, 1999
EXCHANGE AGENT AGREEMENT
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The Bank of New York
Corporate Trust Administration
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Ladies and Gentlemen:
With TXU Eastern Holdings Limited, a private limited
company incorporated under the laws of England and Wales (the
"Guarantor"), TXU Eastern Funding Company, a private unlimited
company incorporated under the laws of England and Wales (the
"Company") proposes to make an offer (the "Exchange Offer") to
exchange equal principal amounts of up to $350,000,000
principal amount of its 6.15% Senior Notes due May 15, 2002,
up to $650,000,000 principal amount of its 6.45% Senior Notes
due May 15, 2005 and up to $500,000,000 principal amount of
its 6.75% Senior Notes due May 15, 2009 (collectively, the
"Old Notes") for equal principal amounts of, respectively, its
6.15% Exchange Senior Notes due May 15, 2002, its 6.45%
Exchange Senior Notes due May 15, 2005 and its 6.75% Exchange
Senior Notes due May 15, 2009 (collectively, the "New Notes")
which New Notes have been registered under the Securities Act
of 1933, as amended. The terms and conditions of the Exchange
Offer as currently contemplated are set forth in a prospectus,
dated ___________, 1998 (the "Prospectus"), proposed to be
distributed to all holders of the Old Notes. The Old Notes
and the New Notes are collectively referred to herein as the
"Notes". Unless the context requires otherwise, references
herein to the Notes, the Old Notes, the New Notes or any
series of the Notes will mean beneficial interests in the
book-entry interests that The Depositary Trust Company ("DTC")
has in such notes. Capitalized terms used herein and not
defined shall have the meanings ascribed to them in the
Prospectus or the Letter of Transmittal in the form or forms
to be delivered with the Prospectus to holders of the Old
Notes ("Letter of Transmittal").
The Company hereby appoints The Bank of New York to
act as exchange agent (the "Exchange Agent") in connection
with the Exchange Offer. References hereinafter to "you"
shall refer to The Bank of New York in its capacity as
Exchange Agent hereunder.
The Exchange Offer is expected to be commenced by
the Company on or about , 1999. The Letter of
Transmittal accompanying the Prospectus (or in the case of
book-entry securities, the ATOP system) is to be used by the
holders of the Old Notes to accept the Exchange Offer and
contains instructions with respect to the delivery of certifi-
▇▇▇▇▇ for Old Notes tendered in connection therewith.
The Exchange Offer shall expire at 5:00 P.M., New
York City time, on , 1999 or on such later date or
time to which the Company or the Guarantor may extend the
Exchange Offer (the "Expiration Date"). Subject to the terms
and conditions set forth in the Prospectus, the Company and
the Guarantor expressly reserve the right to extend the
Exchange Offer from time to time and may extend the Exchange
Offer by the Company giving oral (confirmed in writing) or
written notice to you before 9:00 A.M., New York City time, on
the business day following the previously scheduled Expiration
Date.
The Company and the Guarantor expressly reserve the
right to amend, in any way not inconsistent with the
Registration Rights Agreement, or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not
theretofore accepted for exchange, upon the occurrence of any
of the conditions of the Exchange Offer specified in the
Prospectus under the caption "The Exchange Offer -- Condi-
tions." The Company will give oral (confirmed in writing) or
written notice of any amendment, termination or nonacceptance
to you as promptly as practicable.
In carrying out your duties as Exchange Agent, you
are to act in accordance with the following instructions:
1. You will perform such duties and only such du-
ties as are specifically set forth in the section of the Pro-
spectus captioned THE EXCHANGE OFFER and in the Letter of
Transmittal or as specifically set forth herein; provided,
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however, that in no way will your general duty to act in good
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faith and without gross negligence be discharged by the
foregoing.
2. You will establish an account with respect to
the Old Notes at The Depository Trust Company (the "Book-Entry
Transfer Facility") for purposes of the Exchange Offer within
two business days after the date of the Prospectus, and any
financial institution that is a participant in the Book-Entry
Transfer Facility's systems may make book-entry delivery of
the Old Notes by causing the Book-Entry Transfer Facility to
transfer such Old Notes into your account in accordance with
the Book-Entry Transfer Facility's procedure for such trans-
fer.
3. You are to examine each of the Letters of
Transmittal and confirmation of book-entry transfer into your
account at the Book-Entry Transfer Facility or certificates
for Old Notes and any other documents delivered or mailed to
you by or for holders of the Old Notes to ascertain whether:
(i) the Letters of Transmittal and any such other documents
are duly executed and properly completed in accordance with
instructions set forth therein and (ii) the Old Notes have
otherwise been properly tendered. Determination of all
questions as to validity, form, eligibility, acceptance and
withdrawal with respect to exchange of any Old Notes shall be
made by the Company and the Guarantor. In each case where the
Letter of Transmittal or any other document has been
improperly completed or executed or any of the certificates
for Old Notes are not in proper form for transfer or some
other irregularity in connection with the acceptance of the
Exchange Offer exists, you will endeavor to inform the
presenters of the need for fulfillment of all requirements and
to take any other action as may be necessary or advisable to
cause such irregularity to be corrected. However, you shall
not incur any liabilities under this agreement for failure to
give any such notification.
4. With the approval of a duly appointed Committee
of the Board of Directors or Attorney of the Company or the
Guarantor (such approval, if given orally, to be confirmed in
writing) or any other party designated by such person or
entity in writing, you are authorized to waive any
irregularities in connection with any tender of Old Notes
pursuant to the Exchange Offer.
5. Tenders of Old Notes may be made only as set
forth in the Letter of Transmittal and in the section of the
Prospectus captioned "The Exchange Offer -- Procedures for
Tendering", and Old Notes shall be considered properly
tendered only when tendered in accordance with the procedures
set forth therein. Notwithstanding the provisions of this
paragraph 5, Old Notes which a Director or a duly appointed
Attorney of the Company or the Guarantor shall approve as
having been properly tendered shall be considered to be
properly tendered (such approval, if given orally, shall be
confirmed in writing).
6. You shall advise the Company with respect to
any Old Notes received subsequent to the Expiration Date and
accept its instructions with respect to disposition of such
Old Notes.
7. You shall accept tenders:
a. in cases where the Old Notes are
registered in two or more names only if signed by all
named holders;
b. in cases where the signing person (as
indicated on the Letter of Transmittal) is acting in a
fiduciary or a representative capacity only when proper
evidence of his or her authority so to act is submitted;
and
c. from persons other than the registered
holder of Old Notes provided that customary transfer
requirements, including any applicable transfer taxes,
are fulfilled.
You shall accept partial tenders of Old Notes when so
indicated and as permitted in the applicable Letter of
Transmittal and effect appropriate book-entry transfer and
notify the Depositary and instruct DTC to credit the accounts
of appropriate securities intermediaries on behalf of the
tender or, if registered certificates have been issued,
deliver certificates for Old Notes to the transfer agent for
split-up and return certificates for any untendered Old Notes
or Old Notes that have not been accepted by the Company to the
holder (or such other person as may be designated in the
Letter of Transmittal) as promptly as practicable after
expiration or termination of the Exchange Offer.
8. Upon satisfaction or waiver of all of the con-
ditions to the Exchange Offer, the Company will notify you
(such notice if given orally, to be confirmed in writing) of
its acceptance, promptly after the Expiration Date, of all Old
Notes properly tendered and you, on behalf of the Company,
will cause a certificate in bearer form representing such New
Notes in exchange therefor to be issued as promptly as
possible to the Depositary in bearer form. On behalf of the
Company, you will exchange such Old Notes for New Notes and
cause such Old Notes to be canceled. Delivery of New Notes
will be made on behalf of the Company by you at the rate of
$1,000 principal amount of New Notes for each $1,000 principal
amount of the corresponding series of Old Notes tendered as
promptly as practicable after notice (such notice if given
orally, to be confirmed in writing) of acceptance of said Old
Notes by the Company; provided, however, that in all cases,
Old Notes tendered pursuant to the Exchange Offer will be
exchanged only after timely receipt by you of certificates for
such Old Notes (or confirmation of book-entry transfer into
your account at the Book-Entry Transfer Facility), a properly
completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantees and
any other required documents. You shall issue New Notes only
in denominations of $10,000 or any integral multiple of $1,000
in excess thereof.
9. Tenders pursuant to the Exchange Offer are ir-
revocable, except that, subject to the terms and upon the con-
ditions set forth in the Prospectus and the Letter of Trans-
mittal, Old Notes tendered pursuant to the Exchange Offer may
be withdrawn at any time prior to the Expiration Date in
accordance with the terms of the Exchange Offer.
10. The Company shall not be required to exchange
any Old Notes tendered if any of the conditions set forth in
the Exchange Offer are not met. Notice of any decision by the
Company not to exchange any Old Notes tendered shall be given
in a notice (and, if given orally, confirmed in writing) by
the Company to you.
11. If, pursuant to the Exchange Offer, the Company
does not accept for exchange all or part of the Old Notes ten-
dered because of an invalid tender, the occurrence of certain
other events set forth in the Prospectus under the caption
"The Exchange Offer -- Conditions" or otherwise, you shall as
soon as practicable after the expiration or termination of the
Exchange Offer return such certificates for unaccepted Old
Notes (or effect appropriate book-entry transfer), together
with any related required documents and the Letters of
Transmittal relating thereto that are in your possession, to
the persons who deposited such certificates (or effected such
book-entry transfer).
12. All certificates for reissued Old Notes, unac-
cepted Old Notes or for New Notes shall be forwarded by first-
class mail.
13. You are not authorized to pay or offer to pay
any concessions, commissions or solicitation fees to any bro-
ker, dealer, bank or other persons or to engage or utilize any
person to solicit tenders.
14. As Exchange Agent hereunder you:
a. shall have no duties or obligations other
than as provided in paragraph 1, those specifically set
forth herein or as may be subsequently agreed to in
writing by you and the Company;
b. will be regarded as making no representa-
tions and having no responsibilities as to the validity,
sufficiency, value or genuineness of any of the
certificates or the Old Notes represented thereby depos-
ited with you pursuant to the Exchange Offer, and will
not be required to and will make no representation as to
the validity, value or genuineness of the Exchange Offer;
c. shall not be obligated to take any legal
action hereunder which might in your reasonable judgment
involve any expense or liability, unless you shall have
been furnished with indemnity reasonably satisfactory to
you and any additional fees for taking such action as is
agreed by the parties heretofore;
d. may reasonably rely on and shall be
protected in acting in reliance upon any certificate,
instrument, opinion, notice, letter, telegram or other
document or security delivered to you and reasonably
believed by you to be genuine and to have been signed by
the proper party or parties;
e. may reasonably act upon any tender,
statement, request, comment, agreement or other instru-
ment whatsoever not only as to its due execution and
validity and effectiveness of its provisions, but also as
to the truth and accuracy of any information contained
therein, which you shall in good faith believe to be
genuine or to have been signed or represented by a proper
person or persons or persons acting in a fiduciary or
representative capacity;
f. may rely on and shall be protected in act-
ing upon written or oral instructions from any officer of
the Company or any other party designated by the Company;
g. may consult with your counsel with respect
to any questions relating to your duties and
responsibilities and the advice or opinion of such
counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or
omitted to be taken by you hereunder in good faith and in
accordance with the advice or opinion of such counsel;
and
h. shall not advise any person tendering Old
Notes pursuant to the Exchange Offer as to whether to
tender or refrain from tendering any portion of Old Notes
or as to the market value, decline or appreciation in
market value of any Old Notes that may or may not occur
as a result of the Exchange Offer or as to the market
value of the New Notes.
15. You shall take such action as may from time to
time be requested by the Company or its counsel (and such
other action as you may reasonably deem appropriate) to fur-
nish copies of the Prospectus, Letter of Transmittal and the
Notice of Guaranteed Delivery (as described in the Prospectus)
or such other forms as may be approved from time to time by
the Company, to all persons requesting such documents and to
accept and comply with telephone requests for information re-
lating to the Exchange Offer, provided that such information
shall relate only to the procedures for accepting (or with-
drawing from) the Exchange Offer. The Company will furnish
you with copies of such documents at your request. All other
requests for information relating to the Exchange Offer shall
be directed to the Company, Attention: Treasurer.
16. You shall advise by facsimile transmission or
telephone, and promptly thereafter confirm in writing to the
Treasurer of the Company and such other person or persons as
the Company may request, daily (and more frequently during the
week immediately preceding the Expiration Date and if
otherwise reasonably requested) up to and including the Expi-
ration Date, as to the principal amount of Old Notes which
have been tendered pursuant to the terms of the Exchange Offer
and the items received by you pursuant to the Exchange Offer
and this Agreement, (separately reporting and giving
cumulative totals as to items properly received and items
improperly received). In addition, you will also inform, and
cooperate in making available to, the Company or any such
other person or persons upon request made from time to time
prior to the Expiration Date of such other information in your
possession as it or he or she reasonably requests. Such
cooperation shall include, without limitation, the granting by
you to the Company and such person as the Company may request,
of access to those persons on your staff who are responsible
for receiving tenders, in order to ensure that immediately
prior to the Expiration Date the Company shall have received
information in sufficient detail to enable it to decide
whether to extend the Exchange Offer. You shall prepare a
final list of all persons whose tenders were accepted, the
aggregate principal amount of Old Notes tendered and the ag-
gregate principal amount of Old Notes accepted and deliver
said list to the Company.
17. Letters of Transmittal, book-entry
confirmations and Notices of Guaranteed Delivery shall be
stamped by you as to the date and the time of receipt thereof
and shall be preserved by you for a period of time at least
equal to the period of time you preserve other records
pertaining to the transfer of securities. You shall dispose
of unused Letters of Transmittal and other surplus materials
by returning them to the Company.
18. You hereby expressly waive any lien, encum-
brance or right of set-off whatsoever that you may have with
respect to funds deposited with you for the payment of trans-
fer taxes by reasons of amounts, if any, borrowed by the Com-
pany, or any of its subsidiaries or affiliates pursuant to any
loan or credit agreement with you or for compensation owed to
you hereunder.
19. For services rendered as Exchange Agent hereun-
der, you shall be entitled to such compensation as set forth
on Schedule I attached hereto.
20. You hereby acknowledge receipt of the Prospec-
tus and the Letter of Transmittal and further acknowledge that
you have examined each of them. Any inconsistency between
this Agreement, on the one hand, and the Prospectus and the
Letter of Transmittal (as they may be amended from time to
time), on the other hand, shall be resolved in favor of the
latter two documents, except with respect to the duties,
liabilities and indemnification of you as Exchange Agent,
which shall be controlled by this Agreement.
21. The Company covenants and agrees to indemnify
and hold you harmless in your capacity as Exchange Agent here-
under against any loss, liability, cost or expense, including
attorneys' fees and expenses, arising out of or in connection
with your acceptance or administration of this Agreement and
the performance of its duties hereunder, including without
limitation any act, omission, delay or refusal made by you in
reliance upon any signature, endorsement, assignment,
certificate, order, request, notice, instruction or other in-
strument or document reasonably believed by you to be valid,
genuine and sufficient and in accepting any tender or effect-
ing any transfer of Old Notes reasonably believed by you in
good faith to be authorized, and in delaying or refusing in
good faith to accept any tenders or effect any transfer of Old
Notes; provided, however, that the Company shall not be liable
for indemnification or otherwise for any loss, liability, cost
or expense to the extent arising out of your gross negligence
or willful misconduct. In no case shall the Company be liable
under this indemnity with respect to any claim against you
unless the Company shall be notified by you, by letter or by
facsimile confirmed by letter, of the written assertion of a
claim against you or of any other action commenced against
you, promptly after you shall have received any such written
assertion or notice of commencement of action. The Company
shall be entitled to participate at its own expense in the
defense of any such claim or other action, and, if the Company
so elects, the Company shall assume the defense of any suit
brought to enforce any such claim. In the event that the Com-
pany shall assume the defense of any such suit, the Company
shall not be liable for the fees and expenses of any ad-
ditional counsel thereafter retained by you so long as the
Company shall retain counsel satisfactory to you to defend
such suit, and so long as you shall have not determined, in
your reasonable judgment, that a conflict of interest exists
between you and the Company.
22. You shall arrange to comply with all require-
ments under the tax laws of the United States, including those
relating to missing Tax Identification Numbers, and shall file
any appropriate reports with the Internal Revenue Service.
The Company understands that you are required to deduct 31% on
payments to holders who have not supplied their correct Tax-
payer Identification Number or required certification. Such
funds will be turned over to the Internal Revenue Service in
accordance with applicable regulations.
23. You shall deliver or cause to be delivered, in
a timely manner to each governmental authority to which any
transfer taxes are payable in respect of the exchange of Old
Notes, your check in the amount of all transfer taxes so pay-
able, and the Company shall reimburse you for the amount of
any and all transfer taxes payable in respect of the exchange
of Old Notes; provided, however, that you shall reimburse the
Company for amounts refunded to you in respect of your payment
of any such transfer taxes, at such time as such refund is re-
ceived by you.
24. This Agreement and your appointment as Exchange
Agent hereunder shall be governed by and construed in
accordance with the laws of the State of New York applicable
to agreements made and to be performed entirely within such
state, and without regard to conflicts of law principles, and
shall inure to the benefit of, and the obligations created
hereby shall be binding upon, the successors and assigns of
each of the parties hereto.
25. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original
and all of which taken together shall constitute one and the
same agreement.
26. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby so long as the
economic or legal substance of the agreements contained herein
is not affected in any manner adverse to any party. Upon such
determination that any terms or provisions or the application
thereof is invalid, illegal or unenforceable, the parties
hereto shall negotiate in good faith to modify this Agreement
so as to effect the original intent of the parties as closely
as possible in a mutually acceptable manner in order that the
agreements contained herein may be performed as originally
contemplated to the fullest extent possible.
27. This Agreement shall not be deemed or construed
to be modified, amended, rescinded, canceled or waived, in
whole or in part, except by a written instrument signed by a
duly authorized representative of the party to be charged.
This Agreement may not be modified orally.
28. Unless otherwise provided herein, all notices,
requests and other communications to any party hereunder shall
be in writing (including facsimile or similar writing) and
shall be given to such party, addressed to it, at its address
or telecopy number set forth below:
If to the Company:
TXU Eastern Funding Company
c/o TXU Corp
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Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Attorney
If to the Guarantor:
TXU Eastern Holdings Limited
c/o TXU Corp
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Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Attorney
If to the Exchange Agent:
The Bank of New York
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Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust
Administration
29. Unless terminated earlier by the parties
hereto, this Agreement shall terminate 90 days following the
Expiration Date. Notwithstanding the foregoing, Paragraphs
19, 21 and 23 shall survive the termination of this Agreement.
Upon any termination of this Agreement, you shall promptly
deliver to the Company any certificates for Notes, funds or
property then held by you as Exchange Agent under this
Agreement.
30. This Agreement shall be binding and effective
as of the date hereof.
Please acknowledge receipt of this Agreement and
confirm the arrangements herein provided by signing and re-
turning the enclosed copy.
TXU EASTERN FUNDING COMPANY
By:______________________
Name:
Title:
TXU EASTERN HOLDINGS LIMITED
By:______________________
Name:
Title:
Accepted as of the date
first above written:
THE BANK OF NEW YORK, as Exchange Agent
By:_____________________
Name:
Title:
SCHEDULE I
FEES
THE BANK OF NEW YORK
EXCHANGE AGENT
TEXAS UTILITIES COMPANY
6.15% EXCHANGE SENIOR NOTES DUE MAY 15, 2002
6.45% EXCHANGE SENIOR NOTES DUE MAY 15, 2005
6.75% EXCHANGE SENIOR NOTES DUE MAY 15, 2009
