EXHIBIT 10 (a)
CONFORMED COPY
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TXU US HOLDINGS COMPANY,
as Borrower
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$400,000,000
CREDIT AGREEMENT
Dated as of July 15, 2002
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JPMORGAN CHASE BANK,
as Administrative Agent
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▇. ▇. ▇▇▇▇▇▇ SECURITIES, INC.
Lead Arranger and Book Manager
TABLE OF CONTENTS
Section Page
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Article I
DEFINITIONS; CONSTRUCTION
SECTION 1.01. Defined Terms........................................................................1
SECTION 1.02. Terms Generally.....................................................................14
Article II
THE CREDITS
SECTION 2.01. Commitments.........................................................................15
SECTION 2.02. Loans...............................................................................15
SECTION 2.03. Borrowing Procedure.................................................................16
SECTION 2.04. Facility Fee........................................................................17
SECTION 2.05. Repayment of Loans; Evidence of Indebtedness........................................17
SECTION 2.06. Interest on Loans...................................................................18
SECTION 2.07. Default Interest....................................................................18
SECTION 2.08. Alternate Rate of Interest..........................................................18
SECTION 2.09. Termination and Reduction of Commitments............................................19
SECTION 2.10. Prepayment..........................................................................19
SECTION 2.11. Reserve Requirements; Change in Circumstances.......................................20
SECTION 2.12. Change in Legality..................................................................21
SECTION 2.13. Pro Rata Treatment..................................................................22
SECTION 2.14. Sharing of Setoffs..................................................................22
SECTION 2.15. Payments............................................................................23
SECTION 2.16. Taxes...............................................................................23
SECTION 2.17. Assignment of Commitments Under Certain Circumstances...............................26
Article III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization; Powers................................................................26
SECTION 3.02. Authorization.......................................................................26
SECTION 3.03. Enforceability......................................................................27
SECTION 3.04. Governmental Approvals..............................................................27
SECTION 3.05. Financial Statements................................................................27
SECTION 3.06. Litigation..........................................................................27
SECTION 3.07. Federal Reserve Regulations.........................................................28
SECTION 3.08. Investment Company Act; Public Utility Holding Company Act..........................28
SECTION 3.09. No Material Misstatements...........................................................28
SECTION 3.10. Taxes...............................................................................28
SECTION 3.11. Employee Benefit Plans..............................................................29
SECTION 3.12. Significant Subsidiaries............................................................29
SECTION 3.13. Environmental Matters...............................................................29
SECTION 3.14. Solvency............................................................................30
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Article IV
CONDITIONS
SECTION 4.01. Initial Loans.......................................................................30
SECTION 4.02. Conditions for All Loans............................................................31
Article V
COVENANTS
SECTION 5.01. Existence...........................................................................32
SECTION 5.02. Compliance With Laws; Business and Properties.......................................32
SECTION 5.03. Financial Statements, Reports, Etc..................................................32
SECTION 5.04. Insurance...........................................................................34
SECTION 5.05. Taxes, Etc..........................................................................34
SECTION 5.06. Maintaining Records; Access to Properties and Inspections...........................34
SECTION 5.07. ERISA...............................................................................34
SECTION 5.08. Use of Proceeds.....................................................................34
SECTION 5.09. Consolidations, Mergers, Sales and Acquisitions of Assets and Investments in
Subsidiaries........................................................................34
SECTION 5.10. Limitations on Liens................................................................35
SECTION 5.11. Fixed Charge Coverage...............................................................37
SECTION 5.12. Equity Capitalization Ratio.........................................................37
SECTION 5.13. Restrictive Agreements..............................................................37
Article VI
EVENTS OF DEFAULT
Article VII
THE AGENT
Article VIII
MISCELLANEOUS
SECTION 8.01. Notices.............................................................................42
SECTION 8.02. Survival of Agreement...............................................................42
SECTION 8.03. Binding Effect......................................................................42
SECTION 8.04. Successors and Assigns..............................................................43
SECTION 8.05. Expenses; Indemnity.................................................................45
SECTION 8.06. Right of Setoff.....................................................................47
SECTION 8.07. Applicable Law......................................................................47
SECTION 8.08. Waivers; Amendment..................................................................47
SECTION 8.09. Entire Agreement....................................................................48
SECTION 8.10. Severability........................................................................48
SECTION 8.11. Counterparts........................................................................48
SECTION 8.12. Headings............................................................................48
SECTION 8.13. Interest Rate Limitation............................................................48
SECTION 8.14. Jurisdiction; Venue.................................................................49
SECTION 8.15. Confidentiality.....................................................................49
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EXHIBITS AND SCHEDULES
Exhibit A - Form of Borrowing Request
Exhibit B - Form of Assignment and Acceptance
Schedule 2.01 - Commitments
Schedule 5.13 - Restrictive Agreements
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CREDIT AGREEMENT (the "Agreement"), dated as of July 15, 2002,
among TXU US Holdings Company, a Texas corporation (the
"Borrower"); the lenders listed in Schedule 2.01 (together with
their successors and assigns, the "Lenders"); and JPMorgan Chase
Bank ("JPMorgan Chase"), as administrative agent for the Lenders
(in such capacity, the "Agent").
The Borrower has requested the Lenders to provide the credit facility
hereinafter described in the amounts and on the terms and conditions set forth
herein, the Lenders have so agreed on the terms and conditions set forth herein,
and the Agent has agreed to act as agent for the Lenders, on such terms and
conditions;
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
SECTION 1.01. DEFINED TERMS.
As used in this Agreement, the following terms shall have the meanings
specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with
the provisions of Article II or any Eurodollar Loan converted
(pursuant to Section 2.08 or 2.12(a)(ii)) to a loan bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Acquisition Date" shall mean the date as of which a person or
group of related persons first acquires more than 30% of the
outstanding Voting Shares of TXU (within the meaning of Section 13(d)
or 14(d) of the Exchange Act, and the applicable rules and regulations
thereunder).
"Affiliate" shall mean, when used with respect to a specified
person, another person that directly or indirectly controls or is
controlled by or is under common control with the person specified.
"Agent" shall have the meaning given such term in the preamble
hereto.
"Agreement" shall have the meaning given such term in the
preamble hereto.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greater of (i) the Federal Funds Effective Rate in effect on such day
plus 0.50% and (ii) the Prime Rate in effect on such day. For purposes
hereof, "Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by JPMorgan Chase as its prime
rate in effect at its principal office in New York City; each change
in the Prime Rate shall be effective on the
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date such change is publicly announced as effective; and "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as released
on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so released for any day which is a
Business Day, the arithmetic average (rounded upwards to the next
1/100th of 1%), as determined by JPMorgan Chase, of the quotations for
the day of such transactions received by JPMorgan Chase from three
Federal funds brokers of recognized standing selected by it. If for
any reason JPMorgan Chase shall have determined (which determination
shall be conclusive absent manifest error; provided that JPMorgan
Chase shall, upon request, provide to the Borrower a certificate
setting forth in reasonable detail the basis for such determination)
that it is unable to ascertain the Federal Funds Effective Rate for
any reason, including the inability of JPMorgan Chase to obtain
sufficient quotations in accordance with the terms thereof, the
Alternate Base Rate shall be determined without regard to clause (i)
of the first sentence of this definition until the circumstances
giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal
Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
"Applicable Margin" shall mean, for any Type of Loan at any time,
the percentage per annum set forth below corresponding to such Type of
Loan in the column under the Applicable Rating Level at such time,
provided that during any Utilization Period, the Applicable Margin for
each Type of Loan shall be increased by the Utilization Percentage.
Any change in the Applicable Margin shall be effective on the date on
which the applicable rating agency announces any change in the Debt
Rating.
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Applicable
Rating ▇▇▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇
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Percentage Per Annum
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Eurodollar .500% .725% .925% 1.125%
Margin
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ABR 0 0 0 .125%
Margin
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"Applicable Rating Level" shall mean the level set forth below in
the row next to the then applicable Debt Ratings. If there is a
difference of one level in the Debt Ratings assigned by S&P and
▇▇▇▇▇'▇, then the higher Debt Rating shall be used for purposes of
determining the Applicable Rating Level, and if there is a difference
of more than one level in the Debt Ratings assigned by S&P and
▇▇▇▇▇'▇, then the Debt Rating one level higher than the lower Debt
Rating will be used for purposes of determining the Applicable Rating
Level. Any change in the Applicable Rating Level shall be effective on
the date on which the applicable rating agency announces any change in
the applicable Debt Rating.
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S&P Debt Rating
▇▇▇▇▇'▇ Debt Rating Applicable Rating Level
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BBB+ or better 1
Baa1 or better
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BBB 2
Baa2
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BBB- 3
Baa3
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BB+ or below* 4
Ba1 or below*
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* or unrated
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee in the form of
Exhibit B.
"Available Commitment" shall mean, for each Lender, the excess of
such Lender's Commitment over such Lender's Percentage of the
aggregate principal amount of Loans outstanding. "Available
Commitments" shall refer to the aggregate of the Lenders' Available
Commitments hereunder.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"Board of Directors" shall mean the Board of Directors or
analogous managing body of the Borrower or any duly authorized
committee thereof.
"Borrower" shall have the meaning given such term in the preamble
hereto.
"Borrower Approval Date" shall mean any date on which the
following shall have occurred: the Borrower shall have delivered to
the Agent (in sufficient copies for each of the Lenders) (i) a
certificate of the Secretary or Assistant Secretary of the Borrower
certifying that (A) attached thereto are true and correct copies of
all corporate resolutions and all orders, consents and approvals
required by any Governmental Authority in order to permit or authorize
the Borrower to borrow from banks, financial institutions and other
lenders from time to time, by the issuance of promissory notes,
debentures or other evidences of indebtedness (including, but not
limited to, bank loans, notes, senior notes and commercial paper), in
each case on a secured on unsecured basis, in an aggregate principal
amount to be outstanding exceeding the aggregate principal amount
authorized to be outstanding pursuant to resolutions of the Board of
Directors adopted on November 3, 2000 or any other Borrower Approval
Date (B) that all such resolutions, orders, consents and approvals are
in full force and effect, sufficient for their purpose and, in the
case of such orders, consents and approvals, not subject to any
pending or, to the knowledge of such Secretary or Assistant Secretary
(as the case may be), threatened appeal or other proceeding seeking
reconsideration or review thereof and (ii) an opinion of counsel to
the Borrower in form and substance satisfactory to the
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Agent, as to such orders, consents and approvals and as to the
enforceability of the obligations of the Borrower hereunder on and
after such date.
"Borrowing" shall mean a group of Loans of a single Type made by
the Lenders on a single date and as to which a single Interest Period
is in effect.
"Borrowing Request" shall mean a request made pursuant to Section
2.03 in the form of Exhibit A.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which
banks are open for business in New York City; provided, however, that,
when used in connection with a Eurodollar Loan, the term "Business
Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"A Change in Control" shall be deemed to have occurred if (i) any
person or "group" (within the meaning of Section 13(d) or 14(d) of the
Exchange Act, as amended) shall acquire beneficial ownership of more
than 30% of any outstanding class of Voting Shares of TXU unless such
acquisition shall have been approved prior to such acquisition date by
a majority of Disinterested Directors of TXU or (ii) during any period
of 12 consecutive months, a majority of the members of the board of
directors of TXU cease to be composed of individuals (A) who were
members of board of directors of TXU on the first day of such period,
(B) whose election or nomination to the board of directors of TXU was
approved by individuals referred to in clause (i) above constituting
at the time of such election or nomination at least a majority of the
board of directors of TXU or (C) whose election or nomination to the
board of directors of TXU was approved by individuals referred to in
clauses (i) and (ii) above constituting at the time of such election
or nomination at least a majority of the board of directors of TXU.
"Code" shall mean the Internal Revenue Code of 1986, as the same
may be amended from time to time.
"Commission" shall mean the Public Utility Commission of the
State of Texas.
"Commitment" shall mean, with respect to each Lender, the
commitment of such Lender set forth in Schedule 2.01 hereto to make
Loans, as such Commitment may be permanently terminated or reduced
from time to time pursuant to Section 2.09 or modified from time to
time pursuant to Section 8.04. The Commitment of each Lender shall
automatically and permanently terminate on the Maturity Date if not
terminated earlier pursuant to the terms hereof.
"Consolidated Earnings Available for Fixed Charges" for any
twelve-month period shall mean (i) consolidated net income, calculated
after deducting preferred stock dividends and preferred securities
distributions of Subsidiaries, but before any extraordinary items and
before the effect in such twelve-month period of any change in
accounting principles promulgated by the Financial Accounting
Standards Board becoming effective after December 31, 2001, less (ii)
allowances for equity funds used during construction to the extent
that such allowances, taken as a whole, increased such
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consolidated net income, plus (iii) provisions for Federal income
taxes, to the extent that such provisions, taken as a whole, decreased
such consolidated net income, plus (iv) Consolidated Fixed Charges,
all determined for such twelve-month period with respect to the
Borrower and its Consolidated Subsidiaries on a consolidated basis;
provided, however, that in computing Consolidated Earnings Available
for Fixed Charges for any twelve-month period the following amounts
shall be excluded to the extent otherwise included pursuant to the
foregoing: (A) the effect of any regulatory disallowances resolving
fuel or other issues in any proceeding before the Commission or the
Railroad Commission of Texas in an aggregate amount not to exceed
$100,000,000, (B) any non-cash book losses relating to the sale or
write-down of assets, (C) one-time costs of up to $100,000,000
incurred in connection with the restructuring of certain subsidiaries
of TXU in connection with the 1999 Texas electric industry
restructuring legislation (as described in TXU's filings with the SEC)
and (D) up to $100,000,000 of costs incurred in connection with
write-offs relating to the regulatory settlement plan, initially filed
with the Commission on December 31, 2001, of the Borrower and certain
of its Subsidiaries (as described in TXU's filings with the SEC).
"Consolidated Fixed Charges" for any twelve-month period shall
mean the sum (without duplication) of (i) interest on mortgage bonds,
(ii) interest on other long-term debt, (iii) other interest expense,
including interest on short-term debt and the current portion of
long-term debt, and (iv) preferred stock dividends and preferred
securities distributions of Subsidiaries, all determined for such
twelve-month period with respect to the Borrower and its Consolidated
Subsidiaries on a consolidated basis. For purposes of such
calculation, long-term debt shall not include the principal amount of,
or interest on, Qualified Transition Bonds.
"Consolidated Shareholders' Equity" shall mean the sum (without
duplication) of (i) total common stock equity plus (ii) preferred
stock not subject to mandatory redemption, each (in the case of
clauses (i) and (ii)) determined with respect to the Borrower and its
Consolidated Subsidiaries on a consolidated basis, plus (iii)
Equity-Credit Preferred Securities in an aggregate liquidation
preference amount not in excess of $1,750,000,000.
"Consolidated Subsidiary" of any person shall mean at any date
any Subsidiary or other entity the accounts of which would be
consolidated with those of such person in such person's consolidated
financial statements as of such date.
"Consolidated Total Capitalization" shall mean the sum of (i)
total common stock equity, (ii) preferred stock and preferred
securities, (iii) long-term debt (less amounts due currently) and (iv)
short-term debt consisting of commercial paper, notes payable to
unaffiliated entities and long-term debt due currently to the extent
such short-term debt exceeds $2,000,000,000, determined with respect
to the Borrower and its Consolidated Subsidiaries on a consolidated
basis. For purposes of such calculation, long-term debt shall not
include the principal amount of, or interest on, Qualified Transition
Bonds.
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"Controlled Group" shall mean all members of a controlled group
of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower,
are treated as a single employer under Section 414(b) or 414(c) of the
Code.
"Debt Ratings" shall mean the ratings (whether explicit or
implied) assigned by S&P and ▇▇▇▇▇'▇ to the senior unsecured
non-credit enhanced long term debt of the Borrower.
"Default" shall mean any event or condition, which upon notice,
lapse of time or both would constitute an Event of Default.
"Disinterested Director" shall mean any member of the Board of
Directors of TXU who is not affiliated, directly or indirectly, with,
or appointed by, a person or group of related persons (other than TXU,
any Subsidiary of TXU, or any pension, savings or other employee
benefit plan for the benefit of employees of TXU and/or any Subsidiary
of TXU) acquiring the beneficial ownership of more than 30% of the
outstanding Voting Shares of TXU (within the meaning of Section 13(d)
or 14(d) of the Exchange Act, and the applicable rules and regulations
thereunder) and who either was a member of the Board of Directors of
TXU prior to the Acquisition Date or was recommended for election by a
majority of the Disinterested Directors in office prior to the
Acquisition Date.
"dollars" or "$" shall mean lawful money of the United States of
America.
"Energy" shall mean TXU Energy Company LLC, a Delaware limited
liability company.
"Equity-Credit Preferred Securities" shall mean securities,
however denominated, (i) issued by the Borrower or a Consolidated
Subsidiary of the Borrower, (ii) that are not subject to mandatory
redemption or the underlying securities, if any, of which are not
subject to mandatory redemption, (iii) that are perpetual or mature no
less than 30 years from the date of issuance, (iv) the indebtedness
issued in connection with which, including any guaranty, is
subordinate in right of payment to the unsecured and unsubordinated
indebtedness of the issuer of such indebtedness or guaranty, and (v)
the terms of which permit the deferral of the payment of interest or
distributions thereon to one year after the Maturity Date or later.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that is a member of a group of (i) organizations
described in Section 414(b) or (c) of the Code and (ii) solely for
purposes of the Lien created under Section 412(n) of the Code,
organizations described in Section 414(m) or (o) of the Code of which
the Borrower is a member.
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"ERISA Event" shall mean (i) any "Reportable Event"; (ii) the
adoption of any amendment to a Plan that would require the provision
of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (iii) the incurrence of any liability under Title IV of
ERISA with respect to the termination of any Plan or the withdrawal or
partial withdrawal of the Borrower or any of its ERISA Affiliates from
any Plan or Multiemployer Plan; (iv) the receipt by the Borrower or
any ERISA Affiliate from the PBGC of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to
administer any Plan; (v) the receipt by the Borrower or any ERISA
Affiliate of any notice concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA; (vi) the occurrence of a "prohibited transaction"
with respect to which the Borrower or any of its subsidiaries is
liable; and (vii) any other similar event or condition with respect to
a Plan or Multiemployer Plan that could result in liability of the
Borrower other than a liability to pay premiums or benefits when due.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Loan" shall mean any Loan bearing interest at a rate
determined by reference to the LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term
in Article VI.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Facility Fee" shall have the meaning assigned to such term in
Section 2.04(a).
"Facility Fee Percentage" shall mean, at any time, the percentage
per annum set forth below in the column under the Applicable Rating
Level corresponding to the Debt Ratings of the Borrower that would
produce the lowest Applicable Rating Level (i.e., the highest Facility
Fee Percentage). Any change in the Facility Fee Percentage shall be
effective on the date on which any applicable rating agency announces
any change in a Debt Rating of the Borrower that would result in a
different Facility Fee Percentage pursuant to the terms of this
definition.
===============================================================
Applicable
Rating
▇▇▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇
---------------------------------------------------------------
Percentage Per Annum
---------------------------------------------------------------
Facility Fee 0.125% 0.15% 0.20% 0.25%
===============================================================
"Federal Funds Effective Rate" shall have the meaning set forth
in the definition of "Alternate Base Rate".
"Financial Officer" of any corporation shall mean the chief
financial officer, principal accounting officer, treasurer, associate
or assistant treasurer, or any responsible officer designated by one
of the foregoing persons, of such corporation.
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"First Mortgage" shall mean (i) the Oncor Mortgage, (ii) any
mortgage and deed of trust entered into by Oncor in order to refund or
replace, or in substitution for, the Oncor Mortgage, and (iii) if and
for so long as any first mortgage bonds are issued and outstanding
under the Oncor Mortgage, any other indenture or instrument of Oncor
pursuant to which Oncor issues debt securities secured directly or
indirectly by (A) the Lien created by the Oncor Mortgage and/or (B)
any property of Oncor.
"Five-Year Credit Agreement" shall mean the Five-Year Second
Amended and Restated Competitive Advance and Revolving Credit Facility
Agreement, dated as of February 25, 2000, and amended as of February
23, 2001, February 22, 2002 and April 24, 2002, among TXU, the
Borrower, the lenders party thereto and JPMorgan Chase, as competitive
advance facility agent and administrative agent and fronting bank for
the letters of credit issued thereunder, as amended, restated,
modified or supplemented from time to time.
"GAAP" shall mean generally accepted accounting principles,
applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Indebtedness" of any person shall mean all indebtedness
representing money borrowed which is created, assumed, incurred or
guaranteed in any manner by such person or for which such person is
responsible or liable (whether by agreement to purchase indebtedness
of, or to supply funds to or invest in, others or otherwise).
"Interest Payment Date" shall mean, with respect to any Loan, the
last day of the Interest Period applicable thereto and the date of any
prepayment of such Loan or conversion of such Loan to a Loan of a
different Type.
"Interest Period" shall mean (i) as to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is 1, 2
or 3 months thereafter; provided that, in the case of any Eurodollar
Borrowing made during the 30-day period ending on the Maturity Date,
such period may end on the seventh or fourteenth day thereafter, as
the Borrower may elect, and (ii) as to any ABR Borrowing, the period
commencing on the date of such Borrowing and ending on the earliest of
(A) the next succeeding March 31, June 30, September 30 or December
31, (B) the Maturity Date, and (C) the date such Borrowing is repaid
or prepaid in accordance with Section 2.05 or Section 2.10; provided,
however, that if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of Eurodollar Loans only,
such next succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the
first day of an Interest Period to but excluding the last day of such
Interest Period.
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"JPMorgan Chase" shall have the meaning given such term in the
preamble hereto.
"Lenders" shall have the meaning given such term in the preamble
hereto.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing
for any Interest Period, the rate appearing on Page 3750 of the
Telerate Service (or on any successor or substitute page of such
service, or any successor to or substitute for such service, providing
rate quotations comparable to those currently provided on such page of
such service, as determined by JPMorgan Chase from time to time for
purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) at approximately 11:00
a.m., London time, two Business Days prior to the commencement of such
Interest Period as the rate for dollar deposits with a maturity
comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with
respect to such Eurodollar Borrowing for such Interest Period shall be
the rate at which dollar deposits of $5,000,000 and for a maturity
comparable to such Interest Period are offered by the principal London
office of JPMorgan Chase in immediately available funds in the London
interbank market at approximately 11:00 a.m. London time, two Business
Days prior to the commencement of such Interest Period.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, any person
shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under
any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Loan" shall mean a revolving loan made pursuant to Section 2.03,
whether made as a Eurodollar Loan or as an ABR Loan.
"Margin Regulations" shall mean Regulations T, U and X of the
Board as from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Margin Stock" shall have the meaning given such term under
Regulation U of the Board.
"Material Adverse Change" shall mean a materially adverse change
in the business, assets, operations or financial condition of the
Borrower and its Subsidiaries taken as a whole that makes the Borrower
unable to perform any of its obligations under this Agreement or that
impairs the rights of, or benefits available to, the Lenders under
this Agreement.
"Maturity Date" shall mean the earlier to occur of (i) November
30, 2002 and (ii) the date of termination or reduction in whole of the
Commitments pursuant to Section 2.09 or Article VI.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
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"Multiemployer Plan" shall mean a multiemployer plan as defined
in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate is making, or accruing an obligation to make, contributions,
or has within any of the preceding five plan years made, or accrued an
obligation to make, contributions.
"Oncor" mean Oncor Electric Delivery Company, a Texas
corporation.
"Oncor Mortgage" shall mean the Mortgage and Deed of Trust, dated
as of December 1, 1983, from TXU Electric Company to Irving Trust
Company (now The Bank of New York), Trustee, as amended and
supplemented from time to time and as assumed by Oncor.
"Operating Agreements" shall mean (i) the Operating Agreement,
dated April 28, 1978, as amended by the Modification of Operating
Agreement, dated April 20, 1979, among TXU Mining and the Borrower
(formerly TXU Electric Company, successor to Dallas Power & Light
Company, Texas Electric Service Company and Texas Power & Light
Company) and Energy, TXU Energy Retail Company LP and TXU Generation
Company LP (pursuant to the Assumption Agreement, dated December 31,
2001, by and among the Borrower, Energy, TXU Energy Retail Company LP
and TXU Generation Company LP) (TXU Mining Operating Agreement), and
as it may be amended from time to time, or (ii) the Operating
Agreement, dated December 15, 1976, between TXU Fuel and Dallas Power
& Light Company, Texas Electric Service Company and Texas Power &
Light Company (TXU Fuel Operating Agreement), as it may be amended
from time to time; provided that no amendment of the TXU Mining
Operating Agreement or the TXU Fuel Operating Agreement shall increase
the scope of any Lien permitted under Section 5.10(j).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Percentage" means, for any Lender on any date of determination,
the percentage obtained by dividing such Lender's Commitment on such
date by the Total Commitment on such date.
"Permitted Encumbrances" shall mean, as to any person at any
date, any of the following:
(a) (i) Liens for taxes, assessments or governmental charges
not then delinquent and Liens for workers' compensation awards and
similar obligations not then delinquent and undetermined Liens or
charges incidental to construction, Liens for taxes, assessments or
governmental charges then delinquent but the validity of which is
being contested at the time by such person in good faith against which
an adequate reserve has been established, with respect to which levy
and execution thereon have been stayed and continue to be stayed and
which do not impair the use of the property or the operation of such
person's business, (ii) Liens incurred or created in connection with
or to secure the performance of bids, tenders, contracts (other than
for the payment of money), leases, statutory obligations, surety bonds
or appeal bonds, and mechanics' or materialmen's
11
Liens, assessments or similar encumbrances, the existence of which
does not impair the use of the property subject thereto for the
purposes for which it was acquired, and other Liens of like nature
incurred or created in the ordinary course of business;
(b) Liens securing indebtedness, neither assumed nor guaranteed
by such person nor on which it customarily pays interest, existing
upon real estate or rights in or relating to real estate acquired by
such person for any substation, transmission line, transportation
line, distribution line, right of way or similar purpose;
(c) rights reserved to or vested in any municipality or public
authority by the terms of any right, power, franchise, grant, license
or permit, or by any provision of law, to terminate such right, power,
franchise, grant, license or permit or to purchase or recapture or to
designate a purchaser of any of the property of such person;
(d) rights reserved to or vested in others to take or receive
any part of the power, gas, oil, coal, lignite or other minerals or
timber generated, developed, manufactured or produced by, or grown on,
or acquired with, any property of such person and Liens upon the
production from property of power, gas, oil, coal, lignite or other
minerals or timber, and the by-products and proceeds thereof, to
secure the obligations to pay all or a part of the expenses of
exploration, drilling, mining or development of such property only out
of such production or proceeds;
(e) easements, restrictions, exceptions or reservations in any
property and/or rights of way of such person for the purpose of roads,
pipe lines, substations, transmission lines, transportation lines,
distribution lines, removal of oil, gas, lignite, coal or other
minerals or timber, and other like purposes, or for the joint or
common use of real property, rights of way, facilities and/or
equipment, and defects, irregularities and deficiencies in titles of
any property and/or rights of way, which do not materially impair the
use of such property and/or rights of way for the purposes for which
such property and/or rights of way are held by such person;
(f) rights reserved to or vested in any municipality or public
authority to use, control or regulate any property of such person;
(g) any obligations or duties, affecting the property of such
person, to any municipality or public authority with respect to any
franchise, grant, license or permit;
(h) as of any particular time any controls, Liens,
restrictions, regulations, easements, exceptions or reservations of
any municipality or public authority applying particularly to space
satellites or nuclear fuel;
(i) any judgment Lien against such person securing a judgment
for an amount not exceeding 25% of Consolidated Shareholders' Equity
of such Person, so long as the finality of such judgment is being
contested by appropriate proceedings conducted in good faith and
execution thereon is stayed;
(j) any Lien arising by reason of deposits with or giving of
any form of security to any federal, state, municipal or other
governmental department, commission,
12
board, bureau, agency or instrumentality, domestic or foreign, for any
purpose at any time as required by law or governmental regulation as a
condition to the transaction of any business or the exercise of any
privilege or license, or to enable such person to maintain
self-insurance or to participate in any fund for liability on any
insurance risks or in connection with workers' compensation,
unemployment insurance, old age pensions or other social security or
to share in the privileges or benefits required for companies
participating in such arrangements; or
(k) any landlords' Lien on fixtures or movable property located
on premises leased by such person in the ordinary course of business
so long as the rent secured thereby is not in default.
"person" shall mean any natural person, corporation, business
trust, joint venture, association, company, limited liability company,
partnership or government, or any agency or political subdivision
thereof.
"Plan" shall mean any employee pension benefit plan described
under Section 3(2) of ERISA (other than a Multiemployer Plan) subject
to the provisions of Title IV of ERISA that is maintained by the
Borrower or any ERISA Affiliate.
"Qualified Transition Bonds" shall mean securities, however
denominated, that are (i) issued by the Borrower or a Consolidated
Subsidiary of the Borrower formed and operating solely for the purpose
of (A) purchasing and owning transition property created under a
"financing order" (as such term is defined in the Texas Utilities
Code) issued by the Commission, (B) issuing such securities pursuant
to such order, (C) pledging its interests in such transition property
to secure such securities and (D) engaging in activities ancillary to
those described in clauses (A), (B) and (C) above, (ii) secured by or
otherwise payable from transition charges authorized pursuant to such
order, and (iii) non-recourse to the Borrower or any of its
Consolidated Subsidiaries (other than the issuer of such securities).
"Register" shall have the meaning given such term in Section
8.04(d).
"Reportable Event" shall mean any reportable event as defined in
Sections 4043(c)(1)-(8) of ERISA or the regulations issued thereunder
(other than a reportable event for which the 30 day notice requirement
has been waived) with respect to a Plan (other than a Plan maintained
by an ERISA Affiliate that is considered an ERISA Affiliate only
pursuant to subsection (m) or (o) of Code Section 414).
"Required Lenders" shall mean, at any time, Lenders having
Commitments representing in excess of 50% of the Total Commitment or,
(i) for purposes of acceleration pursuant to clause (ii) of Article
VI, or (ii) if the Total Commitment has been terminated, Lenders
holding in excess of 50% of the aggregate principal amount of Loans
outstanding.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer
or similar official thereof
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responsible for the administration of the obligations of such
corporation in respect of this Agreement.
"S&P" shall mean Standard & Poor's Ratings Services (a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.).
"SEC" shall mean the Securities and Exchange Commission.
"Significant Disposition" shall mean a sale, lease, disposition
or other transfer by the Borrower, or any Subsidiary of the Borrower,
during any 12-month period, of assets constituting, either
individually or in the aggregate with all other assets sold, leased,
disposed or otherwise transferred by the Borrower or any Subsidiary
thereof during such period, 10% or more of the assets of the Borrower
and its Subsidiaries taken as a whole, excluding any such sale, lease,
disposition or other transfer to a Wholly Owned Subsidiary of the
Borrower.
"Significant Subsidiary" shall mean at any time any Subsidiary of
the Borrower that as of such time has total assets in excess of 10% of
the total assets of the Borrower and its Consolidated Subsidiaries;
provided, that each of Energy and Oncor shall at all times be
considered a Significant Subsidiary of the Borrower.
"Solvent" means, with respect to any person as of a particular
date, that on such date such person is able to pay its debts and other
liabilities, contingent obligations and other commitments as they
mature in the normal course of business. In computing the amount of
contingent liabilities at any time, it is intended that such
liabilities will be computed as the amount which, in light of all the
facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured
liability.
"Subsidiary" shall mean, with respect to any person (the
"parent"), any corporation or other entity of which securities or
other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such parent.
"Substantial" shall mean an amount in excess of 10% of the
consolidated assets of the Borrower and its Consolidated Subsidiaries
taken as a whole.
"364-Day Credit Agreement" shall mean the 364-Day Revolving
Credit Facility Agreement, dated as of April 24, 2002, among the
Borrower, Energy, Oncor, the lenders listed in Schedule 2.01 thereto,
JPMorgan Chase, as administrative agent for the lenders thereunder,
and Bank of America, N.A. and JPMorgan Chase, as fronting banks for
the letters of credit issued thereunder, as amended, modified or
supplemented from time to time.
"Total Commitment" shall mean, at any time, the aggregate amount
of Commitments of all the Lenders, as in effect at such time. The
initial amount of the Total Commitment is $400,000,000.
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"TXU" shall mean TXU Corp., a Texas corporation.
"TXU Fuel" shall mean TXU Fuel Company, a Texas corporation.
"TXU Mining" shall mean TXU Mining Company LP, a Texas limited
partnership, and its successors.
"Type", when used in respect of any Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Loan or on
the Loans comprising such Borrowing is determined. For purposes
hereof, "Rate" shall include the LIBO Rate and the Alternate Base
Rate.
"Utilization Percentage" shall mean 0.125% per annum.
"Utilization Period" shall mean any day or days in which the
aggregate principal amount of Loans outstanding is greater than
33-1/3% of the Total Commitment for such day or days.
"Voting Shares" shall mean, as to shares or other equity
interests of a particular corporation or other type of person,
outstanding shares of stock or other equity interests of any class of
such corporation or other person entitled to vote in the election of
directors or other comparable managers of such person, excluding
shares or other interests entitled so to vote only upon the happening
of some contingency.
"Wholly Owned Subsidiary" of any person shall mean any
Consolidated Subsidiary of such person all the shares of common stock
and other voting capital stock or other voting ownership interests
having ordinary voting power to vote in the election of the board of
directors or other governing body performing similar functions (except
directors' qualifying shares) of which are at the time directly or
indirectly owned by such person.
"Withdrawal Liability" shall mean liability of the Borrower
established under Section 4201 of ERISA as a result of a complete or
partial withdrawal from a Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. TERMS GENERALLY.
The definitions in Section 1.01 shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include," "includes" and "including" shall be deemed to
be followed by the phrase "without limitation." All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement unless
the context shall otherwise require. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided, however, that
for purposes of determining compliance with any covenant set forth in Article V,
such terms shall be construed in accordance with GAAP as in effect on the date
hereof applied
15
on a basis consistent with the application used in preparing the Borrower's
audited financial statements referred to in Section 3.05.
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS.
Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Lender agrees, severally
and not jointly, to make Loans to the Borrower at any time and from time to time
until the Maturity Date, subject, however, to the conditions that (i) at no time
shall the aggregate principal amount of the Loans outstanding exceed the Total
Commitment, (ii) at no time shall the aggregate principal amount of the Loans
outstanding to any Lender exceed the amount of such Lender's Commitment and
(iii) at no time shall the sum of (A) the outstanding aggregate principal amount
of all Loans plus (B) the outstanding aggregate amount of the "Extensions of
Credit" under and as defined in each of the 364-Day Credit Agreement and the
Five-Year Credit Agreement plus (C) the outstanding borrowings and other
extensions of credit under other credit agreements or loan agreements that the
Borrower is a party to, for the account of, or owing by, the Borrower exceed
$2,000,000,000 or such different amount reflected in the orders, resolutions and
approvals referenced in (i)(A) of the definition of "Borrower Approval Date".
Within the foregoing limits, the Borrower may borrow, pay or prepay
Loans and request new Loans hereunder, on and after the date hereof and prior to
the Maturity Date, subject to the terms, conditions and limitations set forth
herein.
SECTION 2.02. LOANS.
(a) Each Loan shall be made as part of a Borrowing consisting of
Loans made by the Lenders ratably in accordance with their respective
Commitments; provided, however, that the failure of any Lender to make any Loan
shall not in itself relieve any other Lender of its obligation to lend hereunder
(it being understood, however, that no Lender shall be responsible for the
failure of any other Lender to make any Loan required to be made by such other
Lender). The Loans comprising any Borrowing shall be in an aggregate principal
amount that is an integral multiple of $5,000,000 and not less than $25,000,000
(or an aggregate principal amount equal to the remaining balance of the
Available Commitments).
(b) Each Borrowing shall be comprised entirely of Eurodollar Loans or
ABR Loans, as the Borrower may request pursuant to Section 2.03. Each Lender may
at its option make any Eurodollar Loan by causing any domestic or foreign branch
or Affiliate of such Lender to make such Loan; provided that any exercise of
such option shall not affect the obligation of the Borrower to repay such Loan
in accordance with the terms of this Agreement. Borrowings of more than one Type
may be outstanding at the same time.
(c) Subject to paragraph (d) below, each Lender shall make each Loan
to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds to the Agent in New York, New York, not later than
noon, New York City time, and the Agent shall by
16
2:00 p.m., New York City time, credit the amounts so received to the account or
accounts specified from time to time in one or more notices delivered by the
Borrower to the Agent or, if a Borrowing shall not occur on such date because
any condition precedent herein specified shall not have been met, return the
amounts so received to the respective Lenders. Loans shall be made by the
Lenders pro rata in accordance with Section 2.13. Unless the Agent shall have
received notice from a Lender prior to the date of any Borrowing that such
Lender will not make available to the Agent such Lender's portion of such
Borrowing, the Agent may assume that such Lender has made such portion available
to the Agent on the date of such Borrowing in accordance with this paragraph (c)
and the Agent may, in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have made such portion available to the Agent, such Lender and
the Borrower (without waiving any claim against such Lender for such Lender's
failure to make such portion available) severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Agent, at (i) in the case of the Borrower,
the interest rate applicable at the time to the Loans comprising such Borrowing
and (ii) in the case of such Lender, the Federal Funds Effective Rate. If such
Lender shall repay to the Agent such corresponding amount, such amount shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement.
(d) The Borrower may refinance all or any part of any Borrowing with
a Borrowing of the same or a different Type, subject to the conditions and
limitations set forth in this Agreement. Any Borrowing or part thereof so
refinanced shall be deemed to be repaid or prepaid in accordance with
Section 2.05 or 2.10, as applicable, with the proceeds of a new Borrowing, and
the proceeds of the new Borrowing, to the extent they do not exceed the
principal amount of the Borrowing being refinanced, shall not be paid by the
Lenders to the Agent or by the Agent to the Borrower pursuant to paragraph (c)
above.
SECTION 2.03. BORROWING PROCEDURE.
In order to request a Borrowing, the Borrower shall hand deliver or
telecopy to the Agent a duly completed Borrowing Request in the form of Exhibit
A (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York
City time, three Business Days before such Borrowing, and (b) in the case of an
ABR Borrowing, not later than 11:00 a.m., New York City time, one Business Day
before such Borrowing. Such notice shall be irrevocable and shall in each case
specify (i) whether the Borrowing then being requested is to be a Eurodollar
Borrowing or an ABR Borrowing; (ii) the date of such Borrowing (which shall be a
Business Day) and the amount thereof; and (iii) if such Borrowing is to be a
Eurodollar Borrowing, the Interest Period with respect thereto, which shall not
end after the Maturity Date. If no election as to the Type of Borrowing is
specified in any such notice, then the requested Borrowing shall be an ABR
Borrowing. If no Interest Period with respect to any Eurodollar Borrowing is
specified in any such notice, then the Borrower shall be deemed to have selected
an Interest Period of one month's duration (subject to the limitations set forth
in the definition of "Interest Period"). If the Borrower shall not have given
notice in accordance with this Section 2.03 of its election to refinance a
Borrowing prior to the end of the Interest Period in effect for such Borrowing,
then the Borrower shall (unless such Borrowing is repaid at the end of such
Interest Period) be deemed to have given notice of an election to refinance such
Borrowing with an ABR
17
Borrowing. Notwithstanding any other provision of this Agreement to the
contrary, no Borrowing shall be requested if the Interest Period with respect
thereto would end after the Maturity Date. The Agent shall promptly advise the
Lenders of any notice given pursuant to this Section 2.03 and of each Lender's
portion of the requested Borrowing.
SECTION 2.04. FACILITY FEE.
(a) The Borrower agrees to pay to each Lender, through the Agent, on
each March 31, June 30, September 30 and December 31 (with the first payment
being due on September 30, 2002) and on each date on which the Commitment of
such Lender shall be terminated or reduced as provided herein, a facility fee (a
"Facility Fee"), at a rate per annum equal to the Facility Fee Percentage from
time to time in effect on the amount of the Commitment of such Lender (whether
used or unused), during the preceding quarter (or other period commencing on the
date of this Agreement or ending on the Maturity Date or any date on which the
Commitment of such Lender shall be terminated). The Facility Fee shall be
computed on the basis of the actual number of days elapsed in a year of 360
days. The Facility Fee due to each Lender shall commence to accrue on the date
of this Agreement, and shall cease to accrue on the date of termination of the
Commitment of such Lender as provided herein.
(b) The Facility Fee shall be paid on the dates due, in immediately
available funds, to the Agent for distribution, if and as appropriate, among the
Lenders. Once paid, the Facility Fee shall not be refundable under any
circumstances.
SECTION 2.05. REPAYMENT OF LOANS; EVIDENCE OF INDEBTEDNESS.
(a) The outstanding principal balance of each Loan shall be due and
payable on the last day of the Interest Period applicable thereto and on the
Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness to such Lender resulting from
each Loan made by such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time under
this Agreement.
(c) The Agent shall maintain accounts in which it will record (i) the
amount of each Loan made hereunder, the Type of each Loan made and the Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) the amount of any sum received by the Agent hereunder from the
Borrower and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) of this Section 2.05 shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations therein recorded; provided, however, that the failure of any Lender
or the Agent to maintain such accounts or any error therein shall not in any
manner affect the obligations of the Borrower to repay the Loans in accordance
with their terms.
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SECTION 2.06. INTEREST ON LOANS.
(a) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Margin from time to time in effect.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each ABR Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of (i) 365 or 366 days, as the case may be,
for periods during which the Alternate Base Rate is determined by reference to
the Prime Rate and (ii) 360 days for other periods) at a rate per annum equal to
the Alternate Base Rate plus the Applicable Margin from time to time in effect.
(c) Interest on each Loan shall be payable on each Interest Payment
Date applicable to such Loan except as otherwise provided in this Agreement. The
applicable LIBO Rate or Alternate Base Rate for each Interest Period or day
within an Interest Period, as the case may be, shall be determined by JPMorgan
Chase, and such determination shall be conclusive absent manifest error;
provided that JPMorgan Chase shall, upon request, provide to the Borrower a
certificate setting forth in reasonable detail the basis for such determination.
SECTION 2.07. DEFAULT INTEREST.
If the Borrower shall default in the payment of the principal of or
interest on any Loan or any other amount becoming due hereunder, whether by
scheduled maturity, notice of prepayment, acceleration or otherwise, the
Borrower shall on demand from time to time from the Agent pay interest, to the
extent permitted by law, on such defaulted amount up to (but not including) the
date of actual payment (after as well as before judgment) at a rate per annum
(computed as provided in Section 2.06(b)) equal to the Alternate Base Rate plus
the Applicable Margin for ABR Loans plus 2%.
SECTION 2.08. ALTERNATE RATE OF INTEREST.
In the event, and on each occasion, that on the day two Business Days
prior to the commencement of any Interest Period for a Eurodollar Borrowing the
Agent shall have determined (i) that dollar deposits in the principal amounts of
the Eurodollar Loans comprising such Borrowing are not generally available in
the London interbank market or (ii) that reasonable means do not exist for
ascertaining the LIBO Rate, the Agent shall, as soon as practicable thereafter,
give telecopy notice of such determination to the Borrower and the Lenders. In
the event of any such determination under clause (i) or (ii) above, until the
Agent shall have advised the Borrower and the Lenders that the circumstances
giving rise to such notice no longer exist, any request by the Borrower for a
Eurodollar Borrowing pursuant to Section 2.03 shall be deemed to be a request
for an ABR Borrowing. In the event the Required Lenders notify the Agent that
the rates at which dollar deposits are being offered will not adequately and
fairly reflect the cost to such Lenders of making or maintaining Eurodollar
Loans during such Interest Period, the Agent shall notify the Borrower of such
notice and until the Required Lenders shall have advised the Agent that the
circumstances giving rise to such notice no longer exist, any request by the
Borrower for a Eurodollar Borrowing shall be deemed a request for an ABR
19
Borrowing. Each determination by the Agent hereunder shall be made in good faith
and shall be conclusive absent manifest error; provided that the Agent, shall,
upon request, provide to the Borrower a certificate setting forth in reasonable
detail the basis for such determination.
SECTION 2.09. TERMINATION AND REDUCTION OF COMMITMENTS.
(a) The Commitments shall be automatically terminated on the Maturity
Date.
(b) Upon the issuance for cash by TXU or Energy, of long-term secured
or unsecured debt securities (other than long-term advances from affiliates, the
remarketing of TXU's Series E Senior Notes or any long-term debt issued by TXU
in connection with the refinancing of TXU Gas Company's Putable Asset Term
Securities), the Total Commitment will be permanently reduced by the lesser of
(i) the net proceeds from the issuance of such securities (after payment of
underwriting fees and discounts, legal fees and similar costs and expenses
incurred in connection with such issuance) and (ii) the aggregate amount of the
Total Commitment in effect on such date.
(c) Upon at least two Business Days' prior irrevocable written notice
to the Agent, the Borrower may at any time in whole permanently terminate, or
from time to time in part permanently reduce, the Total Commitment; provided,
however, that (i) each partial reduction of the Total Commitment shall be in an
integral multiple of $10,000,000 and in a minimum principal amount of
$10,000,000 and (ii) no such termination or reduction shall be made that would
reduce the Total Commitment to an amount less than (1) the aggregate principal
amount of Loans outstanding on the date of such termination or reduction (after
giving effect to any prepayment made pursuant to Section 2.10) or (2)
$50,000,000, unless the result of such termination or reduction referred to in
this clause (2) is to reduce the Total Commitment to $0. The Agent shall advise
the Lenders of any notice given pursuant to this Section 2.09(c) and of each
Lender's portion of any such termination or reduction of the Total Commitment.
(d) Each reduction in the Total Commitment hereunder shall be made
ratably among the Lenders in accordance with their respective Commitments. The
Borrower shall pay to the Agent for the account of the Lenders, on the date of
each termination or reduction of the Total Commitment, the Facility Fee on the
amount of the Commitments so terminated or reduced accrued through the date of
such termination or reduction.
SECTION 2.10. PREPAYMENT.
(a) The Borrower shall have the right at any time and from time to
time to prepay any Borrowing, in whole or in part, upon giving telecopy notice
(or telephone notice promptly confirmed by telecopy) to the Agent: (i) before
11:00 a.m., New York City time, three Business Days prior to prepayment, in the
case of Eurodollar Loans, and (ii) before 11:00 a.m., New York City time, one
Business Day prior to prepayment, in the case of ABR Loans; provided, however,
that each partial prepayment shall be in an amount which is an integral multiple
of $10,000,000 and not less than $10,000,000. Each notice of prepayment shall
specify the prepayment date and the principal amount of each Borrowing (or
portion thereof) to be prepaid, shall be irrevocable and shall commit the
Borrower to prepay such Borrowing (or portion thereof) by the amount stated
therein on the date stated therein.
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(b) If the aggregate principal amount of Loans outstanding on any
date shall exceed the Total Commitment on such date (after giving effect to any
reduction on such date in the Total Commitment, pursuant to Section 2.09), then
the Borrower shall prepay Loans in an aggregate principal amount equal to such
excess.
(c) All prepayments under this Section 2.10 shall be subject to
Section 8.05 but otherwise without premium or penalty. All prepayments under
this Section 2.10 shall be accompanied by accrued interest on the principal
amount being prepaid to the date of payment.
SECTION 2.11. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.
(a) Notwithstanding any other provision herein, if after the date of
this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Lender
hereunder (except for changes in respect of taxes on the overall net income of
such Lender or its lending office imposed by the jurisdiction in which such
Lender's principal executive office or lending office is located), or shall
result in the imposition, modification or applicability of any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of or credit extended by any Lender shall result in the imposition on
any Lender or the London interbank market of any other condition affecting this
Agreement, such Lender's Commitment or any Loan (other than an ABR Loan) made by
such Lender, and the result of any of the foregoing shall be to increase the
cost to such Lender of making or maintaining any Loan (other than an ABR Loan)
or to reduce the amount of any sum received or receivable by such Lender
hereunder (whether of principal, interest or otherwise) by an amount deemed by
such Lender to be material, then the Borrower shall, upon receipt of the notice
and certificate provided for in Section 2.11(c), promptly pay to such Lender
such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.
(b) If any Lender shall have determined that the adoption of any law,
rule, regulation or guideline arising out of the July 1988 report of the Basle
Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards," or the
adoption after the date hereof of any other law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any lending office of
such Lender) or any Lender's holding company with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Lender's capital or on the capital of such
Lender's holding company, if any, as a consequence of this Agreement, such
Lender's Commitment or the Loans made by such Lender pursuant hereto to a level
below that which such Lender or such Lender's holding company could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's policies and the policies of such Lender's holding company with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time such additional amount or amounts as will compensate such
Lender for any such reduction suffered will be paid to such Lender by the
Borrower. It is acknowledged that this
21
Agreement is being entered into by the Lenders on the understanding that the
Lenders will not be required to maintain capital against their Commitments under
currently applicable laws, regulations and regulatory guidelines. In the event
the Lenders shall otherwise determine that such understanding is incorrect, it
is agreed that the Lenders will be entitled to make claims under this paragraph
(b) based upon market requirements prevailing on the date hereof for commitments
under comparable credit facilities against which capital is required to be
maintained.
(c) A certificate of each Lender setting forth such amount or amounts
as shall be necessary to compensate such Lender or its holding company as
specified in paragraph (a) or (b) above, as the case may be, and containing an
explanation in reasonable detail of the manner in which such amount or amounts
shall have been determined, shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay each Lender the amount
shown as due on any such certificate delivered by it within 10 days after its
receipt of the same. Each Lender shall give prompt notice to the Borrower of any
event of which it has knowledge, occurring after the date hereof, that it has
determined will require compensation by the Borrower pursuant to this Section;
provided, however, that failure by such Lender to give such notice shall not
constitute a waiver of such Lender's right to demand compensation hereunder.
(d) Failure on the part of any Lender to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Lender's right to demand compensation with respect to such period or any
other period; provided, however, that no Lender shall be entitled to
compensation under this Section 2.11 for any costs incurred or reductions
suffered with respect to any date unless it shall have notified the Borrower
that it will demand compensation for such costs or reductions under paragraph
(c) above not more than 90 days after the later of (i) such date and (ii) the
date on which it shall have become aware of such costs or reductions. The
protection of this Section shall be available to each Lender regardless of any
possible contention of the invalidity or inapplicability of the law, rule,
regulation, guideline or other change or condition which shall have occurred or
been imposed.
(e) Each Lender agrees that it will designate a different lending
office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the reasonable judgment of such Lender, be
disadvantageous to such Lender.
SECTION 2.12. CHANGE IN LEGALITY.
(a) Notwithstanding any other provision herein, if any change in any
law or regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made
by such Lender hereunder, whereupon any request for a Eurodollar
Borrowing shall, as to such Lender only, be deemed a request for an
ABR Loan unless such declaration shall be subsequently
22
withdrawn (any Lender delivering such a declaration hereby agreeing to
withdraw such declaration promptly upon determining that such event of
illegality no longer exists); and
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans, in which event all such Eurodollar Loans shall
be automatically converted to ABR Loans as of the effective date of
such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.12, a notice by any Lender shall
be effective as to each Eurodollar Loan, if lawful, on the last day of the
Interest Period currently applicable to such Eurodollar Loan; in all other cases
such notice shall be effective on the date of receipt.
SECTION 2.13. PRO RATA TREATMENT.
Except as required under Sections 2.12 and 2.17, each Loan, each
payment or prepayment of principal of any Borrowing, each payment of interest on
the Loans, each payment of the Facility Fee, each reduction of the Commitments
and each refinancing or conversion of any Borrowing with a Borrowing of any
Type, shall be allocated pro rata among the Lenders in accordance with their
respective Commitments (or, if such Commitments shall have expired or been
terminated, in accordance with the respective principal amounts of their Loans
outstanding). Each Lender agrees that in computing such Lender's portion of any
Borrowing to be made hereunder, the Agent may, in its discretion, round each
Lender's percentage of such Borrowing to the next higher or lower whole dollar
amount.
SECTION 2.14. SHARING OF SETOFFS.
Each Lender agrees that if it shall, through the exercise of a right
of banker's lien, setoff or counterclaim, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Bankruptcy Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, obtain payment (voluntary or involuntary) in
respect of any Loans as a result of which the unpaid principal portion of its
Loans shall be proportionately less than the unpaid principal portion of the
Loans of any other Lender, it shall be deemed simultaneously to have purchased
from such other Lender at face value, and shall promptly pay to such other
Lender the purchase price for, a participation in the Loans of such other
Lender, so that the aggregate unpaid principal amount of the Loans and
participations in the Loans held by each Lender shall be in the same proportion
to the aggregate unpaid principal amount of all Loans then outstanding as the
principal amount of its Loans prior to such exercise of banker's lien, setoff or
counterclaim or other event was to the principal amount of all Loans outstanding
prior to such exercise of banker's lien, setoff or counterclaim or other event;
provided, however, that, if any such purchase or purchases or adjustments shall
be made pursuant to this Section 2.14 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or
23
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustment restored without interest. The Borrower expressly
consents to the foregoing arrangements and agrees that any Lender holding a
participation in a Loan deemed to have been so purchased may exercise any and
all rights of banker's lien, setoff or counterclaim with respect to any and all
moneys owing by the Borrower to such Lender by reason thereof as fully as if
such Lender had made a Loan in the amount of such participation.
SECTION 2.15. PAYMENTS.
(a) The Borrower shall make each payment (including principal of or
interest on any Loans or the Facility Fee or other amounts) hereunder from an
account in the United States not later than 12:00 noon, New York City time, on
the date when due in dollars to the Agent at its offices at One Chase ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
(Telecopy No. 212-552-5777), in immediately available funds. Each such payment
shall be made without off-set, deduction or counterclaim, provided, that the
foregoing shall not constitute a relinquishment or waiver of the Borrower's
rights to any independent claim that the Borrower may have against the Agent or
any Lender.
(b) Whenever any payment (including principal of or interest on any
Loan or the Facility Fee or other amounts) hereunder shall become due, or
otherwise would occur, on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or the Facility Fee, if
applicable.
SECTION 2.16. TAXES.
(a) Any and all payments of principal and interest on any of the
Loans, or of the Facility Fee or indemnity or expense reimbursements by the
Borrower hereunder ("Borrower Payments") shall be made, in accordance with
Section 2.15, free and clear of and without deduction for any and all current or
future United States Federal, state and local taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect to such
Borrower Payments, but only to the extent reasonably attributable to such
Borrower Payments, excluding (i) income taxes imposed on the net income of the
Agent or any Lender (or any transferee or assignee thereof, including a
participation holder (any such entity a "Transferee")) and (ii) franchise taxes
imposed on the net income of the Agent or any Lender (or Transferee), in each
case by the jurisdiction under the laws of which the Agent or such Lender (or
Transferee) is organized or doing business through offices or branches located
therein, or any political subdivision thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities, collectively
or individually, "Taxes"). If the Borrower shall be required to deduct any Taxes
from or in respect of any sum payable hereunder to any Lender (or any
Transferee) or the Agent, (i) the sum payable shall be increased by the amount
(an "additional amount") necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.16) such Lender (or Transferee) or the Agent shall receive an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.
24
(b) In addition, the Borrower shall pay to the relevant United States
Governmental Authority in accordance with applicable law any current or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
("Other Taxes").
(c) The Borrower shall indemnify each Lender (or Transferee thereof)
and the Agent for the full amount of Taxes and Other Taxes with respect to
Borrower Payments paid by such person, and any liability (including penalties,
interest and expenses (including reasonable attorney's fees and expenses))
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted by the relevant United States
Governmental Authority. A certificate setting forth and containing an
explanation in reasonable detail of the manner in which such amount shall have
been determined and the amount of such payment or liability prepared by a Lender
or the Agent on its behalf, absent manifest error, shall be final, conclusive
and binding for all purposes. Such indemnification shall be made within 30 days
after the date the Lender (or Transferee) or the Agent, as the case may be,
makes written demand therefor.
(d) If a Lender (or Transferee) or the Agent shall become aware that
it is entitled to claim a refund from a United States Governmental Authority in
respect of Taxes or Other Taxes as to which it has been indemnified by the
Borrower, or with respect to which the Borrower has paid additional amounts,
pursuant to this Section 2.16, it shall promptly notify the Borrower of the
availability of such refund claim and shall, within 30 days after receipt of a
request by the Borrower, make a claim to such United States Governmental
Authority for such refund at the Borrower's expense. If a Lender (or Transferee)
or the Agent receives a refund (including pursuant to a claim for refund made
pursuant to the preceding sentence) in respect of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower had paid additional amounts pursuant to this Section 2.16, it shall
within 30 days from the date of such receipt pay over such refund to the
Borrower (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrower under this Section 2.16 with respect to the Taxes
or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
such Lender (or Transferee) or the Agent and without interest (other than
interest paid by the relevant United States Governmental Authority with respect
to such refund); provided, however, that the Borrower, upon the request of such
Lender (or Transferee) or the Agent, agrees to repay the amount paid over to the
Borrower (plus penalties, interest or other charges) to such Lender (or
Transferee) or the Agent in the event such Lender (or Transferee) or the Agent
is required to repay such refund to such United States Governmental Authority.
(e) As soon as practicable, but in any event within 30 days, after
the date of any payment of Taxes or Other Taxes by the Borrower to the relevant
United States Governmental Authority, the Borrower will deliver to the Agent, at
its address referred to in Section 8.01, the original or a certified copy of a
receipt issued by such United States Governmental Authority evidencing payment
thereof.
(f) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.16
shall survive the payment in full of the principal of and interest on all Loans
hereunder.
25
(g) Each of the Agent and each Lender (or Transferee) that is
organized under the laws of a jurisdiction other than the United States, any
State thereof or the District of Columbia (a "Non-U.S. Lender" or "Non U.S.
Agent", as applicable) shall deliver to the Borrower and the Agent two copies of
either United States Internal Revenue Service Form W-8BEN or Form W-8ECI,
properly completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or reduced rate of, United States Federal withholding tax on
payments by the Borrower under this Agreement. Such forms shall be delivered by
each Non-U.S. Lender on or before the date it becomes a party to this Agreement
(or, in the case of a Transferee that is a participation holder, on or before
the date such participation holder becomes a Transferee hereunder) and on or
before the date, if any, such Non-U.S. Lender changes its applicable lending
office by designating a different lending office (a "New Lending Office"). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Notwithstanding any other provision of this Section 2.16(g), a Non-U.S.
Lender shall not be required to deliver any form pursuant to this Section
2.16(g) that such Non-U.S. Lender is not legally able to deliver.
(h) The Borrower shall not be required to indemnify any Non-U.S.
Lender or Non-U.S. Agent (including any Transferee), or to pay any additional
amounts to any Non-U.S. Lender or Non-U.S. Agent (including any Transferee), in
respect of United States Federal, state or local withholding tax pursuant to
paragraph (a) or (c) above to the extent that (i) the obligation to withhold
amounts with respect to United States Federal, state or local withholding tax
existed on the date such Non-U.S. Lender became a party to this Agreement (or,
in the case of a Transferee that is a participation holder, on the date such
participation holder became a Transferee hereunder) or, with respect to payments
to a New Lending Office, the date such Non-U.S. Lender designated such New
Lending Office with respect to a Loan; provided, however, that this clause (i)
shall not apply to any Transferee or New Lending Office that becomes a
Transferee or New Lending Office as a result of an assignment, participation,
transfer or designation made at the request of the Borrower; and provided
further, however, that this clause (i) shall not apply to the extent the
indemnity payment or additional amounts any Transferee or any Lender (or
Transferee) through a New Lending Office, would be entitled to receive (without
regard to this clause (i)) do not exceed the indemnity payment or additional
amounts that the person making the assignment, participation or transfer to such
Transferee or Lender (or Transferee) making the designation of such New Lending
Office, would have been entitled to receive in the absence of such assignment,
participation, transfer or designation or (ii) the obligation to pay such
additional amounts or such indemnity payments would not have arisen but for a
failure by such Non-U.S. Lender (including any Transferee) to comply with the
provisions of paragraphs (g) above and (i) below.
(i) Any Lender (or Transferee) claiming any indemnity payment or
additional amounts payable pursuant to this Section 2.16 shall use reasonable
efforts (consistent with legal and regulatory restrictions) to file any
certificate or document reasonably requested in writing by the Borrower or to
change the jurisdiction of its applicable lending office if the making of such a
filing or change would avoid the need for or reduce the amount of any such
indemnity payment or additional amounts that may thereafter accrue and would
not, in the good faith determination of such Lender (or Transferee), be
otherwise disadvantageous to such Lender (or Transferee).
26
(j) Nothing contained in this Section 2.16 shall require any Lender
(or Transferee) or the Agent to make available to the Borrower any of its tax
returns (or any other information) that it deems to be confidential or
proprietary.
SECTION 2.17. ASSIGNMENT OF COMMITMENTS UNDER CERTAIN CIRCUMSTANCES.
In the event that any Lender shall have delivered a notice or
certificate pursuant to Section 2.11 or 2.12, or the Borrower shall be required
to make additional payments to any Lender under Section 2.16, the Borrower shall
have the right, at its own expense, upon notice to such Lender and the Agent, to
require such Lender to transfer and assign without recourse (in accordance with
and subject to the restrictions contained in Section 8.04) all such Lender's
interests, rights and obligations contained hereunder to another financial
institution approved by the Agent and the Borrower (which approval shall not be
unreasonably withheld) which shall assume such obligations; provided that (i) no
such assignment shall conflict with any law, rule or regulation or order of any
Governmental Authority and (ii) the assignee shall pay to the affected Lender in
immediately available funds on the date of such assignment the principal of and
interest accrued to the date of payment on the Loans made by it hereunder and
all other amounts accrued for its account or owed to it hereunder and the
Borrower shall pay the processing and recordation fee due pursuant to Section
8.04.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each Lender as follows:
SECTION 3.01. ORGANIZATION; POWERS.
The Borrower (i) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization, (ii)
has all requisite power and authority to own its property and assets and to
carry on its business as now conducted and as proposed to be conducted, (iii) is
qualified to do business in every jurisdiction where such qualification is
required, except where the failure so to qualify would not result in a Material
Adverse Change, and (iv) has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement and to request and
receive Loans to the extent permitted under Section 2.01.
SECTION 3.02. AUTHORIZATION.
The execution, delivery and performance by the Borrower of this
Agreement and the making of the Loans to the extent permitted under Section 2.01
(i) have been duly authorized by all requisite corporate action and (ii) will
not (A) violate (x) any provision of any law, statute, rule or regulation
(including, without limitation, the Margin Regulations) or of the certificate of
incorporation or other constitutive documents or by-laws of the Borrower or any
of its Subsidiaries to which the Borrower is subject, (y) any order of any
Governmental Authority or (z) any provision of any indenture, agreement or other
instrument to which the Borrower or any
27
of its Subsidiaries is a party or by which it or any of its property is or may
be bound, (B) be in conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under any such indenture,
agreement or other instrument or (C) result in the creation or imposition of any
Lien upon any property or assets of the Borrower.
SECTION 3.03. ENFORCEABILITY.
This Agreement constitutes a legal, valid and binding obligation of
the Borrower enforceable in accordance with its terms except to the extent that
enforcement may be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally.
SECTION 3.04. GOVERNMENTAL APPROVALS.
No action, consent or approval of, registration or filing with or
other action by any Governmental Authority is or will be required in connection
with the execution, delivery and performance by the Borrower of this Agreement,
except those as have been duly obtained and as are (i) in full force and effect,
(ii) sufficient for their purpose and (iii) not subject to any pending or, to
the knowledge of the Borrower, threatened appeal or other proceeding seeking
reconsideration or review thereof.
SECTION 3.05. FINANCIAL STATEMENTS.
(a) The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of December 31, 2001 and the related consolidated
statements of income, retained earnings and cash flows for the fiscal year then
ended, reported on by Deloitte & Touche LLP and set forth in the Borrower's 2001
Annual Report on Form 10-K, copies of which have been delivered to each of the
Lenders, present fairly, in all material respects, the consolidated financial
position of the Borrower and its Consolidated Subsidiaries as of such date and
their consolidated results of operations and cash flows for the period ending on
such date in conformity with GAAP. The unaudited consolidated balance sheets of
the Borrower and its Consolidated Subsidiaries as of March 31, 2002 and the
related consolidated statements of income and cash flows for the three-month
period ending on such date, certified by a Responsible Officer of the Borrower,
copies of which have been delivered to each of the Lenders, present fairly
(subject to year-end adjustments), in all material respects, the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as of such
date and their consolidated results of operations and cash flows for the period
ending on such date in conformity with GAAP.
(b) Except as set forth in the financial statements or other reports
of the type referred to in Section 5.03 hereof and which have been delivered to
the Lenders on or prior to the date hereof, since December 31, 2001, there has
been no Material Adverse Change with respect to the Borrower, other than as a
result of the matters excluded from the computation of Consolidated Earnings
Available for Fixed Charges as set forth in the definition thereof.
SECTION 3.06. LITIGATION.
Except as set forth in the financial statements or other reports of
the type referred to in Section 5.03 hereof and which have been delivered to the
Lenders on or prior to the date hereof, there is no action, suit or proceeding
pending against, or to the knowledge of the Borrower
28
threatened against or affecting, the Borrower or any of its Subsidiaries before
any court or arbitrator or any governmental body, agency or official in which
there is a reasonable possibility of an adverse decision that could materially
adversely affect the ability of the Borrower to pay its obligations hereunder or
which in any manner draws into question the validity of this Agreement.
SECTION 3.07. FEDERAL RESERVE REGULATIONS.
(a) Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used by the Borrower,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, to purchase or carry Margin Stock or to refund indebtedness
originally incurred for such purpose, or for any other purpose which entails a
violation of, or which is inconsistent with, the provisions of the Margin
Regulations.
(c) Not more than 25% of the value of the assets of the Borrower
subject to the restrictions of Sections 5.09 and 5.10 is represented by Margin
Stock.
SECTION 3.08. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT.
(a) Neither the Borrower nor any of its Subsidiaries is an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940.
(b) Each of the Borrower and its Subsidiaries is exempt from all
provisions of the Public Utility Holding Company Act of 1935 and rules and
regulations thereunder, except for Sections 9(a)(2) and 33 of such Act and the
rules and regulations thereunder, and the execution, delivery and performance by
the Borrower of this Agreement and its obligations hereunder do not violate any
provision of such Act or any rule or regulation thereunder.
SECTION 3.09. NO MATERIAL MISSTATEMENTS.
No report, financial statement or other written information furnished
by or on behalf of the Borrower to the Agent or any Lender pursuant to or in
connection with this Agreement contains or will contain any material
misstatement of fact or omits or will omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were or will be made, not misleading.
SECTION 3.10. TAXES.
The Borrower and its Subsidiaries have filed or caused to be filed
within 3 days of the date on which due, all material Federal, state and local
tax returns which to their knowledge are required to be filed by them, and have
paid or caused to be paid all material taxes shown to be due and payable on such
returns or on any assessments received by them, other than any taxes or
assessments the validity of which is being contested in good faith by
appropriate proceedings and
29
with respect to which appropriate accounting reserves have to the extent
required by GAAP been set aside.
SECTION 3.11. EMPLOYEE BENEFIT PLANS.
With respect to each Plan, the Borrower and its ERISA Affiliates are
in compliance in all material respects with the applicable provisions of ERISA
and the Code and the final regulations and published interpretations thereunder.
No ERISA Event has occurred that alone or together with any other ERISA Event
has resulted or could reasonably be expected to result in a Material Adverse
Change. Neither the Borrower nor any ERISA Affiliate has incurred any Withdrawal
Liability that could result in a Material Adverse Change. Neither the Borrower
nor any ERISA Affiliate has received any notification that any Multiemployer
Plan is in reorganization or has been terminated within the meaning of Title IV
of ERISA, which such reorganization or termination could result in a Material
Adverse Change, and no Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated where such reorganization or termination has
resulted or can reasonably be expected to result, through an increase in the
contributions required to be made to such Plan or otherwise, in a Material
Adverse Change.
SECTION 3.12. SIGNIFICANT SUBSIDIARIES.
Each of the Borrower's Significant Subsidiaries is a corporation,
limited liability company or other type of person duly incorporated or formed
(as the case may be), validly existing and in good standing under the laws of
its jurisdiction of incorporation or formation (as the case may be) and has all
corporate, limited liability company, partnership or other (as the case may be)
powers necessary to carry on its business substantially as now conducted. The
Borrower's Significant Subsidiaries have all material governmental licenses,
authorizations, consents and approvals required to carry on the business of the
Significant Subsidiaries substantially as now conducted.
SECTION 3.13. ENVIRONMENTAL MATTERS.
Except as set forth in or contemplated by the financial statements or
other reports of the type referred to in Section 5.03 hereof and which have been
delivered to the Lenders on or prior to the date hereof, each of the Borrower
and its Subsidiaries has complied in all material respects with all Federal,
state, local and other statutes, ordinances, orders, judgments, rulings and
regulations relating to environmental pollution or to environmental or nuclear
regulation or control, except to the extent that failure to so comply could not
reasonably be expected to result in a Material Adverse Change. Except as set
forth in or contemplated by such financial statements or other reports, neither
the Borrower nor any of its Subsidiaries has received notice of any failure so
to comply, except where such failure could not reasonably be expected to result
in a Material Adverse Change. Except as set forth in or contemplated by such
financial statements or other reports, the facilities of the Borrower or any of
its Subsidiaries, as the case may be, are not used to manage any hazardous
wastes, hazardous substances, hazardous materials, toxic substances, toxic
pollutants or substances similarly denominated, as those terms or similar terms
are used in the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response Compensation and Liability Act, the Hazardous Materials
Transportation Act, the Toxic Substance Control Act, the Clean Air Act, the
Clean Water Act or
30
any other applicable law relating to environmental pollution, or any nuclear
fuel or other radioactive materials, in violation in any material respect of any
law or any regulations promulgated pursuant thereto, except to the extent that
such violations could not reasonably be expected to result in a Material Adverse
Change. Except as set forth in or contemplated by such financial statements or
other reports, the Borrower is aware of no events, conditions or circumstances
involving environmental pollution or contamination that could reasonably be
expected to result in a Material Adverse Change.
SECTION 3.14. SOLVENCY.
The Borrower is Solvent.
ARTICLE IV
CONDITIONS
The obligations of the Lenders to make Loans hereunder are subject to
the satisfaction of the following conditions:
SECTION 4.01. INITIAL LOANS.
The Commitment of each Lender to make its initial Loan is subject to
the conditions that on or prior to the date of such Loan:
(a) The Agent shall have received favorable written legal opinions of
(i) (A) ▇▇▇▇▇▇ ▇▇▇▇ & Priest LLP, special New York counsel to the Borrower, and
(B) Hunton & ▇▇▇▇▇▇▇▇, counsel to the Borrower, and (ii) King & Spalding,
special New York counsel to the Agent, in each case dated the date hereof,
addressed to the Agent and the Lenders and in form and substance satisfactory to
the Agent.
(b) The Agent shall have received (i) a copy of the certificate of
incorporation, including all amendments thereto, of the Borrower, certified as
of a recent date by the Secretary of State of the state of incorporation of the
Borrower, and a certificate as to the good standing of the Borrower as of a
recent date from such Secretary of State; (ii) a certificate of the Secretary or
an Assistant Secretary of the Borrower, dated the date of this Agreement and
certifying (A) that attached thereto is a true and complete copy of the bylaws
of the Borrower as in effect on such date and at all times since a date prior to
the date of the resolutions described in clause (B) below, (B) that attached
thereto are true and complete copies of resolutions duly adopted by the Board of
Directors authorizing the execution and delivery by the Borrower of this
Agreement, the Loans to be made hereunder and the performance by the Borrower of
all of its obligations hereunder, and that such resolutions have not been
modified, rescinded or amended and are in full force and effect, (C) that the
certificate of incorporation referred to in clause (i) above has not been
amended since the date of the last amendment thereto shown on the certificate of
good standing furnished pursuant to such clause (i) and (D) as to the incumbency
and specimen signature of each officer executing this Agreement and any other
document delivered in connection herewith on behalf of the Borrower; (iii) a
certificate of another officer of the Borrower as to the incumbency and specimen
signature of the Secretary or Assistant Secretary executing the certificate
pursuant to (ii) above; and (iv) a certificate of a Responsible Officer of
31
the Borrower, dated the date of this Agreement, stating that (A) no action,
consent or approval of, registration or filing with or other action by any
Governmental Authority is or will be required in connection with the execution,
delivery and performance by the Borrower of this Agreement, except those as have
been duly obtained and as are (1) in full force and effect, (2) sufficient for
their purpose and (3) not subject to any pending or, to the knowledge of such
person, threatened appeal or other proceeding seeking reconsideration or review
thereof, and (B) the representations and warranties set forth in Article III
hereof are true and correct in all material respects on and as of the date
hereof, and (C) no Event of Default or Default has occurred and is continuing on
the date hereof.
(c) The Agent shall have received such other approvals, opinions,
certificates, instruments and documents as the Agent or any of the Lenders may
have reasonably requested, in form satisfactory to the Agent or Lender (if
applicable).
(d) The Lenders and the Agent shall have received payment of all fees
and reimbursements of all expenses for which invoices have been presented as and
when due on or prior to the date of the initial Loans pursuant to the terms of
this Agreement.
SECTION 4.02. CONDITIONS FOR ALL LOANS.
The Commitment of each Lender to make each Loan hereunder shall be
subject to the satisfaction of the following conditions precedent on the date of
such Loan:
(a) The Agent shall have received from the Borrower a Borrowing
Request requesting such Loan as required by Section 2.03.
(b) The representations and warranties of the Borrower set forth in
Article III hereof (except in the case of any Loan that does not increase the
aggregate principal amount of the Loans outstanding, the representations set
forth in Sections 3.05(b), 3.06, 3.11 and 3.13) shall be true and correct in all
material respects on and as of the date of such Loan with the same effect as
though made on and as of such date, except to the extent such representations
and warranties expressly relate to an earlier date.
(c) At the time of and immediately after such Loan, no Default or
Event of Default shall have occurred and be continuing at the time of such Loan
or would result from the making of such Loan.
(d) The Agent shall have received a certificate of a Responsible
Officer of the Borrower certifying that the matters set forth in paragraphs (b)
and (c) of this Section 4.02 are true and correct as of such date.
The acceptance by the Borrower of the proceeds of any Loan shall be deemed to
constitute a representation and warranty by the Borrower on the date of such
Loan as to the matters specified in subsections (b) and (c) of this Section
4.02.
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ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Lender has any Commitment
hereunder or any amount payable hereunder remains unpaid:
SECTION 5.01. EXISTENCE.
It will, and will cause each of its Significant Subsidiaries to, do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence and all rights, licenses, permits, franchises and
authorizations necessary or desirable in the normal conduct of its business
except as otherwise permitted pursuant to Section 5.09.
SECTION 5.02. COMPLIANCE WITH LAWS; BUSINESS AND PROPERTIES.
It will, and will cause each of its Subsidiaries to, comply with all
applicable material laws, rules, regulations and orders of any Governmental
Authority, whether now in effect or hereafter enacted, except where the validity
or applicability of such laws, rules, regulations or orders is being contested
by appropriate proceedings in good faith; and at all times maintain and preserve
all property material to the conduct of its business and keep such property in
good repair, working order and condition and from time to time make, or cause to
be made, all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.
SECTION 5.03. FINANCIAL STATEMENTS, REPORTS, ETC.
It will furnish to the Agent and each Lender:
(a) as soon as available and in any event within 120 days after the
end of each fiscal year of the Borrower, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and
the related consolidated statements of income, retained earnings and cash flows
for such fiscal year, setting forth in each case in comparative form the figures
for the previous fiscal year, all reported on in a manner reasonably acceptable
to the SEC by Deloitte & Touche LLP or other independent public accountants of
nationally recognized standing;
(b) as soon as available and in any event within 60 days after the
end of each of the first three quarters of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
of the end of such quarter and the related consolidated statements of income for
such quarter, for the portion of the Borrower's fiscal year ended at the end of
such quarter, and for the twelve months ended at the end of such quarter, and
the related consolidated statement of cash flows for the portion of the
Borrower's fiscal year ended at the end of such quarter, setting forth
comparative figures for previous dates and periods to the extent required in
Form 10-Q, all certified (subject to normal year-end adjustments) as to fairness
of presentation, GAAP and consistency by a Financial Officer of the Borrower;
(c) simultaneously with any delivery of each set of financial
statements referred to in paragraphs (a) and (b) above a certificate of a
Financial Officer of the Borrower (i) setting forth
33
in reasonable detail the calculations required to establish whether the Borrower
was in compliance with the requirements of Sections 5.11 and 5.12 on the date of
such financial statements, and (ii) stating whether any Default or Event of
Default exists on the date of such certificate and, if any Default or Event of
Default then exists, setting forth the details thereof and the action that the
Borrower is taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in paragraph (a) above, a statement of the firm of
independent public accountants that reported on such statements (i) stating
whether anything has come to their attention to cause them to believe that any
Default or Event of Default existed on the date of such statements and (ii)
confirming the calculations set forth in the Financial Officer's certificate
delivered simultaneously therewith pursuant to paragraph (c) above;
(e) forthwith upon becoming aware of the occurrence of any Default or
Event of Default, a certificate of a Financial Officer of the Borrower setting
forth the details thereof and the action that the Borrower is taking or proposes
to take with respect thereto;
(f) promptly upon the filing thereof, copies of each final prospectus
(other than a prospectus included in any registration statement on Form S-8 or
its equivalent or with respect to a dividend reinvestment plan) and all reports
on Forms 10-K, 10-Q and 8-K and similar reports that the Borrower shall have
filed with the SEC, or any Governmental Authority succeeding to any of or all
the functions of the SEC;
(g) if and when any member of the Controlled Group (i) gives or is
required to give notice to the PBGC of any Reportable Event with respect to any
Plan which might constitute grounds for a termination of such Plan under Title
IV of ERISA, or knows that the plan administrator of any Plan has given or is
required to give notice of any such Reportable Event, a copy of the notice of
such Reportable Event given or required to be given to the PBGC; (ii) receives
notice from a proper representative of a Multiemployer Plan of complete or
partial Withdrawal Liability being imposed upon such member of the Controlled
Group under Title IV of ERISA, a copy of such notice; or (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate, or appoint a
trustee to administer, any Plan, a copy of such notice; and
(h) promptly, from time to time, such additional information
regarding the financial position or business of the Borrower and its
Subsidiaries as the Agent, at the request of any Lender, may reasonably request.
As promptly as practicable after delivering each set of financial statements as
required in paragraph (a) of this Section, the Borrower shall make available a
copy of the consolidating workpapers used by the Borrower in preparing such
consolidated statements to each Lender that shall have requested such
consolidating workpapers. Each Lender that receives such consolidating
workpapers shall hold them in confidence as required by Section 8.15; provided
that no Lender may disclose such consolidating workpapers to any other person
pursuant to clause (iv) of Section 8.15.
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SECTION 5.04. INSURANCE.
It will, and will cause each of its Subsidiaries to, maintain such
insurance or self insurance, to such extent and against such risks, including
fire and other risks insured against by extended coverage, as is customary with
companies similarly situated and in the same or similar businesses.
SECTION 5.05. TAXES, ETC.
It will, and will cause each of its Subsidiaries to, pay and discharge
promptly when due all material taxes, assessments and governmental charges
imposed upon it or upon its income or profits or in respect of its property, as
well as all other material liabilities, in each case before the same shall
become delinquent or in default and before penalties accrue thereon, unless and
to the extent that the same are being contested in good faith by appropriate
proceedings and adequate reserves with respect thereto shall, to the extent
required by GAAP, have been set aside.
SECTION 5.06. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND
INSPECTIONS.
It will, and will cause each of its Subsidiaries to, maintain
financial records in accordance with GAAP and, upon reasonable notice and at
reasonable times, permit authorized representatives designated by any Lender to
visit and inspect its properties and to discuss its affairs, finances and
condition with its officers.
SECTION 5.07. ERISA.
It will, and will cause each of its Subsidiaries that are members of
the Controlled Group to, comply in all material respects with the applicable
provisions of ERISA and the Code except where any noncompliance, individually or
in the aggregate, would not result in a Material Adverse Change.
SECTION 5.08. USE OF PROCEEDS.
It will not, and will not cause or permit any of its Subsidiaries to,
use the proceeds of the Loans for purposes other than working capital and other
general corporate purposes, including the refinancing of short-term borrowings.
SECTION 5.09. CONSOLIDATIONS, MERGERS, SALES AND ACQUISITIONS OF
ASSETS AND INVESTMENTS IN SUBSIDIARIES.
It (i) will not, and will not permit any of its Significant
Subsidiaries to, consolidate or merge with or into any person unless (A) in the
case of any such transaction involving the Borrower, the surviving person is the
Borrower or another person formed under the laws of a State of the United States
of America and assumes or is responsible, by operation of law, for all the
obligations of the Borrower hereunder and (B) in the case of any such
transaction involving any such Significant Subsidiary, the survivor is the
Borrower, such Significant Subsidiary or a Wholly Owned Subsidiary of the
Borrower (or a person which as a result of the transaction becomes a Wholly
Owned Subsidiary of the Borrower), and (ii) will not, and will not permit any of
its Significant Subsidiaries (other than Energy or Oncor) to, make a Significant
Disposition to
35
any person other than the Borrower or a Wholly Owned Subsidiary of the Borrower
(or a person which as a result of such transaction becomes a Wholly Owned
Subsidiary of the Borrower), provided that the Borrower will not in any event
permit any such consolidation, merger, sale, lease or transfer if any Default or
Event of Default relating to the Borrower shall have occurred and be continuing
at the time of or after giving effect to such transaction. Notwithstanding the
foregoing, (x) neither the Borrower nor any of its Subsidiaries will engage to a
Substantial extent in businesses other than those currently conducted by them
and other businesses reasonably related thereto, (y) neither the Borrower nor
any of its Subsidiaries will acquire any Subsidiary or make any investment in
any Subsidiary if, upon giving effect to such acquisition or investment, as the
case may be, the Borrower would not be in compliance with the covenants set
forth in Sections 5.11 and 5.12 and (z) nothing in this Section shall prohibit
any sales of assets permitted by Section 5.10(d).
SECTION 5.10. LIMITATIONS ON LIENS.
Neither the Borrower nor any Significant Subsidiary thereof will
create or assume or permit to exist any Lien in respect of any property or
assets of any kind (real or personal, tangible or intangible) of the Borrower or
any such Significant Subsidiary, or sell any such property or assets subject to
an understanding or agreement, contingent or otherwise, to repurchase such
property or assets, or sell, or permit any Significant Subsidiary thereof to
sell, any accounts receivable; provided that the provisions of this Section
shall not prevent or restrict the creation, assumption or existence of:
(a) any Lien in respect of any such property or assets of any
Significant Subsidiary of the Borrower to secure indebtedness owing by it to the
Borrower or any Wholly Owned Subsidiary of the Borrower; or
(b) Liens (including capital leases) in respect of property acquired
by the Borrower or any Significant Subsidiary thereof, to secure the purchase
price, or the cost of construction and development, of such property (or to
secure indebtedness incurred prior to, at the time of, or within 120 days after
the later of the acquisition of such property and the commencement of operation
of such property for the purpose of financing the acquisition, or the cost of
construction and development, of such property), or Liens existing on any such
property at the time of acquisition of such property by the Borrower or such
Significant Subsidiary, whether or not assumed, or any Lien in respect of
property of any person existing at the time such person becomes a Subsidiary of
the Borrower; or agreements to acquire any property or assets under conditional
sale agreements or other title retention agreements, or capital leases in
respect of any other property; provided that
(A) the aggregate principal amount of Indebtedness
secured by all Liens in respect of any such property shall
not exceed the cost (as determined by the board of directors
or analogous governing body of the Borrower or such
Significant Subsidiary, as the case may be) of such property
at the time of acquisition thereof (or (x) in the case of
property covered by a capital lease, the fair market value,
as so determined, of such property at the time of such
transaction, or (y) in the case of a Lien in respect of
property existing at the time such person becomes a
36
Subsidiary of the Borrower the fair market value, as so
determined of such property at such time), and
(B) at the time of the acquisition of the property by
the Borrower or such Significant Subsidiary, or at the time
such person becomes a Subsidiary of the Borrower, as the
case may be, every such Lien shall apply and attach only to
the property originally subject thereto and fixed
improvements constructed thereon; or
(c) refundings or extensions of any Lien permitted in the foregoing
paragraph (b) for amounts not exceeding the principal amount of the Indebtedness
so refunded or extended or the fair market value (as determined by the board of
directors (or analogous governing body) of the Borrower or such Significant
Subsidiary, as the case may be) of the property theretofore subject to such
Lien, whichever shall be lower, in each case at the time of such refunding or
extension; provided that such Lien shall apply only to the same property
theretofore subject to the same and fixed improvements constructed thereon; or
(d) sales subject to understandings or agreements to repurchase;
provided that the aggregate sales price for all such sales (other than sales to
any governmental instrumentality in connection with such instrumentality's
issuance of indebtedness, including without limitation industrial development
bonds and pollution control bonds, on behalf of the Borrower or any Significant
Subsidiary thereof) made in any one calendar year shall not exceed $50,000,000
in the aggregate for the Borrower and its Significant Subsidiaries; or
(e) any production payment or similar interest which is dischargeable
solely out of natural gas, coal, lignite, oil or other mineral to be produced
from the property subject thereto and to be sold or delivered by the Borrower or
any Significant Subsidiary thereof; or
(f) any Lien, including in connection with sale-leaseback
transactions, created or assumed by the Borrower or any Significant Subsidiary
thereof on natural gas, coal, lignite, oil or other mineral properties or
nuclear fuel owned or leased by the Borrower or such Subsidiary, to secure loans
to the Borrower or such Subsidiary in an aggregate amount not to exceed
$400,000,000 in the aggregate for the Borrower and its Significant Subsidiaries;
provided that neither the Borrower nor any Subsidiary of the Borrower shall
assume or guarantee such financings; or
(g) any Lien (whenever incurred) on assets owned by the Borrower or
any Subsidiary thereof as of the date hereof and any fuel, operating and
maintenance or similar contract related thereto securing Indebtedness of the
Borrower or Subsidiary in an aggregate amount not to exceed 10% of consolidated
assets of the Borrower; or
(h) leases (other than capital leases) now or hereafter existing and
any renewals and extensions thereof under which the Borrower or any Significant
Subsidiary thereof may acquire or dispose of any of its property, subject,
however, to the terms of Section 5.09; or
(i) any Lien created or to be created by the First Mortgage; or
37
(j) any Lien on the rights of the TXU Mining or TXU Fuel existing
under their respective Operating Agreements; or
(k) pledges or sales by any Subsidiary of the Borrower of its
accounts receivable including customers' installment paper; or
(l) the pledge of current assets, in the ordinary course of business,
to secure current liabilities; or
(m) Permitted Encumbrances; or
(n) Liens on cash collateral to secure reimbursement obligations for
letters of credit issued for the account of the Borrower or any of its
Subsidiaries; or
(o) any Lien incurred in connection with the issuance of Qualified
Transition Bonds.
SECTION 5.11. FIXED CHARGE COVERAGE.
The Borrower will not, as of the end of each quarter of each fiscal
year of the Borrower, permit Consolidated Earnings Available for Fixed Charges
for the twelve months then ended to be less than or equal to 200% of
Consolidated Fixed Charges for the twelve months then ended.
SECTION 5.12. EQUITY CAPITALIZATION RATIO.
The Borrower will not, as of the end of each quarter of each fiscal
year of the Borrower, permit the ratio of its Consolidated Shareholders' Equity
to its Consolidated Total Capitalization to be less than 35%.
SECTION 5.13. RESTRICTIVE AGREEMENTS.
The Borrower will not cause or permit Energy or Oncor to enter into
any agreement restricting the ability of Energy or Oncor to make payments,
directly or indirectly, to the Borrower by way of dividends, advances,
repayments of loans or advances, reimbursements of management and other
intercompany charges, expenses and accruals or other returns on investments or
any other agreement or arrangement that restricts the ability of Energy or Oncor
to make any payment, directly or indirectly, to the Borrower other than pursuant
to the terms of preferred stock or Equity-Credit Preferred Securities issued by
Energy or Oncor or their respective Subsidiaries, if the effect of such
agreement is to subject Energy or Oncor or any of their respective Subsidiaries
to restrictions on such payments greater than those to which Energy or Oncor or
any such Subsidiary is subject on the date of this Agreement. All such existing
restrictive agreements are listed on Schedule 5.13 hereto.
38
ARTICLE VI
EVENTS OF DEFAULT
In case of the happening of any of the following events (each an
"Event of Default"):
(a) any representation or warranty made or deemed made by the
Borrower in or in connection with the execution and delivery of this Agreement
or the Loans hereunder shall prove to have been false or misleading in any
material respect when so made, deemed made or furnished;
(b) default shall be made by the Borrower in the payment of any
principal of any Loan when and as the same shall become due and payable, whether
at the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(c) default shall be made by the Borrower in the payment of any
interest on any Loan or the Facility Fee or any other amount (other than an
amount referred to in paragraph (b) above) due hereunder, when and as the same
shall become due and payable, and such default shall continue unremedied for a
period of five days;
(d) default shall be made by the Borrower in the due observance or
performance of any covenant, condition or agreement contained in Section 5.01,
5.11 or 5.12;
(e) default shall be made by the Borrower (i) in the due observance
or performance of any covenant, condition or agreement contained in Section 5.09
and such default shall continue unremedied for a period of 5 days or (ii) in the
due observance or performance of any covenant, condition or agreement contained
herein (other than those specified in (b), (c), (d) or (e)(i) above) and such
default shall continue unremedied for a period of 30 days after notice thereof
from the Agent at the request of any Lender to the Borrower;
(f) TXU shall no longer own, directly or indirectly, all the
outstanding equity interests in the Borrower or any permitted successor to the
Borrower, or the Borrower shall no longer own, directly or indirectly, 100% of
the equity interests in Energy or Oncor; provided, however, that the Borrower
and Energy may sell in an initial public offering up to 20% of the equity
interests in any Subsidiary comprising generating assets of Energy;
(g) the Borrower or any Subsidiary thereof shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any Indebtedness
in a principal amount in excess of $50,000,000, when and as the same shall
become due and payable, subject to any applicable grace periods, or (ii) fail to
observe or perform any other term, covenant, condition or agreement contained in
any agreement or instrument evidencing or governing any such Indebtedness if the
effect of any failure referred to in this clause (ii) is to cause, or to permit
the holder or holders of such Indebtedness or a trustee on its or their behalf
to cause, such Indebtedness to become accelerated or due prior to its stated
maturity;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Borrower or any Significant Subsidiary thereof, or of a
substantial part of the property or assets of the Borrower or any Significant
Subsidiary thereof, under Title 11 of the United States Bankruptcy Code, as
39
now constituted or hereafter amended, or any other Federal or state bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Borrower or any Significant Subsidiary thereof or for a substantial part of the
property or assets of the Borrower or any Significant Subsidiary thereof or
(iii) the winding up or liquidation of the Borrower or any Significant
Subsidiary thereof; and such proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the foregoing
shall be entered;
(i) the Borrower or any Significant Subsidiary thereof shall (i)
voluntarily commence any proceeding or file any petition seeking relief under
Title 11 of the United States Bankruptcy Code, as now constituted or hereafter
amended, or any other Federal or state bankruptcy, insolvency, receivership or
similar law, (ii) consent to the institution of, or fail to contest in a timely
and appropriate manner, any proceeding or the filing of any petition described
in (h) above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Borrower or any Significant Subsidiary thereof or for a substantial part of the
property or assets of it or such Significant Subsidiary, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors, (vi)
become unable, admit in writing its inability or fail generally to pay its debts
as they become due or (vii) take any action for the purpose of effecting any of
the foregoing;
(j) a Change in Control shall occur;
(k) one or more judgments or orders for the payment of money in an
aggregate amount in excess of $50,000,000 shall be rendered against the Borrower
or any Subsidiary thereof or any combination thereof and such judgment or order
shall remain undischarged or unstayed for a period of 30 days, or any action
shall be legally taken by a judgment creditor to levy upon assets or properties
of the Borrower or any Subsidiary thereof to enforce any such judgment or order;
(l) an ERISA Event or ERISA Events shall have occurred that
reasonably could be expected to result in a Material Adverse Change;
then, and in every such event, and at any time thereafter during the continuance
of such event, the Agent, at the request of the Required Lenders, shall, by
notice to the Borrower, take one or all of the following actions, at the same or
different times: (i) terminate forthwith the right of the Borrower to request
and receive Loans; and (ii) declare the Loans then outstanding to be forthwith
due and payable in whole or in part, whereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and any
unpaid accrued Facility Fee and all other liabilities of the Borrower accrued
hereunder, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein to the contrary notwithstanding; provided that
in the case of any event described in paragraph (h) or (i) above affecting the
Borrower, the right of the Borrower to request and receive Loans shall
automatically terminate and the principal of the Loans then outstanding of the
Borrower, together with accrued interest thereon and any unpaid accrued Facility
Fee and all other liabilities of the Borrower accrued hereunder shall
automatically become due and payable, without presentment, demand, protest or
any other
40
notice of any kind, all of which are hereby expressly waived by the Borrower,
anything contained herein to the contrary notwithstanding.
ARTICLE VII
THE AGENT
In order to expedite the transactions contemplated by this Agreement,
JPMorgan Chase is hereby appointed to act as Agent on behalf of the Lenders.
Each Lender hereby irrevocably authorizes the Agent to take such actions on
behalf of such Lender and to exercise such powers as are specifically delegated
to the Agent by the terms and provisions hereof, together with such actions and
powers as are reasonably incidental thereto. The Agent is hereby expressly
authorized by the Lenders, without hereby limiting any implied authority, (a) to
receive on behalf of the Lenders all payments of principal of and interest on
the Loans and all other amounts due to the Lenders hereunder, and promptly to
distribute to each Lender its proper share of each payment so received; (b) to
give notice on behalf of each Lender to the Borrower of any Event of Default of
which the Agent has actual knowledge acquired in connection with its agency
hereunder; and (c) to distribute to each Lender copies of all notices, financial
statements and other materials delivered by the Borrower pursuant to this
Agreement as received by the Agent.
Neither the Agent nor any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted by any of them
except for its or his or her own gross negligence or willful misconduct, or be
responsible for any statement, warranty or representation herein or the contents
of any document delivered in connection herewith, or be required to ascertain or
to make any inquiry concerning the performance or observance by the Borrower of
any of the terms, conditions, covenants or agreements contained in this
Agreement. The Agent shall not be responsible to the Lenders for the due
execution, genuineness, validity, enforceability or effectiveness of this
Agreement or other instruments or agreements. The Agent may deem and treat the
Lender that makes any Loan as the holder of the indebtedness resulting therefrom
for all purposes hereof until it shall have received notice from such Lender,
given as provided herein, of the transfer thereof. The Agent shall in all cases
be fully protected in acting, or refraining from acting, in accordance with
written instructions signed by the Required Lenders and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Lenders. The Agent shall, in the
absence of knowledge to the contrary, be entitled to rely on any instrument or
document believed by it in good faith to be genuine and correct and to have been
signed or sent by the proper person or persons. Neither the Agent nor any of its
directors, officers, employees or agents shall have any responsibility to the
Borrower on account of the failure of or delay in performance or breach by any
Lender of any of its obligations hereunder or to any Lender on account of the
failure of or delay in performance or breach by any other Lender or the Borrower
of any of their respective obligations hereunder or in connection herewith. The
Agent may execute any and all duties hereunder by or through agents or employees
and shall be entitled to rely upon the advice of legal counsel selected by it
with respect to all matters arising hereunder and shall not be liable for any
action taken or suffered in good faith by it in accordance with the advice of
such counsel.
The Lenders hereby acknowledge that the Agent shall not be under any
duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement unless it shall be requested in writing to do
so by the Required Lenders.
41
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor Agent acceptable to the Borrower. If no successor
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within 30 days after the Agent gives notice of its resignation,
then the Agent may, on behalf of the Lenders, appoint a successor Agent, having
a combined capital and surplus of at least $500,000,000 or an Affiliate of any
such bank. Upon the acceptance of any appointment as Agent hereunder by a
successor bank, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the Agent shall
be discharged from its duties and obligations hereunder. After the Agent's
resignation hereunder, the provisions of this Article and Section 8.05 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as the Agent.
With respect to the Loans made by it hereunder, the Agent, in its
individual capacity and not as Agent, shall have the same rights and powers as
any other Lender and may exercise the same as though it were not the Agent, and
the Agent and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not Agent.
Each Lender agrees (i) to reimburse the Agent, on demand, in the
amount of its pro rata share (based on its Commitment hereunder or, if the
Commitments shall have been terminated, the amount of its percentage of Loans
outstanding) of any expenses incurred for the benefit of the Lenders, in its
role as Agent, including counsel fees and compensation of agents and employees
paid for services rendered on behalf of the Lenders, which shall not have been
reimbursed by the Borrower and (ii) to indemnify and hold harmless the Agent and
any of its directors, officers, employees or agents, on demand, in the amount of
such pro rata share, from and against any and all liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against it in any way relating to or arising out of
this Agreement or any action taken or omitted by it under this Agreement to the
extent the same shall not have been reimbursed by the Borrower; provided that no
Lender shall be liable to the Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent or any of its directors, officers, employees or agents.
Each Lender agrees that any allocation made in good faith by the Agent of
expenses or other amounts referred to in this paragraph shall be conclusive and
binding for all purposes.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any related agreement or any document
furnished hereunder or thereunder.
42
▇.▇. ▇▇▇▇▇▇ Securities, Inc. shall not, by virtue of its designation
as "Lead Arranger" and "Book Manager", have any duties, liabilities, obligations
or responsibilities under this Agreement other than, if applicable, as a Lender
hereunder.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. NOTICES.
Notices and other communications provided for herein shall be in
writing and shall be delivered by hand or overnight courier service, mailed or
sent by telecopy, as follows:
(a) if to the Borrower, to it in c/o TXU Business Services Company,
Energy Plaza, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
Treasurer (Telecopy No. 214-812-2488);
(b) if to the Agent, to JPMorgan Chase Bank, Loan and Agency Services
Group, One Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇,
Attention of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ (Telecopy No. 212-552-5777), with a copy to
JPMorgan Chase Bank at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Attention of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Telecopy No. 713-216-4117); and
(c) if to a Lender, to it at its address (or telecopy number) set
forth in the Register or in the Assignment and Acceptance pursuant to which such
Lender became a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy to such party as provided in this Section or in accordance with the
latest unrevoked direction from such party given in accordance with this
Section.
SECTION 8.02. SURVIVAL OF AGREEMENT.
All covenants, agreements, representations and warranties made by the
Borrower herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement shall be considered
to have been relied upon by the Lenders and shall survive the making by the
Lenders of the Loans regardless of any investigation made by the Lenders or on
their behalf, and shall continue in full force and effect as long as there are
any Loans outstanding or the Facility Fee or any other amount payable under this
Agreement is outstanding and unpaid or the Commitments have not been terminated.
SECTION 8.03. BINDING EFFECT.
This Agreement shall become effective when it shall have been executed
by the Borrower and the Agent and when the Agent shall have received copies
hereof (telecopied or otherwise) which, when taken together, bear the signature
of each Lender, and thereafter shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that the
Borrower shall not have the right to assign any rights hereunder or any interest
herein without the prior consent of all the Lenders.
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SECTION 8.04. SUCCESSORS AND ASSIGNS.
(a) Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and assigns of such
party; and all covenants, promises and agreements by or on behalf of any party
that are contained in this Agreement shall bind and inure to the benefit of its
successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement (including all or
a portion of its Commitment and its outstanding Loans); provided, however, that
(i) except in the case of an assignment to a Lender or an Affiliate of such
Lender, an assignment to a Federal Reserve Bank or an assignment made at any
time an Event of Default shall have occurred and be continuing, the Borrower and
the Agent must give their prior written consent to such assignment (which
consent shall not be unreasonably withheld), (ii) the amount of the Commitment
of the assigning Lender subject to each such assignment (determined as of the
date the Assignment and Acceptance with respect to such assignment is delivered
to the Agent) shall not be less than $5,000,000 or, if the amount of the
Commitment of the assigning Lender is less than $5,000,000, the aggregate amount
of such Lender's Commitment, (iii) each such assignment shall be of a constant,
and not a varying, percentage of all the assigning Lender's rights and
obligations under this Agreement and (iv) the parties to each such assignment
shall execute and deliver to the Agent an Assignment and Acceptance, and a
processing and recordation fee of $3,500. Upon acceptance and recording pursuant
to Section 8.04(e), from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five Business
Days after the execution thereof unless otherwise agreed by the Agent (the
Borrower to be given reasonable notice of any shorter period), (A) the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto (but shall continue to be entitled to the benefits of Sections 2.11, 2.16
and 8.05 afforded to such Lender prior to its assignment as well as to any
Facility Fee accrued for its account hereunder and not yet paid)).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim, (ii)
except as set forth in (i) above, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto or the financial condition of the Borrower or the performance or
observance by the Borrower of any obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignor and such
assignee represents and warrants that it is legally authorized to enter into
such Assignment and Acceptance; (iv) such assignee confirms that it has received
a copy of this Agreement, together with copies of the most
44
recent financial statements delivered pursuant to Section 5.03 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Agent, such assigning
Lender or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (vi) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vii) such assignee agrees that it will perform in accordance with their
terms all the obligations which by the terms of this Agreement are required to
be performed by it as a Lender.
(d) The Agent shall maintain at one of its offices in the City of New
York a copy of each Assignment and Acceptance delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the Commitment
of, and the principal amount of the Loans of, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive in the absence of manifest error and the Borrower, the Agent and the
Lenders may treat each person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by each party hereto, at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the processing and recordation
fee referred to in paragraph (b) above and, if required, the written consent of
the Borrower and the Agent to such assignment, the Agent shall (i) accept such
Assignment and Acceptance and (ii) record the information contained therein in
the Register.
(f) Each Lender may without the consent of the Borrower or the Agent
sell participations to one or more banks or other entities in all or a portion
of its rights and/or obligations under this Agreement (including all or a
portion of its Commitment and its Loans); provided, however, that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) each participating bank or other entity
shall be entitled to the benefit of the cost protection provisions contained in
Sections 2.11, 2.16 and 8.05 to the same extent as if it were the selling Lender
(and limited to the amount that could have been claimed by the selling Lender
had it continued to hold the interest of such participating bank or other
entity), except that all claims made pursuant to such Sections shall be made
through such selling Lender, and (iv) the Borrower, the Agent and the other
Lenders shall continue to deal solely and directly with such selling Lender in
connection with such Lender's rights and obligations under this Agreement, and
such Lender shall retain the sole right to enforce the obligations of the
Borrower under this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement (other than amendments, modifications
or waivers (x) decreasing any fees payable hereunder or the amount of principal
of, or the rate at which interest is payable on, the Loans, (y) extending any
scheduled principal payment date or date fixed for the payment of interest on
the Loans or (z) extending the Commitments).
45
(g) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; provided that, prior to any such disclosure, each
such assignee or participant or proposed assignee or participant shall execute
an agreement whereby such assignee or participant shall agree (subject to
customary exceptions) to preserve the confidentiality of any such information.
(h) The Borrower shall not assign or delegate any rights and duties
hereunder without the prior written consent of all Lenders, and any attempted
assignment or delegation (except as a consequence of a transaction expressly
permitted under Section 5.09) by the Borrower without such consent shall be
void.
(i) Any Lender may at any time pledge all or any portion of its
rights under this Agreement to a Federal Reserve Bank; provided that no such
pledge shall release any Lender from its obligations hereunder or substitute any
such Bank for such Lender as a party hereto. In order to facilitate such an
assignment to a Federal Reserve Bank, the Borrower shall, at the request of the
assigning Lender, duly execute and deliver to the assigning Lender a promissory
note or notes evidencing the Loans made to the Borrower by the assigning Lender
hereunder.
SECTION 8.05. EXPENSES; INDEMNITY.
(a) The Borrower agrees to pay all reasonable out-of-pocket expenses
(including reasonable fees, charges and disbursements of counsel) incurred by
the Agent in connection with the preparation, execution and delivery of this
Agreement or in connection with any amendments, modifications or waivers of the
provisions hereof (but only if such amendments, modifications or waivers are
requested by the Borrower) (whether or not the transactions hereby contemplated
are consummated), or incurred by the Agent or any Lender in connection with the
enforcement of their rights in connection with this Agreement (including in
respect of workouts and restructurings) or in connection with the Loans made
hereunder, including the reasonable fees and disbursements of counsel for the
Agent or, in the case of enforcement following an Event of Default, the Lenders.
(b) The Borrower agrees to indemnify each Lender against any loss,
calculated in accordance with the next sentence, or reasonable expense that such
Lender may sustain or incur as a consequence of (i) any failure by the Borrower
to borrow or to refinance, convert or continue any Loan hereunder (including as
a result of the Borrower's failure to fulfill any of the applicable conditions
set forth in Article IV) after irrevocable notice of such borrowing,
refinancing, conversion or continuation has been given pursuant to Section 2.03,
(ii) any payment, prepayment or conversion of a Eurodollar Loan, or assignment
of a Eurodollar Loan required by any other provision of this Agreement or
otherwise made or deemed made, on a date other than the last day of the Interest
Period, if any, applicable thereto, (iii) any default in payment or prepayment
of the principal amount of any Loan or any part thereof or interest accrued
thereon, as and when due and payable (at the due date thereof, whether by
scheduled maturity, acceleration, irrevocable notice of prepayment or otherwise)
or (iv) the occurrence of any Event of Default, including, in each such case,
any loss or reasonable expense sustained or incurred or to be sustained or
incurred by such Lender in liquidating or employing deposits from
46
third parties, or with respect to commitments made or obligations undertaken
with third parties, to effect or maintain any Loan hereunder or any part thereof
as a Eurodollar Loan. Such loss shall include an amount equal to the excess, if
any, as reasonably determined by such Lender, of (x) its cost of obtaining the
funds for the Loan being paid, prepaid, refinanced, converted or not borrowed
(assumed to be the LIBO Rate for the period from the date of such payment,
prepayment, refinancing or failure to borrow or refinance to the last day of the
Interest Period for such Loan (or, in the case of a failure to borrow or
refinance, the Interest Period for such Loan that would have commenced on the
date of such failure) over (y) the amount of interest (as reasonably determined
by such Lender) that would be realized by such Lender in reemploying the funds
so paid, prepaid or not borrowed or refinanced for such period or Interest
Period, as the case may be.
(c) The Borrower agrees to indemnify the Agent, each Lender, each of
their Affiliates and the directors, officers, employees and agents of the
foregoing (each such person being called an "Indemnitee") against, and to hold
each Indemnitee harmless from, any and all costs, losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees and
expenses, incurred by or asserted against any Indemnitee arising out of (i) the
preparation, execution, delivery, enforcement, performance and administration of
this Agreement, (ii) the use of the proceeds of the Loans or (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, including any of the foregoing
arising from the negligence, whether sole or concurrent, on the part of any
Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses (A) are determined by a final judgment of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
such Indemnitee or (B) result from any litigation brought by such Indemnitee
against the Borrower or by the Borrower against such Indemnitee, in which a
final, nonappealable judgment has been rendered against such Indemnitee;
provided, further, that the Borrower agrees that it will not, nor will it permit
any Subsidiary to, without the prior written consent of each Indemnitee, settle,
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification could be
sought under the indemnification provisions of this Section 8.05(c) (whether or
not any Indemnitee is an actual or potential party to such claim, action, suit
or proceeding), unless such settlement, compromise or consent does not include
any statement as to an admission of fault, culpability or failure to act by or
on behalf of any Indemnitee and does not involve any payment of money or other
value by any Indemnitee or any injunctive relief or factual findings or
stipulations binding on any Indemnitee.
(d) The provisions of this Section shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or any investigation made by or on behalf of the Agent or any Lender.
All amounts due under this Section shall be payable on written demand therefor.
(e) A certificate of any Lender or the Agent setting forth any amount
or amounts that such Lender or such Agent is entitled to receive pursuant to
paragraph (b) of this Section and containing an explanation in reasonable detail
of the manner in which such amount or amounts
47
shall have been determined shall be delivered to the Borrower and shall be
conclusive absent manifest error.
SECTION 8.06. RIGHT OF SETOFF.
If an Event of Default shall have occurred and be continuing, each
Lender is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any of and all the obligations of the Borrower
now or hereafter existing under this Agreement held by such Lender, irrespective
of whether or not such Lender shall have made any demand under this Agreement
and although such obligations may be unmatured. The rights of each Lender under
this Section are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.
SECTION 8.07. APPLICABLE LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.
SECTION 8.08. WAIVERS; AMENDMENT.
(a) No failure or delay of the Agent or any Lender in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or demand on the
Borrower or any Subsidiary in any case shall entitle such party to any other or
further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders; provided, however, that
no such agreement shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on, any Loan or date for the payment of the Facility Fee, or waive
or excuse any such payment or any part thereof, or decrease the rate of interest
on any Loan without the prior written consent of each Lender affected thereby,
(ii) increase the Commitment of any Lender, decrease the Facility Fee without
the prior written consent of such Lender, or (iii) amend or modify the
provisions of Section 2.13, 2.14 or Section 8.04(h), the provisions of this
Section or the definition of the "Required Lenders", without the prior written
consent of each Lender; provided further, however, that no such agreement shall
amend, modify or otherwise affect the rights or duties of the Agent hereunder
without the prior written consent of the Agent. Each Lender shall be bound by
any waiver, amendment or modification authorized by this
48
Section and any consent by any Lender or the Agent pursuant to this Section
shall bind any assignee of its rights and interests hereunder.
SECTION 8.09. ENTIRE AGREEMENT.
This Agreement (including the schedules and exhibits hereto)
represents the entire contract among the parties relative to the subject matter
hereof and thereof. Any previous agreement, whether written or oral, among the
parties with respect to the subject matter hereof, is superseded by this
Agreement. There are no unwritten oral agreements between the parties. Nothing
in this Agreement, expressed or implied, is intended to confer upon any party
other than the parties hereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
SECTION 8.10. SEVERABILITY.
In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 8.11. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute but one contract, and shall become effective as provided in Section
8.03.
SECTION 8.12. HEADINGS.
Article and Section headings and the Table of Contents used herein are
for convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 8.13. INTEREST RATE LIMITATION.
(a) Notwithstanding anything herein to the contrary, if at any time
the applicable interest rate, together with all fees and charges which are
treated as interest under applicable law (collectively the "Charges"), as
provided for herein or in any other document executed in connection herewith, or
otherwise contracted for, charged, received, taken or reserved by any Lender,
shall exceed the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received or reserved by such Lender in
accordance with applicable law, the rate of interest payable on the Loans of
such Lender, together with all Charges payable to such Lender, shall be limited
to the Maximum Rate.
(b) If the amount of interest, together with all Charges, payable for
the account of any Lender in respect of any interest computation period is
reduced pursuant to paragraph (a) of this Section and the amount of interest,
together with all Charges, payable for such Lender's account
49
in respect of any subsequent interest computation period, computed pursuant to
Section 2.07, would be less than the Maximum Rate, then the amount of interest,
together with all Charges, payable for such Lender's account in respect of such
subsequent interest computation period shall, to the extent permitted by
applicable law, be automatically increased to such Maximum Rate; provided that
at no time shall the aggregate amount by which interest paid for the account of
any Lender has been increased pursuant to this paragraph (b) exceed the
aggregate amount by which interest, together with all Charges, paid for its
account has theretofore been reduced pursuant to paragraph (a) of this Section.
SECTION 8.14. JURISDICTION; VENUE.
(a) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Subject to the foregoing and to paragraph (b) below, nothing in this Agreement
shall affect any right that any party hereto may otherwise have to bring any
action or proceeding relating to this Agreement against any other party hereto
in the courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or thereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State
court or Federal court of the United States of America sitting in New York City.
Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
SECTION 8.15. CONFIDENTIALITY.
Each Lender shall use its best efforts to hold in confidence all
information, memoranda, or extracts furnished to such Lender (directly or
through the Agent) by the Borrower hereunder or in connection with the
negotiation hereof; provided that such Lender may disclose any such information,
memoranda or extracts (i) to its Affiliates, accountants or counsel, (ii) to any
regulatory agency having authority to examine such Lender, (iii) as required by
any legal or governmental process or otherwise by law, (iv) except as provided
in the last sentence of Section 5.03, to any person to which such Lender sells
or proposes to sell an assignment or a participation in its rights and
obligations hereunder, if such other person agrees for the benefit of the
Borrower to comply with the provisions of this Section and (v) to the extent
that such information, memoranda or extracts shall be publicly available or
shall have become known to such Lender independently of any disclosure by the
Borrower hereunder or in connection with the negotiation hereof. Notwithstanding
the foregoing, any Lender may disclose the provisions
50
of this Agreement, the amounts, maturities and interest rates of its Loans, and
the Facility Fee to which it is entitled, to any purchaser or potential
purchaser of such Lender's interest in its rights and obligations hereunder.
[Signature pages follow]
S-1
TXU US HOLDINGS COMPANY
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
Treasurer and Assistant Secretary
S-2
JPMORGAN CHASE BANK
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
EXHIBIT A
FORM OF BORROWING REQUEST
BORROWING REQUEST
[Date]
JPMorgan Chase Bank,
as Agent for the lenders referred to below,
Loan and Agency Services Group
One Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Ladies and Gentlemen:
The undersigned, TXU US Holdings Company (the "Borrower"), refers to
the Credit Agreement, dated as of July 15, 2002 (as it may hereafter be amended,
modified, extended or restated from time to time, the "Agreement"), among the
Borrower, the lenders listed in Schedule 2.01 thereto (the "Lenders") and
JPMorgan Chase Bank, as Agent. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Agreement.
The Borrower hereby gives you notice pursuant to Section 2.03 of the Agreement
that it requests a Borrowing under the Agreement, and in that connection sets
forth below the terms on which such Borrowing is requested to be made:
(A) Date of Borrowing (which is a Business Day) _________
(B) Principal amount of Borrowing /1/ _________
(C) Interest rate basis /2/ _________
(D) Interest Period and the last day thereof /3/ _________
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/1/ Not less than $25,000,000 (and in integral multiples of $5,000,000) or
greater than the Total Commitment then available.
/2/ Eurodollar Loan or ABR Loan.
/3/ Which shall be subject to the definition of "Interest Period" and end
not later than the Maturity Date.
Upon acceptance of any or all of the Loans made by the Lenders in
response to this request, the Borrower shall be deemed to have represented and
warranted that the applicable conditions to lending specified in Article IV of
the Agreement have been satisfied.
Very truly yours,
TXU US HOLDINGS COMPANY
By
-------------------------------
Name:
Title:
A-2
EXHIBIT B
FORM OF ASSIGNMENT AND ACCEPTANCE
ASSIGNMENT AND ACCEPTANCE
[Date]
Reference is made to the Credit Agreement, dated as of July 15, 2002
(as amended, modified, extended or restated from time to time, the "Agreement"),
among TXU US Holdings Company (the "Borrower"), the lenders listed in Schedule
2.01 thereto (the "Lenders") and JPMorgan Chase Bank, as Agent for the lenders.
Terms defined in the Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the [Effective Date of Assignment set forth
below], the interests set forth on the reverse hereof (the "Assigned Interest")
in the Assignor's rights and obligations under the Agreement, including, without
limitation, the interests set forth on the reverse hereof in the Commitment of
the Assignor on the [Effective Date of Assignment] and the Loans owing to the
Assignor which are outstanding on the [Effective Date of Assignment], together
with unpaid interest accrued on the assigned Loans to the [Effective Date of
Assignment] and the amount, if any, set forth on the reverse hereof of the
Facility Fee accrued to the [Effective Date of Assignment] for the account of
the Assignor. Each of the Assignor and the Assignee hereby makes and agrees to
be bound by all the representations, warranties and agreements set forth in
Section 8.04 of the Agreement, a copy of which has been received by each such
party. From and after the [Effective Date of Assignment], (i) the Assignee shall
be a party to and be bound by the provisions of the Agreement and, to the extent
of the interests assigned by this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent of
the interests assigned by this Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Agreement.
2. This Assignment and Acceptance is being delivered to the Agent
together with (i) if the Assignee is organized under the laws of a jurisdiction
outside the United States, the forms specified in Section 2.16(g) of the
Agreement, duly completed and executed by such Assignee and (ii) a processing
and recordation fee of $3,500.
3. This Assignment and Acceptance shall be governed by and construed
in accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment
unless otherwise agreed by the Agent):
Percentage Assigned of
Principal Amount Assigned Facility/Commitment (set forth, to at
Facility least 8 decimals, as a percentage of the
Facility and the aggregate Commitments of
all Lenders thereunder
Commitment Assigned: $____________ __________%
Loans: $____________ __________%
Fees Assigned (if any): $____________ __________%
B-2
The terms set forth and on the reverse side Accepted:
hereof are hereby agreed to:
[ASSIGNOR], as TXU US HOLDINGS COMPANY
Assignor
By , as By
--------------------------------- -------------------------
Name: Name:
Title: Title:
[ASSIGNEE], as JPMORGAN CHASE BANK, as
Assignee, Agent
By , as
---------------------------------
Name: By
Title: -------------------------
Name:
Title:
B-3
SCHEDULE 2.01
COMMITMENTS
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NAME OF LENDER COMMITMENT
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JPMorgan Chase Bank $400,000,000
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Total $400,000,000
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SCHEDULE 5.13
RESTRICTIVE AGREEMENTS
Oncor Mortgage