EXECUTION COPY
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PURCHASE AGREEMENT
for
9% EXCHANGEABLE SUBORDINATED NOTES
DUE 2012
By and Among
TXU CORP.,
TXU ENERGY COMPANY LLC
AND
UXT HOLDINGS LLC
Dated as of November 18, 2002
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PURCHASE AGREEMENT, dated as of November 18, 2002 (the "Agreement"),
by and among TXU Energy Company LLC (the "Company"), a Delaware limited
liability company formed by TXU Corp., a Texas corporation ("TXU"), TXU and UXT
Holdings LLC (the "Purchaser").
WHEREAS, the Company is the issuer of 9% Exchangeable Subordinated
Notes due 2012 (the "Notes"), a form of which is attached hereto as Exhibit A;
WHEREAS, the Company desires to sell, and the Purchaser desires to
buy, $750 million principal amount of the Notes; and
WHEREAS, in connection with the acquisition of the Notes by the
Purchaser, and the sale of the Notes by the Company, the Purchaser, TXU and the
Company will enter into the Ancillary Agreements.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the Company, TXU and the
Purchaser hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person; provided, however, that neither TXU Europe nor any of its Subsidiaries
shall be deemed an Affiliate of TXU or any of its Affiliates unless this
Agreement expressly provides otherwise. For the avoidance of doubt, TXU and its
Affiliates shall be considered Affiliates of the Company and the Purchaser and
its Affiliates shall not be considered Affiliates of the Company.
"Agreement" shall have the meaning set forth in the Preamble.
"Agreement Value" means, for each hedge agreement, on any date of
determination, an amount determined in good faith by the Company equal to: (a)
in the case of any hedge agreement documented pursuant to the Master Agreement,
the amount, if any, that would be payable by or to the Company or any of its
Subsidiaries to or from its counterparty to such hedge agreement, as if (i) such
hedge agreement was terminated early on such date of determination and, (ii) the
Company or such Subsidiary was the sole "Affected Party", and assumes second
method and market quotation and adjusts for collateral positions, or (b) in the
case of a hedge agreement traded on an exchange, the ▇▇▇▇-to-market value of
such hedge agreement, which will be the unrealized gain or loss
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on such hedge agreement to the Company or such Subsidiary to such hedge
agreement determined in good faith by the Company based on the settlement price
of such hedge agreement on such date of determination, or (c) in all other
cases, the ▇▇▇▇-to-market value of such hedge agreement, which will be the
unrealized gain or loss on such hedge agreement to the Company or such
Subsidiary to such hedge agreement determined in good faith by the Company;
capitalized terms used and not otherwise defined in this definition shall have
the meaning set forth in the above described Master Agreement.
"Ancillary Agreements" means the Exchange Agreement and the
Registration Rights Agreement.
"Assets" has the meaning set forth in Section 3.15.
"Available Contracts" has the meaning set forth in Section 3.14.
"Business" means the generation of electricity, wholesale energy
trading, retail energy marketing, energy delivery and other energy-related
services by TXU or any of its Subsidiaries.
"Business Day" means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by Law to be closed in the States
of New York or Texas.
"Claims" means any and all administrative, regulatory or judicial
actions, suits, petitions, appeals, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations, proceedings, consent
orders or consent agreements.
"Closing" shall have the meaning set forth in Section 2.02.
"Closing Date" shall have the meaning set forth in Section 2.02.
"Common Stock" means the common stock, without par value, of TXU.
"Common Stock Equivalents" means any issuance of any warrants, options
or subscription or purchase rights with respect to shares of Common Stock and
the issuance of any securities convertible into or exchangeable for shares of
Common Stock and the issuance of any warrants, options or subscription or
purchase rights with respect to such convertible or exchangeable securities.
"Company" shall have the meaning set forth in the Preamble.
"Disclosure Schedule" means the schedule that modifies the
representations, warranties or covenants of TXU and the Company contained herein
to the extent that such representations, warranties, or covenants expressly
refer to the Disclosure Schedule and which is an integral part of this
Agreement.
"Encumbrance" means any security interest, pledge, hypothecation,
mortgage, lien (including, without limitation, environmental and tax liens),
violation, charge, lease,
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license, encumbrance, servient easement, adverse claim, reversion, reverter,
preferential arrangement, restrictive covenant, condition or restriction of any
kind, including, without limitation, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of ownership.
"Environmental Claims" means any Claims relating in any way to any
Environmental Law or any Environmental Permit, including, without limitation,
(a) any and all Claims by Governmental Authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (b) any and all Claims by any Person seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the Environment.
"Environmental Law" has the meaning set forth in Section 3.10.
"ERCOT" has the meaning set forth in Section 5.08.
"ERISA" has the meaning set forth in Section 3.16.
"ERISA Affiliate" has the meaning set forth in Section 3.16.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agreement" means the Exchange Agreement, to be entered into,
by and between the Purchaser, the Company and TXU, pursuant to which the Notes
may be exchanged for TXU Common Stock, substantially in the form of Exhibit B
hereto.
"Final Order" means action taken by the relevant regulatory authority
relating to this Agreement or the transactions contemplated hereby 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 hereby may be consummated has expired, and as to which all
conditions to the consummation of such transactions prescribed by law,
regulation or order have been satisfied.
"Financial Statements" means the audited consolidated balance sheet of
each of TXU, the Company and TXU Holdings for each of the last two fiscal years
ended December 31, 2001 and 2000 and the related audited consolidated statements
of income, retained earnings, stockholders' equity and changes in financial
position, together with the related notes and schedules thereto, accompanied by
the reports of accountants.
"Form 8-K" means the Current Report on Form 8-K to be filed by TXU
Holdings on behalf of the Company and disclosing the September 30, 2002 Interim
Financial Statements of the Company.
"Governmental Authority" means any United States or non-United States
federal, national, supranational, state, provincial, local, or similar
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or
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judicial or arbitral body, including the Federal Energy Regulatory Commission,
the Nuclear Regulatory Commission, the SEC or the appropriate state public
utilities commission.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"Hazardous Materials" means (a) petroleum and petroleum products,
radioactive materials, asbestos-containing materials, urea formaldehyde foam
insulation, transformers or other equipment that contain polychlorinated
biphenyls and radon gas, (b) any other chemicals, materials or substances
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes", "restricted
hazardous wastes", "toxic substances", "toxic pollutants", "contaminants" or
"pollutants", or words of similar import, under any applicable Environmental
Law, and (c) any other chemical, material or substance which is regulated by any
Environmental Law.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" of any Person means, without duplication, net of
restricted cash and cash equivalents off-setting Indebtedness (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of property or
services (other than trade payables and accrued liabilities arising in the
ordinary course of business), (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all capitalized lease obligations of such Person,
(f) all obligations, contingent or otherwise, of such Person under acceptance,
letter of credit or similar facilities securing Indebtedness and all interest
rate or foreign exchange hedging transactions valued at the Agreement Value
thereof, (g) all unconditional obligations of such Person to purchase, redeem,
retire, defease or otherwise acquire for value any capital stock of such Person
or any warrants, rights or options to acquire such capital stock, (h) all
Indebtedness of any other Person of the type referred to in clauses (a) through
(g) guaranteed by such Person or for which such Person shall otherwise
(including pursuant to any keepwell, makewell or similar arrangement) become
directly or indirectly liable (other than indirectly as a result of a
performance guarantee not entered into with respect to Indebtedness), and (i)
all third party Indebtedness of the type referred to in clauses (a) through (h)
above secured by any lien or security interest on property (including accounts
and contract rights) owned by the Person whose Indebtedness is being measured,
even though such Person has not assumed or become liable for the payment of such
third party Indebtedness, the amount of such obligation being deemed to be the
lesser of the net book value of such property or the amount of the obligation so
secured; provided that (i) true sales of accounts receivables and (ii) the
obligations evidenced by the Notes, shall not constitute "Indebtedness"
hereunder.
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"Interim Financial Statements" means the unaudited consolidated
balance sheet of each of TXU, the Company and TXU Holdings as of March 31, 2002,
June 30, 2002 and September 30, 2002 and related consolidated statements of
income, retained earnings, stockholders' equity and changes in financial
position together with the related notes and schedules thereto (which, in the
case of the September 30, 2002 Interim Financial Statements of the Company, were
previously provided to the Purchaser in draft form and will be filed by TXU
Holdings in final form with the SEC as part of the Form 8-K).
"IRS" means the Internal Revenue Service of the United States.
"Law" means any United States or non-United States federal, national,
supranational, state, provincial, local or similar statute, law, ordinance,
regulation, rule, code, order, requirement or rule of law (including, without
limitation, common law).
"Liabilities" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising under
any Law (including, without limitation, any Environmental Law), Action or
Governmental Order and those arising under any contract, agreement, arrangement,
commitment or undertaking.
"Loss" shall have the meaning set forth in Section 7.02.
"Master Agreement" means the Master Agreement (Multi-Currency Cross
Border) published by the International Swap and Derivatives Association, Inc.
"Material Adverse Effect" means any circumstance, change in or effect
on TXU or any of its Subsidiaries that, individually or in the aggregate with
all other circumstances, changes in or effects on TXU, the Company or any
Subsidiary is or is reasonably likely to be materially adverse to the business,
operations, assets or liabilities (including, without limitation, contingent
liabilities), results of operations or the financial condition of either (a) TXU
and its Subsidiaries, taken as a whole, or (b) the Company and its Subsidiaries
taken as a whole.
"Membership Interest" means the membership interests in the Company,
all of which are currently owned indirectly by TXU.
"Notes" has the meaning set forth in the Recitals.
"Nuclear Facility" has the meaning set forth in Section 3.20.
"Permitted Transferee" has the meaning set forth in the Note.
"Person" means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
"Plans" has the meaning set forth in Section 3.16.
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"Purchase Price" shall have the meaning set forth in Section 2.01.
"Purchaser" shall have the meaning set forth in the Preamble.
"Purchaser Indemnified Party" shall have the meaning set forth in
Section 6.02(a).
"Registration Rights Agreement" means the Registration Rights
Agreement, to be entered into, by and among the Purchaser, the Company and TXU,
substantially in the form of Exhibit C hereto.
"Release" means disposing, discharging, injecting, spilling, leaking,
leaching, dumping, emitting, escaping, emptying, seeping, placing and the like
into or upon any land or water or air or otherwise entering into the
Environment.
"Reports" has the meaning set forth in Section 3.09.
"Rights Agreement" means the Rights Agreement, dated as of February
19, 1999, between Texas Utilities Company and The Bank of New York, as Rights
Agent.
"SEC" means the Securities and Exchange Commission.
"SEC Reports" has the meaning set forth in Section 3.09.
"Securities Act" shall have the meaning set forth in Section 3.08.
"Structuring Fee" has the meaning set forth in Section 5.04.
"Subsidiaries" means, with respect to any Person, "subsidiary company"
as such term is defined in the 1935 Act and any and all corporations,
partnerships, limited liability companies, joint ventures, associations and
other entities controlled by such Person directly or indirectly through one or
more intermediaries; provided, however that, neither TXU Europe nor any
Subsidiary of TXU Europe shall be deemed a Subsidiary of TXU or any of its
Affiliates unless this Agreement expressly provides otherwise.
"Tax" or "Taxes" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation, taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs' duties, tariffs, and
similar charges.
"Termination Date" has the meaning set forth in Section 8.01(b).
"Transaction Expenses" has the meaning set forth in Section 9.02.
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"TXU" has the meaning set forth in the Recitals.
"TXU Europe" means TXU Europe Limited, an indirect wholly owned
subsidiary of TXU.
"TXU Holdings" means TXU US Holdings Company, a wholly owned
subsidiary of TXU.
"TXU Holdings Common Stock" means the common stock, without par value
of TXU Holdings.
"Unavailable Contracts" has the meaning set forth in Section 3.14.
"U.S. GAAP" means the generally accepted accounting principles applied
in the United States.
"1935 Act" means the Public Utility Holding Company Act of 1935, as
amended.
ARTICLE II
PURCHASE AND SALE OF Interests
SECTION 2.01 Purchase and Sale of Interests. Subject to the
fulfillment or waiver of the conditions precedent set forth in Article VI, the
Company hereby agrees to issue and sell to the Purchaser, and the Purchaser
hereby agrees to purchase from the Company, $750 million aggregate principal
amount of the Notes for $750 million (the "Purchase Price").
SECTION 2.02 Closing. Subject to the terms and conditions of this
Agreement, the issuance, sale and purchase of the Notes contemplated by this
Agreement shall take place at a closing (the "Closing") to be held at the
offices of Shearman & Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
at 10:00 A.M., Eastern Standard Time on the later of (a) November 22, 2002 or
(b) two Business Days following the satisfaction or waiver of all other
conditions to the obligations of the parties set forth in Article VI (other than
those conditions that by their nature are to be fulfilled at Closing), or at
such other place or at such other time or such other date as the Purchaser and
the Company shall mutually agree upon in writing (the date on which the Closing
takes place being the "Closing Date").
SECTION 2.03 Closing Deliveries by the Company and TXU. At the
Closing, the Company or TXU, as the case may be, shall deliver, or cause to be
delivered, to the Purchaser:
(a) the Notes, in such number and denomination as reasonably
requested by the Purchaser in accordance with Section 6.04 of the
Notes; and
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(b) the certificates, opinions and other documents required
to be delivered pursuant to Section 6.01 and any other certificates or
documents reasonably requested by the Purchaser.
SECTION 2.04 Closing Deliveries by the Purchaser. At the Closing, the
Purchaser shall deliver, or cause to be delivered, to the Company:
(a) the Purchase Price, net of the Structuring Fee and
Transaction Expenses, by wire transfer in immediately available funds
to an account designated in writing by the Company to the Purchaser
not later than three Business Days prior to the Closing Date; and
(b) the certificates, opinions and other documents required
to be delivered pursuant to Section 6.02.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF TXU AND THE COMPANY
As an inducement to the Purchaser to enter into this Agreement, TXU
and the Company hereby jointly and severally represent and warrant to the
Purchaser as follows:
SECTION 3.01 Organization, Authority and Qualification of TXU and the
Company. TXU is a corporation and the Company is a limited liability company, in
each case, duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization, as the case may be,
and has all necessary power and authority to enter into this Agreement and the
Ancillary Agreements, to carry out its obligations hereunder and thereunder and
to consummate the transactions contemplated by this Agreement and thereby. Each
of TXU and the Company is duly licensed or qualified to do business and each is
in good standing in each jurisdiction in which the properties owned or leased by
them or the operation of their businesses make such licensing or qualification
necessary, other than such failures to be so licensed or qualified and in good
standing as would reasonably be expected not to be material. The execution and
delivery of this Agreement and the Ancillary Agreements by each of TXU and the
Company, the performance by each of TXU and the Company of their respective
obligations hereunder and thereunder and the consummation by each of TXU and the
Company of the transactions contemplated by this Agreement and thereby have been
duly authorized by all requisite action on the part of each of TXU and the
Company and their stockholders or members, as the case may be. This Agreement
has been, and upon their execution and delivery, the Ancillary Agreements and
the Notes shall have been, duly executed and delivered by each of TXU and the
Company, and (assuming in the case of this Agreement and the Ancillary
Agreements, due authorization, execution and delivery by the Purchaser) shall
constitute, legal, valid and binding obligations of each of TXU and the Company,
enforceable against each of TXU and the Company in accordance with their
respective terms.
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SECTION 3.02 Subsidiaries. (a) Other than as set forth in Section
3.02(i) of the Disclosure Schedule, TXU has no material Subsidiaries. Other than
the Subsidiaries or as set forth in Section 3.02(ii) of the Disclosure Schedule,
neither TXU nor any of its Subsidiaries is a member of (nor is any material part
of the Business conducted through) any partnership nor is TXU or any of its
Subsidiaries a participant in any joint venture or similar arrangement that is
material to TXU or the Company.
(b) Each Subsidiary of TXU that is a corporation: (i) is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, (ii) has all
necessary power and authority to own, operate or lease the properties
and assets owned, operated or leased by such Subsidiary and to carry
on its business as it has been and is currently conducted by such
Subsidiary and (iii) is duly licensed or qualified to do business and
is in good standing in each jurisdiction in which the properties owned
or leased by it or the operation of its business makes such licensing
or qualification necessary or desirable, other than such failures to
be licensed or qualified and in good standing as would be reasonably
expected not to have a Material Adverse Effect. Each Subsidiary of TXU
that is not a corporation: (i) is duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization,
(ii) has all necessary power and authority to own, operate or lease
the properties and assets owned, operated or leased by such Subsidiary
and to carry on its business as it has been and is currently conducted
by such Subsidiary and (iii) is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the
properties owned or leased by it or the operation of its business
makes such licensing or qualification necessary or desirable, other
than such failures to be licensed or qualified and in good standing as
would be reasonably expected not to have a Material Adverse Effect.
(c) All corporate actions taken by each Subsidiary of TXU
have been duly authorized by such Subsidiary (or its parent company,
as the case may be) and no Subsidiary has taken any action that in any
material respect conflicts with, constitutes a default under or
results in a violation of any provision of its certificate of
incorporation or by-laws (or similar organizational documents).
SECTION 3.03 Capitalization. (a) The authorized capital stock of TXU
consists of 1,000,000,000 shares of Common Stock and 50,000,000 shares of
Preference Stock $25.00 par value per share ("Preference Stock"). As of November
8, 2002, (i) 287,136,570 shares of Common Stock were issued and outstanding, all
of which are validly issued, fully paid and nonassessable, (ii) 813,000 shares
of Preference Stock were issued and outstanding, all of which are validly
issued, fully paid and nonassessable, and (iii) as of September 30, 2002, less
than 10,000,000 shares of Common Stock were reserved for issuance pursuant to
employee and director benefit plans. None of the issued and outstanding shares
of Common Stock was issued in violation of any preemptive rights. Other than (i)
any grants of stock, rights and stock options to employees and directors in the
ordinary course of business under employee and director benefit plans, (ii) any
issuances of rights under the Rights Agreement or (iii) any transactions under
TXU's dividend reinvestment and direct stock purchase plan or (iv) as set forth
in the SEC Reports, there are no options, warrants, convertible securities or
other rights, agreements, arrangements or commitments of any character relating
to the issuance of additional shares of Common Stock or Preference Stock by TXU.
Other than as set forth in the SEC Reports, there
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are no outstanding contractual obligations of TXU to repurchase, redeem or
otherwise acquire any shares of Common Stock or Preference Stock or to provide
funds to, or make any material investment (in the form of a loan, capital
contribution or otherwise) in, any other Person. Other than as set forth in the
SEC Reports, there are no voting trusts, stockholder agreements, proxies or
other agreements or understandings in effect with respect to the voting or
transfer of any of the shares of Common Stock or Preference Stock to which TXU
or any of its Subsidiaries is a party.
(b) The Company is a limited liability company. TXU Holdings
is the beneficial owner of all of the authorized, issued and
outstanding Membership Interests of the Company (other than Membership
Interests treated as held by the Purchaser for tax purposes). TXU is
the direct or indirect beneficial owner of all of the issued and
outstanding shares of voting capital stock of TXU Holdings. TXU Energy
Trading Company LP, TXU Energy Retail Company LP and TXU Generation
Holdings Company LLC are direct or indirect wholly owned Subsidiaries
of the Company.
(c) All the outstanding shares of capital stock of each of
TXU's Subsidiaries that is a corporation are validly issued, fully
paid, nonassessable and, except with respect to wholly owned
Subsidiaries, free of preemptive rights and are owned by TXU, whether
directly or indirectly, free and clear of all Encumbrances in all
material respects. Other than any grants of directors' qualifying
shares, there are no options, warrants, convertible securities or
other rights, agreements, arrangements or commitments of any character
relating to the issuance of additional shares of capital stock or
other equity interests of any of TXU's material Subsidiaries or
obligating TXU, TXU Holdings or any of their respective material
Subsidiaries to issue or sell any shares of capital stock of, or any
other interest in, any material Subsidiary. Other than (i) as set
forth in the SEC Reports, (ii) pursuant to the transactions
contemplated by this Agreement and the Ancillary Agreements or (iii)
any proxy to vote in respect of the equity interests of TXU's
Subsidiaries granted to the Chairman of the Board and Chief Executive
Officer of TXU, there are no voting trusts, stockholder agreements,
proxies or other agreements or understandings in effect with respect
to the voting or transfer of any shares of capital stock of or any
other interests in any material Subsidiary to which TXU, TXU Holdings
or any of their respective material Subsidiaries is a party.
SECTION 3.04 No Conflict. The execution, delivery and performance of
this Agreement and the Ancillary Agreements by TXU and the Company do not and
will not (a) violate, conflict with or result in the breach of any provision of
the certificate of incorporation and by-laws of TXU or similar organizational
documents of the Company or any of their respective Subsidiaries, (b) conflict
with or violate any Law or Governmental Order applicable to TXU, the Company,
any of their respective Subsidiaries or any of their respective assets,
properties or businesses including, without limitation, the Business, or (c)
conflict with, result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any Encumbrance on any of the shares of Common Stock, any of the
assets of TXU or any of the Membership Interests or any of the assets of the
Company pursuant to, any note, bond, mortgage or indenture, contract, agreement,
lease, sublease, license, permit, franchise or
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other instrument or arrangement to which TXU, the Company or any of their
respective Subsidiaries is a party or by which any of the shares of Common
Stock, any of the assets of TXU or any of the Membership Interests or any of
such assets or properties is bound or affected, other than such conflicts or
violations as would not reasonably be expected to have a Material Adverse
Effect.
SECTION 3.05 Governmental Consents and Approvals. Other than as set
forth in Section 3.05 of the Disclosure Schedule, the execution, delivery and
performance of this Agreement by TXU and the Company do not and will not require
any consent, approval, authorization or other order of, action by, filing with
or notification to, any Governmental Authority.
SECTION 3.06 Compliance with Laws. (a) TXU and the Company have
conducted and continue to conduct their respective businesses, in all material
respects, in accordance with all Laws and Governmental Orders applicable to them
or any of their respective Subsidiaries or any of their respective properties or
assets, including, without limitation, their Assets, and neither TXU, the
Company nor any of their respective Subsidiaries are in violation in any
material respect of any such Law or Governmental Order.
(b) No such Governmental Order has or could affect the
legality, validity or enforceability of this Agreement, any Ancillary
Agreement or the consummation of the transactions contemplated by this
Agreement or thereby.
SECTION 3.07 Financial Information; Books and Records. (a) The
Financial Statements and the Interim Financial Statements (i) were prepared in
accordance with the books of account and other financial records of TXU and its
consolidated Subsidiaries including TXU Europe and its Subsidiaries, (ii)
present fairly the consolidated financial condition and results of operations of
TXU and its consolidated Subsidiaries including TXU Europe and its Subsidiaries
as of the dates thereof or for the periods covered thereby, and (iii) have been
prepared in accordance with U.S. GAAP applied on a basis consistent with past
practices and (iv) include all adjustments (consisting only of normal recurring
accruals) that are necessary for a fair presentation of consolidated financial
condition and results of the operations as of the dates thereof or for the
periods covered thereby.
(b) The books of account and other financial records of TXU
and its consolidated Subsidiaries including TXU Europe and its
Subsidiaries: (i) reflect all items of income and expense and all
assets and Liabilities required to be reflected therein in accordance
with U.S. GAAP applied on a basis consistent with past practices, (ii)
are in all material respects complete and correct, and do not contain
or reflect any material inaccuracies or discrepancies and (iii) have
been maintained in accordance with good business and accounting
practices.
SECTION 3.08 Litigation. Except as set forth in Section 3.08 of the
Disclosure Schedule or as disclosed in the SEC Reports, (a) there are no
material Actions (i) by or against TXU or any of its material Subsidiaries or by
or against TXU or any Affiliate thereof and relating to the Business, TXU or any
of its material Subsidiaries or (ii) affecting any of the assets of TXU or its
material Subsidiaries or the Business pending before any Governmental Authority
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(or, to the actual knowledge of TXU, threatened to be brought by or before any
Governmental Authority) and (b) neither TXU nor any of its material Subsidiaries
or any of their respective assets or properties, including, without limitation,
the Assets, is subject to any material Governmental Order (nor, to the actual
knowledge of TXU, are there any such material Governmental Orders threatened to
be imposed by any Governmental Authority).
SECTION 3.09 Reports. The filings required to be made (the "Reports")
by TXU and its Subsidiaries under the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Texas Utilities Code, the Federal Power Act, the Natural
Gas Act or the 1935 Act have been filed with the SEC, the Federal Energy
Regulatory Commission or the Texas Public Utility Commission, as the case may
be, including all forms, statements, reports, written agreements and all
documents, exhibits, amendments and supplements appertaining thereto, and TXU
and its Subsidiaries, as the case may be, have complied in all material respects
with all applicable requirements of the appropriate act and the rules and
regulations thereunder. As of their respective dates, the Reports filed with the
SEC under the Exchange Act, the Securities Act or the 1935 Act (the "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. To the extent applicable, the statutory certification
requirements of Section 302 and Section 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002
have been complied with in all respects by TXU and its Subsidiaries.
SECTION 3.10 Environmental and Other Permits and Licenses; Related
Matters. Except as set forth in the Financial Statements, Interim Financial
Statements or the SEC Reports, (a) TXU and each of its Subsidiaries has complied
in all material respects with all federal, state, local and other statutes,
ordinances, orders, judgments, rulings, regulations and legally binding
interpretations thereof, relating to the environment, pollution, natural
resources, health and safety, and nuclear regulation or control, including,
without limitation, any permits, approvals or other authorizations required by
such, (together, "Environmental Laws") and all material past noncompliance with
Environmental Laws has been resolved without any pending, ongoing or future
obligation, cost or liability; (b) neither TXU nor any of its Subsidiaries has
received any written notice from any entity, whether governmental or otherwise,
alleging failure to comply with, or any material liability under, any
Environmental Laws, and to the actual knowledge of TXU and any of its
Subsidiaries, no such written notices are threatened; (c) there has been no
Release of any quantities or concentrations of Hazardous Material at, on or
emanating to or from any facilities and properties currently or formerly owned,
operated, leased, used or occupied by TXU or any of its Subsidiaries that have
or will result in a material liability imposed on TXU or its Subsidiaries; and
(d) TXU and each of its Subsidiaries are aware of no events, conditions or
circumstances that could reasonably be expected to give rise to any material
liability under any Environmental Law.
SECTION 3.11 Regulation as a Utility. No Subsidiary of TXU is a
"public utility company" under the 1935 Act, other than Oncor Electric Delivery
Company and TXU Gas Company. No Subsidiary of TXU other than Oncor Electric
Delivery Company is an "electric utility" under the Texas Utilities Code and no
Subsidiary of TXU is a "gas utility" under the Texas Utilities Code other than
TXU Gas Company, TXU Fuel Company and Lone Star Gas Company of Texas, Inc. No
Subsidiary of TXU is subject to any material regulation as
12
a public utility or public service company (or similar designation) by any state
of the United States (other than the State of Texas).
(b) TXU and the Company and each of their respective Subsidiaries are
exempt from all provisions of the 1935 Act and rules and regulations thereunder,
except for Sections 9(a)(2) and 33 of such Act and rules and regulations
thereunder, and the execution, delivery and performance by TXU and the Company
of this Agreement, and their respective obligations hereunder, do not violate
any provision of the 1935 Act or any rule or regulation thereunder.
SECTION 3.12 Authorization of Notes. On or prior to the Closing Date,
the Company will have duly authorized and issued the Notes and the Notes will be
legally valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the enforceability thereof may
be (i) subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization or similar laws in effect which affect the
enforcement of creditors' rights generally and (ii) limited by general
principles of equity (whether considered in a proceeding at law or equity).
SECTION 3.13 Absence of Certain Changes or Events; Absence of
Undisclosed Liabilities. (a) Except as set forth in the SEC Reports filed prior
to the date hereof, from December 31, 2001 through the date hereof, TXU, TXU
Holdings, the Company and their Subsidiaries have conducted the Business only in
the ordinary course of business consistent with past practice and there has not
been, and no fact or condition exists which would have or, insofar as reasonably
can be foreseen, could have a Material Adverse Effect.
(b) Other than as disclosed in the Financial Statements, and only to
the extent not inconsistent with the Interim Financial Statements for the
quarter ended September 30, 2002, neither TXU, the Company nor any of their
respective Subsidiaries have any liabilities or obligations (whether absolute,
accrued, contingent or otherwise), other than (i) related to the transactions
contemplated by this Agreement, (ii) Liabilities, obligations or contingencies
that are accrued or reserved against in the consolidated financial statements of
TXU, TXU Holdings or the Company or reflected in the notes thereto for the
quarter ended September 30, 2002, (iii) which were incurred after September 30,
2002 in the ordinary course of business and would not be reasonably expected to
have a Material Adverse Effect or (iv) would not be required by U.S. GAAP to be
reflected in a consolidated corporate balance sheet.
SECTION 3.14 Material Contracts. (a) TXU and TXU Holdings have filed
with the SEC all reports and exhibits required to be filed under Regulation S-K
of the Securities Act as attachments to their respective SEC Reports filed prior
to the date hereof, including all material contracts (the "Available
Contracts"). Section 3.14 of the Disclosure Schedule sets forth all other
material contracts of TXU, TXU Holdings and the Company (other than this
Agreement and the Ancillary Agreements) that are required to be filed with the
SEC in the future, pursuant to Regulation S-K of the Securities Act, as
attachments to the SEC Reports of TXU and TXU Holdings (the "Unavailable
Contracts" and, together with the Available Contracts and all other contracts
material to the operation or conduct of the Business, including, without
limitation, any material contracts relating to or for Indebtedness,
non-competition,
13
transactions with Affiliates, transactions not in the ordinary course of
business or transactions with any Governmental Authority, the "Material
Contracts").
(a) Each Material Contract: (i) is valid and binding on the
parties thereto and is in full force and effect and (ii) upon
consummation of the transactions contemplated by this Agreement and
the Ancillary Agreements shall continue in full force and effect
without penalty or other adverse consequence. Neither TXU nor any of
its Subsidiaries is in breach of, or default under, any Material
Contract.
(b) To the actual knowledge of TXU and the Company, no other
party to any Material Contract is in breach thereof or default
thereunder and none of TXU or any of its Subsidiaries has received any
notice of termination, cancellation, breach or default under any
Material Contract.
SECTION 3.15 Assets. (a) TXU or a Subsidiary of TXU, owns, leases or
has the legal right to use all properties and assets, used or intended to be
used in, and material to, the conduct of the Business and, with respect to
contract rights, is a party to and enjoys the right to the benefits of all
contracts, agreements and other arrangements used or intended to be used by (as
such relate to the Business) TXU or any of its Subsidiaries, and material to,
the conduct of the Business, all of which properties, assets and rights
constitute "Assets". Each of TXU, the Company or any of their respective
Subsidiaries, as the case may be, has good and marketable title to, or, in the
case of leased or subleased Assets, valid and subsisting leasehold interests in,
all the Assets, free and clear of all Encumbrances that impair in any material
respect the ability of such entity to use such Assets in the manner they are
used or intended to be used.
(b) The Assets constitute all the properties, assets and
rights forming a part of, used, held or intended to be used in, and
all such properties, assets and rights as are necessary in, and
material to, the conduct of, the Business. TXU and the Company have
caused all Assets to be maintained in accordance with good business
practice, and all Assets are in good operating condition and repair
and are suitable for the purposes for which they are used and
intended.
SECTION 3.16 Employee Benefit Matters. Each "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and each other material plan, policy, program, practice,
agreement, understanding or arrangement maintained, sponsored or contributed to
by TXU, or by any trade or business (whether or not incorporated) that together
with TXU would be deemed a "single employer" within the meaning of Section
4001(b) of ERISA (an "ERISA Affiliate") (collectively, the "Plans"), has been
operated and administered in all material respects in accordance with its terms
and all applicable Law, including, but not limited to, ERISA and the Code,
except to the extent that such operation and administration would not reasonably
be expected to have a Material Adverse Effect. With respect to the Plans except
for matters disclosed in Financial Statements of TXU or the Plans, no event has
occurred and, to the knowledge of TXU and its ERISA Affiliates, there exists no
condition or set of circumstances in connection with which TXU or its ERISA
Affiliates could be subject to any Liability (other than routine claims for
benefits) under the terms of the Plans, ERISA, the Code or any other applicable
Law that has had, or would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. All
14
contributions or payments required to be made under each Plan, by reason of Part
3 of Subtitle B of Title I of ERISA, Section 412 of the Code, or the terms of
the Plan, have been and will be timely made. No Liability has been incurred
under, arising out of or by operation of Title IV of ERISA (other than liability
to the Pension Benefit Guaranty Corporation for premiums arising in the ordinary
course), and to the knowledge of TXU and its ERISA Affiliates no fact or event
exists which could reasonably be expected give rise to any such Liability,
except to the extent that any such Liability would not reasonably be expected to
have a Material Adverse Effect.
SECTION 3.17 Taxes. (a) All returns and reports in respect of Taxes
("Tax Returns") required to be filed by or with respect to TXU and each
Subsidiary of TXU (including any consolidated, combined or unitary Tax Returns)
have been timely filed; (b) all Taxes required to be shown on such Tax Returns
or otherwise due have been timely paid; (c) all such Tax Returns are true,
correct and complete in all material respects; (d) except for adjustments,
actions or proceedings in respect of which adequate reserves have been
established in accordance with U.S. GAAP applied on a basis consistent with past
practices (i) no adjustment relating to such Tax Returns has been proposed
formally or informally by any Tax authority and, to the actual knowledge of TXU,
no basis exists for any such adjustment and (ii) there are no pending or, to the
actual knowledge of TXU, threatened actions or proceedings for the assessment or
collection of Taxes against TXU or any Subsidiary of TXU or any corporation that
was included in the filing of a Tax Return with TXU or the Company on a
consolidated or combined basis; (e) there are no Tax liens on any assets of TXU
or any Subsidiary of TXU; (f) immediately prior to the Closing, the Company is
classified as a partnership (and not as an association, or publicly-traded
partnership, taxable as a corporation) for U.S. federal income Tax purposes; and
(g) neither the Company nor any Subsidiary of the Company has any (A) income
reportable for a period ending after the Closing Date but attributable to a
transaction (e.g., an installment sale) occurring in or a change in accounting
method made for a period ending on or prior to the Closing Date that resulted in
a deferred reporting of income from such transaction or from such change in
accounting method (other than a deferred intercompany transaction), or (B)
deferred gain or loss arising out of any deferred intercompany transaction.
SECTION 3.18 Insurance. All material assets, properties and risks of
TXU and any of its Subsidiaries are, and for the past five years have been,
covered by valid and, except for insurance policies that have expired under
their terms in the ordinary course, currently effective insurance policies or
binders of insurance (including, without limitation, general liability
insurance, property insurance and workers' compensation insurance) issued in
favor of TXU or a Subsidiary of TXU, as the case may be, in such types and
amounts and covering such risks as are consistent with customary practices and
standards of companies engaged in businesses and operations similar to those of
TXU, or such Subsidiary, as the case may be.
SECTION 3.19 Full Disclosure. (a) Neither TXU nor any Subsidiary of
TXU has actual knowledge of any facts pertaining to TXU, any Subsidiary of TXU
or the Business which could reasonably be expected to have a Material Adverse
Effect and which have not been disclosed to the Purchaser in this Agreement, the
Financial Statements, the Interim Financial Statements or the SEC Reports.
(b) The representations or warranties of TXU and the Company
in this Agreement, and all written statements and certificates
furnished or to be furnished to the
15
Purchaser pursuant to this Agreement, or in connection with the
transactions contemplated by this Agreement, taken as a whole do not
contain or will not contain any untrue statement of a material fact,
or do not or will not omit to state a material fact necessary to make
the statements contained herein or therein not misleading.
SECTION 3.20 Operations of Nuclear Power Plant . The operation of the
nuclear generation plant (the "Nuclear Facility") wholly owned by the Company is
being conducted in substantial compliance with current laws and regulations
governing nuclear plant operations. The Nuclear Facility maintains and is in
substantial compliance with emergency evacuation plans as required by the laws
and regulations governing nuclear plant operations and as of the date of this
Agreement, the storage of spent nuclear fuel and the plans for the
decommissioning of the Nuclear Facility substantially conform with the
requirements of applicable law.
SECTION 3.21 TXU Europe. (a) Except for Liabilities arising from the
matters set forth on Section 3.21 of the Disclosure Schedule, neither TXU nor
any of its Subsidiaries, are liable to or for any Liability, including
Indebtedness, of TXU Europe and its Subsidiaries.
(b) Except as set forth on Section 3.21 of the Disclosure
Schedule and as would not individually or in the aggregate be
material, no contract, agreement, arrangement, license, lease, note,
guarantee, mortgage, commitment or understanding exists between TXU
and its Subsidiaries, on the one hand, and TXU Europe and its
Subsidiaries, on the other hand.
SECTION 3.22 Nature of Operations. TXU and the Company are primarily
engaged directly or through their majority owned Subsidiaries in the production
or sale of a product or service other than the investment of capital.
SECTION 3.23 Investment Company. Neither TXU nor the Company is an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
As an inducement to the Company to enter into this Agreement, the
Purchaser hereby represents and warrants to the Company as follows:
SECTION 4.01 Organization and Authority of the Purchaser. The
Purchaser is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has all necessary power and
authority to enter into this Agreement and the Ancillary Agreements to which it
is a party, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated by this Agreement. The execution and
delivery by the Purchaser of this Agreement and the Ancillary Agreements, the
performance by the
16
Purchaser of its obligations hereunder and thereunder and the consummation by
the Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all requisite action on the part of the Purchaser. This Agreement
has been, and upon their execution and delivery the Ancillary Agreements shall
be duly executed and delivered by the Purchaser, and (assuming due
authorization, execution and delivery by the Company) this Agreement and the
Ancillary Agreements shall constitute legal, valid and binding obligations of
the Purchaser, enforceable against the Purchaser in accordance with its terms.
SECTION 4.02 No Conflict. The execution, delivery and performance by
the Purchaser of this Agreement and the Ancillary Agreements do not and will not
(a) violate, conflict with or result in the breach of any provision of the
organizational documents of the Purchaser, (b) conflict with or violate any Law
or Governmental Order applicable to the Purchaser or (c) conflict with, or
result in any breach of, constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, require any
consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement to which the Purchaser is a party,
which would adversely affect the ability of the Purchaser to carry out its
obligations under, and to consummate the transactions contemplated by, this
Agreement or by the Ancillary Agreements, except in the case any of the
foregoing that would not be reasonably expected to have a material adverse
effect.
SECTION 4.03 Governmental Consents. Except as set forth in Section
3.05 of the Disclosure Schedule, the execution, delivery and performance of this
Agreement by the Purchaser do not and will not require any consent, approval,
authorization or other order of, action by, filing with or notification to any
Governmental Authority.
SECTION 4.04 Financing. The Purchaser has or will have at Closing
sufficient funds to consummate the transactions contemplated in this Agreement.
SECTION 4.05 Private Placement. (a) The Purchaser understands that the
offering and sale of the Notes and the Common Stock by the Company is intended
to be exempt from registration under the Securities Act pursuant to Section 4(2)
thereof.
(b) The Purchaser is an "accredited investor" as such term is defined
in Rule 501(a) of Regulation D under the Securities Act.
(c) The Purchaser is acquiring the Notes to be acquired hereunder (and
will acquire the Common Stock upon exchange pursuant to the Exchange Agreement)
for its own account (or for accounts over which it exercises investment
authority), for investment and not with a view to the public resale or
distribution thereof, in violation of any securities law.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01 Conduct of Business Prior to the Closing. (a) TXU
covenants and agrees that, between the date hereof and the time of the Closing,
TXU shall, and shall cause
17
each of its Subsidiaries to, conduct their respective businesses in the ordinary
course and consistent with TXU's and such Subsidiary's prior practice and in
compliance in all material respects with all applicable Laws. TXU shall not, and
shall cause each of its Subsidiaries not to, take any action that would, or that
is reasonably likely to, result in any of the representations and warranties of
TXU set forth in Article III (i) that are not qualified by "materiality" or
"material" or "Material Adverse Effect" to be untrue in any material respect and
(ii) that are qualifed by "materiality" or "material" or "Material Adverse
Effect" to be untrue in any respect, as of the date made or as of the Closing
Date or in any of the conditions to the transactions contemplated hereby and set
forth herein not being satisfied.
(b) The Company covenants and agrees that, between the date
hereof and the time of the Closing, the Company shall, and shall cause
each of its Subsidiaries to, conduct their respective businesses in
the ordinary course and consistent with the Company's and such
Subsidiary's prior practice and in compliance in all material respects
with all applicable Laws. The Company shall not, and shall cause each
of its Subsidiaries not to, take any action that would, or that is
reasonably likely to, result in any of the representations and
warranties of the Company set forth in Article III (i) that are not
qualified by "materiality" or "material" or "Material Adverse Effect"
to be untrue in any material respect and (ii) that are qulaifed by
"materiality" or "material" or "Material Adverse Effect" to be untrue
in any respect, as of the date made or as of the Closing Date or in
any of the conditions to the consummation of the transactions
contemplated hereby and set forth herein not being satisfied.
SECTION 5.02 Access to Information. (a) From the date hereof until the
Closing, upon reasonable prior notice, TXU shall cause its officers, directors,
employees, agents, representatives, accountants and counsel and shall cause its
Subsidiaries and each of its Subsidiaries' officers, directors, employees,
agents, representatives, accountants and counsel to: afford the officers,
employees, agents, accountants, counsel, financing sources and representatives
of the Purchaser reasonable access, during normal business hours, to the
offices, properties, plants, other facilities, books and records of the Business
and each Subsidiary and to those officers, directors, employees, agents,
accountants and counsel of the Company and of each of its Subsidiaries who have
any knowledge relating to the Company, any Subsidiary or the Business.
(b) From the date hereof until the Closing, upon reasonable prior
notice, TXU shall use its reasonable best efforts to cause TXU Europe and each
of TXU Europe's officers, directors, employees, agents, representatives,
accountants and counsel to: afford the officers, employees, agents, accountants,
counsel, financing sources and representatives of the Purchaser reasonable
access, during normal business hours, to the offices, properties, plants, other
facilities, books, records of TXU Europe and each of its Subsidiaries and to
those officers, directors, employees, agents, accountants and counsel of TXU
Europe and its Subsidiaries who have knowledge relating to TXU Europe or its
Subsidiaries.
SECTION 5.03 Notice of Developments. Prior to the Closing, to the
extent TXU or any of its Subsidiaries has actual knowledge, TXU shall promptly
notify the Purchaser in writing of (a) all events, circumstances, facts and
occurrences arising subsequent to the date of this Agreement which could
reasonably be expected to result in any breach of a representation or
18
warranty or covenant of TXU or the Company in this Agreement or which could have
the effect of making any representation or warranty of TXU or the Company in
this Agreement untrue or incorrect in any respect and (b) all other material
developments affecting the assets, liabilities, business, financial condition,
or results of operations of TXU or any of its Subsidiaries (including TXU Europe
and its Subsidiaries, but only to the extent such developments could reasonably
be expected to have a Material Adverse Effect.
SECTION 5.04 Structuring Fee. At the Closing, the Purchaser shall
deduct from the Purchase Price (a) an amount equal to the product of Purchase
Price multiplied by .0133 as a fee for the assistance of DLJ Merchant Banking
III, Inc.'s in structuring the transactions contemplated by this Agreement (the
"Structuring Fee") and (b) in accordance with Section 9.02 of this Agreement,
any and all Transaction Expenses incurred through the Closing Date.
SECTION 5.05 Amended and Restated Limited Liability Company Agreement
of the Company. The Purchasers and TXU agree that, promptly following the date
hereof and in any event, prior to the Closing Date, TXU shall cause the
amendment and restatement of the Limited Liability Company Agreement of the
Company, dated as of November 12, 2001, in form and substance reasonably
satisfactory to the Purchasers and TXU.
SECTION 5.06 Further Action. (a) Each party hereto shall use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
do or cause to be done all things necessary, proper or advisable under
applicable Law, and execute and deliver such documents and other papers as may
be required to carry out the provisions of this Agreement and the Ancillary
Agreements and consummate and make effective the transactions contemplated by
this Agreement and the Ancillary Agreements.
(b) Each party hereto shall, and shall cause its
Subsidiaries to, cooperate and use its reasonable best efforts to (i)
promptly prepare and file with the appropriate Governmental
Authorities all necessary reports, applications, petitions, forms,
notices or other applicable documents required or advisable with
respect to the transactions contemplated by this Agreement and the
Ancillary Agreements, (ii) comply, at the earliest practicable date
following the date of receipt by Purchaser or the Company, with any
request for information or documents from a Governmental Authority
related to, and appropriate in the light of, matters within the
jurisdiction of such Governmental Authority, provided that (x) the
parties shall use their reasonable best efforts to keep any such
information confidential to the extent required by the party providing
the information and (y) each party may take, in its reasonable
discretion, appropriate legal action not to provide information
relating to trade or business secrets, privileged information or other
information which reasonably should be treated as confidential, (iii)
take all actions necessary or advisable to obtain no later than the
Termination Date all necessary permits, consents, approvals and
authorizations of all Governmental Authorities necessary or advisable
to consummate the transactions contemplated by this Agreement and the
Ancillary Agreements and (iv) oppose vigorously any litigation that
would impede or delay the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements,
including, without limitation, promptly appealing any adverse court
order.
19
SECTION 5.07 Taxes. TXU and the Company each covenants that: (a)(i)
For all U.S. federal, state, local and foreign income Tax purposes, the Note
shall be treated as a preferred equity interest in the Company (including
amounts deducted from the Purchase Price in respect of the Structuring Fee and
Transaction Expenses pursuant to Section 2.04(a) hereof), and unless prohibited
by applicable law, TXU shall cause the Company to elect to be classified as a
partnership (and not as an association, or publicly-traded partnership, taxable
as a corporation). (ii) Accordingly, TXU and the Company shall cause a capital
account shall be maintained for the holder in accordance with section
1.704-2(b)(2) of the U.S. Treasury regulations, which shall be increased to
reflect the amounts invested by the holder in the Company and allocations of net
profits (or, to the extent required, items of income and gain), and which shall
be reduced to reflect distributions by the Company to the holder (including
amounts payable pursuant to the terms of the Note) and allocations of net losses
(or, to the extent required, items of deduction or loss). (iii) Promptly
following the end of each fiscal year of the Company (and in no event later than
90 days after the close of such fiscal year), TXU and the Company shall cause to
be provided to the holder an IRS Schedule K-1, reporting the holder's share of
the taxable income or loss of the Company, and such separately stated items of
income, gain, loss, deduction or credit as required by U.S. federal income Tax
law, and TXU and the Company also shall cause to be provided such information as
shall be required or reasonably requested by the holder for purposes of allowing
the holder to prepare and file its U.S. federal, state, local and foreign income
Tax returns. (iv) In the event that the Note is exchanged by the holder for a
membership interest in the Company (at the option of the Company or otherwise),
TXU and the Company each covenants that, consistent with the U.S. federal,
state, local and foreign income Tax treatment of the Note as a preferred equity
interest in the Company, such an exchange shall be treated as a "nonrecognition
transaction" under section 721 of the Internal Revenue Code of 1986, as amended.
(v) Other than any elections made upon the conversion of the Company to a
partnership for federal Tax purposes (which shall be made consistent with past
practice, where applicable), the Company (including any tax matters member
thereof in its capacity as such) shall not, and TXU shall cause the Company not
to (including for the period after the date hereof through the Closing), make,
revoke or change any express or deemed Tax election or change any method of Tax
accounting if objected to in writing by the Holders' Tax Representative within
15 days of receiving notice thereof from the Company (which objection shall not
be unreasonably made, and the Company shall consult with the Holders' Tax
Representative and keep such Holder reasonably informed as to any material Tax
claim, audit or proceeding that, in any case, the Company determines in good
faith could affect the tax treatment of a Holder as owner of a preferred equity
interest in the Company or the amount or tax character of any Tax item allocated
or to be allocated to the Holder in its capacity as owner. "Holders' Tax
Representative" means a representative designated as such by a Majority in
Voting Interest.
(b) (i) For each fiscal year of the Company, net profits (or, if
required, items of income and gain) shall be allocated to the holder for U.S.
federal, state, local and foreign income Tax purposes only to the extent of the
amount of interest actually paid to the holder in respect of the Note during
such fiscal year. (ii) No other net profits or losses (or items of income, gain,
loss or deduction) shall be allocated to the holder for such purposes, except
that, if no member of the Company has a positive capital account balance, the
holder may be allocated a proportionate share of the net losses of the Company,
if any, until its capital account has been reduced to zero. (iii) In the event
that the holder receives an allocation of net losses hereunder, the holder
thereafter shall be entitled to allocations of net profits (and, if required,
items of
20
income or gain) so that the holder's capital account will equal the amount that
the holder would be entitled to receive pursuant to the terms of the Note in
connection with the liquidation or winding up of the Company. (iv)
Notwithstanding anything to the contrary herein, the holder shall not be
allocated any capital losses of the Company.
(c) Notwithstanding anything to the contrary herein, prior to any
exchange of the Note for a membership interest in the Company the holder shall
not be considered a member of the Company by reason of its ownership of the Note
for any purpose other than U.S. federal, state, local and foreign income Tax
purposes, and shall not have the rights and obligations of a member pursuant to
the Limited Liability Company Agreement of the Company.
(d) The Company shall, and TXU shall cause the Company to, prepare and
file all Tax Returns with respect to the Company (in a manner consistent with
the intended Tax treatment of the Notes pursuant to this Section 5.07), and to
pay or cause to be paid all Taxes due with respect to the income and operations
of the Company (other than income Taxes of the holders of Notes (or substitute
preferred equity interests) in relation to income of the Company that passes
through pursuant to the treatment of the Company as a partnership for Tax
purposes).
(e) Notwithstanding anything to the contrary herein, the Company and
TXU shall be liable for and shall hold the Purchaser harmless against any real
property transfer or gains, sales, use, transfer, value added, stock transfer,
and stamp taxes, any transfer, recording, registration, and other fees and any
similar Taxes that become payable in connection with the transactions
contemplated by this Agreement. The Company and TXU, after the review and
consent by the Purchaser, shall file such applications and documents as shall
permit any such Tax to be assessed and paid on or prior to the Closing Date in
accordance with any available pre-sale filing procedure.
(f) The Purchaser covenants that it will, and that it will cause its
transferees that are Permitted Transferees to, treat the Notes for all federal
income Tax purposes consistently with the treatment to which TXU and the Company
have agreed pursuant to this Section 5.07.
SECTION 5.08 Generation Capacity. Purchaser represents and warrants to
TXU and the Company that it does not own and control, and agrees that it will
not acquire ownership and control of, installed generation capacity within the
Electric Reliability Council of Texas ("ERCOT") in an amount that would cause
the Company to be deemed to own and control more than 20% of the installed
generation capacity located in ERCOT in violation of Section 39.154 of the Texas
Utility Code and the Substantive Rules of the Public Utility Commission of
Texas.
SECTION 5.09 Securities Issuances. From the date hereof until the
Closing, TXU shall not issue or sell in any manner whatsoever any Common Stock
or Common Stock Equivalents if such issuance or sale would result in an
adjustment of the Note Exercise Price (as defined in the Exchange Agreement) if
the Exchange Agreement were executed as of the date hereof.
21
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.01 Conditions to Obligations of the Purchaser. The
Purchaser's obligation to purchase and to pay for the Notes on the Closing Date
shall be subject to the satisfaction or waiver of each of the following
conditions precedent on or prior to the Closing Date:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of TXU and the Company contained in
this Agreement (1) that are not qualified by "materiality" or
"material" or "Material Adverse Effect" shall have been true and
correct in all material respects when made and shall be true and
correct in all material respects as of the Closing Date with the same
force and effect as if made as of the Closing Date and (2) that are
qualified by "materiality" or "material" or "Material Adverse Effect"
shall have been true and correct when made and shall be true and
correct as of the Closing Date, except to the extent such
representations and warranties are as of another date, in which case,
such representations and warranties shall be true and correct as of
that date, in each case, with the same force and effect as if made as
of the Closing Date, other than such representations and warranties as
are made as of another date and (ii) the covenants and agreements
contained in this Agreement to be complied with by TXU and the Company
on or before the Closing Date shall have been complied with in all
material respects, and the Purchaser shall have received a certificate
of each of TXU and the Company to such effect signed by a duly
authorized officer thereof;
(b) Closing Certificates. On or prior to the Closing Date,
the Purchaser shall have received certificates dated the Closing Date
and signed, respectively, by an authorized officer of the Company or
TXU, as the case may be, in form and substance reasonably satisfactory
to the Purchaser as to the incumbency and signature of the certifying
party's representative authorized to execute and deliver, as may be
required hereunder, documents on its behalf in connection with the
transactions contemplated hereby;
(c) No Material Adverse Effect. No event or events shall
have occurred, or be reasonably likely to occur, which, individually
or in the aggregate, have, or could have, a Material Adverse Effect;
(d) Ancillary Agreements. TXU and the Company shall have
executed and delivered to the Purchaser each of the Ancillary
Agreements to which it is a party;
(e) Issuance of the Notes. All actions required by any
applicable Law or necessary in the reasonable opinion of the Purchaser
to issue the Notes shall have been duly taken (or provisions therefor
shall have been made), including, without limitation, the making of
all registrations and filings, and all necessary consents shall have
been received;
22
(f) No Events. On and as of the Closing Date, immediately
prior to and after giving effect to the transactions contemplated by
this Agreement and the Ancillary Agreements, no event that with the
giving of notice, the passage of time, or both, shall have occurred
and be continuing and no condition shall exist that constitutes, or
with the giving of notice, the passage of time, or both, would
constitute, an event of default hereunder or thereunder;
(g) Opinion of Counsel. The Purchaser shall have received
from ▇▇▇▇▇▇ ▇▇▇▇ & Priest LLP or Hunton & ▇▇▇▇▇▇▇▇, legal opinions (i)
in the case of the sale of Notes by the Company, that no approval is
required by the Federal Energy Regulatory Commission, the SEC, the
Nuclear Regulatory Commission or the Texas Public Utility Commission,
(ii) in the case of the exchange of Notes into Common Stock, that no
approval is required by the Federal Energy Regulatory Commission or
the Texas Public Utility Commission and such other matters as may be
agreed by the parties and (iii) certain corporate matters, including
enforceability and no conflict with law or contract.
(h) Approval of Governmental Authorities. Any authorization,
consent or approval of any Governmental Authority necessary for the
execution, delivery and performance of this Agreement by TXU and the
Company shall have been obtained prior to the Closing and such
authorizations, consents and approvals shall have become Final Orders.
(i) No Proceeding or Litigation. No Action shall have been
commenced by or before any Governmental Authority, and no Governmental
Order shall exist, to set aside, restrain, enjoin or otherwise prevent
the execution, delivery or performance of this Agreement, the
Ancillary Agreements or any other documents executed in connection
herewith or therewith, or the consummation of the transactions
contemplated hereby or thereby or that could in the reasonable
judgment of the Purchaser adversely alter the transactions
contemplated hereby or thereby;
(j) No Violation. There shall have been no violation of any
applicable Law in effect as of the Closing Date as a result of or
giving effect to the transactions contemplated hereby or as
contemplated by the Ancillary Agreements or by any party hereto or
thereto and the Purchaser shall not be subject to any penalty or
liability under or pursuant to any applicable Law in effect as of the
Closing Date by virtue of the transactions contemplated hereby or
thereby; and
SECTION 6.02 Conditions to Obligations of the Company. The obligation
of the Company to sell the Notes on the Closing Date shall be subject to the
satisfaction or waiver of each of the following conditions precedent on or prior
to the Closing Date:
(a) Representations and Warranties. The representations and
warranties of the Purchaser contained in this Agreement (i) that are
not qualified by "materiality" or "material" or "Material Adverse
Effect" shall have been true and correct in all material respects when
made and shall be true and correct in all material respects as of the
Closing Date with the same force and effect as if made as of the
Closing Date and (ii) that are qualified by "materiality" or
"material" or "Material Adverse Effect" shall have been true
23
and correct when made and shall be true and correct of the Closing
Date, except to the extent such representations and warranties are as
of another date, in which case, such representations and warranties
shall be true and correct as of that date, in each case, with the same
force and effect as if made as of the Closing Date, other than such
representations and warranties as are made as of another date and (ii)
the covenants and agreements contained in this Agreement to be
complied with by the Purchaser on or before the Closing Date shall
have been complied with in all material respects, and the Company
shall have received a certificate of the Purchaser to such effect
signed by a duly authorized officer thereof; and
(b) Closing Certificates. On or prior to the Closing Date,
the Company shall have received a certificate dated the Closing Date
and signed by an authorized officer of the Purchaser in form and
substance reasonably satisfactory to the Company as to the incumbency
and signature of the certifying party's representative authorized to
execute and deliver, as may be required hereunder, documents on its
behalf in connection with the transactions contemplated hereby and by
the Operating Agreement.
(c) Opinion of Counsel. TXU shall have received from ▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, with respect to certain Federal Energy Regulatory
Commission matters, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ingersoll, LLP, with
respect to certain Nuclear Regulatory Commission matters, and ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇ LLP, with respect to certain Texas Utilities Code
matters, legal opinions with respect to (i) in the case of the sale of
the Notes by the Company, that no approval is required by the Federal
Energy Regulatory Commission, the SEC or the Texas Public Utility
Commission and (ii) in the case of the exchange of Notes into Common
Stock, that no approval is required by the Federal Energy Regulatory
Commission or the Texas Public Utility Commission and such other
matters as may be agreed by the parties.
ARTICLE VII
INDEMNIFICATION
SECTION 7.01 Survival of Representations and Warranties. The
representations and warranties of TXU and the Company contained in this
Agreement shall survive the Closing until the second anniversary of the Closing
Date, other than the representations and warranties set forth in Section 3.10,
which shall survive until the fourth anniversary of the Closing Date. The
liability of the Company with respect to the Company's representations and
warranties shall not be reduced by any investigation made at any time by or on
behalf of the Purchaser. Notwithstanding anything herein to the contrary, the
representations and warranties contained in Section 3.17 and the covenants
contained in Section 5.07 shall terminate at the close of business on the 30th
day following the expiration of the applicable statute of limitations with
respect to the Tax liabilities in question (giving effect to any waiver,
mitigation or extension thereof).
SECTION 7.02 Indemnification by TXU and the Company. (a) TXU and the
Company shall jointly and severally indemnify and hold harmless the Purchaser
and its Affiliates, officers, directors, employees, agents, successors and
assigns (each a "Purchaser
24
Indemnified Party") from and against any and all Liabilities, losses, diminution
in value, damages, claims, costs and expenses, interest, awards, judgments and
penalties (including, without limitation, attorneys' and consultants' fees and
expenses) suffered or incurred by them (including, without limitation, any
Action brought or otherwise initiated by any of them) (hereinafter a "Loss"),
arising out of or resulting from: (i) the breach of any representation or
warranty of TXU or the Company contained herein, or in any agreement,
certificate or instrument delivered pursuant hereto set forth therein) and (ii)
the breach of any agreement or covenant of TXU or the Company contained herein.
To the extent that TXU's and the Company's undertakings set forth in this
Section 7.02 may be unenforceable, TXU and the Company shall contribute the
maximum amount that they are permitted to contribute under applicable Law to the
payment and satisfaction of all Losses incurred by the Purchaser Indemnified
Parties.
(b) A Purchaser Indemnified Party shall give TXU notice of
any matter that a Purchaser Indemnified Party has determined has given
or could give rise to a right of indemnification under this Agreement
within 60 days of such determination, stating the amount of the Loss,
if known, and method of computation thereof, and containing a
reference to the provisions of this Agreement in respect of which such
right of indemnification is claimed or arises. The obligations and
Liabilities of TXU and the Company under this Article VII with respect
to Losses arising from claims of any third party that are subject to
the indemnification provided for in this Article VII ("Third Party
Claims") shall be governed by and be contingent upon the following
additional terms and conditions: if a Purchaser Indemnified Party
shall receive notice of any Third Party Claim, the Purchaser
Indemnified Party shall give TXU notice of such Third Party Claim
within 30 days after the receipt by the Purchaser Indemnified Party of
such notice; provided, however, that the failure to provide such
notice shall not release TXU and the Company from any of their
obligations under this Article VII except to the extent that TXU is
materially prejudiced by such failure and shall not relieve TXU and
the Company from any other obligation or Liability that it may have to
any Purchaser Indemnified Party otherwise than under this Article VII.
If TXU or the Company acknowledges in writing its obligation to
indemnify the Purchaser Indemnified Party hereunder against any Losses
that may result from such Third Party Claim, then TXU and the Company
shall be entitled to assume and control the defense of such Third
Party Claim at its expense and through counsel of its choice if it
gives notice of its intention to do so to the Purchaser Indemnified
Party within five days of the receipt of such notice from the
Purchaser Indemnified Party; provided, however, that if there exists
or is reasonably likely to exist a conflict of interest that would
make it inappropriate in the judgment of the Purchaser Indemnified
Party in its sole and absolute discretion for the same counsel to
represent both the Purchaser Indemnified Party, on the one hand, and
TXU and the Company, on the other hand, then the Purchaser Indemnified
Party shall be entitled to retain its own counsel in addition to any
requisite local counsel for which the Purchaser Indemnified Party
reasonably determines counsel is required, at the expense of TXU and
the Company. In the event that TXU or the Company exercises the right
to undertake any such defense against any such Third Party Claim as
provided above, the Purchaser Indemnified Party shall cooperate with
TXU and the Company in such defense and make available to TXU and the
Company, at the expense of TXU and the Company, all witnesses,
pertinent records, materials and information in the Purchaser
Indemnified
25
Party's possession or under the Purchaser Indemnified Party's control
relating thereto as is reasonably required by TXU and the Company.
Similarly, in the event the Purchaser Indemnified Party is, directly
or indirectly, conducting the defense against any such Third Party
Claim, TXU and the Company shall cooperate with the Purchaser
Indemnified Party in such defense and make available to the Purchaser
Indemnified Party, at the expense of TXU and the Company, all such
witnesses, records, materials and information in TXU's and the
Company's possession or under TXU's and the Company's control relating
thereto as is reasonably required by the Purchaser Indemnified Party.
No such Third Party Claim may be settled by TXU or the Company without
the prior written consent of the Purchaser Indemnified Party, except
if such settlement constitutes a full and unconditional release of the
Purchaser Indemnified Party.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by the Purchaser if, between the date hereof and the
Closing: (i) an event or condition occurs that has resulted in a
Material Adverse Effect, (ii) any representations and warranties of
TXU or the Company contained in this Agreement (1) that are not
qualified by "materiality" or "Material Adverse Effect" shall not have
been true and correct in all material respects when made or (2) that
are qualified by "materiality" or "Material Adverse Effect" shall not
have been true and correct when made, (iii) TXU or the Company shall
not have complied in all material respects with the covenants or
agreements contained in this Agreement to be complied with by it or
(iv) TXU or any of its Subsidiaries makes a general assignment for the
benefit of creditors, or any proceeding shall be instituted by or
against TXU or any of its Subsidiaries seeking to adjudicate any of
them a bankrupt or insolvent, or seeking liquidation, winding up or
reorganization, arrangement, adjustment, protection, relief or
composition of its debts under any Law relating to bankruptcy,
insolvency or reorganization;
(b) by either the Company or the Purchaser if the Closing
shall not have occurred by December 31, 2002 (the "Termination Date");
provided, however, that the right to terminate this Agreement under
this Section 8.01(b) shall not be available to any party whose failure
to fulfill any obligation under this Agreement shall have been the
cause of, or shall have resulted in, the failure of the Closing to
occur on or prior to such date;
(c) by either the Purchaser or the Company in the event that
any Governmental Authority shall have issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
nonappealable;
26
(d) by the Purchaser, by written notice to TXU, if there
shall have been any material breach of any representation and
warranty, or any material breach of any covenant or agreement by TXU
or the Company hereunder and such breach shall not have been remedied
within 10 days after receipt by TXU of notice in writing from the
Purchaser, specifying the nature of such breach and requesting that it
be remedied; or
(e) by the mutual written consent of the Company and the
Purchaser.
SECTION 8.02 Effect of Termination. In the event of termination of
this Agreement as provided in Section 7.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto,
except with respect to Section 7.02 and 9.02, which shall survive any
termination of this Agreement, and except that nothing herein shall relieve
either party from liability for any breach of this Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Amendment; Waiver. This Agreement may not be amended,
supplemented, modified or restated except by an instrument in writing signed by,
or on behalf of, the parties hereto or by a waiver in accordance with this
Section 9.01. Any party to this Agreement may (a) extend the time for the
performance of any of the obligations or other acts of any other party, (b)
waive any inaccuracies in the representations and warranties of any other party
contained herein or in any document delivered by any other party pursuant hereto
or (c) waive compliance with any of the agreements of any other party or
conditions to such party's obligations contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition of this
Agreement. The failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any of such rights. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 9.02 Expenses. Except as otherwise specified in this
Agreement, all reasonable costs and expenses, including, without limitation,
fees and disbursements of counsel, financial advisors, accountants and filing
fees, including any fee related to any filing required under the HSR Act,
incurred in connection with this Agreement, the Notes, the Ancillary Agreements
and the transactions contemplated hereby and thereby (the "Transaction
Expenses") shall be paid by TXU. To the extent that the Purchaser pays any
Transaction Expenses, TXU shall, as promptly as reasonably practicable,
reimburse the Purchaser for the full amount of the Transaction Expenses paid by
the Purchaser.
SECTION 9.03 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by an internationally recognized overnight courier service, by telecopy,
facsimile or registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or
27
at such other address for a party as shall be specified in a notice given in
accordance with this Section 9.03):
(a) if to TXU or the Company:
TXU Energy Company LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Treasurer
with a copy to:
Hunton & ▇▇▇▇▇▇▇▇
Energy Plaza
30th Floor
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
and to:
▇▇▇▇▇▇ ▇▇▇▇ & Priest LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
(b) if to the Purchaser:
DLJ Merchant Banking III, Inc.
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇, Esq.
with a copy to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
SECTION 9.04 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and
29
provisions of this Agreement shall nevertheless remain in full force and effect
for so long as the economic or legal substance of the transactions contemplated
by this Agreement is not affected in any manner materially adverse to any party.
Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, 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 an acceptable manner in order that the transactions
contemplated by this Agreement are consummated as originally contemplated to the
greatest extent possible.
SECTION 9.05 Assignment. This Agreement may not be assigned by
operation of law or otherwise without the express written consent of the Company
or the Purchaser (which consent may be granted or withheld in the sole
discretion of the Company or the Purchaser); provided, however, that the
Purchaser may assign this Agreement or any of its rights and obligations
hereunder to one or more Permitted Transferees without the consent of the
Company. The rights of any Purchaser with respect to the Note, shall be
transferred to any Person who is a transferee of such Notes; provided that such
transferees shall have assumed the obligations of the Purchaser hereunder in a
form satisfactory to the Company. All obligations of the Company hereunder shall
survive any such transfer.
SECTION 9.06 Third Party Beneficiaries and Transfers. Except for the
provisions of Article VII relating to indemnified parties, this Agreement shall
be binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person, any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 9.07 Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
New York. The parties hereto hereby (a) submit to the exclusive jurisdiction of
any state or federal court sitting in the Borough of Manhattan of The City of
New York for the purpose of any action arising out of or relating to this
Agreement brought by any party hereto, and (b) irrevocably waive, and agree not
to assert by way of motion, defense, or otherwise, in any such action, any claim
that it is not subject personally to the jurisdiction of the above-named courts,
that its property is exempt or immune from attachment or execution, that the
action is brought in an inconvenient forum, that the venue of the action is
improper, or that this Agreement or the transactions contemplated by this
Agreement may not be enforced in or by any of the above-named courts.
SECTION 9.08 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.
SECTION 9.09 Entire Agreement. This Agreement, the Note, the Exchange
Agreement and the Registration Rights Agreement constitute the entire agreement
of the parties hereto with respect to the subject matter hereof and thereof and
supersede all prior agreements
29
and undertakings, both written and oral, among TXU, the Company and the
Purchaser with respect to the subject matter hereof and thereof.
SECTION 9.10 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.11 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
SECTION 9.12 Public Announcements. Subject to its legal obligations
(including requirements of stock exchanges and other similar regulatory bodies
and other than as may be required pursuant to the Exchange Act), no party shall
make any announcement regarding the entering into of this Agreement or the
Closing to the financial community, governmental entities, employees, customers
or the general public without the prior consent of the other party, which shall
not be unreasonably withheld, and the parties shall cooperate with each other as
to the timing and contents of any such announcement.
30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers or other representatives thereunto duly
authorized, as of the date first above written.
TXU CORP.
By:
--------------------------------
Name:
Title:
TXU ENERGY COMPANY LLC
By:
--------------------------------
Name:
Title:
UXT HOLDINGS LLC
By:
--------------------------------
Name:
Title:
EXHIBIT A
FORM OF NOTE
EXHIBIT B
FORM OF EXCHANGE AGREEMENT
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
Table of Contents
Page
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions........................................1
ARTICLE II
PURCHASE AND SALE OF Interests
SECTION 2.01 Purchase and Sale of Interests.....................7
SECTION 2.02 Closing............................................7
SECTION 2.03 Closing Deliveries by the Company and TXU..........7
SECTION 2.04 Closing Deliveries by the Purchaser................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF TXU AND THE COMPANY
SECTION 3.01 Organization, Authority and Qualification of TXU
and the Company....................................8
SECTION 3.02 Subsidiaries.......................................9
SECTION 3.03 Capitalization.....................................9
SECTION 3.04 No Conflict.......................................10
SECTION 3.05 Governmental Consents and Approvals...............11
SECTION 3.06 Compliance with Laws..............................11
SECTION 3.07 Financial Information; Books and Records..........11
SECTION 3.08 Litigation........................................11
SECTION 3.09 SEC Reports.......................................12
SECTION 3.10 Environmental and Other Permits and Licenses;
Related Matters...................................12
SECTION 3.11 Regulation as a Utility...........................12
SECTION 3.12 Authorization of Notes............................13
SECTION 3.13 Absence of Certain Changes or Events; Absence of
Undisclosed Liabilities...........................13
SECTION 3.14 Material Contracts................................13
SECTION 3.15 Assets............................................14
SECTION 3.16 Employee Benefit Matters..........................14
SECTION 3.17 Taxes.............................................15
SECTION 3.18 Insurance.........................................15
SECTION 3.19 Full Disclosure...................................15
SECTION 3.20 Operations of Nuclear Power Plant.................16
SECTION 3.21 TXU Europe........................................16
SECTION 3.22 Nature of Operations..............................16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
SECTION 4.01 Organization and Authority of the Purchaser.......16
SECTION 4.02 No Conflict.......................................17
SECTION 4.03 Governmental Consents.............................17
SECTION 4.04 Financing.........................................17
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01 Conduct of Business Prior to the Closing..........17
SECTION 5.02 Access to Information.............................18
SECTION 5.03 Notice of Developments............................18
SECTION 5.04 Structuring Fee...................................19
ii
SECTION 5.05 Amended and Restated Limited Liability Company
Agreement of the Company..........................19
SECTION 5.06 Further Action....................................19
SECTION 5.07 Taxes.............................................20
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.01 Conditions to Obligations of the Purchaser........22
SECTION 6.02 Conditions to Obligations of the Company..........23
ARTICLE VII
INDEMNIFICATION
SECTION 7.01 Survival of Representations and Warranties........24
SECTION 7.02 Indemnification by TXU and the Company............24
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination.......................................26
SECTION 8.02 Effect of Termination.............................27
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Amendment; Waiver.................................27
SECTION 9.02 Expenses..........................................27
SECTION 9.03 Notices...........................................27
SECTION 9.04 Severability......................................28
SECTION 9.05 Assignment........................................29
SECTION 9.06 Third Party Beneficiaries and Transfers...........29
SECTION 9.07 Governing Law; Consent to Jurisdiction............29
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SECTION 9.08 Waiver of Jury Trial..............................29
SECTION 9.09 Entire Agreement..................................29
SECTION 9.10 Headings..........................................30
SECTION 9.11 Counterparts......................................30
SECTION 9.12 Public Announcements..............................30
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