preliminary
or permanent injunction or other order by any federal or state court preventing
consummation of the transactions contemplated hereby shall have been issued and
be continuing in effect, and the transactions contemplated hereby shall not have
been prohibited under any applicable federal or state law or regulation
(collectively, "RESTRAINTS"); PROVIDED, HOWEVER, that each of the parties shall
have used all reasonable efforts to prevent the entry of any such Restraints and
to appeal as promptly as possible any such Restraints that may be entered.
(b) STATUTORY APPROVALS. The Seller Required Statutory Approvals
and the Purchaser Required Statutory Approvals shall have been obtained at or
prior to the Closing
39
Date by a Final Order. A "FINAL ORDER" shall mean action by the relevant
regulatory authority which has not been reversed, stayed, enjoined, set aside,
annulled or suspended, with respect to which any waiting period prescribed by
law before the transactions contemplated thereby may be consummated has expired
(but without the requirement for expiration of any applicable rehearing or
appeal period), and as to which all conditions to the consummation of such
transactions prescribed by law, regulation or order have been satisfied.
(c) HSR ACT. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
Section 7.2 CONDITIONS TO OBLIGATION OF THE PURCHASER TO EFFECT THE
CLOSING. The obligation of the Purchaser to effect the Closing shall be further
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions, except as may be waived by the Purchaser in writing pursuant to
Section 9.3:
(a) PERFORMANCE OF OBLIGATIONS OF THE SELLER. The Seller will
have performed in all material respects its agreements and covenants contained
in or contemplated by this Agreement which are required to be performed by it at
or prior to the Closing.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Seller set forth in this Agreement shall be true and correct
(i) on and as of the date hereof and (ii) on and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of the Closing Date (except for representations and warranties that expressly
speak only as of a specific date or time which need only be true and correct as
of such date or time) except in each of cases (i) and (ii) for such failures of
representations or warranties to be true and correct (without giving effect to
any materiality qualification or standard contained in any such representations
and warranties) which would not result in a Company Material Adverse Effect.
(c) CLOSING CERTIFICATES. The Purchaser shall have received a
certificate signed by the Seller, dated the Closing Date, to the effect that the
conditions set forth in Section 7.2(a) and Section 7.2(b) have been satisfied
and to the further effect that, as of the respective dates of reports filed with
the SEC by the Company and Company Subsidiaries under the Securities Act and
Exchange Act since January 1, 2001, and as of the Closing Date, such reports did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading and
that as of the Closing Date there has not been any development or combination of
developments affecting the Company or any Company Subsidiary, of which the
Seller or the Company has knowledge, that would have a Company Material Adverse
Effect.
(d) SELLER REQUIRED CONSENTS. The Seller Required Consents, the
failure of which to obtain would have a Company Material Adverse Effect, shall
have been obtained.
40
(e) REGULATORY APPROVALS. The Final Orders of any Governmental
Authority having authority over the transactions contemplated by this Agreement
shall have been received and shall not impose terms or conditions (which are in
addition to terms and conditions due to existing laws, rules or regulations),
which would have a Company Material Adverse Effect or a Purchaser Material
Adverse Effect, provided, however, that any terms or conditions imposed by the
FERC, the Federal Trade Commission or the Antitrust Division of the United
States Department of Justice relating to market power, including but not limited
to, divestiture of generation or transmission improvements, will not constitute
a Company Material Adverse Effect or a Purchaser Material Adverse Effect.
Section 7.3 CONDITIONS TO OBLIGATION OF THE SELLER TO EFFECT THE
CLOSING. The obligation of the Seller to effect the Closing shall be further
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions, except as may be waived by the Seller in writing pursuant to Section
9.3:
(a) PERFORMANCE OF OBLIGATIONS OF THE PURCHASER. The Purchaser
(and/or its appropriate Subsidiaries) will have performed in all material
respects its agreements and covenants contained in or contemplated by this
Agreement which are required to be performed by it at or prior to the Closing
Date.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser set forth in this Agreement shall be true and
correct (i) on and as of the date hereof and (ii) on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of the Closing Date (except for representations and warranties that
expressly speak only as of a specific date or time which need only be true and
correct as of such date or time) except in each of cases (i) and (ii) for such
failures of representations or warranties to be true and correct (without giving
effect to any materiality qualification or standard contained in any such
representations and warranties) which would not prevent, materially delay or
materially impair the Purchaser's ability to consummate the transaction
contemplated by this Agreement.
(c) CLOSING CERTIFICATES. The Seller shall have received a
certificate signed by the Purchaser, dated the Closing Date, to the effect that
the conditions set forth in Section 7.3(a) and Section 7.3(b) have been
satisfied and to the further effect that, as of the respective dates of reports
filed with the SEC by the Purchaser under the Securities Act and Exchange Act
since January 1, 2001, and as of the Closing Date, such reports did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(d) PURCHASER REQUIRED CONSENTS. The Purchaser Required Consents,
the failure of which to obtain would prevent, materially delay or materially
impair the Purchaser's ability to consummate the transactions contemplated by
this Agreement, shall have been obtained.
41
ARTICLE VIII
TERMINATION
Section 8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date (the "TERMINATION DATE"):
(a) by mutual written consent of the Seller and the Purchaser;
(b) by the Purchaser or the Seller, if any state or federal law,
order, rule or regulation is adopted or issued, which has the effect, as
supported by the written opinion of outside counsel for such party, of
prohibiting the Closing, or by any party hereto if any court of competent
jurisdiction in the United States or any state shall have issued an order,
judgment or decree permanently restraining, enjoining or otherwise prohibiting
the Closing, and such order, judgment or decree shall have become final and
nonappealable;
(c) by the Purchaser or the Seller, by written notice to the
other party, if the Closing Date shall not have occurred on or before March 27,
2003 (the "INITIAL TERMINATION DATE"); PROVIDED, HOWEVER, that the right to
terminate the Agreement under this Section 8.1(c) shall not be available to any
party whose failure to fulfill any obligation under this Agreement shall have
proximately contributed to the failure of the Closing Date to occur on or before
such date; and PROVIDED, FURTHER, that if on the Initial Termination Date the
conditions to the Closing set forth in Sections 7.1(b), 7.1(c) and/or 7.2(e)
shall not have been fulfilled but all other conditions to the Closing shall be
fulfilled or shall be capable of being fulfilled, then the Initial Termination
Date shall be extended for a twelve-month period;
(d) by the Purchaser, by written notice to the Seller, if there
shall have been a material breach of any representation or warranty, or a
material breach of any covenant or agreement of the Seller hereunder, which
breaches would result in a Company Material Adverse Effect, and such breach
shall not have been remedied within thirty (30) days after receipt by the Seller
of notice in writing from the Purchaser, specifying the nature of such breach
and requesting that it be remedied or the Purchaser shall not have received
adequate assurance of a cure of such breach within such thirty (30) day period
or the Seller shall not have made a capital contribution to the Company in an
amount equal to the expected damages from such breach;
(e) by the Seller, by written notice to the Purchaser, if there
shall have been a material breach of any representation or warranty, or a
material breach of any covenant or agreement of the Purchaser hereunder, which
breaches would prevent, materially delay or materially impair the Purchaser's
ability to consummate the transactions contemplated by this Agreement, and such
breach shall not have been remedied within thirty (30) days after receipt by the
Purchaser of notice in writing from the Seller, specifying the nature of such
breach and requesting that it be remedied or the Seller shall not have received
adequate assurance of a cure of such breach within such thirty (30) day period;
or
(f) by the Purchaser, by written notice to the Seller, to the
extent the Purchaser is not in breach of this Agreement, if the condition to the
Purchaser's obligation to
42
effect the Closing contained in Section 7.2(e) cannot be met in spite of the
Purchaser's use of its best efforts to obtain such Seller Required Regulatory
Approvals and Purchaser Required Regulatory Approvals, including seeking to
exhaust any rehearing or refiling opportunities relating to such approvals.
Section 8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Seller or the Purchaser pursuant to Section 8.1, there
shall be no liability on the part of either the Seller or the Purchaser or their
respective officers or directors hereunder, EXCEPT (a) that nothing herein shall
relieve any party from liability for any breach of any representation, warranty,
covenant or agreement of such party contained in this Agreement and (b) that
Sections 8.2, 9.2, 9.4, 9.6, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13, and the agreement
contained in the last sentence of Section 6.1 shall survive the termination.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 SURVIVAL OF OBLIGATIONS. All representations, warranties,
covenants, obligations and agreements of the parties contained in this Agreement
or in any instrument, certificate, opinion or other writing provided for herein,
shall not survive the Closing; PROVIDED, HOWEVER, that the representation and
warranty of the Seller contained in Section 3.2(b), the representation and
warranty of the Purchaser contained in Section 4.6(c) and the covenants of the
Seller and the Purchaser contained in Sections 6.4, 6.5, 6.6, 6.7, 6.8, 6.9,
6.10, 6.11 and the second sentence of Section 6.1 shall survive the Closing and
provided further, that the prohibition on solicitation for employment contained
in Section 5.1(r) shall continue in full force and effect for 12 months
following the Closing Date.
Section 9.2 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified and supplemented in any and all respects, but only by a written
instrument signed by each of the parties hereto expressly stating that such
instrument is intended to amend, modify or supplement this Agreement.
Section 9.3 EXTENSION; WAIVER. At any time prior to the Closing Date,
a party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein, to the extent permitted by applicable law. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.
Section 9.4 EXPENSES. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses except that the fee payable in connection with
the filing required by the HSR Act shall be shared one-half by Seller and
one-half by Purchaser. Notwithstanding the foregoing, in any
43
action or proceeding brought to enforce any provisions of this Agreement, or
where any provision hereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys' fees and disbursements
in addition to its costs and expenses and any other available remedy.
Section 9.5 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given (a) when delivered personally, (b)
when sent by reputable overnight courier service, or (c) when telecopied (which
is confirmed by copy sent within one business day by a reputable overnight
courier service) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) If to the Seller, to
The
AES Corporation
0000 X. 00xx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: General Counsel
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
and
(ii) if to the Purchaser, to
Ameren Corporation
One Ameren Plaza
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Vice President/General Counsel and Secretary
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
44
Xxxxx, Day, Xxxxxx & Xxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Section 9.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement, the Confidentiality Agreement, the Side Agreement Relating To
CILCO/ENRON Contract of even date herewith among the Seller, the Company and the
Purchaser, and the Membership Interest Purchase Agreement between the Seller and
the Purchaser of even date herewith (a) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and thereof and (b) are
not intended to confer, and shall not confer, upon any Person other than the
parties hereto and thereto and Company Indemnified Parties as set forth in
Section 6.4 any remedies, claims of liability or reimbursement, causes of action
or any other rights whatsoever.
Section 9.7 SEVERABILITY. Any term or provision of this Agreement that
is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction or other authority declares that any term or provision
hereof is invalid, void or unenforceable, the parties agree that the court
making such determination shall have the power to reduce the scope, duration,
area or applicability of the term or provision, to delete specific words or
phrases, or to replace any invalid, void or unenforceable term or provision with
a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.
Section 9.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Delaware without giving
effect to the principles of conflicts of law thereof.
Section 9.9 VENUE. Each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any federal court located in the State of
Delaware or any
Delaware state court in the event any dispute arises out of this
Agreement, (b) agrees that it shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (c)
agrees that it shall not bring any action relating to this Agreement in any
court other than a federal or state court sitting in the State of
Delaware.
Section 9.10 WAIVER OF JURY TRIAL AND CERTAIN DAMAGES. Each party to
this Agreement waives, to the fullest extent permitted by applicable law, (a)
any right it may have to a trial by jury in respect of any action, suit or
proceeding arising out of or relating to this Agreement and (b) any right it may
have to receive damages from any other party based on any
45
theory of liability for any special, indirect, consequential (including lost
profits) or punitive damages.
Section 9.11 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not to be performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof in
addition to any other remedies at law or in equity.
Section 9.12 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto
(whether by operation of law or otherwise) without the prior written consent of
the other party; PROVIDED, HOWEVER, that the Seller may transfer the Shares to a
wholly owned Subsidiary of the Seller as long as such Subsidiary agrees in
writing to be bound by the applicable terms of this Agreement and no such
assignment shall relieve the Seller from its obligations hereunder.
Section 9.13 INTERPRETATION. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement,
respectively, unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"INCLUDE," "INCLUDES" or "INCLUDING" are used in this Agreement, they shall be
deemed to be followed by the words "WITHOUT LIMITATION." Any item or other
matter referenced or disclosed in one section of the Seller Disclosure Schedule
or the Purchaser Disclosure Schedule, as the case may be, shall be deemed to
have been referenced or disclosed in all sections of such Disclosure Schedule
where such reference or disclosure is required. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
Section 9.14 COUNTERPARTS; EFFECT. This Agreement may be executed and
delivered (including via facsimile) in one or more counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one and the
same agreement.
46
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
THE
AES CORPORATION
By: /s/XXXXX X. XXX
------------------------------------
Name: Xxxxx X. Xxx
Title: Vice President
AMEREN CORPORATION
By: /s/XXXXXX X. XXXXXXXX
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President & General Counsel
47
