Exhibit 99.1
EXCHANGE AGENCY AGREEMENT
July __, 2001
Wilmington Trust Company
Corporate Trust Administration
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
PG&E National Energy Group, Inc., a Delaware corporation (the "Company"),
proposes to make an offer (the "Exchange Offer") to exchange any and all of its
outstanding 10.375% Senior Notes, due 2011) (the "Original Notes") for its
10.375% Senior Notes due 2011 (the "Exchange Notes"). The terms and conditions
of the Exchange Offer as currently contemplated are set forth in a prospectus,
dated July __, 2001 (as the same may be amended or supplemented from time to
time, the "Prospectus"), to be distributed to all record holders of the Original
Notes. A copy of the Prospectus is attached hereto as Exhibit A. The Original
Notes and the Exchange Notes are collectively referred to herein as the
"Securities." Capitalized terms used but not defined herein shall have the same
meaning given them in the Prospectus.
A copy of each of the form of the Letter of Transmittal, the form of the
Notice of Guaranteed Delivery, the form of letter to brokers and the form of
letter to clients to be used in connection with the Exchange Offer are attached
hereto as Exhibit B.
The Company hereby appoints Wilmington Trust Company to act as exchange
agent (the "Exchange Agent") in connection with the Exchange Offer. References
hereinafter to "you" shall refer to the Exchange Agent.
The Exchange Offer is expected to be commenced by the Company on or about
July __, 2001. The Letter of Transmittal accompanying the Prospectus (or in the
case of book-entry securities, the ATOP system) is to be used by the holders of
the Original Notes to accept the Exchange Offer and contains instructions with
respect to (i) the delivery of certificates for Original Notes tendered in
connection therewith and (ii) the book-entry transfer of Securities to the
Exchange Agent's account.
The Exchange Offer shall expire at 5:00 p.m., New York City time, on
________, 2001 or on such later date or time to which the Company may extend the
Exchange Offer (the "Expiration Date"). Subject to the terms and conditions
set forth in the Prospectus, the Company expressly reserves the right to extend
the Exchange Offer from time to time by giving oral (to be confirmed
Page 1 of 11
in writing) or written notice to you before 9:00 a.m., New York City time, on
the Business Day following the previously scheduled Expiration Date.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Original Notes not theretofore
accepted for exchange, upon the occurrence of any of the conditions of the
Exchange Offer specified in the Prospectus under the caption "The Exchange Offer
B Conditions to the Exchange Offer." The Company will give you prompt oral
(confirmed in writing) or written notice of any amendment, termination or
nonacceptance of Original Notes.
In carrying out your duties as Exchange Agent, you are to act in accordance
with the following instructions:
1. You will perform such duties and only such duties as are specifically
set forth in the section of the Prospectus captioned "The Exchange Offer" or in
the Letter of Transmittal or as specifically set forth herein; provided,
however, that in no way will your general duty to act in good faith be
discharged by the foregoing.
2. You will establish an account with respect to the Original Notes at The
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Exchange Offer as soon as practicable, and any financial institution that is
a participant in the Book-Entry Transfer Facility's system may make book-entry
delivery of the Original Notes by causing the Book-Entry Transfer Facility to
transfer such Original Notes into your account in accordance with the Book Entry
Transfer Facility's procedure for such transfer.
3. You are to examine each of the Letters of Transmittal and certificates
for Original Notes (or confirmation of book-entry transfer into your account at
the Book-Entry Transfer Facility) and any other documents received by you from
or for holders of the Original Notes to ascertain whether: (i) on their face
the Letters of Transmittal and any such other documents are duly executed and
properly completed in accordance with instructions set forth therein and (ii)
the Original Notes have otherwise been properly tendered. In each case where
the Letter of Transmittal or any other document has been improperly completed or
executed or any of the certificates for Original Notes are not in proper form
for transfer or some other irregularity in connection with the acceptance of the
Exchange Offer exists, you will endeavor to inform such tendering holders of the
need for fulfillment of all requirements and to take any other action as may be
necessary or advisable to cause such irregularity to be corrected.
4. With the approval of any person designated in writing by the Company (a
"Designated Officer") (such approval, if given orally, to be confirmed in
writing) or any other party designated by any such Designated Officer in
writing, you are authorized to waive any irregularities in connection with any
tender of Original Notes pursuant to the Exchange Offer.
5. Tenders of Original Notes may be made only as set forth in the Letter
of Transmittal and in the section of the Prospectus captioned "The Exchange
Offer B Procedures for Tendering,"
Page 2 of 11
and Original Notes shall be considered properly tendered to you only when
tendered in accordance with the procedures set forth therein.
Notwithstanding the provisions of this paragraph 5, Original Notes
that any Designated Officer of the Company shall approve as having been properly
tendered shall be considered to be properly tendered. Such approval, if given
orally, shall be confirmed in writing.
6. You shall advise the Company with respect to any Original Notes
received subsequent to the Expiration Date and accept their instructions with
respect to disposition of such Original Notes.
7. You shall accept tenders:
(a) in cases where the Original Notes are registered in two or more
names only if signed by all named holders;
(b) in cases where the signing person (as indicated on the Letter of
Transmittal) is acting in a fiduciary or a representative
capacity only when proper evidence of such person's authority to
so act is submitted; and
(c) from persons other than the registered holder of Original Notes
provided that customary transfer requirements are satisfied.
You shall accept partial tenders of Original Notes where so indicated and
as permitted in the Letter of Transmittal and deliver certificates or Original
Notes to the transfer agent for division and return any untendered Original
Notes to the holder (or such other person as may be designated in the Letter of
Transmittal) as promptly as practicable after expiration or termination of the
Exchange Offer.
8. Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Company will notify you (such notice, if given orally, to be
confirmed in writing) of its acceptance, promptly after the Expiration Date, of
all Original Notes properly tendered and you, on behalf of the Company, will
exchange such Original Notes for Exchange Notes provided to you by or on behalf
of the Company and cause such Original Notes to be canceled. Delivery of
Exchange Notes will be made on behalf of the Company by you at the rate of
$1,000 principal amount of Exchange Notes for each $1,000 principal amount of
the corresponding series of Original Notes tendered promptly after notice (such
notice, if given orally, to be confirmed in writing) of acceptance of said
Original Notes by the Company; provided, however, that in all cases, Original
Notes tendered pursuant to the Exchange Offer will be exchanged only after
timely receipt by you of certificates for such Original Notes (or confirmation
of book-entry transfer into your account at the Book-Entry Transfer Facility), a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees and any other required
documents. The Company shall issue Exchange Notes only in denominations of
$1,000 or any integral multiple thereof. Original Notes
Page 3 of 11
may be tendered in whole or in part in denominations of $100,000 and integral
multiples of $1,000 in excess thereof, provided that if any Original Notes are
tendered for exchange in part, the untendered principal amount thereof must be
$100,000 or any integral multiple of $1,000 in excess thereof.
9. Tenders pursuant to the Exchange Offer are irrevocable, except that,
subject to the terms and upon the conditions set forth in the Prospectus and the
Letter of Transmittal, Original Notes tendered pursuant to the Exchange Offer
may be withdrawn at any time on or prior to the Expiration Date.
10. The Company shall not be required to exchange any Original Notes
tendered if any of the conditions set forth in the Exchange Offer are not met.
Notice of any decision by the Company not to exchange any Original Notes
tendered shall be given orally (and confirmed in writing) by the Company to you.
11. If, pursuant to the Exchange Offer, the Company does not accept for
exchange all or part of the Original Notes tendered because of an invalid
tender, the occurrence of certain other events set forth in the Prospectus under
the caption "The Exchange Offer B Conditions to the Exchange Offer" or
otherwise, you shall promptly after the expiration or termination of the
Exchange Offer return those certificates of Original Notes not accepted for
exchange (or effect appropriate book-entry transfer), together with any related
required documents and the Letters of Transmittal relating thereto that are in
your possession, to the persons who deposited them.
12. All certificates for reissued Original Notes, unaccepted Original
Notes or Exchange Notes shall be forwarded: (a) by first-class certified mail,
return receipt requested, under a blanket surety bond at the direction and
expense of the Company protecting you and the Company from loss or liability
arising out of the non-receipt or non-delivery of such certificates; (b) by
registered mail insured separately by you at the expense of the Company,
protecting you and the Company from loss or liability arising out of the non-
receipt or non-delivery of such certificates; or (c) by effectuating appropriate
book-entry transfer.
13. You are not authorized to pay or offer any concessions, commissions or
solicitation fees to any broker, dealer, bank or other persons or to engage or
utilize any person to solicit tenders.
14. As Exchange Agent hereunder, you:
(a) shall have no duties or obligations other than those specifically
set forth in the section of the Prospectus captioned "The
Exchange Offer" or in the Letter of Transmittal or as
specifically set forth herein or as may be subsequently agreed to
in writing by you and the Company;
(b) will be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value or
genuineness of any of the certificates
Page 4 of 11
or the Original Notes or Exchange Notes represented thereby
deposited with you or issued pursuant to the Exchange Offer, and
will not be required to and will make no representation as to the
validity, value or genuineness of the Exchange Offer or the
Letter of Transmittal or any other disclosure materials delivered
in connection therewith;
(c) shall not be obligated to take any legal action hereunder; if,
however, you determine to take any legal action hereunder, and,
where the taking of such action might, in your judgment, subject
or expose you to any expense or liability, you shall not be
required to act unless you shall have been furnished with an
indemnity satisfactory to you;
(d) may rely on, and be fully authorized and protected in acting or
failing to act upon any certificate, instrument, opinion, notice,
letter, telegram, telex, facsimile transmission or other document
or security delivered to you and believed by you to be genuine
and to have been signed by the proper party or parties;
(e) may reasonably act upon any tender, statement, request, agreement
or other instrument whatsoever not only as to its due execution
and validity and effectiveness of its provisions, but also as to
the truth and accuracy of any information contained therein,
which you shall in good faith believe to be genuine or to have
been signed or represented by a proper person or persons;
(f) may rely on, and shall be authorized and protected in acting or
failing to act upon the written, telephonic and oral instructions
with respect to any matter relating to you acting as Exchange
Agent covered by this Agreement (or supplementing or qualifying
any such actions) of officers of the Company;
(g) may consult with counsel satisfactory to you, including counsel
for the Company, with respect to any questions relating to your
duties and responsibilities and the advice or opinion of such
counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken
by you hereunder in good faith and in accordance with the advice
or opinion of such counsel, provided that you shall promptly
notify the Company of any action taken or omitted by you in
reliance upon such advice or opinion;
(h) are not authorized, and shall have no obligation, to pay any
brokers, dealers or soliciting fees to any person; and
(i) shall not advise any person tendering Original Notes pursuant to
the Exchange Offer as to the wisdom of making such tender or as
to the market
Page 5 of 11
value or decline or appreciation in market value of any Original
Notes.
15. You shall take such action as may from time to time be requested by
the Company or its counsel or any Designated Officer of the Company (and such
other action as you may reasonably deem appropriate) to furnish copies of the
Prospectus, Letter of Transmittal and the Notice of Guaranteed Delivery or such
other forms as may be approved and provided to you from time to time by the
Company, to all persons requesting such documents and to accept and comply with
telephone requests for information relating to the Exchange Offer, provided that
such information shall relate only to the procedures for accepting (or
withdrawing from) the Exchange Offer. The Company will furnish you with copies
of such documents at your request. All other requests for information relating
to the Exchange Offer shall be directed to the Company, Attention: Senior Vice
President, Finance.
16. You shall advise by facsimile transmission or telephone, and promptly
thereafter confirm in writing to Senior Vice President, Finance of the Company,
and such other person or persons as the Company may request, daily (and more
frequently during the week immediately preceding the Expiration Date and if
otherwise requested by the Company) up to and including the Expiration Date, as
to the aggregate principal amount of Original Notes which have been tendered
pursuant to the Exchange Offer and the items received by you pursuant to this
Agreement, separately reporting and giving cumulative totals as to items
properly received and items improperly received. In addition, you will also
inform, and cooperate in making available to, the Company or any such other
person or persons, upon oral request made from time to time on or prior to the
Expiration Date, such other information as it or such person reasonably
requests. Such cooperation shall include, without limitation, the granting by
you to the Company and such person as the Company may request, of access to
those persons on your staff who are responsible for receiving tenders, in order
to ensure that immediately prior to the Expiration Date the Company shall have
received information in sufficient detail to enable it to decide whether to
extend the Exchange Offer. You shall prepare a final list of all persons whose
tenders were accepted, the aggregate principal amount of Original Notes
tendered, the aggregate principal amount of Original Notes accepted and deliver
said list to the Company promptly after the Expiration Date.
17. Letters of Transmittal and Notices of Guaranteed Delivery received by
you shall be stamped by you as to the date and the time of receipt thereof and
shall be preserved by you for a period of time at least equal to the period of
time you preserve other records pertaining to the transfer of securities.
18. You hereby expressly waive any lien, encumbrance or right of set-off
whatsoever that you may have with respect to funds deposited with you for the
payment of transfer taxes by reasons of amounts, if any, borrowed by the
Company, or any of its subsidiaries or affiliates pursuant to any loan or credit
agreement with you or for compensation owed to you hereunder.
19. For services rendered as Exchange Agent hereunder, you shall be
entitled to the compensation set forth on Schedule I attached hereto, plus
reasonable out-of-pocket expenses and
Page 6 of 11
reasonable attorneys' fees, incurred in connection with your services hereunder,
within thirty days following receipt by the Company of an itemized statement of
such expenses and fees in reasonable detail.
20. (a) The Company covenants and agrees to indemnify and hold you (which
for purposes of this paragraph shall include your directors,
officers and employees) harmless in your individual capacity and
in your capacity as Exchange Agent hereunder from and against any
and all loss, liability, cost, damage, expense and claim,
including but not limited to reasonable attorneys' fees and
expenses, incurred by you as a result of, arising out of or in
connection with the performance by you of your duties under this
Agreement or the compliance by you with the instructions set
forth herein or delivered hereunder; provided, however, that the
Company shall not be liable for indemnification or otherwise, or
hold you harmless, for any loss, liability, costs, damage,
expense or claim arising out of your bad faith, gross negligence
or willful misconduct. In no case shall the Company be liable
under this indemnity with respect to any claim against you unless
the Company shall be notified by you, by letter or by facsimile
confirmed by letter, of the written assertion of a claim against
you or of any other action commenced against you, promptly after
you shall have received any such written assertion or notice of
commencement of action. The Company shall be entitled to
participate at its own expense in the defense of any such claim
or other action, and, if the Company so elects, the Company may
assume the defense of any suit brought to enforce any claim such;
provided, that the Company shall not be entitled to assume the
defense of any such action if the named parties to such action
include both the Company and you and representation of both
parties by the same legal counsel would, in the written opinion
of counsel to you, be inappropriate due to actual or potential
conflicting interests between them. In the event that the
Company shall assume the defense of any such suit or threatened
action in respect of which indemnification may be sought
hereunder, the Company shall not be liable for the fees and
expenses of any counsel thereafter retained by you. The Company
shall not be liable under this paragraph for the fees and
expenses of more than one legal counsel for you.
(b) You agree that, without the prior written consent of the Company
(which consent shall not be unreasonably withheld), you will not
settle, compromise or consent to the entry of any pending or
threatened claim, action, or proceeding in respect of which
indemnification could be sought in accordance with the
indemnification provisions of this Agreement (whether or not you
or the Company or any of its directors or controlling persons is
an actual or potential party to such claim, action or
proceeding).
Page 7 of 11
21. The Company understands that you are required in certain instances to
deduct 31% of the amounts to be paid with respect to interest paid on the
Exchange Notes and proceeds from the sale, exchange, redemption or retirement of
the Exchange Notes from holders who have not supplied their correct Taxpayer
Identification Number or required certification. You will remit any such funds
to the Internal Revenue Service in accordance with applicable regulations.
22. You shall notify the Company of the amount of any transfer taxes of
which you have actual knowledge are payable in respect of the exchange of
Original Notes.
23. This Agreement and your appointment as Exchange Agent hereunder shall
be construed and enforced in accordance with the laws of the State of Delaware
applicable to agreements made and to be performed entirely within such state,
and without regard to conflicts of law principles, and shall inure to the
benefit of, and the obligations created hereby shall be binding upon, the
successors and assigns of each of the parties hereto, and no other person shall
have any rights hereunder.
24. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
25. In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
26. This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged. This Agreement may not be modified orally.
27. Unless otherwise provided herein, all notices, requests and other
communications to any part hereunder shall be in writing (including facsimile or
similar writing) and shall be given to such party, addressed to it, at its
address or facsimile number set forth below:
If to the Company: PG&E National Energy Group, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
If to the Exchange Agent: Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ Cimallore
Page 8 of 11
28. Unless terminated earlier by the parties hereto, this Agreement shall
terminate 90 days following the Expiration Date. Notwithstanding the foregoing,
Paragraphs 19, 20 and 21 shall survive the termination of this Agreement. Upon
any termination of this Agreement, you shall promptly deliver to the Company any
certificates for Securities, funds or property then held by you as Exchange
Agent under this Agreement.
29. This Agreement shall be binding and effective as of the date hereof.
Page 9 of 11
Please acknowledge receipt of this Agreement and confirm the arrangements
herein provided by signing and returning the enclosed copy.
PG&E NATIONAL ENERGY GROUP, INC.
By:
-----------------------------------------
Title:
Accepted as of the date first above written:
WILMINGTON TRUST COMPANY
By:
-----------------------------------------
Page 10 of 11
SCHEDULE I
----------
FEES
----
SCHEDULE OF FEES
FOR
PG&E NATIONAL ENERGY GROUP, INC.
10.375% Senior Notes Due 2011
1. Exchange Agent Fee: $5,000
Covers review of the Letter of Transmittal, the Exchange Agent Agreement
and other related documentation; establishment of accounts and systems link with
depositories; operational and administrative charges and time spent in
connection with the review, receipt and processing of Letters of Transmittal,
Agent's Messages and Notices of Guaranteed Delivery.
Note: The fees set forth in this schedule are subject to review of
documentation and our internal credit and conflict review. The fees are also
subject to change should circumstances warrant. Out-of-pocket expenses and
disbursements, including reasonable counsel fees, incurred in the performance of
our duties will be added to the billed fees. If a deal should fail to close for
reasons beyond our control, we reserve the right to charge our acceptance plus
reimbursement for legal fees incurred.
Fees for any services not specifically covered in this or other applicable
schedules will be based on an appraisal of services rendered.
Page 11 of 11