-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EZ5TlyuvUpFhD1VQNz5vsxrxOfwqBjKCNoUf+KVc//7wemPdvaNusOgOODXYiXCD FOBliuEIXEQrQAZTc9A0Hw== 0000947871-03-001026.txt : 20030418 0000947871-03-001026.hdr.sgml : 20030418 20030418130252 ACCESSION NUMBER: 0000947871-03-001026 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20030418 GROUP MEMBERS: CREDIT SUISSE FIRST BOSTO GROUP MEMBERS: UXT AIV, LP GROUP MEMBERS: UXT HOLDCO 2, LLC GROUP MEMBERS: UXT HOLDINGS, LLC GROUP MEMBERS: UXT INTERMEDIARY, LLC FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CREDIT SUISSE FIRST BOSTON/ CENTRAL INDEX KEY: 0000824468 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: PO BOX 900 STREET 2: FHLS CITY: ZURICH SWITZERLAND MAIL ADDRESS: STREET 1: PO BOX 900 CITY: ZURICH SWITZERLAND FORMER COMPANY: FORMER CONFORMED NAME: CREDIT SUISSE DATE OF NAME CHANGE: 19921119 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TXU CORP /TX/ CENTRAL INDEX KEY: 0001023291 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 752669310 STATE OF INCORPORATION: TX FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-52457 FILM NUMBER: 03655512 BUSINESS ADDRESS: STREET 1: ENERGY PLAZA STREET 2: 1601 BRYAN ST CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2148125210 MAIL ADDRESS: STREET 1: 1601 BRYAN STREET STREET 2: SUITE 36056 CITY: DALLAS STATE: TX ZIP: 75201 FORMER COMPANY: FORMER CONFORMED NAME: TUC HOLDING CO DATE OF NAME CHANGE: 19960919 FORMER COMPANY: FORMER CONFORMED NAME: TEXAS UTILITIES CO /TX/ DATE OF NAME CHANGE: 19970805 SC 13D 1 sc13d_041703.txt SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Rule 13d-101) Under the Securities Exchange Act of 1934 TXU Corp. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, No Par Value - -------------------------------------------------------------------------------- (Title of Class of Securities) 873168108 (CUSIP Number) UXT Holdings LLC UXT Intermediary LLC c/o Credit Suisse First Boston Private Equity Inc. Eleven Madison Avenue NY, NY 10010 (212) 325-2000 Attn: Ivy Dodes, Esq. - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) April 9, 2003 ------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. |_| Note: Schedules filed in paper format shall include a signed original and five copies of the Schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. The information required on this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Exchange Act") or otherwise subject to the liabilities of that section of the Exchange Act but shall be subject to all other provisions of the Exchange Act (however, see the Notes). (Continued on following pages) (Page of pages) SCHEDULE 13D - --------------------------------- ------------------------------------ CUSIP No. 873168108 Page of Pages ------------ ------- - --------------------------------- ------------------------------------ - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON UXT Holdings, LLC - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER SEE ITEM 5. NUMBER OF ----------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY SEE ITEM 5. OWNED BY ----------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING SEE ITEM 5. PERSON ----------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER SEE ITEM 5. - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON SEE ITEM 5. - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) SEE ITEM 5. - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- SCHEDULE 13D - --------------------------------- ------------------------------------ CUSIP No. 873168108 Page of Pages ------------ ------- - --------------------------------- ------------------------------------ - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON UXT Intermediary, LLC - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER SEE ITEM 5. NUMBER OF ----------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY SEE ITEM 5. OWNED BY ----------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING SEE ITEM 5. PERSON ----------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER SEE ITEM 5. - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON SEE ITEM 5. - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) SEE ITEM 5. - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- SCHEDULE 13D - --------------------------------- ------------------------------------ CUSIP No. 873168108 Page of Pages ------------ ------- - --------------------------------- ------------------------------------ - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON UXT AIV, LP - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO, AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER SEE ITEM 5. NUMBER OF ----------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY SEE ITEM 5. OWNED BY ----------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING SEE ITEM 5. PERSON ----------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER SEE ITEM 5. - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON SEE ITEM 5. - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) SEE ITEM 5. - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- SCHEDULE 13D - --------------------------------- ------------------------------------ CUSIP No. 873168108 Page of Pages ------------ ------- - --------------------------------- ------------------------------------ - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON UXT Holdco 2, LLC - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO, AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER SEE ITEM 5. NUMBER OF ----------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY SEE ITEM 5. OWNED BY ----------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING SEE ITEM 5. PERSON ----------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER SEE ITEM 5. - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON SEE ITEM 5. - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) SEE ITEM 5. - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- SCHEDULE 13D - --------------------------------- ------------------------------------ CUSIP No. 873168108 Page of Pages ------------ ------- - --------------------------------- ------------------------------------ - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Credit Suisse First Boston, on behalf of the Credit Suisse First Boston business unit - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS N/A - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |X| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Switzerland - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER SEE ITEM 5. NUMBER OF ----------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY SEE ITEM 5. OWNED BY ----------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING SEE ITEM 5. PERSON ----------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER SEE ITEM 5. - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON SEE ITEM 5. - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) SEE ITEM 5. - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON BK, HC - -------------------------------------------------------------------------------- Item 1. Security and Issuer. ------------------- This statement relates to the common stock, no par value (the "Common Stock"), of TXU Corp. (the "Company"). The shares of common stock are issuable by the Company upon exchange of 9% exchangeable subordinated notes due 2012 (the "Notes") of TXU Energy Company LLC, an indirect wholly-owned subsidiary of the Company ("TXU Energy"). The Company's principal executive office is located at Energy Plaza, 1601 Bryan Street, Dallas, Texas, 75201. Item 2. Identity and Background. ----------------------- This statement is being filed jointly on behalf of the following persons (collectively "Reporting Persons"): (1) UXT Holdings, LLC, a Delaware limited liability company ("UXT Holdings"); (2) UXT Intermediary, LLC , a Delaware limited liability company ("UXT Intermediary"); (3) UXT AIV, L.P., a Delaware limited partnership ("UXT AIV"); (4) UXT Holdco 2, LLC, a Delaware limited liability company ("UXT Holdco" and together with UXT Holdings, UXT Intermediary and UXT AIV, the "UXT Entities"); and (5) Credit Suisse First Boston, a Swiss bank (the "Bank"), on behalf of itself and its subsidiaries, to the extent that they constitute the Credit Suisse First Boston business unit (the "CSFB business unit") excluding Asset Management (as defined below) (the "CSFB Entities"). Each of UXT Holdings and UXT Intermediary is a Delaware limited liability company formed for the purpose of investing in the Notes and Common Stock. UXT AIV, a Delaware limited partnership, is the sole member of UXT Intermediary and was formed as an alternative investment vehicle for certain limited partners of DLJ Merchant Banking Partners III, L.P., a Delaware limited partnership ("DLJMB III"). DLJ Merchant Banking III, Inc., a Delaware corporation ("MB III Inc.") serves as managing general partner and DLJ Merchant Banking III, L.P., a Delaware limited partnership ("MB III LP") serves as associate general partner of UXT AIV. UXT Holdco, a Delaware limited liability company, is the sole member of UXT Holdings and was formed for the purpose of investing in the Notes and the Common Stock. MB III Inc. serves as managing member and MB III LP serves as associate managing member of UXT Holdco. The members of UXT Holdco are subsidiaries of DLJMB III and other parallel investment partnerships affiliated with DLJMB III. DLJMB III is a Delaware corporation which makes investments for long-term appreciation. MB III Inc. is a Delaware corporation that serves as managing general partner of DLJMB III and UXT AIV and managing member of UXT Holdco. MB III Inc. is responsible for the management of such entities and, in conjunction with MB III LP, participates in making investment decisions for these entities. Page of Pages MB III LP is a Delaware limited partnership that serves as associate general partner of DLJMB III and UXT AIV and associate managing member of UXT Holdco. MB III LP, in conjunction with MB III Inc., participates in investment decisions for these entities. The address of the principal business and office of each of the UXT Entities and the CSFB Entities is c/o Credit Suisse First Boston Private Equity, Inc., Eleven Madison Avenue, New York, New York 10010. While the CSFB Entities, including DLJMB III and the entities listed below, disclaim beneficial ownership of the securities to which this statement relates, as a result of the relationship of the CSFB Entities to, and the pecuniary interest of the CSFB Entities in, the UXT Entities and Credit Suisse First Boston Private Equity ("CSFBPE") as described below, such entities may be deemed to beneficially own the securities to which this statement relates. CSFBPE is the sole stockholder of MB III Inc. The address of the principal business and office of CSFBPE is Eleven Madison Avenue, New York, New York 10010. Credit Suisse First Boston (USA), Inc., a Delaware corporation and holding company ("CSFB-USA"), is the sole stockholder of CSFBPE. The address of the principal business and office of CSFB-USA is Eleven Madison Avenue, New York, New York 10010. In addition, CSFB-USA is the sole member of Credit Suisse First Boston LLC ("CSFB LLC"), a Delaware limited liability company and registered broker-dealer. The address of the principal business and office of CSFB LLC is Eleven Madison Avenue, New York, New York 10010. Credit Suisse First Boston, Inc., a Delaware corporation ("CSFBI"), is the sole stockholder of CSFB-USA. The address of the principal business and office of CSFBI is Eleven Madison Avenue, New York, New York 10010. The Bank owns directly a majority of the voting stock and all of the non-voting stock of CSFBI. The ultimate parent company of the Bank and CSFBI and the direct owner of the remainder of the voting stock of CSFBI is Credit Suisse Group ("CSG"), a corporation formed under the laws of Switzerland. In accordance with Securities and Exchange Commission Release No. 34-39538 (January 12, 1998), this Schedule 13D is being filed by the Bank on behalf of itself and its subsidiaries, to the extent that they constitute the CSFB business unit, excluding Asset Management (as defined below). The CSFB business unit is also comprised of an asset management business principally conducted under the brand name Credit Suisse Asset Management ("Asset Management"). The CSFB Entities provide financial advisory and capital raising services, sales and trading for users and suppliers of capital around the world and invests in and manages private equity and venture capital funds. Asset Management provides asset management and investment advisory services to institutional, mutual fund and private investors worldwide. The address of the Bank's principal business and office is Uetlibergstrasse 231, P.O. Box 900, CH 8070 Zurich, Switzerland. Page of Pages CSG is a global financial services company with two distinct business units. In addition to the CSFB business unit, CSG and its consolidated subsidiaries are comprised of the Credit Suisse Financial Services business unit (the "Credit Suisse Financial Services business unit"). CSG's business address is Paradeplatz 8, P.O. Box 1, CH 8070 Zurich, Switzerland. CSG, for purposes of the federal securities laws, may be deemed ultimately to control the Bank and the other CSFB Entities. CSG, its executive officers and directors, and its direct and indirect subsidiaries (including Asset Management and the Credit Suisse Financial Services business unit) may beneficially own securities of the Company, and such securities are not reported in this statement. CSG disclaims beneficial ownership of shares of Common Stock beneficially owned by its direct and indirect subsidiaries, including the UXT Entities and the CSFB Entities. The UXT Entities, the CSFB Entities and the Bank disclaim beneficial ownership of shares of Common Stock beneficially owned by CSG, Asset Management and the Credit Suisse Financial Services business unit. The name, business address, citizenship and title of each executive officer of director of MB III Inc., CSFBPE, CSFB-USA, CSFB LLC and the CSFB Entities that are corporations are set forth in Schedules A-1 through A-6 attached hereto, each of which is incorporated by reference. Except as otherwise provided herein, during the past five (5) years, neither any of the Reporting Persons nor, to the best knowledge of any of the Reporting Persons, any person listed on the schedules hereto has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to United States federal or state securities laws or finding any violation with respect to such laws. On January 22, 2002, Credit Suisse First Boston Corporation ("CSFBC"), the predecessor of CSFB LLC, without admitting or denying any alleged violation, entered into coordinated settlements with NASD Regulation, Inc. ("NASDR") and the Securities and Exchange Commission ("SEC") resolving all outstanding investigations of CSFBC into the allocation of shares in initial public offerings ("IPOs"). CSFBC consented to these settlements without admitting or denying any of the allegations made in the SEC's Complaint or the Letter of Acceptance, Waiver and Consent ("AWC") filed with the NASDR. The SEC and NASDR alleged that, between April 1999 and June 2000, certain CSFBC employees allocated many shares in IPOs to over 100 customers with whom they had improper profit-sharing arrangements. The NASDR and SEC alleged that certain employees allocated "hot" IPO shares to certain customers who paid the Firm a portion of the profits (between 33 and 65 percent) that they made when they sold their IPO stock, by paying inflated brokerage commissions on transactions unrelated to the IPO shares. Page of Pages Under the terms of the coordinated settlement: o CSFBC paid a total of $100 million. This amount included $30 million in fines and civil penalties divided evenly between the SEC and NASDR, and a total of $70 million in disgorgement, $35 million of which was paid to the U.S. Treasury and $35 million of which was paid to the NASDR, representing the monies obtained as a result of the conduct described by the SEC and NASDR. The SEC determined in this case that it was appropriate and in the public interest to pay funds to the U.S. Treasury rather than to any third parties. o CSFBC has adopted and is implementing revised policies and procedures for allocating IPOs in its broker-dealer operations. The SEC and NASD have reviewed these policies and procedures. These included the establishment of an IPO Allocation Review Committee, a process for the pre-qualification of accounts before they are eligible to receive IPO allocations, and enhanced supervisory procedures, which may include the review of commissions paid by certain accounts receiving allocations around the time of the IPO. CSFBC also agreed to retain an independent consultant to review the implementation of these policies and procedures one year from the date of the settlement. In the NASDR settlement, CSFBC, without admitting or denying any findings, consented to a censure and findings that it violated NASD Rules 2110, 2330, 2710, 3010 and 3110. These Rules (a) require broker-dealers to adhere to just and equitable principles of trade, (b) prohibit broker-dealers from sharing in the profits of client accounts except as specifically provided, (c) require a managing underwriter to file certain information that may have a bearing on the NASDR's review of underwriting arrangements, (d) require members to establish, maintain and enforce a reasonable supervisory system, and (e) require broker-dealers to maintain certain books and records. The NASDR AWC also found violations of Section 17(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and SEC Rule 17a-3, thereunder, which are incorporated by NASD Rule 3110 and similarly impose certain record keeping requirements on CSFBC as a broker-dealer. In the SEC settlement, CSFBC, without admitting or denying the allegations of the Complaint, consented to entry by the District Court for the District of Columbia of a final judgment that: (1) permanently enjoined CSFBC, directly or indirectly, from violations of NASD Conduct Rules 2110 and 2330 and Section 17(a)(1) of the Exchange Act and SEC Rule 17a-3; and (2) ordered CSFBC to comply with certain undertakings. Neither the SEC nor NASDR made any allegations or findings of fraudulent conduct by CSFBC. Further, neither the SEC nor NASDR alleged that any IPO prospectus was rendered false or misleading by CSFBC's conduct or that this conduct affected either the offering price of an IPO or the price at which any IPO stock traded in the aftermarket. On November 26, 1996, the SEC brought a civil action in federal court in California against CSFBC and two former employees of its public finance department relating to CSFBC's role as lead underwriter of a September 1994 Orange County pension obligation Page of Pages bond ("POB") financing, which the county completed 10 weeks prior to its bankruptcy. The SEC alleged that the Official Statement misrepresented and omitted material facts about the Orange County Investment Pool, including the Pool's investment strategy, the risks of that strategy and the Pool's investment losses, and it sought to hold CS First Boston responsible for the alleged omissions and misrepresentations. The complaint alleged violations of certain anti-fraud provisions, including Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, Section 15B(c)(1) of the Exchange Act, and MSRB Rule G-17. CSFBC filed its answer to the complaint on January 13, 1997, in which it denied all allegations of misconduct and asserted twelve affirmative defenses. On January 29, 1998, the lawsuit was dismissed with prejudice, upon the consent of the SEC, CSFBC and the individual defendants, as part of an out-of-court settlement of this matter. Also pursuant to that settlement, CSFBC and the individual defendants, without admitting or denying liability, consented to the entry of a SEC administrative order finding negligence-based violations of Section 17(a)(2) and (a)(3) of the Securities Act and MSRB Rule G-17. CSFBC and the two individuals agreed to pay monetary penalties of $800,000, $35,000 and $35,000 respectively. The SEC administrative order contained no allegation or finding of any fraudulent, intentional or reckless misconduct by CSFBC or any of its current or former employees. Item 3. Source and Amount of Funds or other Consideration. ------------------------------------------------- Pursuant to the Purchase Agreement (as defined in Item 6 below), UXT Holdings and UXT Intermediary purchased an aggregate $750 million principal amount of Notes for an aggregate purchase price of $750 million. On December 19, 2002, UXT Holdings and UXT Intermediary collectively sold an aggregate of $250 million principal of Notes to third parties for an aggregate purchase price of $250 million. The members of UXT Holdings and UXT Intermediary contributed to the capital of such entities the $750 million necessary to purchase the Notes. Of such amount, $650 million was contributed to the capital of the UXT Entities by their respective partners and members and an aggregate of $100 million was borrowed by UXT AIV and UXT Holdco from an affiliate. In December 2002, $55.5 million of such borrowings were repaid from the proceeds of the sale of the Notes. Item 4. Purpose of Transaction. ---------------------- UXT Holdings and UXT Intermediary purchased the securities covered by this statement in order to acquire an interest in the Company and TXU Energy for investment purposes. The UXT Entities intend to review continuously their position in the Company. Depending on further evaluations of the business prospects of the Company and upon other developments, including, but not limited to general economic and business conditions and stock market conditions, the UXT Entities may exchange all or a portion of the Notes into shares of Common Stock, retain or dispose of all or a portion of the Notes and/or Common Stock beneficially owned by them, subject to any applicable legal and contractual Page of Pages restrictions on their ability to do so in privately negotiated transactions, open market sales or otherwise. Pursuant to the Exchange Agreement (as defined in Item 6), the ability of the UXT Entities to acquire additional shares of Common Stock or engage in certain other transactions related to the Company is restricted. See Item 6 below. Pursuant to an Exchange Agreement (as defined in Item 6 below) and subject to applicable laws and regulations, UXT AIV or an affiliate thereof has the right to designate one person (the "Purchaser Director") to serve on the board of directors of the Company (the "Board"). At each election at which the term of the Purchaser Director expires, the Board will recommend for election a person designated by UXT AIV. If there is no Purchaser Director serving on the Board, UXT AIV will have the right to consult with and advise the Board. UXT AIV's right to designate a Purchaser Director will terminate on the earlier to occur of (i) the later of (A) November 22, 2012 and (B) the date no principal amount of the Notes remain outstanding and (ii) the date on which the UXT Entities or their Permitted Transferees (as defined in the Exchange Agreement) own Notes and Common Stock aggregating less than 30% of the initial $750 million invested (the "Termination Date"). In addition, the matters set forth in Item 6 below are incorporated in this Item 4 by reference as if fully set forth herein. Except as set forth in this Item 4 (including the matters described in Item 6 which are incorporated in this Item 4 by reference), the Reporting Persons have no present plans or proposals that relate to, or that would result in, any of the actions specified in clauses (a) through (j) of Schedule 13D of the Exchange Act. Item 5. Interest in Securities of the Issuer. ------------------------------------ (a)-(c) On November 22, 2002, UXT Intermediary purchased $472,420,757.46 aggregate principal amount of Notes and UXT Holdings purchased $277,579,242.54 aggregate principal amount of Notes. On December 19, 2002, UXT Intermediary sold $165,493,608.80 aggregate principal amount of Notes and UXT Holdings sold $84,506,391.20 aggregate principal amount of Notes, in each case, to a group of entities (collectively the "Berkshire Affiliates") affiliated with Berkshire Hathaway, Inc. ("Berkshire"). As a result, UXT Intermediary currently owns $306,927,148.66 principal amount of Notes exchangeable into an aggregate of 23,386,351 shares of Common Stock which represents 6.8% of the outstanding Common Stock of the Company. UXT Holdings currently owns $193,072,851.34 principal amount of Notes exchangeable into an aggregate of 14,711,209 shares of Common Stock which represents 4.4% of the outstanding Common Stock of the Company. In the aggregate, the UXT Entities beneficially own 38,097,560 shares of Common Stock representing 10.6% of the Common Stock of the Company. As general partners and managing members of the UXT Entities, MB III Inc. and MB III LP would, upon exchange of the Notes for Common Stock, have the power to vote and dispose of shares of Common Stock held by the UXT Entities, and may be deemed to beneficially own shares of Common Stock owned by the UXT Entities. Each of MB III Inc. and MB III LP has shared voting and dispositive power with respect to the shares of Page of Pages Common Stock beneficially owned by UXT Holdings and UXT Intermediary. The CSFB Entities, including DLJMB III and the entities listed below, other than MB III LP and MB III Inc., disclaim beneficial ownership of the securities to which this statement relates, however as a result of the relationship of the CSFB Entities to, and the pecuniary interest of the CSFB Entities interest in, the UXT Entities as described in Item 2 above, under the Exchange Act such entities may be deemed to beneficially own the securities to which this statement relates. CSG, for purposes of the federal securities laws, may be deemed to ultimately control the Bank and the other CSFB Entities. CSG, its executive officers and directors, and its direct and indirect subsidiaries (including Asset Management and the Credit Suisse Financial Services business unit) may beneficially own shares of common stock and such securities not reported in this statement. CSG disclaims beneficial ownership of the securities to which this statement relates that are beneficially owned by its direct and indirect subsidiaries, including the UXT Entities and the CSFB Entities. The UXT Entities and the CSFB Entities disclaim beneficial ownership of shares of common stock beneficially owned by CSG, Asset Management and the Credit Suisse Financial Services business unit. (d) The right to receive dividends on, and proceeds from the sale of the shares of Common Stock beneficially owned by UXT Holdings and UXT Intermediary and beneficially owned as described in the paragraphs above, is governed by the organizational documents of each such entity, and such dividends or proceeds may be distributed with respect to numerous general and limited partnership interests. (e) Not applicable. Item 6. Contracts, Arrangements, Understanding or Relationships with respect to Securities of the Issuer. - ------------------------------------------------------------------------------- The response to Item 4 of this Statement is incorporated herein by reference. Purchase Agreement - ------------------ On November 18, 2002 (the "Closing"), UXT Holdings, the Company and TXU Energy entered into a purchase agreement (the "Purchase Agreement") pursuant to which UXT Holdings agreed to purchase $750 million aggregate principal amount of Notes for $750 million. The Purchase Agreement contains the customary representations and warranties. On November 22, 2002, UXT Holdings assigned its right to purchase $472,420,757.46 aggregate principal of the Notes to UXT Intermediary and on such date UXT Holdings and UXT Intermediary purchased the $750 million of Notes. At the Closing, MB III Inc. received a fee for structuring the transaction equal to the aggregate purchase price for the Notes multiplied by .0133 and any transaction expenses incurred throughout the Closing. This description of the Purchase Agreement is qualified in its entirety by reference to the Purchase Agreement, a copy of which has been filed as Exhibit 1 to this Statement and is incorporated herein by reference. Page of Pages Registration Rights Agreement - ----------------------------- On November 22, 2002, UXT Holdings, UXT Intermediary and the Company entered into a registration rights agreement (the "Registration Rights Agreement"). Pursuant to the Registration Rights Agreement, as amended, the Company is obligated to file with the Securities and Exchange Commission (the "SEC") and use best efforts to have declared effective, a shelf registration statement on Form S-3 with respect to the Common Stock issuable upon exchange of the Notes. The Company is required to maintain the effectiveness of such shelf registration until 180 days after the date less than 10% of the initial registrable securities remain. Such Form S-3 was filed on March 19, 2003. In addition, the UXT Entities have the right to require the Company to effect up to two additional registrations of the Common Stock subject to conditions set forth in the Registration Rights Agreement. The Company also has the customary "black out" rights to delay the filing or effectiveness of any registration statement under the Registration Rights Agreement. The UXT Entities also have unlimited rights to participate in other registration statements filed by the Company with respect to the Common Stock. The Registration Rights Agreement contains customary indemnification provisions. This description of the Registration Rights Agreement is qualified in its entirety by reference to the Registration Rights Agreement, a copy of which has been filed as Exhibit 2 to this Statement and is incorporated herein by reference. Exchange Agreement - ------------------ On November 22, 2002, UXT Holdings, UXT Intermediary and the Company entered into an exchange agreement (the "Exchange Agreement") pursuant to which the Company granted the UXT Entities an irrevocable right to exchange all or part of the Notes (an "Exchange Right") as of the Closing, at an initial price per share of Common Stock of $13.15 (the "Exchange Price"). The Exchange Price is subject to anti-dilution adjustments as stated in the Exchange Agreement which take effect if the Company issues or sells shares of Common Stock or Common Stock Equivalents (as defined in the Exchange Agreement) without consideration or at a price per share less than their current market price while any Exchange Right is outstanding. The Exchange Right has subsequently been adjusted and is currently at $13.1242. The right to exchange the Notes into Common Stock is subject to certain conditions including expiration of applicable waiting periods under the Hart Scott Rodino Act of 1976 (the "HSR Act"). On March 19, 2003, UXT AIV filed a notification under the HSR Act and on April 9, 2003 the waiting period expired. If upon exchange of the Notes, the number of shares of Common Stock to be delivered to the UXT Entities and their affiliates would result in the UXT Entities and their affiliates becoming the beneficial owners of more than 4.9% of the outstanding Common Stock of the Company (the "Threshold Amount"), then the Company will deliver to a voting trustee Page of Pages the number of shares of Common Stock in excess of the Threshold Amount to be deposited in a voting trust ("Voting Trust I"). If the percentage of shares in Voting Trust I exceeds 4.9%, such excess shares will be deposited in a second voting trust ("Voting Trust II"). Subject to the conditions and terms stated in the Exchange Agreement and subject to applicable laws and regulations, UXT AIV or an affiliate thereof has the right to designate one person (the "Purchaser Director") to serve on the board of directors of the Company (the "Board"). The Board will recommend for election and cause to be elected to the Board a nominee, and will use reasonable best efforts to solicit proxies in favor of such nominee. At each election at which the term of the Purchaser Director expires, the Board will recommend for election a person designated by UXT AIV. If there is no Purchaser Director serving on the Board, UXT AIV will have the right to consult with and advise the Board. Immediately following the Termination Date, UXT AIV will cause the Purchaser Director to resign from the Board and its right to designate future Purchaser Directors will end. UXT AIV has agreed to take all actions, including voting its outstanding Common Stock, in order to effect such action. During the period commencing on the November 22, 2002 and ending on the date that UXT Entities, as a group, own less than 10% of the initial amount of Notes and/or Common Stock, UXT Entities and certain of their affiliates have agreed that neither they nor any entity controlled by them (other than certain portfolio companies) will, without the prior approval of the Board (excluding, for purposes of such approval, the Purchaser Director), (i) acquire, offer or propose to acquire or agree to acquire the beneficial ownership of any Common Stock of the Company other than Common Stock issued pursuant to the Exchange Agreement (or any warrants, options or other rights to purchase or acquire, or any securities convertible into, or exchangeable for, any Common Stock); (ii) make any public announcement with respect to, or submit any proposal for, any merger, consolidation, sale of substantial assets (other than sales made in the ordinary course of business of such holder) or other business combination or extraordinary transaction involving the Company; (iii) except in connection with the election of the Purchaser Director, make, or in any way participate in, any "solicitation" of "proxies" (as such terms are defined or used in Regulation 14A under the Exchange Act) to vote any Common Stock or seek to advise or influence any person (other than any affiliate) with respect to the voting of any Common Stock (iv) otherwise act, either alone or in concert with others, to seek control of the Board or (v) publicly disclose any intention, proposal, plan or arrangement with respect to any of the foregoing This description of the Exchange Agreement is qualified in its entirety by reference to the Exchange Agreement, a copy of which has been filed as Exhibit 3 to this Statement and is incorporated herein by reference. Notes - ----- The terms of the Notes provide that the Company will pay interest on the unpaid principal amount of the Notes at a rate per annum equal to 9%, payable quarterly in arrears on each payment date as set forth in the Note. The Company has the right, exercisable prior to 180 Page of Pages days after the closing of the sale of the Notes, to require the holders to exchange its interest in the Notes for a preferred equity interest in the Company with substantially identical economic terms satisfactory to the Holders. Subject to the terms and conditions of the Note, for so long as at least 30% of the original principal of the Notes remains held by the UXT Entities and their permitted transferees, the Board of Managers of TXU Energy (the "Energy Board") shall at all times include one Manager (the "Holder Manager") chosen by UXT AIV. During any period for which there is no Holder Manager serving on the Energy Board and if UXT AIV holds any interest and Notes, UXT AIV will be entitled to consult with and advise the management and Board of Managers of TXU Energy on significant business issues. The holders of the Notes have agreed that they shall not transfer the Note to any competitor or in violation of the Securities Act of 1933. The transfer of the Notes is subject to the terms and conditions of the Exchange Agreement. This description of the Notes is qualified in its entirety by reference to the Notes, a copy of which has been filed as Exhibit 4 to this Statement and is incorporated herein by reference. Voting Trust Agreements - ----------------------- On March 21, 2003, UXT Holdings, UXT Intermediary, MB III Inc. and Wells Fargo Bank Minnesota, N.A. ("Wells Fargo") entered into a voting trust agreement (the "Voting Trust I Agreement"). On March 21, 2003, UXT Holdings, UXT Intermediary, MB III Inc. and Christiana Bank & Trust Company ("Christiana Bank" together with Wells Fargo, the "Trustees") entered into a voting trust agreement (the "Voting Trust II Agreement" together with the Voting Trust I Agreement, the "Voting Trust Agreements"). The Voting Trust I Agreement sets out the terms and conditions for all Common Stock acquired by the UXT Entities above the Threshold Amount, pursuant to the provision in the Exchange Agreement (defined above) which mandates the deposit of all beneficially owned shares of UXT Entities above the Threshold Amount to be deposited in Voting Trust I. The Voting Trust II Agreement sets out the terms and conditions for all Common Stock acquired by the UXT Entities that surpasses 4.9% in Voting Trust I. Pursuant to Voting Trust Agreement I and Voting Trust Agreement II, Wells Fargo and Christiana Bank, respectively, will have the exclusive right to vote the Common Stock (the "Trust Shares") to be placed in Voting Trust I and Voting Trust II, respectively (the "Voting Trusts"), and will have the full power and authority to vote the Trust Shares as each, in its sole judgment, believes to be in the best interest of the shareholders of the Company, generally. The Voting Trusts will terminate on the earliest to occur of (i) March 21, 2013, (ii) the written election of MB III Inc. or the holders of the Voting Trust certificates (the "Trust Certificates") representing fifty percent (50%) or more of the Trust Shares thereby; provided, however, that immediately after giving effect to such termination, MB III Inc. and its affiliates will, in the aggregate, beneficially own (through record ownership, Page of Pages contract or otherwise), as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended, not more than 4.9% of the total fully diluted number of shares of Common Stock then outstanding. Except as provided in the Voting Trust Agreements, the Trust Certificates representing Trust Shares may not be delivered to a holder, a holder's designee or any other third party prior to the termination of the voting trust. This description of the Voting Trust Agreements are qualified in its entirety by reference to the Voting Trust Agreements, copies of which have been filed as Exhibit 5 and Exhibit 6 to this Statement and are incorporated herein by reference. Berkshire Purchase Agreement - ---------------------------- On December 19, 2002, UXT Holdings, UXT Intermediary and the Berkshire Affiliates entered into a Purchase Agreement (the "Berkshire Purchase Agreement") pursuant to which the Berkshire Affiliates acquired $250 aggregate principal amount of Notes for $250 million from UXT Holdings and UXT Intermediary. The Berkshire Purchase Agreement contains the customary representations and warranties. This description of the Berkshire Purchase Agreement is qualified in its entirety by reference to the Berkshire Purchase Agreement, a copy of which has been filed as Exhibit 7 to this Statement and is incorporated herein by reference. Assignment, Assumption and Waiver Agreement - ------------------------------------------- On December 19, 2002, UXT Holdings, UXT Intermediary, the Company, TXU Energy and (with respect to certain sections stated in the agreement) Berkshire entered into an assignment, assumption and waiver agreement (the "Assignment, Assumption and Waiver Agreement"). Pursuant to the Assignment, Assumption and Waiver Agreement, Berkshire and the Berkshire Affiliates agreed to assume, perform and discharge certain duties and obligations of UXT Holdings and UXT Intermediary under the Exchange Agreement and Registration Rights Agreement and waive certain rights under the Note. The Company agreed to the assignment of the rights and benefits and obligations under the Purchase Agreement. Subject to the terms and conditions in the Assignment, Assumption and Waiver Agreement, the Company waived certain provisions from the Purchase Agreement and the Exchange Agreement. UXT Holdings, UXT Intermediary, Berkshire and the Berkshire Affiliates agreed not to enter any agreements relating to the voting or exercise of other rights with respect to the Common Stock or the Notes. This description of the Assignment, Assumption and Waiver Agreement is qualified in its entirety by reference to the Assignment, Assumption and Waiver Agreement, a copy of which has been filed as Exhibit 8 to this Statement and is incorporated herein by reference. Page of Pages Item 7. Material to be filed as Exhibits. -------------------------------- Exhibit 1: Purchase Agreement for 9% Exchangeable Subordinated Notes due 2012 dated November 18, 2002 by and among TXU Corp., TXU Energy, LLC and UXT Holdings. Exhibit 2: Registration Rights Agreement dated November 22, 2002 by and among TXU Corp., UXT Holdings LLC and UXT Intermediary LLC. Exhibit 3: Exchange Agreement dated November 22, 2002 by and among TXU Corp., TXU Energy Company LLC, UXT Holdings LLC and UXT Intermediary LLC. Exhibit 4: TXU Energy Company $472,420,757.46 Exchangeable Subordinated Note dated as of November 22, 2002. Exhibit 5: Voting Trust I Agreement dated March 21, 2003 by and among UXT Holdings, UXT Intermediary, DLJ Merchant Banking III, Inc. and Wells Fargo Bank Minnesota, N.A. Exhibit 6: Voting Trust II Agreement dated March 21, 2003 by and among UXT Holdings, UXT Intermediary, DLJ Merchant Banking III, Inc. and Christiana Bank & Trust Company. Exhibit 7: Purchase Agreement for 9% Exchangeable subordinated Notes due 2012 of TXU Energy Company LLC dated December 19, 2002 by and among UXT Holdings, UXT Intermediary and Berkshire Affiliates. Exhibit 8: The Assignment, Assumption and Waiver Agreement dated December 19, 2002 by and among UXT Holdings LLC, UXT Holdings Intermediary LLC, TXU Corp., TXU Energy Company LLC and solely with respect to sections 9, 10(b) and 12, Berkshire Hathaway Inc. Page of Pages SIGNATURE After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this Statement is true, complete and correct. Dated: April 18, 2003 UXT HOLDINGS, LLC By: UXT Holdco 2, LLC its sole member By: DLJ Merchant Banking III, Inc. its managing member By: /s/ Michael Isikow ---------------------------------- Name: Michael Isikow Title: Principal UXT INTERMEDIARY, LLC By: UXT AIV, L.P. its sole member By: DLJ Merchant Banking III, Inc. its managing member By: /s/ Michael Isikow ---------------------------------- Name: Michael Isikow Title: Principal UXT AIV, LP By: DLJ Merchant Banking III, Inc. its managing member By: /s/ Michael Isikow ---------------------------------- Name: Michael Isikow Title: Principal Page of Pages UXT HOLDCO 2, LLC By: DLJ Merchant Banking III, Inc. its managing member By: /s/ Michael Isikow ---------------------------------- Name: Michael Isikow Title: Principal CREDIT SUISSE FIRST BOSTON, on behalf of the Credit Suisse First Boston business unit By: /s/ Ivy Dodes ---------------------------------- Name: Ivy Dodes Title: Managing Director Page of Pages SCHEDULE A-1 EXECUTIVE OFFICERS AND DIRECTORS OF DLJ MERCHANT BANKING III, INC. The following sets forth the name, business address, present principal occupation and citizenship of each executive officer of the DLJ Merchant Banking III, Inc. The business address of the Reporting Person is Eleven Madison Avenue, New York, New York 10010.
NAME BUSINESS ADDRESS TITLE CITIZENSHIP - ---- ---------------- ----- ----------- Lawrence M.v.D Schloss Eleven Madison Avenue Chairman United States New York, NY 10010 USA Nicole Arnaboldi Eleven Madison Avenue Managing Director and Board Member United States New York, NY 10010 USA Thompson Dean Eleven Madison Avenue Managing Director and Board Member United States New York, NY 10010 USA Peter T. Grauer Eleven Madison Avenue Board Member United States New York, NY 10010 USA Andrew H. Rush Eleven Madison Avenue Managing Director and Board Member United States New York, NY 10010 USA Carlos Garcia Eleven Madison Avenue Managing Director Argentina New York, NY 10010 USA Reid S. Perper Eleven Madison Avenue Managing Director United States New York, NY 10010 USA James A. Quella Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Hartley Rogers Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Susan Schnabel Eleven Madison Avenue Managing Director United States New York, NY 10010 USA
Page of Pages SCHEDULE A-2 EXECUTIVE OFFICERS AND DIRECTORS OF CREDIT SUISSE FIRST BOSTON PRIVATE EQUITY, INC. The following sets forth the name, business address, present principal occupation and citizenship of each director and executive officer of Credit Suisse First Boston Private Equity, Inc. The business address of Credit Suisse First Boston Private Equity, Inc. is Eleven Madison Avenue, New York, New York 10010.
NAME BUSINESS ADDRESS TITLE CITIZENSHIP - ---- ---------------- ----- ----------- Lawrence M.v.D. Schloss Eleven Madison Avenue Board Member and Chief Executive Officer United States New York, NY 10010 USA George R. Horning Eleven Madison Avenue Chief Operating Officer United States New York, NY 10010 USA Kenneth J. Lohsen Eleven Madison Avenue Controller United States New York, NY 10010 USA Laura Raftery Eleven Madison Avenue Treasurer United States New York, NY 10010 USA Edward A. Poletti Eleven Madison Avenue Chief Financial Officer United States New York, NY 10010 USA Nicole S. Arnaboldi Eleven Madison Avenue Chief Operations Officer - Funds United States New York, NY 10010 USA Management
Page of Pages SCHEDULE A-3 EXECUTIVE OFFICERS AND DIRECTORS OF CREDIT SUISSE FIRST BOSTON (USA), INC. The following sets forth the name, business address, present principal occupation and citizenship of each director and executive officer of Credit Suisse First Boston (USA), Inc. The business address of Credit Suisse First Boston (USA), Inc. is Eleven Madison Avenue, New York, New York 10010.
NAME BUSINESS ADDRESS TITLE CITIZENSHIP - ---- ---------------- ----- ----------- John J. Mack Eleven Madison Avenue President, Chief Executive Officer and United States New York, NY 10010 USA Board Member Stephen R. Volk Eleven Madison Avenue Managing Director and Board Member United States New York, NY 10010 USA Adebayo O. Ogunlesi Eleven Madison Avenue Board Member, Head of Global Investment Nigeria New York, NY 10010 USA Banking Eileen K. Murray Eleven Madison Avenue Board Member and Managing Director United States New York, NY 10010 USA Brady W. Dougan Eleven Madison Avenue Head of the Securities Division and Board United States New York, NY 10010 USA Member Jeffrey M. Peek Eleven Madison Avenue Board Member and Managing Director, Head United States New York, NY 10010 USA of Financial Services Division Andrew B. Federbusch Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Carlos Onis Eleven Madison Avenue Managing Director United States New York, NY 10010 USA D. Wilson Ervin Eleven Madison Avenue Head of Strategic Risk Management United States New York, NY 10010 USA David C. Fisher Eleven Madison Avenue Chief Financial and Accounting Officer United States New York, NY 10010 USA Gary G. Lynch Eleven Madison Avenue Managing Director and General Counsel United States New York, NY 10010 USA Luther L. Terry, Jr. Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Neil Radey Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Neil Moskowitz Eleven Madison Avenue Managing Director United States New York, NY 10010 USA
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NAME BUSINESS ADDRESS TITLE CITIZENSHIP - ---- ---------------- ----- ----------- Robert C. O'Brien Eleven Madison Avenue Chief Credit Officer United States New York, NY 10010 USA Lewis H. Wirshba Eleven Madison Avenue Treasurer United States New York, NY 10010 USA Brian D. Finn Eleven Madison Avenue Board Member United States New York, NY 10010 USA Barbara A. Yastine Eleven Madison Avenue Board Member United States New York, NY 10010 USA Jeffrey H. Salzman Eleven Madison Avenue Managing Director, Head of Private Client United States New York, NY 10010 USA Services/Persting
Page of Pages SCHEDULE A-4 EXECUTIVE OFFICERS AND DIRECTORS OF CREDIT SUISSE FIRST BOSTON, INC. The following sets forth the name, business address, present principal occupation and citizenship of each director and executive officer of Credit Suisse First Boston, Inc. The business address of Credit Suisse First Boston, Inc. is Eleven Madison Avenue, New York, New York 10010.
NAME BUSINESS ADDRESS TITLE CITIZENSHIP - ---- ---------------- ----- ----------- John J. Mack Eleven Madison Avenue President, Chief Executive Officer and United States New York, NY 10010 USA Board Member Stephen R. Volk Eleven Madison Avenue Board Member United States New York, NY 10010 USA Adebayo O. Ogunlesi Eleven Madison Avenue Managing Director Nigeria New York, NY 10010 USA Brady W. Dougan Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Carlos Onis Eleven Madison Avenue Managing Director United States New York, NY 10010 USA D. Wilson Ervin Eleven Madison Avenue Managing Director United States New York, NY 10010 USA David C. Fisher Eleven Madison Avenue Managing Director, Chief Accounting United States New York, NY 10010 USA Officer and Controller David C. O'Leary Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Gary G. Lynch Eleven Madison Avenue Managing Director and General Counsel United States New York, NY 10010 USA Jeffrey H. Salzman Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Lewis H. Wirshba Eleven Madison Avenue Managing Director and Treasurer United States New York, NY 10010 USA Neil Moskowitz Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Neil Radey Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Robert C. O'Brien Eleven Madison Avenue Managing Director and Chief Credit Officer United States New York, NY 10010 USA Eileen K. Murray Eleven Madison Avenue Managing Director United States New York, NY 10010 USA
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NAME BUSINESS ADDRESS TITLE CITIZENSHIP - ---- ---------------- ----- ----------- Jeffrey M. Peek Eleven Madison Avenue Managing Director United States New York, NY 10010 USA
Page of Pages SCHEDULE A-5 EXECUTIVE OFFICERS OF THE CSFB ENTITIES The following sets forth the name, business address, present principal occupation and citizenship of each executive officer of the CSFB Entities. The business address of the CSFB Entities is Eleven Madison Avenue, New York, New York 10010.
NAME BUSINESS ADDRESS TITLE CITIZENSHIP - ---- ---------------- ----- ----------- John J. Mack Eleven Madison Avenue Chief Executive Officer, Chairman United States New York, NY 10010 USA Christopher Carter Eleven Madison Avenue Chairman of Europe Great Britain New York, NY 10010 USA Brady W. Dougan Eleven Madison Avenue Co-President, Institutional Securities United States New York, NY 10010 USA Stephen R. Volk Eleven Madison Avenue Chairman of CSFB United States New York, NY 10010 USA Thomas R. Nides Eleven Madison Avenue Chief Administrative Officer United States New York, NY 10010 USA Hector W. Sants One Cabot Square Londo Chief Executive Officer and Assistant Great Britain England Vice Chairman of European Region Richard E. Thornburgh Eleven Madison Avenue Chief Risk Officer of Credit Suisse Group United States New York, NY 10010 USA Adebayo Ogunlesi Eleven Madison Avenue Head of Global Investment Banking Nigeria New York, NY 10010 USA Eileen K. Murray Eleven Madison Avenue Head of Global Technology, Operations and United States New York, NY 10010 USA Product Control Brian Finn Eleven Madison Avenue Member of CSFB Office of the Chairman United States New York, NY 10010 USA Gary G. Lynch Eleven Madison Avenue Global General Counsel and Vice Chairman United States New York, NY 10010 USA to oversee Research and Legal Compliance Departments Paul Calello Eleven Madison Avenue Chairman and Officer of the Asia-Pacific United States New York, NY 10010 USA Region Michael Clark Eleven Madison Avenue Co-Head of the Equity Division United States New York, NY 10010 USA Bennett J. Goodman Eleven Madison Avenue Chairman of Merchant Banking and Leverage United States New York, NY 10010 USA Finance James P. Healy Eleven Madison Avenue Co-Head of the Fixed Income Division United States New York, NY 10010 USA
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James E. Kreitman Eleven Madison Avenue Co-Head of the Equity Division United States New York, NY 10010 USA Jeffrey M. Peek Eleven Madison Avenue Vice Chairman and Head of Financial United States New York, NY 10010 USA Services Division Jerry Wood Eleven Madison Avenue Co-Head of the Fixed Income Division United States New York, NY 10010 USA Barbara A. Yastine Eleven Madison Avenue Chief Financial Officer United States New York, NY 10010 USA
Page of Pages SCHEDULE A-6 EXECUTIVE OFFICERS AND DIRECTORS OF THE CREDIT SUISSE FIRST BOSTON LLC The following sets forth the name, business address, present principal occupation and citizenship of each executive officer of the Credit Suisse First Boston LLC. The business address of the Reporting Person is Eleven Madison Avenue, New York, New York 10010.
NAME BUSINESS ADDRESS TITLE CITIZENSHIP - ---- ---------------- ----- ----------- John J. Mack Eleven Madison Avenue President, Chief Executive Officer, Board United States New York, NY 10010 USA Member Carlos Onis Eleven Madison Avenue Managing Director and Board Member United States New York, NY 10010 USA Brady W. Dougan Eleven Madison Avenue Managing Director and Board Member United States New York, NY 10010 USA David C. Fisher Eleven Madison Avenue Managing Director and Board Member United States New York, NY 10010 USA D. Wilson Ervin Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Robert C. O'Brien Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Frank J. DeCongelio Eleven Madison Avenue Head of Operations United States New York, NY 10010 USA Lewis H. Wirshba Eleven Madison Avenue Treasurer United States New York, NY 10010 USA Gary C. Lynch Eleven Madison Avenue Managing Director and General Counsel United States New York, NY 10010 USA Rochelle Pullman Eleven Madison Avenue Controller United States New York, NY 10010 USA
Page of Pages EX-1 3 ex1to13d_041503.txt EXHIBIT 1 TO SCHEDULE 13D EXECUTION COPY =============================================================================== PURCHASE AGREEMENT for 9% EXCHANGEABLE SUBORDINATED NOTES DUE 2012 By and Among TXU CORP., TXU ENERGY COMPANY LLC AND UXT HOLDINGS LLC Dated as of November 18, 2002 =============================================================================== PURCHASE AGREEMENT, dated as of November 18, 2002 (the "Agreement"), by and among TXU Energy Company LLC (the "Company"), a Delaware limited liability company formed by TXU Corp., a Texas corporation ("TXU"), TXU and UXT Holdings LLC (the "Purchaser"). WHEREAS, the Company is the issuer of 9% Exchangeable Subordinated Notes due 2012 (the "Notes"), a form of which is attached hereto as Exhibit A; WHEREAS, the Company desires to sell, and the Purchaser desires to buy, $750 million principal amount of the Notes; and WHEREAS, in connection with the acquisition of the Notes by the Purchaser, and the sale of the Notes by the Company, the Purchaser, TXU and the Company will enter into the Ancillary Agreements. NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants hereinafter set forth, the Company, TXU and the Purchaser hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.01 Definitions. As used in this Agreement, the following terms shall have the following meanings: "Action" means any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority. "Affiliate" means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person; provided, however, that neither TXU Europe nor any of its Subsidiaries shall be deemed an Affiliate of TXU or any of its Affiliates unless this Agreement expressly provides otherwise. For the avoidance of doubt, TXU and its Affiliates shall be considered Affiliates of the Company and the Purchaser and its Affiliates shall not be considered Affiliates of the Company. "Agreement" shall have the meaning set forth in the Preamble. "Agreement Value" means, for each hedge agreement, on any date of determination, an amount determined in good faith by the Company equal to: (a) in the case of any hedge agreement documented pursuant to the Master Agreement, the amount, if any, that would be payable by or to the Company or any of its Subsidiaries to or from its counterparty to such hedge agreement, as if (i) such hedge agreement was terminated early on such date of determination and, (ii) the Company or such Subsidiary was the sole "Affected Party", and assumes second method and market quotation and adjusts for collateral positions, or (b) in the case of a hedge agreement traded on an exchange, the mark-to-market value of such hedge agreement, which will be the unrealized gain or loss 1 on such hedge agreement to the Company or such Subsidiary to such hedge agreement determined in good faith by the Company based on the settlement price of such hedge agreement on such date of determination, or (c) in all other cases, the mark-to-market value of such hedge agreement, which will be the unrealized gain or loss on such hedge agreement to the Company or such Subsidiary to such hedge agreement determined in good faith by the Company; capitalized terms used and not otherwise defined in this definition shall have the meaning set forth in the above described Master Agreement. "Ancillary Agreements" means the Exchange Agreement and the Registration Rights Agreement. "Assets" has the meaning set forth in Section 3.15. "Available Contracts" has the meaning set forth in Section 3.14. "Business" means the generation of electricity, wholesale energy trading, retail energy marketing, energy delivery and other energy-related services by TXU or any of its Subsidiaries. "Business Day" means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in the States of New York or Texas. "Claims" means any and all administrative, regulatory or judicial actions, suits, petitions, appeals, demands, demand letters, claims, liens, notices of noncompliance or violation, investigations, proceedings, consent orders or consent agreements. "Closing" shall have the meaning set forth in Section 2.02. "Closing Date" shall have the meaning set forth in Section 2.02. "Common Stock" means the common stock, without par value, of TXU. "Common Stock Equivalents" means any issuance of any warrants, options or subscription or purchase rights with respect to shares of Common Stock and the issuance of any securities convertible into or exchangeable for shares of Common Stock and the issuance of any warrants, options or subscription or purchase rights with respect to such convertible or exchangeable securities. "Company" shall have the meaning set forth in the Preamble. "Disclosure Schedule" means the schedule that modifies the representations, warranties or covenants of TXU and the Company contained herein to the extent that such representations, warranties, or covenants expressly refer to the Disclosure Schedule and which is an integral part of this Agreement. "Encumbrance" means any security interest, pledge, hypothecation, mortgage, lien (including, without limitation, environmental and tax liens), violation, charge, lease, 2 license, encumbrance, servient easement, adverse claim, reversion, reverter, preferential arrangement, restrictive covenant, condition or restriction of any kind, including, without limitation, any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership. "Environmental Claims" means any Claims relating in any way to any Environmental Law or any Environmental Permit, including, without limitation, (a) any and all Claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law and (b) any and all Claims by any Person seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the Environment. "Environmental Law" has the meaning set forth in Section 3.10. "ERCOT" has the meaning set forth in Section 5.08. "ERISA" has the meaning set forth in Section 3.16. "ERISA Affiliate" has the meaning set forth in Section 3.16. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Agreement" means the Exchange Agreement, to be entered into, by and between the Purchaser, the Company and TXU, pursuant to which the Notes may be exchanged for TXU Common Stock, substantially in the form of Exhibit B hereto. "Final Order" means action taken by the relevant regulatory authority relating to this Agreement or the transactions contemplated hereby which has not been reversed, stayed, enjoined, set aside, annulled or suspended, with respect to which any waiting period prescribed by law before the transactions contemplated hereby may be consummated has expired, and as to which all conditions to the consummation of such transactions prescribed by law, regulation or order have been satisfied. "Financial Statements" means the audited consolidated balance sheet of each of TXU, the Company and TXU Holdings for each of the last two fiscal years ended December 31, 2001 and 2000 and the related audited consolidated statements of income, retained earnings, stockholders' equity and changes in financial position, together with the related notes and schedules thereto, accompanied by the reports of accountants. "Form 8-K" means the Current Report on Form 8-K to be filed by TXU Holdings on behalf of the Company and disclosing the September 30, 2002 Interim Financial Statements of the Company. "Governmental Authority" means any United States or non-United States federal, national, supranational, state, provincial, local, or similar government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or 3 judicial or arbitral body, including the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission, the SEC or the appropriate state public utilities commission. "Governmental Order" means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority. "Hazardous Materials" means (a) petroleum and petroleum products, radioactive materials, asbestos-containing materials, urea formaldehyde foam insulation, transformers or other equipment that contain polychlorinated biphenyls and radon gas, (b) any other chemicals, materials or substances defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials", "extremely hazardous wastes", "restricted hazardous wastes", "toxic substances", "toxic pollutants", "contaminants" or "pollutants", or words of similar import, under any applicable Environmental Law, and (c) any other chemical, material or substance which is regulated by any Environmental Law. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder. "Indebtedness" of any Person means, without duplication, net of restricted cash and cash equivalents off-setting Indebtedness (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services (other than trade payables and accrued liabilities arising in the ordinary course of business), (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all capitalized lease obligations of such Person, (f) all obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities securing Indebtedness and all interest rate or foreign exchange hedging transactions valued at the Agreement Value thereof, (g) all unconditional obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any capital stock of such Person or any warrants, rights or options to acquire such capital stock, (h) all Indebtedness of any other Person of the type referred to in clauses (a) through (g) guaranteed by such Person or for which such Person shall otherwise (including pursuant to any keepwell, makewell or similar arrangement) become directly or indirectly liable (other than indirectly as a result of a performance guarantee not entered into with respect to Indebtedness), and (i) all third party Indebtedness of the type referred to in clauses (a) through (h) above secured by any lien or security interest on property (including accounts and contract rights) owned by the Person whose Indebtedness is being measured, even though such Person has not assumed or become liable for the payment of such third party Indebtedness, the amount of such obligation being deemed to be the lesser of the net book value of such property or the amount of the obligation so secured; provided that (i) true sales of accounts receivables and (ii) the obligations evidenced by the Notes, shall not constitute "Indebtedness" hereunder. 4 "Interim Financial Statements" means the unaudited consolidated balance sheet of each of TXU, the Company and TXU Holdings as of March 31, 2002, June 30, 2002 and September 30, 2002 and related consolidated statements of income, retained earnings, stockholders' equity and changes in financial position together with the related notes and schedules thereto (which, in the case of the September 30, 2002 Interim Financial Statements of the Company, were previously provided to the Purchaser in draft form and will be filed by TXU Holdings in final form with the SEC as part of the Form 8-K). "IRS" means the Internal Revenue Service of the United States. "Law" means any United States or non-United States federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, order, requirement or rule of law (including, without limitation, common law). "Liabilities" means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, including, without limitation, those arising under any Law (including, without limitation, any Environmental Law), Action or Governmental Order and those arising under any contract, agreement, arrangement, commitment or undertaking. "Loss" shall have the meaning set forth in Section 7.02. "Master Agreement" means the Master Agreement (Multi-Currency Cross Border) published by the International Swap and Derivatives Association, Inc. "Material Adverse Effect" means any circumstance, change in or effect on TXU or any of its Subsidiaries that, individually or in the aggregate with all other circumstances, changes in or effects on TXU, the Company or any Subsidiary is or is reasonably likely to be materially adverse to the business, operations, assets or liabilities (including, without limitation, contingent liabilities), results of operations or the financial condition of either (a) TXU and its Subsidiaries, taken as a whole, or (b) the Company and its Subsidiaries taken as a whole. "Membership Interest" means the membership interests in the Company, all of which are currently owned indirectly by TXU. "Notes" has the meaning set forth in the Recitals. "Nuclear Facility" has the meaning set forth in Section 3.20. "Permitted Transferee" has the meaning set forth in the Note. "Person" means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended. "Plans" has the meaning set forth in Section 3.16. 5 "Purchase Price" shall have the meaning set forth in Section 2.01. "Purchaser" shall have the meaning set forth in the Preamble. "Purchaser Indemnified Party" shall have the meaning set forth in Section 6.02(a). "Registration Rights Agreement" means the Registration Rights Agreement, to be entered into, by and among the Purchaser, the Company and TXU, substantially in the form of Exhibit C hereto. "Release" means disposing, discharging, injecting, spilling, leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing and the like into or upon any land or water or air or otherwise entering into the Environment. "Reports" has the meaning set forth in Section 3.09. "Rights Agreement" means the Rights Agreement, dated as of February 19, 1999, between Texas Utilities Company and The Bank of New York, as Rights Agent. "SEC" means the Securities and Exchange Commission. "SEC Reports" has the meaning set forth in Section 3.09. "Securities Act" shall have the meaning set forth in Section 3.08. "Structuring Fee" has the meaning set forth in Section 5.04. "Subsidiaries" means, with respect to any Person, "subsidiary company" as such term is defined in the 1935 Act and any and all corporations, partnerships, limited liability companies, joint ventures, associations and other entities controlled by such Person directly or indirectly through one or more intermediaries; provided, however that, neither TXU Europe nor any Subsidiary of TXU Europe shall be deemed a Subsidiary of TXU or any of its Affiliates unless this Agreement expressly provides otherwise. "Tax" or "Taxes" means any and all taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any government or taxing authority, including, without limitation, taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers' compensation, unemployment compensation, or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; license, registration and documentation fees; and customs' duties, tariffs, and similar charges. "Termination Date" has the meaning set forth in Section 8.01(b). "Transaction Expenses" has the meaning set forth in Section 9.02. 6 "TXU" has the meaning set forth in the Recitals. "TXU Europe" means TXU Europe Limited, an indirect wholly owned subsidiary of TXU. "TXU Holdings" means TXU US Holdings Company, a wholly owned subsidiary of TXU. "TXU Holdings Common Stock" means the common stock, without par value of TXU Holdings. "Unavailable Contracts" has the meaning set forth in Section 3.14. "U.S. GAAP" means the generally accepted accounting principles applied in the United States. "1935 Act" means the Public Utility Holding Company Act of 1935, as amended. ARTICLE II PURCHASE AND SALE OF Interests SECTION 2.01 Purchase and Sale of Interests. Subject to the fulfillment or waiver of the conditions precedent set forth in Article VI, the Company hereby agrees to issue and sell to the Purchaser, and the Purchaser hereby agrees to purchase from the Company, $750 million aggregate principal amount of the Notes for $750 million (the "Purchase Price"). SECTION 2.02 Closing. Subject to the terms and conditions of this Agreement, the issuance, sale and purchase of the Notes contemplated by this Agreement shall take place at a closing (the "Closing") to be held at the offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022, at 10:00 A.M., Eastern Standard Time on the later of (a) November 22, 2002 or (b) two Business Days following the satisfaction or waiver of all other conditions to the obligations of the parties set forth in Article VI (other than those conditions that by their nature are to be fulfilled at Closing), or at such other place or at such other time or such other date as the Purchaser and the Company shall mutually agree upon in writing (the date on which the Closing takes place being the "Closing Date"). SECTION 2.03 Closing Deliveries by the Company and TXU. At the Closing, the Company or TXU, as the case may be, shall deliver, or cause to be delivered, to the Purchaser: (a) the Notes, in such number and denomination as reasonably requested by the Purchaser in accordance with Section 6.04 of the Notes; and 7 (b) the certificates, opinions and other documents required to be delivered pursuant to Section 6.01 and any other certificates or documents reasonably requested by the Purchaser. SECTION 2.04 Closing Deliveries by the Purchaser. At the Closing, the Purchaser shall deliver, or cause to be delivered, to the Company: (a) the Purchase Price, net of the Structuring Fee and Transaction Expenses, by wire transfer in immediately available funds to an account designated in writing by the Company to the Purchaser not later than three Business Days prior to the Closing Date; and (b) the certificates, opinions and other documents required to be delivered pursuant to Section 6.02. ARTICLE III REPRESENTATIONS AND WARRANTIES OF TXU AND THE COMPANY As an inducement to the Purchaser to enter into this Agreement, TXU and the Company hereby jointly and severally represent and warrant to the Purchaser as follows: SECTION 3.01 Organization, Authority and Qualification of TXU and the Company. TXU is a corporation and the Company is a limited liability company, in each case, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, as the case may be, and has all necessary power and authority to enter into this Agreement and the Ancillary Agreements, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated by this Agreement and thereby. Each of TXU and the Company is duly licensed or qualified to do business and each is in good standing in each jurisdiction in which the properties owned or leased by them or the operation of their businesses make such licensing or qualification necessary, other than such failures to be so licensed or qualified and in good standing as would reasonably be expected not to be material. The execution and delivery of this Agreement and the Ancillary Agreements by each of TXU and the Company, the performance by each of TXU and the Company of their respective obligations hereunder and thereunder and the consummation by each of TXU and the Company of the transactions contemplated by this Agreement and thereby have been duly authorized by all requisite action on the part of each of TXU and the Company and their stockholders or members, as the case may be. This Agreement has been, and upon their execution and delivery, the Ancillary Agreements and the Notes shall have been, duly executed and delivered by each of TXU and the Company, and (assuming in the case of this Agreement and the Ancillary Agreements, due authorization, execution and delivery by the Purchaser) shall constitute, legal, valid and binding obligations of each of TXU and the Company, enforceable against each of TXU and the Company in accordance with their respective terms. 8 SECTION 3.02 Subsidiaries. (a) Other than as set forth in Section 3.02(i) of the Disclosure Schedule, TXU has no material Subsidiaries. Other than the Subsidiaries or as set forth in Section 3.02(ii) of the Disclosure Schedule, neither TXU nor any of its Subsidiaries is a member of (nor is any material part of the Business conducted through) any partnership nor is TXU or any of its Subsidiaries a participant in any joint venture or similar arrangement that is material to TXU or the Company. (b) Each Subsidiary of TXU that is a corporation: (i) is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, (ii) has all necessary power and authority to own, operate or lease the properties and assets owned, operated or leased by such Subsidiary and to carry on its business as it has been and is currently conducted by such Subsidiary and (iii) is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such licensing or qualification necessary or desirable, other than such failures to be licensed or qualified and in good standing as would be reasonably expected not to have a Material Adverse Effect. Each Subsidiary of TXU that is not a corporation: (i) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, (ii) has all necessary power and authority to own, operate or lease the properties and assets owned, operated or leased by such Subsidiary and to carry on its business as it has been and is currently conducted by such Subsidiary and (iii) is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such licensing or qualification necessary or desirable, other than such failures to be licensed or qualified and in good standing as would be reasonably expected not to have a Material Adverse Effect. (c) All corporate actions taken by each Subsidiary of TXU have been duly authorized by such Subsidiary (or its parent company, as the case may be) and no Subsidiary has taken any action that in any material respect conflicts with, constitutes a default under or results in a violation of any provision of its certificate of incorporation or by-laws (or similar organizational documents). SECTION 3.03 Capitalization. (a) The authorized capital stock of TXU consists of 1,000,000,000 shares of Common Stock and 50,000,000 shares of Preference Stock $25.00 par value per share ("Preference Stock"). As of November 8, 2002, (i) 287,136,570 shares of Common Stock were issued and outstanding, all of which are validly issued, fully paid and nonassessable, (ii) 813,000 shares of Preference Stock were issued and outstanding, all of which are validly issued, fully paid and nonassessable, and (iii) as of September 30, 2002, less than 10,000,000 shares of Common Stock were reserved for issuance pursuant to employee and director benefit plans. None of the issued and outstanding shares of Common Stock was issued in violation of any preemptive rights. Other than (i) any grants of stock, rights and stock options to employees and directors in the ordinary course of business under employee and director benefit plans, (ii) any issuances of rights under the Rights Agreement or (iii) any transactions under TXU's dividend reinvestment and direct stock purchase plan or (iv) as set forth in the SEC Reports, there are no options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the issuance of additional shares of Common Stock or Preference Stock by TXU. Other than as set forth in the SEC Reports, there 9 are no outstanding contractual obligations of TXU to repurchase, redeem or otherwise acquire any shares of Common Stock or Preference Stock or to provide funds to, or make any material investment (in the form of a loan, capital contribution or otherwise) in, any other Person. Other than as set forth in the SEC Reports, there are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the shares of Common Stock or Preference Stock to which TXU or any of its Subsidiaries is a party. (b) The Company is a limited liability company. TXU Holdings is the beneficial owner of all of the authorized, issued and outstanding Membership Interests of the Company (other than Membership Interests treated as held by the Purchaser for tax purposes). TXU is the direct or indirect beneficial owner of all of the issued and outstanding shares of voting capital stock of TXU Holdings. TXU Energy Trading Company LP, TXU Energy Retail Company LP and TXU Generation Holdings Company LLC are direct or indirect wholly owned Subsidiaries of the Company. (c) All the outstanding shares of capital stock of each of TXU's Subsidiaries that is a corporation are validly issued, fully paid, nonassessable and, except with respect to wholly owned Subsidiaries, free of preemptive rights and are owned by TXU, whether directly or indirectly, free and clear of all Encumbrances in all material respects. Other than any grants of directors' qualifying shares, there are no options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the issuance of additional shares of capital stock or other equity interests of any of TXU's material Subsidiaries or obligating TXU, TXU Holdings or any of their respective material Subsidiaries to issue or sell any shares of capital stock of, or any other interest in, any material Subsidiary. Other than (i) as set forth in the SEC Reports, (ii) pursuant to the transactions contemplated by this Agreement and the Ancillary Agreements or (iii) any proxy to vote in respect of the equity interests of TXU's Subsidiaries granted to the Chairman of the Board and Chief Executive Officer of TXU, there are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any shares of capital stock of or any other interests in any material Subsidiary to which TXU, TXU Holdings or any of their respective material Subsidiaries is a party. SECTION 3.04 No Conflict. The execution, delivery and performance of this Agreement and the Ancillary Agreements by TXU and the Company do not and will not (a) violate, conflict with or result in the breach of any provision of the certificate of incorporation and by-laws of TXU or similar organizational documents of the Company or any of their respective Subsidiaries, (b) conflict with or violate any Law or Governmental Order applicable to TXU, the Company, any of their respective Subsidiaries or any of their respective assets, properties or businesses including, without limitation, the Business, or (c) conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the shares of Common Stock, any of the assets of TXU or any of the Membership Interests or any of the assets of the Company pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or 10 other instrument or arrangement to which TXU, the Company or any of their respective Subsidiaries is a party or by which any of the shares of Common Stock, any of the assets of TXU or any of the Membership Interests or any of such assets or properties is bound or affected, other than such conflicts or violations as would not reasonably be expected to have a Material Adverse Effect. SECTION 3.05 Governmental Consents and Approvals. Other than as set forth in Section 3.05 of the Disclosure Schedule, the execution, delivery and performance of this Agreement by TXU and the Company do not and will not require any consent, approval, authorization or other order of, action by, filing with or notification to, any Governmental Authority. SECTION 3.06 Compliance with Laws. (a) TXU and the Company have conducted and continue to conduct their respective businesses, in all material respects, in accordance with all Laws and Governmental Orders applicable to them or any of their respective Subsidiaries or any of their respective properties or assets, including, without limitation, their Assets, and neither TXU, the Company nor any of their respective Subsidiaries are in violation in any material respect of any such Law or Governmental Order. (b) No such Governmental Order has or could affect the legality, validity or enforceability of this Agreement, any Ancillary Agreement or the consummation of the transactions contemplated by this Agreement or thereby. SECTION 3.07 Financial Information; Books and Records. (a) The Financial Statements and the Interim Financial Statements (i) were prepared in accordance with the books of account and other financial records of TXU and its consolidated Subsidiaries including TXU Europe and its Subsidiaries, (ii) present fairly the consolidated financial condition and results of operations of TXU and its consolidated Subsidiaries including TXU Europe and its Subsidiaries as of the dates thereof or for the periods covered thereby, and (iii) have been prepared in accordance with U.S. GAAP applied on a basis consistent with past practices and (iv) include all adjustments (consisting only of normal recurring accruals) that are necessary for a fair presentation of consolidated financial condition and results of the operations as of the dates thereof or for the periods covered thereby. (b) The books of account and other financial records of TXU and its consolidated Subsidiaries including TXU Europe and its Subsidiaries: (i) reflect all items of income and expense and all assets and Liabilities required to be reflected therein in accordance with U.S. GAAP applied on a basis consistent with past practices, (ii) are in all material respects complete and correct, and do not contain or reflect any material inaccuracies or discrepancies and (iii) have been maintained in accordance with good business and accounting practices. SECTION 3.08 Litigation. Except as set forth in Section 3.08 of the Disclosure Schedule or as disclosed in the SEC Reports, (a) there are no material Actions (i) by or against TXU or any of its material Subsidiaries or by or against TXU or any Affiliate thereof and relating to the Business, TXU or any of its material Subsidiaries or (ii) affecting any of the assets of TXU or its material Subsidiaries or the Business pending before any Governmental Authority 11 (or, to the actual knowledge of TXU, threatened to be brought by or before any Governmental Authority) and (b) neither TXU nor any of its material Subsidiaries or any of their respective assets or properties, including, without limitation, the Assets, is subject to any material Governmental Order (nor, to the actual knowledge of TXU, are there any such material Governmental Orders threatened to be imposed by any Governmental Authority). SECTION 3.09 Reports. The filings required to be made (the "Reports") by TXU and its Subsidiaries under the Securities Act of 1933, as amended (the "Securities Act"), the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Texas Utilities Code, the Federal Power Act, the Natural Gas Act or the 1935 Act have been filed with the SEC, the Federal Energy Regulatory Commission or the Texas Public Utility Commission, as the case may be, including all forms, statements, reports, written agreements and all documents, exhibits, amendments and supplements appertaining thereto, and TXU and its Subsidiaries, as the case may be, have complied in all material respects with all applicable requirements of the appropriate act and the rules and regulations thereunder. As of their respective dates, the Reports filed with the SEC under the Exchange Act, the Securities Act or the 1935 Act (the "SEC Reports") did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. To the extent applicable, the statutory certification requirements of Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002 have been complied with in all respects by TXU and its Subsidiaries. SECTION 3.10 Environmental and Other Permits and Licenses; Related Matters. Except as set forth in the Financial Statements, Interim Financial Statements or the SEC Reports, (a) TXU and each of its Subsidiaries has complied in all material respects with all federal, state, local and other statutes, ordinances, orders, judgments, rulings, regulations and legally binding interpretations thereof, relating to the environment, pollution, natural resources, health and safety, and nuclear regulation or control, including, without limitation, any permits, approvals or other authorizations required by such, (together, "Environmental Laws") and all material past noncompliance with Environmental Laws has been resolved without any pending, ongoing or future obligation, cost or liability; (b) neither TXU nor any of its Subsidiaries has received any written notice from any entity, whether governmental or otherwise, alleging failure to comply with, or any material liability under, any Environmental Laws, and to the actual knowledge of TXU and any of its Subsidiaries, no such written notices are threatened; (c) there has been no Release of any quantities or concentrations of Hazardous Material at, on or emanating to or from any facilities and properties currently or formerly owned, operated, leased, used or occupied by TXU or any of its Subsidiaries that have or will result in a material liability imposed on TXU or its Subsidiaries; and (d) TXU and each of its Subsidiaries are aware of no events, conditions or circumstances that could reasonably be expected to give rise to any material liability under any Environmental Law. SECTION 3.11 Regulation as a Utility. No Subsidiary of TXU is a "public utility company" under the 1935 Act, other than Oncor Electric Delivery Company and TXU Gas Company. No Subsidiary of TXU other than Oncor Electric Delivery Company is an "electric utility" under the Texas Utilities Code and no Subsidiary of TXU is a "gas utility" under the Texas Utilities Code other than TXU Gas Company, TXU Fuel Company and Lone Star Gas Company of Texas, Inc. No Subsidiary of TXU is subject to any material regulation as 12 a public utility or public service company (or similar designation) by any state of the United States (other than the State of Texas). (b) TXU and the Company and each of their respective Subsidiaries are exempt from all provisions of the 1935 Act and rules and regulations thereunder, except for Sections 9(a)(2) and 33 of such Act and rules and regulations thereunder, and the execution, delivery and performance by TXU and the Company of this Agreement, and their respective obligations hereunder, do not violate any provision of the 1935 Act or any rule or regulation thereunder. SECTION 3.12 Authorization of Notes. On or prior to the Closing Date, the Company will have duly authorized and issued the Notes and the Notes will be legally valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforceability thereof may be (i) subject to applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization or similar laws in effect which affect the enforcement of creditors' rights generally and (ii) limited by general principles of equity (whether considered in a proceeding at law or equity). SECTION 3.13 Absence of Certain Changes or Events; Absence of Undisclosed Liabilities. (a) Except as set forth in the SEC Reports filed prior to the date hereof, from December 31, 2001 through the date hereof, TXU, TXU Holdings, the Company and their Subsidiaries have conducted the Business only in the ordinary course of business consistent with past practice and there has not been, and no fact or condition exists which would have or, insofar as reasonably can be foreseen, could have a Material Adverse Effect. (b) Other than as disclosed in the Financial Statements, and only to the extent not inconsistent with the Interim Financial Statements for the quarter ended September 30, 2002, neither TXU, the Company nor any of their respective Subsidiaries have any liabilities or obligations (whether absolute, accrued, contingent or otherwise), other than (i) related to the transactions contemplated by this Agreement, (ii) Liabilities, obligations or contingencies that are accrued or reserved against in the consolidated financial statements of TXU, TXU Holdings or the Company or reflected in the notes thereto for the quarter ended September 30, 2002, (iii) which were incurred after September 30, 2002 in the ordinary course of business and would not be reasonably expected to have a Material Adverse Effect or (iv) would not be required by U.S. GAAP to be reflected in a consolidated corporate balance sheet. SECTION 3.14 Material Contracts. (a) TXU and TXU Holdings have filed with the SEC all reports and exhibits required to be filed under Regulation S-K of the Securities Act as attachments to their respective SEC Reports filed prior to the date hereof, including all material contracts (the "Available Contracts"). Section 3.14 of the Disclosure Schedule sets forth all other material contracts of TXU, TXU Holdings and the Company (other than this Agreement and the Ancillary Agreements) that are required to be filed with the SEC in the future, pursuant to Regulation S-K of the Securities Act, as attachments to the SEC Reports of TXU and TXU Holdings (the "Unavailable Contracts" and, together with the Available Contracts and all other contracts material to the operation or conduct of the Business, including, without limitation, any material contracts relating to or for Indebtedness, non-competition, 13 transactions with Affiliates, transactions not in the ordinary course of business or transactions with any Governmental Authority, the "Material Contracts"). (a) Each Material Contract: (i) is valid and binding on the parties thereto and is in full force and effect and (ii) upon consummation of the transactions contemplated by this Agreement and the Ancillary Agreements shall continue in full force and effect without penalty or other adverse consequence. Neither TXU nor any of its Subsidiaries is in breach of, or default under, any Material Contract. (b) To the actual knowledge of TXU and the Company, no other party to any Material Contract is in breach thereof or default thereunder and none of TXU or any of its Subsidiaries has received any notice of termination, cancellation, breach or default under any Material Contract. SECTION 3.15 Assets. (a) TXU or a Subsidiary of TXU, owns, leases or has the legal right to use all properties and assets, used or intended to be used in, and material to, the conduct of the Business and, with respect to contract rights, is a party to and enjoys the right to the benefits of all contracts, agreements and other arrangements used or intended to be used by (as such relate to the Business) TXU or any of its Subsidiaries, and material to, the conduct of the Business, all of which properties, assets and rights constitute "Assets". Each of TXU, the Company or any of their respective Subsidiaries, as the case may be, has good and marketable title to, or, in the case of leased or subleased Assets, valid and subsisting leasehold interests in, all the Assets, free and clear of all Encumbrances that impair in any material respect the ability of such entity to use such Assets in the manner they are used or intended to be used. (b) The Assets constitute all the properties, assets and rights forming a part of, used, held or intended to be used in, and all such properties, assets and rights as are necessary in, and material to, the conduct of, the Business. TXU and the Company have caused all Assets to be maintained in accordance with good business practice, and all Assets are in good operating condition and repair and are suitable for the purposes for which they are used and intended. SECTION 3.16 Employee Benefit Matters. Each "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and each other material plan, policy, program, practice, agreement, understanding or arrangement maintained, sponsored or contributed to by TXU, or by any trade or business (whether or not incorporated) that together with TXU would be deemed a "single employer" within the meaning of Section 4001(b) of ERISA (an "ERISA Affiliate") (collectively, the "Plans"), has been operated and administered in all material respects in accordance with its terms and all applicable Law, including, but not limited to, ERISA and the Code, except to the extent that such operation and administration would not reasonably be expected to have a Material Adverse Effect. With respect to the Plans except for matters disclosed in Financial Statements of TXU or the Plans, no event has occurred and, to the knowledge of TXU and its ERISA Affiliates, there exists no condition or set of circumstances in connection with which TXU or its ERISA Affiliates could be subject to any Liability (other than routine claims for benefits) under the terms of the Plans, ERISA, the Code or any other applicable Law that has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. All 14 contributions or payments required to be made under each Plan, by reason of Part 3 of Subtitle B of Title I of ERISA, Section 412 of the Code, or the terms of the Plan, have been and will be timely made. No Liability has been incurred under, arising out of or by operation of Title IV of ERISA (other than liability to the Pension Benefit Guaranty Corporation for premiums arising in the ordinary course), and to the knowledge of TXU and its ERISA Affiliates no fact or event exists which could reasonably be expected give rise to any such Liability, except to the extent that any such Liability would not reasonably be expected to have a Material Adverse Effect. SECTION 3.17 Taxes. (a) All returns and reports in respect of Taxes ("Tax Returns") required to be filed by or with respect to TXU and each Subsidiary of TXU (including any consolidated, combined or unitary Tax Returns) have been timely filed; (b) all Taxes required to be shown on such Tax Returns or otherwise due have been timely paid; (c) all such Tax Returns are true, correct and complete in all material respects; (d) except for adjustments, actions or proceedings in respect of which adequate reserves have been established in accordance with U.S. GAAP applied on a basis consistent with past practices (i) no adjustment relating to such Tax Returns has been proposed formally or informally by any Tax authority and, to the actual knowledge of TXU, no basis exists for any such adjustment and (ii) there are no pending or, to the actual knowledge of TXU, threatened actions or proceedings for the assessment or collection of Taxes against TXU or any Subsidiary of TXU or any corporation that was included in the filing of a Tax Return with TXU or the Company on a consolidated or combined basis; (e) there are no Tax liens on any assets of TXU or any Subsidiary of TXU; (f) immediately prior to the Closing, the Company is classified as a partnership (and not as an association, or publicly-traded partnership, taxable as a corporation) for U.S. federal income Tax purposes; and (g) neither the Company nor any Subsidiary of the Company has any (A) income reportable for a period ending after the Closing Date but attributable to a transaction (e.g., an installment sale) occurring in or a change in accounting method made for a period ending on or prior to the Closing Date that resulted in a deferred reporting of income from such transaction or from such change in accounting method (other than a deferred intercompany transaction), or (B) deferred gain or loss arising out of any deferred intercompany transaction. SECTION 3.18 Insurance. All material assets, properties and risks of TXU and any of its Subsidiaries are, and for the past five years have been, covered by valid and, except for insurance policies that have expired under their terms in the ordinary course, currently effective insurance policies or binders of insurance (including, without limitation, general liability insurance, property insurance and workers' compensation insurance) issued in favor of TXU or a Subsidiary of TXU, as the case may be, in such types and amounts and covering such risks as are consistent with customary practices and standards of companies engaged in businesses and operations similar to those of TXU, or such Subsidiary, as the case may be. SECTION 3.19 Full Disclosure. (a) Neither TXU nor any Subsidiary of TXU has actual knowledge of any facts pertaining to TXU, any Subsidiary of TXU or the Business which could reasonably be expected to have a Material Adverse Effect and which have not been disclosed to the Purchaser in this Agreement, the Financial Statements, the Interim Financial Statements or the SEC Reports. (b) The representations or warranties of TXU and the Company in this Agreement, and all written statements and certificates furnished or to be furnished to the 15 Purchaser pursuant to this Agreement, or in connection with the transactions contemplated by this Agreement, taken as a whole do not contain or will not contain any untrue statement of a material fact, or do not or will not omit to state a material fact necessary to make the statements contained herein or therein not misleading. SECTION 3.20 Operations of Nuclear Power Plant . The operation of the nuclear generation plant (the "Nuclear Facility") wholly owned by the Company is being conducted in substantial compliance with current laws and regulations governing nuclear plant operations. The Nuclear Facility maintains and is in substantial compliance with emergency evacuation plans as required by the laws and regulations governing nuclear plant operations and as of the date of this Agreement, the storage of spent nuclear fuel and the plans for the decommissioning of the Nuclear Facility substantially conform with the requirements of applicable law. SECTION 3.21 TXU Europe. (a) Except for Liabilities arising from the matters set forth on Section 3.21 of the Disclosure Schedule, neither TXU nor any of its Subsidiaries, are liable to or for any Liability, including Indebtedness, of TXU Europe and its Subsidiaries. (b) Except as set forth on Section 3.21 of the Disclosure Schedule and as would not individually or in the aggregate be material, no contract, agreement, arrangement, license, lease, note, guarantee, mortgage, commitment or understanding exists between TXU and its Subsidiaries, on the one hand, and TXU Europe and its Subsidiaries, on the other hand. SECTION 3.22 Nature of Operations. TXU and the Company are primarily engaged directly or through their majority owned Subsidiaries in the production or sale of a product or service other than the investment of capital. SECTION 3.23 Investment Company. Neither TXU nor the Company is an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER As an inducement to the Company to enter into this Agreement, the Purchaser hereby represents and warrants to the Company as follows: SECTION 4.01 Organization and Authority of the Purchaser. The Purchaser is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all necessary power and authority to enter into this Agreement and the Ancillary Agreements to which it is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated by this Agreement. The execution and delivery by the Purchaser of this Agreement and the Ancillary Agreements, the performance by the 16 Purchaser of its obligations hereunder and thereunder and the consummation by the Purchaser of the transactions contemplated by this Agreement have been duly authorized by all requisite action on the part of the Purchaser. This Agreement has been, and upon their execution and delivery the Ancillary Agreements shall be duly executed and delivered by the Purchaser, and (assuming due authorization, execution and delivery by the Company) this Agreement and the Ancillary Agreements shall constitute legal, valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with its terms. SECTION 4.02 No Conflict. The execution, delivery and performance by the Purchaser of this Agreement and the Ancillary Agreements do not and will not (a) violate, conflict with or result in the breach of any provision of the organizational documents of the Purchaser, (b) conflict with or violate any Law or Governmental Order applicable to the Purchaser or (c) conflict with, or result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Purchaser is a party, which would adversely affect the ability of the Purchaser to carry out its obligations under, and to consummate the transactions contemplated by, this Agreement or by the Ancillary Agreements, except in the case any of the foregoing that would not be reasonably expected to have a material adverse effect. SECTION 4.03 Governmental Consents. Except as set forth in Section 3.05 of the Disclosure Schedule, the execution, delivery and performance of this Agreement by the Purchaser do not and will not require any consent, approval, authorization or other order of, action by, filing with or notification to any Governmental Authority. SECTION 4.04 Financing. The Purchaser has or will have at Closing sufficient funds to consummate the transactions contemplated in this Agreement. SECTION 4.05 Private Placement. (a) The Purchaser understands that the offering and sale of the Notes and the Common Stock by the Company is intended to be exempt from registration under the Securities Act pursuant to Section 4(2) thereof. (b) The Purchaser is an "accredited investor" as such term is defined in Rule 501(a) of Regulation D under the Securities Act. (c) The Purchaser is acquiring the Notes to be acquired hereunder (and will acquire the Common Stock upon exchange pursuant to the Exchange Agreement) for its own account (or for accounts over which it exercises investment authority), for investment and not with a view to the public resale or distribution thereof, in violation of any securities law. ARTICLE V ADDITIONAL AGREEMENTS SECTION 5.01 Conduct of Business Prior to the Closing. (a) TXU covenants and agrees that, between the date hereof and the time of the Closing, TXU shall, and shall cause 17 each of its Subsidiaries to, conduct their respective businesses in the ordinary course and consistent with TXU's and such Subsidiary's prior practice and in compliance in all material respects with all applicable Laws. TXU shall not, and shall cause each of its Subsidiaries not to, take any action that would, or that is reasonably likely to, result in any of the representations and warranties of TXU set forth in Article III (i) that are not qualified by "materiality" or "material" or "Material Adverse Effect" to be untrue in any material respect and (ii) that are qualifed by "materiality" or "material" or "Material Adverse Effect" to be untrue in any respect, as of the date made or as of the Closing Date or in any of the conditions to the transactions contemplated hereby and set forth herein not being satisfied. (b) The Company covenants and agrees that, between the date hereof and the time of the Closing, the Company shall, and shall cause each of its Subsidiaries to, conduct their respective businesses in the ordinary course and consistent with the Company's and such Subsidiary's prior practice and in compliance in all material respects with all applicable Laws. The Company shall not, and shall cause each of its Subsidiaries not to, take any action that would, or that is reasonably likely to, result in any of the representations and warranties of the Company set forth in Article III (i) that are not qualified by "materiality" or "material" or "Material Adverse Effect" to be untrue in any material respect and (ii) that are qulaifed by "materiality" or "material" or "Material Adverse Effect" to be untrue in any respect, as of the date made or as of the Closing Date or in any of the conditions to the consummation of the transactions contemplated hereby and set forth herein not being satisfied. SECTION 5.02 Access to Information. (a) From the date hereof until the Closing, upon reasonable prior notice, TXU shall cause its officers, directors, employees, agents, representatives, accountants and counsel and shall cause its Subsidiaries and each of its Subsidiaries' officers, directors, employees, agents, representatives, accountants and counsel to: afford the officers, employees, agents, accountants, counsel, financing sources and representatives of the Purchaser reasonable access, during normal business hours, to the offices, properties, plants, other facilities, books and records of the Business and each Subsidiary and to those officers, directors, employees, agents, accountants and counsel of the Company and of each of its Subsidiaries who have any knowledge relating to the Company, any Subsidiary or the Business. (b) From the date hereof until the Closing, upon reasonable prior notice, TXU shall use its reasonable best efforts to cause TXU Europe and each of TXU Europe's officers, directors, employees, agents, representatives, accountants and counsel to: afford the officers, employees, agents, accountants, counsel, financing sources and representatives of the Purchaser reasonable access, during normal business hours, to the offices, properties, plants, other facilities, books, records of TXU Europe and each of its Subsidiaries and to those officers, directors, employees, agents, accountants and counsel of TXU Europe and its Subsidiaries who have knowledge relating to TXU Europe or its Subsidiaries. SECTION 5.03 Notice of Developments. Prior to the Closing, to the extent TXU or any of its Subsidiaries has actual knowledge, TXU shall promptly notify the Purchaser in writing of (a) all events, circumstances, facts and occurrences arising subsequent to the date of this Agreement which could reasonably be expected to result in any breach of a representation or 18 warranty or covenant of TXU or the Company in this Agreement or which could have the effect of making any representation or warranty of TXU or the Company in this Agreement untrue or incorrect in any respect and (b) all other material developments affecting the assets, liabilities, business, financial condition, or results of operations of TXU or any of its Subsidiaries (including TXU Europe and its Subsidiaries, but only to the extent such developments could reasonably be expected to have a Material Adverse Effect. SECTION 5.04 Structuring Fee. At the Closing, the Purchaser shall deduct from the Purchase Price (a) an amount equal to the product of Purchase Price multiplied by .0133 as a fee for the assistance of DLJ Merchant Banking III, Inc.'s in structuring the transactions contemplated by this Agreement (the "Structuring Fee") and (b) in accordance with Section 9.02 of this Agreement, any and all Transaction Expenses incurred through the Closing Date. SECTION 5.05 Amended and Restated Limited Liability Company Agreement of the Company. The Purchasers and TXU agree that, promptly following the date hereof and in any event, prior to the Closing Date, TXU shall cause the amendment and restatement of the Limited Liability Company Agreement of the Company, dated as of November 12, 2001, in form and substance reasonably satisfactory to the Purchasers and TXU. SECTION 5.06 Further Action. (a) Each party hereto shall use its reasonable best efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things necessary, proper or advisable under applicable Law, and execute and deliver such documents and other papers as may be required to carry out the provisions of this Agreement and the Ancillary Agreements and consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements. (b) Each party hereto shall, and shall cause its Subsidiaries to, cooperate and use its reasonable best efforts to (i) promptly prepare and file with the appropriate Governmental Authorities all necessary reports, applications, petitions, forms, notices or other applicable documents required or advisable with respect to the transactions contemplated by this Agreement and the Ancillary Agreements, (ii) comply, at the earliest practicable date following the date of receipt by Purchaser or the Company, with any request for information or documents from a Governmental Authority related to, and appropriate in the light of, matters within the jurisdiction of such Governmental Authority, provided that (x) the parties shall use their reasonable best efforts to keep any such information confidential to the extent required by the party providing the information and (y) each party may take, in its reasonable discretion, appropriate legal action not to provide information relating to trade or business secrets, privileged information or other information which reasonably should be treated as confidential, (iii) take all actions necessary or advisable to obtain no later than the Termination Date all necessary permits, consents, approvals and authorizations of all Governmental Authorities necessary or advisable to consummate the transactions contemplated by this Agreement and the Ancillary Agreements and (iv) oppose vigorously any litigation that would impede or delay the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements, including, without limitation, promptly appealing any adverse court order. 19 SECTION 5.07 Taxes. TXU and the Company each covenants that: (a)(i) For all U.S. federal, state, local and foreign income Tax purposes, the Note shall be treated as a preferred equity interest in the Company (including amounts deducted from the Purchase Price in respect of the Structuring Fee and Transaction Expenses pursuant to Section 2.04(a) hereof), and unless prohibited by applicable law, TXU shall cause the Company to elect to be classified as a partnership (and not as an association, or publicly-traded partnership, taxable as a corporation). (ii) Accordingly, TXU and the Company shall cause a capital account shall be maintained for the holder in accordance with section 1.704-2(b)(2) of the U.S. Treasury regulations, which shall be increased to reflect the amounts invested by the holder in the Company and allocations of net profits (or, to the extent required, items of income and gain), and which shall be reduced to reflect distributions by the Company to the holder (including amounts payable pursuant to the terms of the Note) and allocations of net losses (or, to the extent required, items of deduction or loss). (iii) Promptly following the end of each fiscal year of the Company (and in no event later than 90 days after the close of such fiscal year), TXU and the Company shall cause to be provided to the holder an IRS Schedule K-1, reporting the holder's share of the taxable income or loss of the Company, and such separately stated items of income, gain, loss, deduction or credit as required by U.S. federal income Tax law, and TXU and the Company also shall cause to be provided such information as shall be required or reasonably requested by the holder for purposes of allowing the holder to prepare and file its U.S. federal, state, local and foreign income Tax returns. (iv) In the event that the Note is exchanged by the holder for a membership interest in the Company (at the option of the Company or otherwise), TXU and the Company each covenants that, consistent with the U.S. federal, state, local and foreign income Tax treatment of the Note as a preferred equity interest in the Company, such an exchange shall be treated as a "nonrecognition transaction" under section 721 of the Internal Revenue Code of 1986, as amended. (v) Other than any elections made upon the conversion of the Company to a partnership for federal Tax purposes (which shall be made consistent with past practice, where applicable), the Company (including any tax matters member thereof in its capacity as such) shall not, and TXU shall cause the Company not to (including for the period after the date hereof through the Closing), make, revoke or change any express or deemed Tax election or change any method of Tax accounting if objected to in writing by the Holders' Tax Representative within 15 days of receiving notice thereof from the Company (which objection shall not be unreasonably made, and the Company shall consult with the Holders' Tax Representative and keep such Holder reasonably informed as to any material Tax claim, audit or proceeding that, in any case, the Company determines in good faith could affect the tax treatment of a Holder as owner of a preferred equity interest in the Company or the amount or tax character of any Tax item allocated or to be allocated to the Holder in its capacity as owner. "Holders' Tax Representative" means a representative designated as such by a Majority in Voting Interest. (b) (i) For each fiscal year of the Company, net profits (or, if required, items of income and gain) shall be allocated to the holder for U.S. federal, state, local and foreign income Tax purposes only to the extent of the amount of interest actually paid to the holder in respect of the Note during such fiscal year. (ii) No other net profits or losses (or items of income, gain, loss or deduction) shall be allocated to the holder for such purposes, except that, if no member of the Company has a positive capital account balance, the holder may be allocated a proportionate share of the net losses of the Company, if any, until its capital account has been reduced to zero. (iii) In the event that the holder receives an allocation of net losses hereunder, the holder thereafter shall be entitled to allocations of net profits (and, if required, items of 20 income or gain) so that the holder's capital account will equal the amount that the holder would be entitled to receive pursuant to the terms of the Note in connection with the liquidation or winding up of the Company. (iv) Notwithstanding anything to the contrary herein, the holder shall not be allocated any capital losses of the Company. (c) Notwithstanding anything to the contrary herein, prior to any exchange of the Note for a membership interest in the Company the holder shall not be considered a member of the Company by reason of its ownership of the Note for any purpose other than U.S. federal, state, local and foreign income Tax purposes, and shall not have the rights and obligations of a member pursuant to the Limited Liability Company Agreement of the Company. (d) The Company shall, and TXU shall cause the Company to, prepare and file all Tax Returns with respect to the Company (in a manner consistent with the intended Tax treatment of the Notes pursuant to this Section 5.07), and to pay or cause to be paid all Taxes due with respect to the income and operations of the Company (other than income Taxes of the holders of Notes (or substitute preferred equity interests) in relation to income of the Company that passes through pursuant to the treatment of the Company as a partnership for Tax purposes). (e) Notwithstanding anything to the contrary herein, the Company and TXU shall be liable for and shall hold the Purchaser harmless against any real property transfer or gains, sales, use, transfer, value added, stock transfer, and stamp taxes, any transfer, recording, registration, and other fees and any similar Taxes that become payable in connection with the transactions contemplated by this Agreement. The Company and TXU, after the review and consent by the Purchaser, shall file such applications and documents as shall permit any such Tax to be assessed and paid on or prior to the Closing Date in accordance with any available pre-sale filing procedure. (f) The Purchaser covenants that it will, and that it will cause its transferees that are Permitted Transferees to, treat the Notes for all federal income Tax purposes consistently with the treatment to which TXU and the Company have agreed pursuant to this Section 5.07. SECTION 5.08 Generation Capacity. Purchaser represents and warrants to TXU and the Company that it does not own and control, and agrees that it will not acquire ownership and control of, installed generation capacity within the Electric Reliability Council of Texas ("ERCOT") in an amount that would cause the Company to be deemed to own and control more than 20% of the installed generation capacity located in ERCOT in violation of Section 39.154 of the Texas Utility Code and the Substantive Rules of the Public Utility Commission of Texas. SECTION 5.09 Securities Issuances. From the date hereof until the Closing, TXU shall not issue or sell in any manner whatsoever any Common Stock or Common Stock Equivalents if such issuance or sale would result in an adjustment of the Note Exercise Price (as defined in the Exchange Agreement) if the Exchange Agreement were executed as of the date hereof. 21 ARTICLE VI CONDITIONS TO CLOSING SECTION 6.01 Conditions to Obligations of the Purchaser. The Purchaser's obligation to purchase and to pay for the Notes on the Closing Date shall be subject to the satisfaction or waiver of each of the following conditions precedent on or prior to the Closing Date: (a) Representations, Warranties and Covenants. (i) The representations and warranties of TXU and the Company contained in this Agreement (1) that are not qualified by "materiality" or "material" or "Material Adverse Effect" shall have been true and correct in all material respects when made and shall be true and correct in all material respects as of the Closing Date with the same force and effect as if made as of the Closing Date and (2) that are qualified by "materiality" or "material" or "Material Adverse Effect" shall have been true and correct when made and shall be true and correct as of the Closing Date, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct as of that date, in each case, with the same force and effect as if made as of the Closing Date, other than such representations and warranties as are made as of another date and (ii) the covenants and agreements contained in this Agreement to be complied with by TXU and the Company on or before the Closing Date shall have been complied with in all material respects, and the Purchaser shall have received a certificate of each of TXU and the Company to such effect signed by a duly authorized officer thereof; (b) Closing Certificates. On or prior to the Closing Date, the Purchaser shall have received certificates dated the Closing Date and signed, respectively, by an authorized officer of the Company or TXU, as the case may be, in form and substance reasonably satisfactory to the Purchaser as to the incumbency and signature of the certifying party's representative authorized to execute and deliver, as may be required hereunder, documents on its behalf in connection with the transactions contemplated hereby; (c) No Material Adverse Effect. No event or events shall have occurred, or be reasonably likely to occur, which, individually or in the aggregate, have, or could have, a Material Adverse Effect; (d) Ancillary Agreements. TXU and the Company shall have executed and delivered to the Purchaser each of the Ancillary Agreements to which it is a party; (e) Issuance of the Notes. All actions required by any applicable Law or necessary in the reasonable opinion of the Purchaser to issue the Notes shall have been duly taken (or provisions therefor shall have been made), including, without limitation, the making of all registrations and filings, and all necessary consents shall have been received; 22 (f) No Events. On and as of the Closing Date, immediately prior to and after giving effect to the transactions contemplated by this Agreement and the Ancillary Agreements, no event that with the giving of notice, the passage of time, or both, shall have occurred and be continuing and no condition shall exist that constitutes, or with the giving of notice, the passage of time, or both, would constitute, an event of default hereunder or thereunder; (g) Opinion of Counsel. The Purchaser shall have received from Thelen Reid & Priest LLP or Hunton & Williams, legal opinions (i) in the case of the sale of Notes by the Company, that no approval is required by the Federal Energy Regulatory Commission, the SEC, the Nuclear Regulatory Commission or the Texas Public Utility Commission, (ii) in the case of the exchange of Notes into Common Stock, that no approval is required by the Federal Energy Regulatory Commission or the Texas Public Utility Commission and such other matters as may be agreed by the parties and (iii) certain corporate matters, including enforceability and no conflict with law or contract. (h) Approval of Governmental Authorities. Any authorization, consent or approval of any Governmental Authority necessary for the execution, delivery and performance of this Agreement by TXU and the Company shall have been obtained prior to the Closing and such authorizations, consents and approvals shall have become Final Orders. (i) No Proceeding or Litigation. No Action shall have been commenced by or before any Governmental Authority, and no Governmental Order shall exist, to set aside, restrain, enjoin or otherwise prevent the execution, delivery or performance of this Agreement, the Ancillary Agreements or any other documents executed in connection herewith or therewith, or the consummation of the transactions contemplated hereby or thereby or that could in the reasonable judgment of the Purchaser adversely alter the transactions contemplated hereby or thereby; (j) No Violation. There shall have been no violation of any applicable Law in effect as of the Closing Date as a result of or giving effect to the transactions contemplated hereby or as contemplated by the Ancillary Agreements or by any party hereto or thereto and the Purchaser shall not be subject to any penalty or liability under or pursuant to any applicable Law in effect as of the Closing Date by virtue of the transactions contemplated hereby or thereby; and SECTION 6.02 Conditions to Obligations of the Company. The obligation of the Company to sell the Notes on the Closing Date shall be subject to the satisfaction or waiver of each of the following conditions precedent on or prior to the Closing Date: (a) Representations and Warranties. The representations and warranties of the Purchaser contained in this Agreement (i) that are not qualified by "materiality" or "material" or "Material Adverse Effect" shall have been true and correct in all material respects when made and shall be true and correct in all material respects as of the Closing Date with the same force and effect as if made as of the Closing Date and (ii) that are qualified by "materiality" or "material" or "Material Adverse Effect" shall have been true 23 and correct when made and shall be true and correct of the Closing Date, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct as of that date, in each case, with the same force and effect as if made as of the Closing Date, other than such representations and warranties as are made as of another date and (ii) the covenants and agreements contained in this Agreement to be complied with by the Purchaser on or before the Closing Date shall have been complied with in all material respects, and the Company shall have received a certificate of the Purchaser to such effect signed by a duly authorized officer thereof; and (b) Closing Certificates. On or prior to the Closing Date, the Company shall have received a certificate dated the Closing Date and signed by an authorized officer of the Purchaser in form and substance reasonably satisfactory to the Company as to the incumbency and signature of the certifying party's representative authorized to execute and deliver, as may be required hereunder, documents on its behalf in connection with the transactions contemplated hereby and by the Operating Agreement. (c) Opinion of Counsel. TXU shall have received from Huber Lawrence & Abell, with respect to certain Federal Energy Regulatory Commission matters, Ballard Spahr Andrews & Ingersoll, LLP, with respect to certain Nuclear Regulatory Commission matters, and Locke Lidell & Sapp LLP, with respect to certain Texas Utilities Code matters, legal opinions with respect to (i) in the case of the sale of the Notes by the Company, that no approval is required by the Federal Energy Regulatory Commission, the SEC or the Texas Public Utility Commission and (ii) in the case of the exchange of Notes into Common Stock, that no approval is required by the Federal Energy Regulatory Commission or the Texas Public Utility Commission and such other matters as may be agreed by the parties. ARTICLE VII INDEMNIFICATION SECTION 7.01 Survival of Representations and Warranties. The representations and warranties of TXU and the Company contained in this Agreement shall survive the Closing until the second anniversary of the Closing Date, other than the representations and warranties set forth in Section 3.10, which shall survive until the fourth anniversary of the Closing Date. The liability of the Company with respect to the Company's representations and warranties shall not be reduced by any investigation made at any time by or on behalf of the Purchaser. Notwithstanding anything herein to the contrary, the representations and warranties contained in Section 3.17 and the covenants contained in Section 5.07 shall terminate at the close of business on the 30th day following the expiration of the applicable statute of limitations with respect to the Tax liabilities in question (giving effect to any waiver, mitigation or extension thereof). SECTION 7.02 Indemnification by TXU and the Company. (a) TXU and the Company shall jointly and severally indemnify and hold harmless the Purchaser and its Affiliates, officers, directors, employees, agents, successors and assigns (each a "Purchaser 24 Indemnified Party") from and against any and all Liabilities, losses, diminution in value, damages, claims, costs and expenses, interest, awards, judgments and penalties (including, without limitation, attorneys' and consultants' fees and expenses) suffered or incurred by them (including, without limitation, any Action brought or otherwise initiated by any of them) (hereinafter a "Loss"), arising out of or resulting from: (i) the breach of any representation or warranty of TXU or the Company contained herein, or in any agreement, certificate or instrument delivered pursuant hereto set forth therein) and (ii) the breach of any agreement or covenant of TXU or the Company contained herein. To the extent that TXU's and the Company's undertakings set forth in this Section 7.02 may be unenforceable, TXU and the Company shall contribute the maximum amount that they are permitted to contribute under applicable Law to the payment and satisfaction of all Losses incurred by the Purchaser Indemnified Parties. (b) A Purchaser Indemnified Party shall give TXU notice of any matter that a Purchaser Indemnified Party has determined has given or could give rise to a right of indemnification under this Agreement within 60 days of such determination, stating the amount of the Loss, if known, and method of computation thereof, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed or arises. The obligations and Liabilities of TXU and the Company under this Article VII with respect to Losses arising from claims of any third party that are subject to the indemnification provided for in this Article VII ("Third Party Claims") shall be governed by and be contingent upon the following additional terms and conditions: if a Purchaser Indemnified Party shall receive notice of any Third Party Claim, the Purchaser Indemnified Party shall give TXU notice of such Third Party Claim within 30 days after the receipt by the Purchaser Indemnified Party of such notice; provided, however, that the failure to provide such notice shall not release TXU and the Company from any of their obligations under this Article VII except to the extent that TXU is materially prejudiced by such failure and shall not relieve TXU and the Company from any other obligation or Liability that it may have to any Purchaser Indemnified Party otherwise than under this Article VII. If TXU or the Company acknowledges in writing its obligation to indemnify the Purchaser Indemnified Party hereunder against any Losses that may result from such Third Party Claim, then TXU and the Company shall be entitled to assume and control the defense of such Third Party Claim at its expense and through counsel of its choice if it gives notice of its intention to do so to the Purchaser Indemnified Party within five days of the receipt of such notice from the Purchaser Indemnified Party; provided, however, that if there exists or is reasonably likely to exist a conflict of interest that would make it inappropriate in the judgment of the Purchaser Indemnified Party in its sole and absolute discretion for the same counsel to represent both the Purchaser Indemnified Party, on the one hand, and TXU and the Company, on the other hand, then the Purchaser Indemnified Party shall be entitled to retain its own counsel in addition to any requisite local counsel for which the Purchaser Indemnified Party reasonably determines counsel is required, at the expense of TXU and the Company. In the event that TXU or the Company exercises the right to undertake any such defense against any such Third Party Claim as provided above, the Purchaser Indemnified Party shall cooperate with TXU and the Company in such defense and make available to TXU and the Company, at the expense of TXU and the Company, all witnesses, pertinent records, materials and information in the Purchaser Indemnified 25 Party's possession or under the Purchaser Indemnified Party's control relating thereto as is reasonably required by TXU and the Company. Similarly, in the event the Purchaser Indemnified Party is, directly or indirectly, conducting the defense against any such Third Party Claim, TXU and the Company shall cooperate with the Purchaser Indemnified Party in such defense and make available to the Purchaser Indemnified Party, at the expense of TXU and the Company, all such witnesses, records, materials and information in TXU's and the Company's possession or under TXU's and the Company's control relating thereto as is reasonably required by the Purchaser Indemnified Party. No such Third Party Claim may be settled by TXU or the Company without the prior written consent of the Purchaser Indemnified Party, except if such settlement constitutes a full and unconditional release of the Purchaser Indemnified Party. ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER SECTION 8.01 Termination. This Agreement may be terminated at any time prior to the Closing: (a) by the Purchaser if, between the date hereof and the Closing: (i) an event or condition occurs that has resulted in a Material Adverse Effect, (ii) any representations and warranties of TXU or the Company contained in this Agreement (1) that are not qualified by "materiality" or "Material Adverse Effect" shall not have been true and correct in all material respects when made or (2) that are qualified by "materiality" or "Material Adverse Effect" shall not have been true and correct when made, (iii) TXU or the Company shall not have complied in all material respects with the covenants or agreements contained in this Agreement to be complied with by it or (iv) TXU or any of its Subsidiaries makes a general assignment for the benefit of creditors, or any proceeding shall be instituted by or against TXU or any of its Subsidiaries seeking to adjudicate any of them a bankrupt or insolvent, or seeking liquidation, winding up or reorganization, arrangement, adjustment, protection, relief or composition of its debts under any Law relating to bankruptcy, insolvency or reorganization; (b) by either the Company or the Purchaser if the Closing shall not have occurred by December 31, 2002 (the "Termination Date"); provided, however, that the right to terminate this Agreement under this Section 8.01(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date; (c) by either the Purchaser or the Company in the event that any Governmental Authority shall have issued an order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and nonappealable; 26 (d) by the Purchaser, by written notice to TXU, if there shall have been any material breach of any representation and warranty, or any material breach of any covenant or agreement by TXU or the Company hereunder and such breach shall not have been remedied within 10 days after receipt by TXU of notice in writing from the Purchaser, specifying the nature of such breach and requesting that it be remedied; or (e) by the mutual written consent of the Company and the Purchaser. SECTION 8.02 Effect of Termination. In the event of termination of this Agreement as provided in Section 7.01, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto, except with respect to Section 7.02 and 9.02, which shall survive any termination of this Agreement, and except that nothing herein shall relieve either party from liability for any breach of this Agreement. ARTICLE IX MISCELLANEOUS SECTION 9.01 Amendment; Waiver. This Agreement may not be amended, supplemented, modified or restated except by an instrument in writing signed by, or on behalf of, the parties hereto or by a waiver in accordance with this Section 9.01. Any party to this Agreement may (a) extend the time for the performance of any of the obligations or other acts of any other party, (b) waive any inaccuracies in the representations and warranties of any other party contained herein or in any document delivered by any other party pursuant hereto or (c) waive compliance with any of the agreements of any other party or conditions to such party's obligations contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any of such rights. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available. SECTION 9.02 Expenses. Except as otherwise specified in this Agreement, all reasonable costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors, accountants and filing fees, including any fee related to any filing required under the HSR Act, incurred in connection with this Agreement, the Notes, the Ancillary Agreements and the transactions contemplated hereby and thereby (the "Transaction Expenses") shall be paid by TXU. To the extent that the Purchaser pays any Transaction Expenses, TXU shall, as promptly as reasonably practicable, reimburse the Purchaser for the full amount of the Transaction Expenses paid by the Purchaser. SECTION 9.03 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by telecopy, facsimile or registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or 27 at such other address for a party as shall be specified in a notice given in accordance with this Section 9.03): (a) if to TXU or the Company: TXU Energy Company LLC 1601 Bryan Street Dallas, TX 75201 Facsimile: 214-812-8998 Attention: Treasurer with a copy to: Hunton & Williams Energy Plaza 30th Floor 1601 Bryan Street Dallas, TX 75201 Facsimile: 214-880-0011 Attention: Timothy A. Mack and to: Thelen Reid & Priest LLP 875 Third Avenue New York, NY Facsimile: (212) 603-2001 Attention: Robert J. Reger, Jr. (b) if to the Purchaser: DLJ Merchant Banking III, Inc. Eleven Madison Avenue New York, NY 10010-3629 Facsimile: (212) 325-8256 Attention: Ivy Dodes, Esq. with a copy to: Shearman & Sterling 599 Lexington Avenue New York, NY 10022-6069 Facsimile: (212) 848-7179 Attention: Stephen M. Besen, Esq. SECTION 9.04 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and 29 provisions of this Agreement shall nevertheless remain in full force and effect for so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated by this Agreement are consummated as originally contemplated to the greatest extent possible. SECTION 9.05 Assignment. This Agreement may not be assigned by operation of law or otherwise without the express written consent of the Company or the Purchaser (which consent may be granted or withheld in the sole discretion of the Company or the Purchaser); provided, however, that the Purchaser may assign this Agreement or any of its rights and obligations hereunder to one or more Permitted Transferees without the consent of the Company. The rights of any Purchaser with respect to the Note, shall be transferred to any Person who is a transferee of such Notes; provided that such transferees shall have assumed the obligations of the Purchaser hereunder in a form satisfactory to the Company. All obligations of the Company hereunder shall survive any such transfer. SECTION 9.06 Third Party Beneficiaries and Transfers. Except for the provisions of Article VII relating to indemnified parties, this Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. SECTION 9.07 Governing Law; Consent to Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. The parties hereto hereby (a) submit to the exclusive jurisdiction of any state or federal court sitting in the Borough of Manhattan of The City of New York for the purpose of any action arising out of or relating to this Agreement brought by any party hereto, and (b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, that the venue of the action is improper, or that this Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the above-named courts. SECTION 9.08 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. SECTION 9.09 Entire Agreement. This Agreement, the Note, the Exchange Agreement and the Registration Rights Agreement constitute the entire agreement of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior agreements 29 and undertakings, both written and oral, among TXU, the Company and the Purchaser with respect to the subject matter hereof and thereof. SECTION 9.10 Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 9.11 Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. SECTION 9.12 Public Announcements. Subject to its legal obligations (including requirements of stock exchanges and other similar regulatory bodies and other than as may be required pursuant to the Exchange Act), no party shall make any announcement regarding the entering into of this Agreement or the Closing to the financial community, governmental entities, employees, customers or the general public without the prior consent of the other party, which shall not be unreasonably withheld, and the parties shall cooperate with each other as to the timing and contents of any such announcement. 30 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers or other representatives thereunto duly authorized, as of the date first above written. TXU CORP. By: -------------------------------- Name: Title: TXU ENERGY COMPANY LLC By: -------------------------------- Name: Title: UXT HOLDINGS LLC By: -------------------------------- Name: Title: EXHIBIT A FORM OF NOTE EXHIBIT B FORM OF EXCHANGE AGREEMENT EXHIBIT C FORM OF REGISTRATION RIGHTS AGREEMENT Table of Contents Page ARTICLE I DEFINITIONS SECTION 1.01 Definitions........................................1 ARTICLE II PURCHASE AND SALE OF Interests SECTION 2.01 Purchase and Sale of Interests.....................7 SECTION 2.02 Closing............................................7 SECTION 2.03 Closing Deliveries by the Company and TXU..........7 SECTION 2.04 Closing Deliveries by the Purchaser................8 ARTICLE III REPRESENTATIONS AND WARRANTIES OF TXU AND THE COMPANY SECTION 3.01 Organization, Authority and Qualification of TXU and the Company....................................8 SECTION 3.02 Subsidiaries.......................................9 SECTION 3.03 Capitalization.....................................9 SECTION 3.04 No Conflict.......................................10 SECTION 3.05 Governmental Consents and Approvals...............11 SECTION 3.06 Compliance with Laws..............................11 SECTION 3.07 Financial Information; Books and Records..........11 SECTION 3.08 Litigation........................................11 SECTION 3.09 SEC Reports.......................................12 SECTION 3.10 Environmental and Other Permits and Licenses; Related Matters...................................12 SECTION 3.11 Regulation as a Utility...........................12 SECTION 3.12 Authorization of Notes............................13 SECTION 3.13 Absence of Certain Changes or Events; Absence of Undisclosed Liabilities...........................13 SECTION 3.14 Material Contracts................................13 SECTION 3.15 Assets............................................14 SECTION 3.16 Employee Benefit Matters..........................14 SECTION 3.17 Taxes.............................................15 SECTION 3.18 Insurance.........................................15 SECTION 3.19 Full Disclosure...................................15 SECTION 3.20 Operations of Nuclear Power Plant.................16 SECTION 3.21 TXU Europe........................................16 SECTION 3.22 Nature of Operations..............................16 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER SECTION 4.01 Organization and Authority of the Purchaser.......16 SECTION 4.02 No Conflict.......................................17 SECTION 4.03 Governmental Consents.............................17 SECTION 4.04 Financing.........................................17 ARTICLE V ADDITIONAL AGREEMENTS SECTION 5.01 Conduct of Business Prior to the Closing..........17 SECTION 5.02 Access to Information.............................18 SECTION 5.03 Notice of Developments............................18 SECTION 5.04 Structuring Fee...................................19 ii SECTION 5.05 Amended and Restated Limited Liability Company Agreement of the Company..........................19 SECTION 5.06 Further Action....................................19 SECTION 5.07 Taxes.............................................20 ARTICLE VI CONDITIONS TO CLOSING SECTION 6.01 Conditions to Obligations of the Purchaser........22 SECTION 6.02 Conditions to Obligations of the Company..........23 ARTICLE VII INDEMNIFICATION SECTION 7.01 Survival of Representations and Warranties........24 SECTION 7.02 Indemnification by TXU and the Company............24 ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER SECTION 8.01 Termination.......................................26 SECTION 8.02 Effect of Termination.............................27 ARTICLE IX MISCELLANEOUS SECTION 9.01 Amendment; Waiver.................................27 SECTION 9.02 Expenses..........................................27 SECTION 9.03 Notices...........................................27 SECTION 9.04 Severability......................................28 SECTION 9.05 Assignment........................................29 SECTION 9.06 Third Party Beneficiaries and Transfers...........29 SECTION 9.07 Governing Law; Consent to Jurisdiction............29 iii SECTION 9.08 Waiver of Jury Trial..............................29 SECTION 9.09 Entire Agreement..................................29 SECTION 9.10 Headings..........................................30 SECTION 9.11 Counterparts......................................30 SECTION 9.12 Public Announcements..............................30 iv EX-2 4 ex2to13d_041503.txt EXHIBIT 2 TO SCHEDULE 13D REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT, dated as of November 22, 2002 (this "Agreement"), by and between TXU Corp., a Texas corporation (the "Company"), UXT Holdings LLC, and UXT Intermediary LLC (each, a "Purchaser" and collectively, "Purchasers"). WHEREAS, Purchasers purchased 9% Exchangeable Subordinated Notes Due 2012 (the "Notes") of TXU Energy Company LLC, a Delaware limited liability company ("TXU Energy"), pursuant to that certain Purchase Agreement dated as of the date hereof (the "Purchase Agreement"), among TXU Energy, the Company and Purchasers; and WHEREAS, TXU Energy, the Company and Purchasers entered into an exchange agreement on the date hereof (the "Exchange Agreement") pursuant to which Purchasers will have the right to exchange its Notes into Common Stock (as defined below) of the Company. NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, it is agreed as follows: 1. Definitions. (a) Unless otherwise defined herein, the terms below shall have the following meanings (such meanings being equally applicable to both the singular and plural form of the terms defined): "Affiliate" shall mean, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person and shall also include, with respect to any Purchaser, the general partner and any limited partner and any Affiliate of the general partner and any limited partner of such Purchaser. For avoidance of doubt, the Company and its Affiliates shall be considered Affiliates of TXU Energy and Purchasers and their Affiliates shall not be considered Affiliates of TXU Energy or the Company. "Agreement" shall mean this Registration Rights Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing. "Business Day" shall mean any day other than Saturday, Sunday or any other day which is a legal holiday under the laws of the States of New York, Texas or a day on which national banking associations in such States are authorized or required by law or other governmental action to close. "Common Stock" shall mean shares of the Company's common stock, without par value. "Control" (including the terms "Controlled by" and "under common Control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including, without limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person. "DLJ Entities" shall have the meaning as set forth in the Exchange Agreement. "Effective Period" shall mean the period commencing with the effective date of the Shelf Registration Statement and ending on the date that is 180 days from the date that the Purchasers and their Affiliates, as a group, own less than ten percent (10%) of the initial amount of Registrable Securities. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and all rules and regulations promulgated thereunder. "Holder" shall mean Purchasers, and any transferee of Purchasers to whom Registrable Securities are permitted to be transferred in accordance with the terms of this Agreement, and, in each case, who continues to be entitled to the rights of a Holder hereunder. "NASD" shall mean the National Association of Securities Dealers, Inc., or any successor entity thereof. "Person" shall mean any individual, corporation, partnership, joint venture, firm, trust, unincorporated organization, government or any agency or political subdivision thereof or other entity. "Registrable Securities" shall mean (a) the shares of Common Stock issued pursuant to the Exchange Agreement and held by a Holder upon exchange of any Notes and (b) any securities issuable or issued or distributed in respect of any of the Common Stock identified in clause (a) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, reorganization, merger, consolidation or otherwise. For purposes of this Agreement, (i) Registrable Securities shall cease to be Registrable Securities when a Registration Statement covering such Registrable Securities has been declared effective under the Securities Act by the SEC and such Registrable Securities have been disposed of pursuant to such effective Registration Statement or (ii) Registrable Securities of the Holder shall not be deemed to be Registrable Securities at any time when such Registrable Securities may be distributed to the public pursuant to Rule 144(k) (or any successor provision then in effect) under the Securities Act. "Registration Statement" shall mean any Demand Registration Statement, Piggy-Back Registration Statement and/or the Shelf Registration Statement, as the case may be. "SEC" shall mean the Securities and Exchange Commission, or any successor thereto. 2 "Securities Act" shall mean the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder. (b) The following terms have the meanings set forth in the Section set forth opposite such term: Term Section ---- ------- Acquisition 12 Acquisition Restrictions 12 Blackout Period 5 Company Recitals Damages Accrual Period 10(b) Demand for Registration 3(c) Demand Registration 3(a) Demand Registration Statement 3(a) Exchange Agreement Recitals Excused Performance 10(c) Indemnified Party 9(d) Indemnifying Party 9(d) Liquidated Damages Amount 10(b) Maximum Number of Securities 3(b) Participating Demand Holders 3(a) Participating Piggy-Back Holders 4(b) Piggy-Back Registration 4(a) Piggy-Back Registration Statement 4(a) Notes Recitals Purchase Agreement Recitals Purchasers Recitals Shelf Registration Statement 2 TXU Energy Recitals 2. Shelf Registration Statement. As promptly as practicable (and in any event within 30 days after the date hereof), the Company shall file with the SEC, and thereafter use its reasonable best efforts to have declared effective as soon as practicable after the filing thereof, a "shelf" Registration Statement (a "Shelf Registration Statement") on Form S-3 or Form S-1, in the event the Company is not "S-3 eligible", pursuant to Rule 415 under the Securities Act covering the resale of any or all of the Registrable Securities, and Registrable Securities issuable (whether or not issued) under the Exchange Agreement. The Company shall, subject to customary terms and conditions, use its reasonable best efforts to keep the Shelf Registration Statement continuously effective from the date that such Shelf Registration Statement is declared effective during the Effective Period to the extent required to permit the disposition (in accordance with the intended method or methods thereof, as aforesaid) of the Registrable Securities so registered. 3 3. Demand Registration. (a) After receipt of a written request from a Holder requesting that the Company effect a registration (a "Demand Registration") under the Securities Act covering all or part of the Registrable Securities which specifies the intended method or methods of disposition thereof, the Company shall promptly notify all Holders in writing of the receipt of such request and each such Holder, in lieu of exercising its rights under Section 4 hereof, may elect (by written notice sent to the Company within ten (10) Business Days from the date of such Holder's receipt of the aforementioned notice from the Company) to have all or part of such Holder's Registrable Securities included in such registration thereof pursuant to this Section 3, and such Holder shall specify in such notice the number of Registrable Securities that such Holder elects to include in such registration. Thereupon the Company shall, as expeditiously as is possible, but in any event no later than thirty (30) days (excluding any days which occur during a permitted Blackout Period under Section 5 below) after receipt of a written request for a Demand Registration, file with the SEC and use its reasonable best efforts to cause to be declared effective as soon as practical after the filing thereof a registration statement (a "Demand Registration Statement") relating to all shares of Registrable Securities which the Company has been so requested to register by such Holders ("Participating Demand Holders"), to the extent required to permit the disposition (in accordance with the intended method or methods thereof, as aforesaid) of the Registrable Securities so registered; provided, however, that the aggregate number of the Registrable Securities requested to be registered constitute at least 10% of the initial amount of the Registrable Securities or include all Registrable Securities which remain outstanding at such time; provided further that, the Company may, if permitted by applicable Laws and Regulations, utilize the Shelf Registration Statement to satisfy its obligations hereunder. (b) If the majority of the Participating Demand Holders in a Demand Registration relating to a public offering so request that the offering be underwritten with a managing underwriter selected in the manner set forth in Section 14 below and such managing underwriter of such Demand Registration advises the Company in writing that, in its opinion, the number of securities to be included in such offering is greater than the total number of securities which can be sold therein without having a material adverse effect on the distribution of such securities or otherwise having a material adverse effect on the marketability thereof (the "Maximum Number of Securities"), then the Company shall include in such Demand Registration the Registrable Securities that the Participating Demand Holders have requested to be registered thereunder only to the extent the number of such Registrable Securities does not exceed the Maximum Number of Securities. If such amount exceeds the Maximum Number of Securities, the number of Registrable Securities included in such Demand Registration shall be allocated among all the Participating Demand Holders on a pro rata basis (based on the number of Registrable Securities held by each Participating Demand Holder). (c) Holders shall be entitled to an aggregate of two (2) registrations of Registrable Securities pursuant to Section 3(a) in respect of an underwritten secondary offering (each, a "Demand for Registration"); provided that a registration requested pursuant to Section 3(a) shall not be deemed to have been effected for purposes of Section 3(d) unless (i) it has been declared effective by the SEC, (ii) it has remained effective for the period set forth in Section 6(a) and (iii) the offering of Registrable Securities pursuant to such registration is not subject to 4 any stop order, injunction or other order or requirement of the SEC (other than any such stop order, injunction or other requirement of the SEC prompted by act or omission of Holders of Registrable Securities). (d) Notwithstanding anything to the contrary contained herein, the Company shall not be required to prepare and file (i) more than two Demand Registration Statements in any 12 month period or (ii) any Demand Registration Statement within 90 days following the date of effectiveness of any other Registration Statement. 4. Piggy-Back Registration. (a) If at any time on or after January 1, 2003, the Company proposes to file on its behalf and/or on behalf of any holder of its securities (other than a holder of Registrable Securities) a registration statement under the Securities Act on any form (other than a registration statement on Form S-4 or S-8, any successor form for securities to be offered in a transaction of the type referred to in Rule 145 under the Securities Act, to employees of the Company pursuant to any employee benefit plan or the Company's divided reinvestment and direct stock purchase plan, respectively) for the registration of Common Stock or preferred stock that is convertible to Common Stock (a "Piggy-Back Registration"), it will give written notice to all Holders at least twenty (20) days before the initial filing with the SEC of such piggy-back registration statement (a "Piggy-Back Registration Statement"), which notice shall set forth the intended method of disposition of the securities proposed to be registered by the Company. The notice shall offer to include in such filing the aggregate number of shares of Registrable Securities as such Holders may request. (b) Each Holder desiring to have Registrable Securities registered under this Section 4 ("Participating Piggy-Back Holders") shall advise the Company in writing within ten (10) days after the date of receipt of such offer from the Company, setting forth the amount of such Registrable Securities for which registration is requested. The Company shall thereupon include in such filing the number or amount of Registrable Securities for which registration is so requested, subject to paragraph (c) below, and shall use its reasonable best efforts to effect registration of such Registrable Securities under the Securities Act. (c) If the Piggy-Back Registration relates to an underwritten public offering and the managing underwriter of such proposed public offering advises in writing that, in its opinion, the amount of Registrable Securities requested to be included in the Piggy-Back Registration in addition to the securities being registered by the Company would be greater than the Maximum Number of Securities (having the same meaning as defined in Section 3(b) but replacing the term "Demand Registration" with "Piggy-Back Registration"), then: (i) in the event the Company initiated the Piggy-Back Registration, the Company shall include in such Piggy-Back Registration first, the securities the Company proposes to register and second, the securities of all other selling security holders, including the Participating Piggy-Back Holders, to be included in such Piggy-Back Registration in an amount which, together with the securities the Company proposes to register, shall not exceed the Maximum Number of Securities, such amount to be 5 allocated among such selling security holders on a pro rata basis (based on the number of securities of the Company held by each such selling security holder); (ii) in the event any holder of securities of the Company initiated the Piggy-Back Registration, the Company shall include in such Piggy-Back Registration first, the securities such initiating security holder proposes to register, second, the securities of any other selling security holders (including Participating Piggy-Back Holders), in an amount which, together with the securities the initiating security holder proposes to register, shall not exceed the Maximum Number of Securities, such amount to be allocated among such other selling security holders on a pro rata basis (based on the number of securities of the Company held by each such selling security holder) and third, any securities the Company proposes to register, in an amount which, together with the securities the initiating security holder and the other selling security holders propose to register, shall not exceed the Maximum Number of Securities; (d) The Company will not hereafter enter into any agreement which is inconsistent with the rights of priority provided in paragraph (c) above. 5. Blackout Periods. The Company shall have the right to delay the filing or effectiveness of a Registration Statement required pursuant to Section 3 hereof or suspend sales under a Shelf Registration Statement filed hereunder during no more than two (2) periods aggregating to not more than 45 days in any 12 month period (a "Blackout Period") in the event that (i) the Company would, in accordance with the written advice of its counsel, be required to disclose in the prospectus information not otherwise then required by law to be publicly disclosed and (ii) in the good faith and reasonable judgment of the Company's Board of Directors, there is a reasonable likelihood that such disclosure, or any other action to be taken in connection with the prospectus, would materially and adversely affect or interfere with any financing, acquisition, merger, disposition of assets (not in the ordinary course of business), corporate reorganization or other similar transaction in which the Company is engaged or in respect of which the Company proposes to engage in discussions or negotiations with respect to, or has proposed or taken a substantial step to commence, or there is an event or state of facts relating to the Company which is material to the Company the disclosure of which would, in the reasonable judgment of the Company, be adverse to its interests; provided, however, that the Company shall delay during such Blackout Period the filing or effectiveness of, or suspend sales under, any Registration Statement required pursuant to the registration rights of the holders of any securities of the Company. The Company shall promptly give the Holders written notice of such determination containing a general statement of the reasons for such postponement and an approximation of the anticipated delay. 6. Registration Procedures. If the Company is required by the provisions of Section 2 or 3 to use its reasonable best efforts to effect the registration of any of its securities under the Securities Act, the Company will, as expeditiously as possible: (a) prepare and file with the SEC a Registration Statement with respect to such securities and use its reasonable best efforts to cause such Registration Statement promptly to become and remain effective for a period of time required for the disposition of such securities by the holders thereof but not to exceed 90 days for a Demand 6 Registration under Section 3(a) (except with respect to a Shelf Registration Statement under Section 2 which shall remain effective during the Effective Period); provided, however, that before filing such Registration Statement or any amendments thereto (for purposes of this subsection, amendments shall not be deemed to include any filing that the Company is required to make pursuant to the Exchange Act), the Company shall furnish the representatives of the Holders referred to in Section 6(m) copies of all documents proposed to be filed, which documents will be subject to the review of such counsel. The Company shall not be deemed to have used its reasonable best efforts to keep a Registration Statement effective during the applicable period if it voluntarily takes any action that would result in the Holders of such Registrable Securities not being able to sell such Registrable Securities during that period, unless such action is required under applicable law; (b) prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities covered by such Registration Statement until the earlier of such time as all of such securities have been disposed of in a public offering or the expiration of 90 days for a Demand Registration under Section 3(a) (except with respect to the Shelf Registration Statement under Section 2, for which such period shall be the Effective Period); (c) furnish to such selling security holders such number of conformed copies of the applicable Registration Statement and each such amendment and supplement thereto (including in each case all exhibits), and copies of a summary prospectus or other prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents, as such selling security holders may reasonably request; (d) use its reasonable best efforts to register or qualify the securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions within the United States and Puerto Rico as each Holder of such securities shall reasonably request, to keep such registration or qualification in effect for so long as such Registration Statement remains in effect, and to take any other action which may be reasonably necessary to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such Holder (provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business, subject itself to taxation in or to file a general consent to service of process in any jurisdiction wherein it would not but for the requirements of this paragraph (d) be obligated to do so; and provided further that the Company shall not be required to qualify such Registrable Securities in any jurisdiction in which the securities regulatory authority requires that any Holder submit any shares of its Registrable Securities to the terms, provisions and restrictions of any escrow, lockup or similar agreement(s) for consent to sell Registrable Securities in such jurisdiction unless such Holder agrees to do so), and do such other reasonable acts and things as may be required of it to enable such Holder to consummate the disposition in such jurisdiction of the securities covered by such Registration Statement; 7 (e) furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to Section 2 or 3, if the method of distribution is by means of an underwriting, on the date that the shares of Registrable Securities are delivered to the underwriters for sale pursuant to such registration, or if such Registrable Securities are not being sold through underwriters, on the date that the registration statement with respect to such shares of Registrable Securities becomes effective, (1) a signed opinion, dated such date, of the independent legal counsel representing the Company for the purpose of such registration, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to the Holders making such request, as to such matters as such underwriters or the Holders holding a majority of the Registrable Securities included in such registration, as the case may be, may reasonably request and as would be customary in such a transaction and (2) letters dated such date and the date the offering is priced from the independent certified public accountants of the Company, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to the Holders making such request and, if such accountants refuse to deliver such letters to such Holders, then to the Company (i) stating that they are independent certified public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements and other financial data of the Company included in the Registration Statement or the prospectus, or any amendment or supplement thereto, comply as to form in all material respects with the applicable accounting requirements of the Securities Act and (ii) covering such other financial matters (including information as to the period ending not more than five (5) business days prior to the date of such letters) with respect to the registration in respect of which such letter is being given as such underwriters or the Holders holding a majority of the Registrable Securities included in such registration, as the case may be, may reasonably request and as would be customary in such a transaction; (f) enter into customary agreements (including if the method of distribution is by means of an underwriting, an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities; (g) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make earnings statements satisfying the provisions of Section 11(a) of the Securities Act generally available to the Holders no later than 45 days after the end of any 12 month period (or 90 days, if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in an underwritten public offering or (ii) if not sold to underwriters in such an offering, beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement, which statements shall cover said 12 month periods; (h) use its reasonable best efforts to cause all such Registrable Securities to be listed on each securities exchange or quotation system on which similar securities issued by the Company are listed or traded; 8 (i) give written notice to the Holders: (i) when such Registration Statement or any amendment thereto has been filed with the SEC and when such Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the SEC for amendments or supplements to such Registration Statement or the prospectus included therein or for additional information; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Common Stock for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (v) of the happening of any event that requires the Company to make changes in such Registration Statement or the prospectus in order to make the statements therein not misleading (which notice shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made); (j) use its reasonable best efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of such Registration Statement at the earliest possible time; (k) furnish to each Holder, without charge, at least one copy of such Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits (including those, if any, incorporated by reference); (l) upon the occurrence of any event contemplated by Section 6(i)(v) above, promptly prepare a post-effective amendment to such Registration Statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to the Holders, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance with Section 6(i)(v) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Holders shall suspend use of such prospectus and use their reasonable efforts to return to the Company all copies of such prospectus (at the Company's expense) other than permanent file copies then in such Holder's possession, and the period of effectiveness of such Registration Statement provided for above shall be extended by the number of days from and including the date of the giving of such notice to the date Holders shall have received such amended or supplemented prospectus pursuant to this Section 6(l); 9 (m) make reasonably available for inspection by the representatives of the Holders, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other agent retained by such representative or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and cause the Company's officers, directors and employees to supply all relevant information reasonably requested by such representative or any such underwriter, attorney, accountant or agent in connection with the registration; (n) in connection with any underwritten offering pursuant to a Demand Registration under Section 3(a), make appropriate officers of the Company and the senior executives of the Company available to the selling security holders for meetings with prospective purchasers of the Registrable Securities and prepare and present to potential investors customary "road show" material in each case in accordance with the recommendations of the underwriters and in all respects in a manner consistent with other new issuances of securities in an offering of a similar size to such offering of the Registrable Securities, in connection with any proposed sale of the Registrable Securities; provided, however, that the aggregate number of Registrable Securities requested to be sold constitute at least 10% of the Registrable securities issued on the date the demand to file the Demand Registration Statement pursuant to such Demand Registration was made; and (o) use reasonable best efforts to procure the cooperation of the Company's transfer agent in settling any offering or sale of Registrable Securities, including with respect to the transfer of physical stock certificates into book-entry form in accordance with any procedures reasonably requested by the Holders or the underwriters. 7. Expenses. All expenses incurred in connection with each registration pursuant to Sections 2, 3 and 4 of this Agreement, excluding underwriters' discounts and commissions, but including without limitation all registration, filing and qualification fees, word processing, duplicating, printers' and accounting fees (including the expenses of any special audits or "comfort" letters required by or incident to such performance and compliance), fees of the NASD or listing fees, messenger and delivery expenses, all fees and expenses of complying with state securities or blue sky laws, fees and disbursements of counsel for the Company, fees and expenses of the Company and the underwriters relating to "road show" investor presentations, including the reasonable fees and disbursements of one counsel for the selling Holders (which counsel shall be selected by the Holders holding a majority in interest of the Registrable Securities being registered), shall be paid by the Company: 8. Rule 144 and Rule 144A Information. (a) With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Registrable Securities to the public without registration, the Company agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act; 10 (ii) use its reasonable best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (iii) furnish to each Holder of Registrable Securities forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of such Rule 144 and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as such Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing such Holder to sell any Registrable Securities without registration. (b) At all times during which the Company is neither subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, nor exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, it will provide, upon the written request of any Holder of Registrable Securities in written form (as promptly as practicable and in any event within 15 Business Days), to any prospective buyer of such stock designated by such Holder, all information required by Rule 144A(d)(4)(i) of the General Regulations promulgated by the SEC under the Securities Act. 9. Indemnification and Contribution. (a) The Company shall indemnify and hold harmless each Holder and its Affiliates, such Holder's partners and their Affiliates, directors and officers, each person who participates in the offering of such Registrable Securities, including underwriters (as defined in the Securities Act), and each person, if any, who controls such Holder or participating person within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or proceedings in respect thereof) arise out of or are based on any untrue or alleged untrue statement of any material fact contained in such Registration Statement on the effective date thereof (including any prospectus filed under Rule 424 under the Securities Act or any amendments or supplements thereto) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse each such Holder and its Affiliates, such Holder's partners and their Affiliates, directors and officers, such participating person or controlling person for any legal or other expenses reasonably incurred by them (but not in excess of expenses incurred in respect of one counsel for all of them unless there is an actual conflict of interest between any indemnified parties, which indemnified parties may be represented by separate counsel) in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 9(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld); provided further, that the Company shall not be liable to any Holder and its Affiliates, such Holder's partners and their Affiliates, directors and officers, participating person or controlling person in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in 11 connection with such Registration Statement, preliminary prospectus, final prospectus or amendments or supplements thereto, in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder and its Affiliates, such Holder's partners and their Affiliates, directors and officers, participating person or controlling person. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any such Holder and its Affiliates, such Holder's partners and their Affiliates, directors and officers, participating person or controlling person, and shall survive the transfer of such securities by such Holder. (b) Each Holder requesting or joining in a registration severally and not jointly shall indemnify and hold harmless the Company, each of its directors and officers, each person, if any, who controls the Company within the meaning of the Securities Act, and each agent and any underwriter for the Company (within the meaning of the Securities Act) against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer, controlling person, agent or underwriter may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or proceedings in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in such Registration Statement on the effective date thereof (including any prospectus filed under Rule 424 under the Securities Act or any amendments or supplements thereto) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in such Registration Statement, preliminary or final prospectus, or amendments or supplements thereto, in reliance upon and in conformity with written information furnished by or on behalf of such Holder expressly for use in connection with such registration; and each such Holder shall reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, agent or underwriter (but not in excess of expenses incurred in respect of one counsel for all of them unless there is an actual conflict of interest between any indemnified parties, which indemnified parties may be represented by separate counsel) in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 9(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and provided further that the liability of each Holder hereunder shall be limited to the proportion of any such loss, claim, damage, liability or expense which is equal to the proportion that the net proceeds from the sale of the securities sold by such Holder under such Registration Statement bears to the total net proceeds from the sale of all securities sold thereunder, but not in any event to exceed the net proceeds received by such Holder from the sale of Registrable Securities covered by such Registration Statement. (c) If the indemnification provided for in this Section 9 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in 12 connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. If the allocation provided in this paragraph (c) is not permitted by applicable law, the parties shall contribute based upon the relevant benefits received by the Company from the initial offering of the Registrable Securities on the one hand and the net proceeds received by the Holders from the sale of Registrable Securities on the other. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 9(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. (d) Any Person entitled to indemnification hereunder (the "Indemnified Party") agrees to give prompt written notice to the indemnifying party (the "Indemnifying Party") after the receipt by the Indemnified Party of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which the Indemnified Party intends to claim indemnification or contribution pursuant to this Agreement; provided that the failure so to notify the Indemnified Party shall not relieve the Indemnifying Party of any liability that it may have to the Indemnified Party hereunder unless such failure is materially prejudicial to the Indemnifying Party. If notice of commencement of any such action is given to the Indemnifying Party as above provided, the Indemnifying Party shall be entitled to participate in and, to the extent it may wish, to assume the defense of such action at its own expense, with counsel chosen by it and reasonably satisfactory to such Indemnified Party. The Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be paid by the Indemnified Party unless (i) the Indemnifying Party agrees to pay the same, (ii) the Indemnifying Party fails to assume the defense of such action or (iii) the named parties to any such action (including any impleaded parties) have been advised by such counsel that either (A) representation of such Indemnified Party and the Indemnifying Party by the same counsel would be inappropriate under applicable standards of professional conduct or (B) there are one or more legal defenses available to it which are substantially different from or additional to those available to the Indemnifying Party. No Indemnifying Party shall be liable for any settlement entered into without its written consent, which consent shall not be unreasonably withheld. (e) The agreements contained in this Section 9 shall survive the transfer of the Registered Securities by any Holder and sale of all the Registrable Securities pursuant to any Registration Statement and shall remain in full force and effect, regardless of any investigation 13 made by or on behalf of any Holder or such director, officer or participating or controlling Person. 10. Payment of Liquidated Damages. (a) The parties hereto agree that the Holders of Registrable Securities will suffer damages, and that it would not be feasible to ascertain the extent of such damages with precision, if (i) a Registration Statement is not timely filed pursuant to Section 2, 3 and 6, (ii) a Registration Statement has not been declared effective under the Securities Act or any foreign securities laws pursuant to Section 6 or (iii) the Company fails to comply with any of the terms of this Agreement. Each of the events described above shall be deemed to continue until (a) the date a Registration Statement is filed in the case of an event of the type described in clause (i), (b) the date a Registration Statement is declared effective under the Securities Act or any foreign securities laws in the case of an event of the type described in clause (ii) and (c) termination of the breach in the case of an event of the type described in clause (iii). (b) Accordingly, commencing on (and including) any event date described above and ending on the day such failure to file or become effective or breach is cured (a "Damages Accrual Period"), the Company agrees to pay, as liquidated damages and not as a penalty, an amount (the "Liquidated Damages Amount") payable to Holders of Registrable Securities within 15 days from the date such Damages Accrual Period ends, at a rate per annum equal to 2% of the value of the Registrable Securities owned by the Holders; provided that no liquidated damages shall accrue or be payable if the failure to file, go effective or comply is the result of an Excused Performance. (c) An "Excused Performance" shall be deemed to result from (a) the failure of the SEC to declare a Registration Statement effective despite the Company's reasonable good faith efforts to respond to SEC comments in a timely and complete manner, (b) the failure of the SEC to declare a Registration Statement effective because of the failure of any Holder to provide any information requested by the SEC, the NASD or any state securities regulatory body concerning itself or its Affiliates, its or such Affiliates' relationship with the Company or any Affiliates of the Company, or its plans for the disposition of Registrable Securities or (c) the failure of the NASD or any state securities regulatory body to provide any necessary clearance, registration or qualification for the offering. 11. Limitations on Registration of Other Securities; Representation. From and after the date of this Agreement, the Company shall not, without the prior written consent of a majority in interest of the Holders, enter into any agreement with any holder or prospective holder of any securities of the Company giving such holder or prospective holder any registration rights the terms of which are as or more favorable taken as a whole than the registration rights granted to the Holders hereunder unless the Company shall also give such rights to the Holders hereunder. 12. Acquisition of Additional Common Stock. (a) During the period commencing on the date hereof and ending on the termination of the Effective Period, each of the DLJ Entities hereby agrees that neither it or any 14 entity Controlled by it (other than portfolio companies of the DLJ Entities) shall, without the prior approval of the Company's Board of Directors (excluding, for purposes of such approval, the Purchaser Director (as defined in the Exchange Agreement)), (i) acquire, offer or propose to acquire or agree to acquire (whether by purchase, tender or exchange offer, through an acquisition of Control of another Person (including by way of merger or consolidation), by joining a partnership, syndicate or other group, or otherwise), the beneficial ownership of any Common Stock of the Company other than Common Stock issued pursuant to the Exchange Agreement (or any warrants, options or other rights to purchase or acquire, or any securities convertible into, or exchangeable for, any Common Stock of the Company); (ii) make any public announcement with respect to, or submit any proposal for, any merger, consolidation, sale of substantial assets (other than sales made in the ordinary course of business of such Holder) or other business combination or extraordinary transaction involving the Company; (iii) except in connection with the election of the Purchaser Director, make, or in any way participate in, any "solicitation" of "proxies" (as such terms are defined or used in Regulation 14A under the Exchange Act) to vote any Common Stock of the Company or seek to advise or influence any Person (other than any Affiliate) with respect to the voting of any Common Stock of the Company; (iv) otherwise act, either alone or in concert with others, to seek control of the Company's Board or (v) publicly disclose any intention, proposal, plan or arrangement with respect to any of the foregoing (collectively, the "Acquisition Restrictions"). The Acquisition Restrictions contained in clause (i) above shall not apply to any acquisition (each, an "Acquisition") of beneficial ownership of any additional Common Stock of the Company: (x) which is by way of stock dividends, stock reclassifications or other distributions or offering made available on a pro rata basis to holders of Common Stock of the Company generally or (y) that involves Common Stock acquired from the Company in accordance with the provisions of the Exchange Agreement. 13. No Inconsistent Agreements. The Company will not hereafter enter into any agreement with respect to its securities, which is inconsistent in any material respects with the rights granted to the Holders in this Agreement. 14. Selection of Managing Underwriters. In the event the Holders have requested an underwritten offering pursuant to Section 3(a), the underwriter or underwriters shall be selected by the Holders of a majority of the shares being so registered and shall be approved by the Company, which approval shall not be unreasonably withheld or delayed, provided (i) that all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of such Holders of Registrable Securities, (ii) that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement shall be conditions precedent to the obligations of such Holders of Registrable Securities and (iii) that no Holder shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Holder, the Registrable Securities of such Holder and such Holder's intended method of distribution and any other representations required by law. Subject to the foregoing, all Holders proposing to distribute Registrable Securities through such underwritten offering shall enter into an underwriting agreement in customary form with the underwriter or underwriters. If any Holder of Registrable Securities disapproves of the terms of the underwriting, such Holder may elect to withdraw all its Registrable Securities by written notice to the Company, the managing 15 underwriter and the other Holders participating in such registration. The securities so withdrawn shall also be withdrawn from registration. 15. Miscellaneous. (a) No Short Sales; Hedging. The DLJ Entities agree that they will not sell any shares of Common Stock short or buy any put option (other than "costless collars" after the second anniversary of the date hereof) in respect of shares of Common Stock so long as any of the Notes remain outstanding. The DLJ Entities further agree not to engage in any hedging activities with respect to Common Stock until the second anniversary of the date hereof. (b) Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of the Agreement was not performed in accordance with the terms hereof and that the parties hereto shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or in equity. (c) Amendments and Waivers; Assignment. (i) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Company and a majority in interest of the Holders or, in the case of a waiver, by the party or parties against whom the waiver is to be effective; provided, however, that waiver by the Holders shall require the consent of a majority in interest of the Holders. (ii) No failure or delay by any party in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of time specified herein) shall operate as a waiver thereof and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. (d) Notice Generally. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified by notice given in accordance with this Section 15(d)): 16 (i) If to Purchaser, at UXT Holdings LLC Eleven Madison Avenue New York, NY 10010-3629 Attention: Ivy Dodes Facsimile: 212-325-8256 and to any Holder, at the address provided by such Holder with a copy to: Shearman & Sterling 599 Lexington Avenue New York, NY 10022 Attention: Stephen Besen Mark Roppel Facsimile: 212-848-7179 (ii) If to the Company, at TXU Corp. 1601 Bryan Street Dallas, TX 75201 Attention: Treasurer Facsimile: 214-812-8998 with a copy to: Hunton & Williams 1601 Bryan Street Dallas, Texas 75201 Attention: Timothy A. Mack Facsimile: 212-603-2001 and to: Thelen Reid & Priest LLP 875 Third Avenue New York, NY 10022 Attention: Robert J. Reger, Jr. Facsimile : 212-603-2001 (e) Successors and Assigns; Third Party Beneficiaries. (i) This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the 17 parties hereto as hereinafter provided. The registration rights of any Holder with respect to any Registrable Securities shall be transferred to any Person who is the transferee of such Registrable Securities; provided that such transferees shall have assumed the obligations of such Holder hereunder in a form satisfactory to the Company. All of the obligations of the Company hereunder shall survive any such transfer. Except as provided in Section 9, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement. (ii) It is acknowledged and agreed that the DLJ Entities and their Affiliates shall not transfer Common Stock issued to them pursuant to the Exchange Agreement to a Competitor (as defined in the Notes) other than pursuant to a public offering. (iii) Any transferee (or group of affiliated transferees) of the Notes or Common Stock that would own or have pursuant to such transfer (assuming the exercise of the Exchange Right) the right to acquire 5% or more of the outstanding Common Stock as of the date of the transfer of such securities shall, before such transfer, agree to be bound by the restrictions set forth in Section 12 and Section 15(a). (f) Headings. The headings and subheadings in this Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof. (g) Governing Law; Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. (i) Any claim, action, suit or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby, may be heard and determined in any New York state or federal court sitting in The City of New York, County of Manhattan, and each of the parties hereto hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom in any such claim, action, suit or proceeding) and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any such claim, action, suit or proceeding in any such court or that any such claim, action, suit or proceeding that is brought in any such court has been brought in an inconvenient forum. (ii) Subject to applicable law, process in any such claim, action, suit or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Nothing herein shall affect the right of any party to serve legal process in any manner permitted by law or at equity. WITH RESPECT TO ANY SUCH CLAIM, ACTION, SUIT OR PROCEEDING IN ANY SUCH COURT, EACH OF THE PARTIES IRREVOCABLY WAIVES AND RELEASES TO THE OTHER ITS RIGHT TO A TRIAL BY JURY, AND AGREES THAT IT WILL NOT SEEK A TRIAL BY JURY IN ANY SUCH PROCEEDING. (h) Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other 18 conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions is not affected in any manner materially adverse to any party. Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible. (i) Entire Agreement. This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto. (j) Cumulative Remedies. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise. (k) Construction. Each party hereto acknowledges and agrees that it has had the opportunity to draft, review and edit the language of this Agreement and that no presumption for or against any party arising out of drafting all or any part of this Agreement will be applied in any Dispute relating to, in connection with or involving this Agreement. Accordingly, the parties hereto hereby waive the benefit of any rule of Law or any legal decision that would require, in cases of uncertainty, that the language of a contract should be interpreted most strongly against the party who drafted such language. [Signatures appear on next page] 19 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. TXU CORP. By: ------------------------------------- Name: Title: UXT HOLDINGS LLC By: ------------------------------------- Name: Title: UXT INTERMEDIARY LLC By: ------------------------------------- Name: Title: 20 EX-3 5 ex3to13d_041503.txt EXHIBIT 3 TO SCHEDULE 13D EXCHANGE AGREEMENT This EXCHANGE AGREEMENT (this "Agreement"), dated as of November 22, 2002, is among TXU Corp., a Texas corporation (the "Company"), TXU Energy Company LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company ("TXU Energy"), UXT Holdings LLC, and UXT Intermediary LLC (each a "Purchaser" and collectively, "Purchasers"). WHEREAS, in consideration for the Invested Principal Amount (as defined below) paid to TXU Energy, Purchasers received 9% Exchangeable Subordinated Notes Due 2012 of TXU Energy (the "Notes"), pursuant to the Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"), among the Company, TXU Energy and Purchaser; WHEREAS, the parties have agreed that the Notes owned by Purchasers are to be exchangeable into Common Stock (as defined below) at any time and from time to time; and WHEREAS, in connection with the acquisition of the Notes the Company and Purchasers entered into the Registration Rights Agreement (as defined below) that sets forth certain registration rights with respect to shares of Common Stock that Purchasers may receive under this Agreement. NOW THEREFORE, in consideration of the premises and the covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, it is agreed by the parties as follows: 1. Definitions (a) Unless otherwise defined herein, the terms below shall have the following meanings (such meanings being equally applicable to singular and plural forms of the terms defined): "Affiliate" shall mean, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person and shall also include, with respect to any Purchaser, the general partner and any limited partner and any Affiliate of the general partner and any limited partner of such Purchaser. For avoidance of doubt, the Company and its Affiliates shall be considered Affiliates of TXU Energy and any Purchaser and its Affiliates shall not be considered Affiliates of TXU Energy or the Company. "Affiliated Employee Benefit Trust" means any trust that is a successor to the assets held by a trust established under an employee benefit plan subject to ERISA or any other trust established directly or indirectly under such plan or any other such plan having the same sponsor. "Aggregate Converted Principal" means, at a specified date, the sum of all the Conversion Principal Amounts in respect of which the Company issued shares of Common Stock to a Purchaser from the date hereof to such specified date. "Authorization" means any and all permits, licenses, authorizations, orders, certificates, registrations or other approvals granted by any Governmental Agency. "Board" means the board of directors of the Company. "Business Day" shall mean any day other than Saturday, Sunday or any other day which is a legal holiday under the laws of the States of New York or Texas or a day on which national banking associations in such States are authorized or required by law or other governmental action to close. "Common Stock" means shares of common stock, without par value, of the Company. "Controls" means (including the terms "Controlled by" and "under common Control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including, without limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person. "Conversion Principal Amount" means, at a specified date, an amount of the Current Invested Principal Amount set forth in an Exchange Notice that represents the aggregate principal amount of the Notes that a Purchaser is requesting to be converted into Common Stock pursuant to such Exchange Notice. "Current Invested Principal Amount" means, at a specified date, an amount equal to the Invested Principal Amount less the Aggregate Converted Principal, in each case, from the date hereof to such specified date. "Current Market Price" means in respect of any share of Common Stock on any date herein specified the average of the daily market prices for five (5) consecutive trading days commencing ten (10) trading days before the public announcement of any sale or other issuance of Common Stock or Common Stock Equivalents. The daily market price for each such trading day shall be the last reported sale price on such day on the New York Stock Exchange (the "NYSE") or, if the Common Stock is not so listed or admitted, the last reported sale price on such day on the NYSE or any other trading facility on which such Common Stock is then listed; provided, however, that if no sale takes place on such day on any such exchange, market or trading facility, the average of the last reported closing bid and ask prices on such day as officially quoted on such exchange, market or trading facility shall be the daily market price for such trading day. "DLJ Entity" or "DLJ Entities" means each investor or entity listed on Schedule 1.1. 2 "DLJ VCOC Fund" means UXT AIV, L.P., a Delaware limited partnership, or a DLJ Entity or Affiliate thereof designated by UXT AIV, L.P. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "FERC" means the Federal Energy Regulatory Commission. "Governmental Agency" means any supranational, multinational, municipal, provincial, federal, state, local, foreign or other governmental agency, instrumentality, commission, authority, board or body, including but not limited to the NRC, FERC, SEC and PUCT. "Holder" shall mean Purchasers and any transferee of Purchasers. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "Invested Principal Amount" means $750,000,000, excluding any interest added to the Invested Principal Amount pursuant to Section 2.01 in respect of the Notes exchanged. "Law" means all laws, statutes and ordinances of the United States (including but not limited to PUHCA), any state of the United States, any foreign country, any foreign state and any political subdivision thereof, including all decisions, orders, judgments or decrees of courts having the effect of law in each such jurisdiction. "Majority in Interest" means, at any time, a majority of the principal amount of the Notes outstanding at such time. "NRC" means the Nuclear Regulatory Commission. "Notes" means all 9% Exchangeable Subordinated Notes Due 2012 of TXU Energy owned by Purchasers that have not been exchanged pursuant to an Exchange Notice. "Permitted Transferee" means in the case of any DLJ Entity, (A) any other DLJ Entity, (B) any general or limited partner of any DLJ Entity (a "DLJ Partner"), and any Affiliated Employee Benefit Trust or Person that is an Affiliate of any DLJ Partner (collectively, the "DLJ Affiliates"), (C) any managing director, general partner, director, limited partner, officer or employee of any DLJ Entity or of any DLJ Affiliate, or the heirs, executors, administrators, testamentary trustees, legatees or beneficiaries of any of the foregoing persons referred to in this clause (C) (collectively, "DLJ Associates"), (D) a trust (to the extent recognized by applicable Law), the beneficiaries of which, or a corporation, limited liability company or partnership, all of the stockholders, members or general or limited partners of which, include only DLJ Entities, DLJ Affiliates, DLJ Associates, their spouses or their lineal descendants or (E) a voting trustee for one or more DLJ Entities, DLJ Affiliates or DLJ Associates under the terms of a voting trust (to the extent recognized by applicable Law). 3 "Person" shall mean any individual, corporation, partnership, joint venture, firm, trust, unincorporated organization, government or any agency or political subdivision thereof or other entity. "PUCT" means the Public Utility Commission of Texas. "PUHCA" means the Public Utility Holding Company Act of 1935, as amended. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of the date hereof, among the Company and Purchasers. "Regulation" means any rule or regulation of any Governmental Agency having the effect of Law or any rule or regulation of any self-regulatory organization. "SEC" means the Securities and Exchange Commission. "Termination Date" means the earlier to occur of (i) the later of (A) the tenth anniversary of the date hereof and (B) the date no principal amount of Notes remain outstanding and (ii) the date on which the DLJ Entities or their Permitted Transferees own Notes and Common Stock aggregating less than thirty percent (30%) of the Invested Principal Amount (determined, in the case of Common Stock, on the basis of the Note Exercise Price at the date Exchange Rights are exercised with respect to such Common Stock). "Voting Trust Agreement(s)" means one or more voting trust agreements in a form reasonably acceptable to the Company to be entered into among the Company, one or more of the DLJ Entities and a trustee to be selected by the DLJ Entities who shall be reasonably acceptable to the Company. "Voting Trustee" means the trustee appointed under the Voting Trust Agreement(s). (b) The following terms have the meanings set forth in the section set forth opposite such term: "Acquisition".......................................................9 "Acquisition Restriction"...........................................9 "Agreement"..................................................Preamble "Closing"........................................................2(e) "Closing Date"...................................................2(e) "Common Stock Equivalents".......................................4(b) "Company"....................................................Preamble "Exchange Right".................................................2(a) "Exchange Notice"................................................2(c) "Extraordinary Common Stock Event"...............................4(e) "Net Consideration Per Share"....................................4(c) "Non-U.S. Antitrust Laws"........................................5(b) "Note Exercise Price"............................................2(a) "Other Non-U.S. Jurisdictions"...................................7(b) 4 "Plan Asset Regulations".........................................6(b) "Purchaser"..................................................Preamble "Purchase Agreement".........................................Preamble "Purchaser Director..............................................6(a) "Subsequent Closing".............................................2(e) "Threshold Amount"...............................................2(g) 2. Exchange of Notes for Common Stock (a) Grant of Exchange Right. The Company hereby grants each Purchaser an irrevocable right to exchange all or part of its Notes for Common Stock (an "Exchange Right") at a price per share of Common Stock initially equal to $13.15 (the "Note Exercise Price"), subject to the terms and conditions set forth herein. The Note Exercise Price is subject to adjustment as set forth in Section 4. (b) Exercise Period of Exchange Right. At any time after the date hereof and from time to time, the Exchange Right may be exercised by any Purchaser in its sole discretion, in whole or in part until such time as all of the Notes are exchanged for Common Stock, paid at maturity or redeemed in accordance with their terms. (c) Exercise of Exchange Right. The Exchange Right shall be exercised by written notice from any Purchaser to the Company (an "Exchange Notice") stating that such Purchaser desires to exercise an Exchange Right and setting forth: (i) the proposed closing date, which (subject to the earlier satisfaction or waiver of conditions set forth in Section 7) shall be no earlier than three (3) days after and no later than twenty (20) days after the date of delivery of such notice, and (ii) the amount of Notes to be exchanged expressed as a Conversion Principal Amount. (d) Exchange of Notes. (i) The Exchange Right will be deemed to be exercised on the date of delivery of the Exchange Notice. The number of shares of Common Stock to be issued and delivered to a Purchaser in connection with the delivery of the Exchange Notice shall be determined by dividing the Conversion Principal Amount as set forth in such Exchange Notice by the Note Exercise Price then in effect. (ii) Any accrued and unpaid interest (including accrued and unpaid interest added to the Invested Principal Amount pursuant to Section 2.01 of the Notes) in respect of any Notes to be exchanged into shares of Common Stock pursuant to an Exchange Notice shall be paid in cash at the time such Notes are exchanged. (e) Closing. The consummation of the exchange of Notes for Common Stock contemplated by this Agreement (the "Closing") shall occur no earlier than three (3) days after and no later than twenty (20) days after the date (a "Closing Date") of delivery of an Exchange Notice. In the event that all of Purchasers' Notes are not exchanged pursuant to this Agreement at the Closing, Purchasers may engage in successive closings (each, a "Subsequent Closing") with respect to the completion of the exchange of its Notes for Common Stock. (f) Closing Deliveries. 5 (i) At the Closing or any Subsequent Closing, as the case may be, the Company shall deliver to each applicable Purchaser (A) certificates evidencing such number of shares of Common Stock (as calculated in accordance with Section 2(d) above), pursuant to the Exchange Notice to which the Closing or such Subsequent Closing relates, in definitive form and registered in such names and in such denominations as such Purchaser shall reasonably request and (B) an amount in cash equal to any accrued and unpaid interest (including accrued and unpaid interest added to the Invested Principal Amount pursuant Section 2.01 of the Notes) in respect of the Notes exchanged into Common Stock pursuant to the Exchange Notice delivered to the Company under Section 2(d) above. (ii) At the Closing or any Subsequent Closing, as the case may be, each applicable Purchaser shall deliver to the Company such number of Notes owned by such Purchaser with an aggregate principal amount equal to the Conversion Principal Amount as set forth in the Exchange Notice to which the Closing or such Subsequent Closing relates, together with an instrument of transfer reasonably satisfactory to the Company duly executed by such Purchaser. (g) Voting Trust Closing Delivery. If, at any time after the Closing or any Subsequent Closing, the number of shares of Common Stock delivered to the DLJ Entities and their Affiliates shall result in the DLJ Entities and their Affiliates becoming beneficial owners of more than 4.9% of the outstanding Common Stock of the Company (the "Threshold Amount"), then the Company, pursuant to the instructions set forth in the Exchange Notice, shall deliver to the Voting Trustee in connection with such Closing or Subsequent Closing the number of shares of Common Stock in excess of the Threshold Amount. 3. Representations and Warranties of the Company and Purchasers (a) The Company hereby represents and warrants to each Purchaser as follows: (i) Existence. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Texas and has full corporate power and authority to conduct its business and own and operate its properties as now conducted, owned and operated. (ii) Authorization and Enforceability. The Company has the full power and authority and has taken all required corporate and other action necessary to authorize and permit the Company to execute and deliver this Agreement and to carry out the terms hereof and to issue and deliver the Common Stock, and none of such actions will violate any provision of the Company's Articles of Incorporation or Bylaws or any applicable Law, or rule of any stock exchange where the Common Stock is listed, or result in the breach of, or constitute a default (or event which, with notice or lapse of time or both, would constitute a default) under, any agreement, instrument or understanding to which the Company is a party or by which it is bound. This Agreement constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and similar laws of 6 general application related to the enforcement of creditor's rights generally and (ii) general principles of equity. (iii) Issuance of Common Stock. The shares of Common Stock that may be issued pursuant to this Agreement have been duly authorized and, when issued and delivered in accordance with this Agreement, will be validly issued and outstanding and will be fully paid and nonassessable. (b) Each Purchaser hereby represents and warrants to the Company as follows: (i) Existence. Such Purchaser is a corporation, limited liability company or partnership, as the case may be, duly organized and validly existing under the laws of the State of Delaware. (ii) Authorization and Enforceability. Such Purchaser has the full power and authority and has taken all action necessary to authorize and permit it to execute and deliver this Agreement and to carry out the terms hereof and none of such actions will violate any provision of such Purchaser's organizational documents or any applicable Law, or result in the breach of, or constitute a default (or event which, with notice or lapse of time or both, would constitute a default) under, any agreement, instrument or understanding to which such Purchaser is a party or by which it is bound. This Agreement constitutes a legal, valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except to the extent limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium and similar laws of general application related to the enforcement of creditor's rights generally and (ii) general principles of equity. 4. Anti-Dilution Adjustments (a) If the Company shall, while any Purchaser's Exchange Rights under this Agreement are outstanding, issue or sell shares of Common Stock or Common Stock Equivalents (as defined below) without consideration or at a price per share or Net Consideration Per Share (as defined below) less than the Current Market Price in effect immediately prior to such issuance or sale then in such case the Note Exercise Price, except as hereinafter provided, shall be lowered so as to be equal to an amount determined by multiplying such Note Exercise Price by the following fraction: N() + N1 -------- N() + N2 Where: N() = the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares of Common Stock or Common Stock Equivalents (calculated on a fully diluted basis assuming the exercise or conversion of all then exercisable or convertible options, warrants, purchase rights and convertible securities). 7 N1 = the number of shares of Common Stock which the aggregate consideration (without giving effect to any underwriter's discounts or commissions) if any (including the Net Consideration Per Share with respect to the issuance of Common Stock Equivalents), received or receivable by the Company for the total number of such additional shares of Common Stock so issued or deemed to be issued would purchase at the Current Market Price in effect immediately prior to such issuance. N2 = the number of such additional shares of Common Stock so issued or deemed to be issued. (b) For purposes of this Section 4, if a part or all of the consideration received by the Company in connection with the issuance of any securities described in this Section 4 consists of property other than cash, such consideration shall be deemed to have a fair market value as is reasonably determined in good faith by the Board or a committee thereof. For the purposes of this Section 4, the issuance of any warrants, options or subscription or purchase rights with respect to shares of Common Stock and the issuance of any securities convertible into or exchangeable for shares of Common Stock and the issuance of any warrants, options or subscription or purchase rights with respect to such convertible or exchangeable securities (collectively, "Common Stock Equivalents") shall be deemed an issuance of Common Stock. For the avoidance of doubt, if a Common Stock Equivalent is issued or sold as part of a unit with any other security of the Company or its Affiliates that is not independent of a Common Stock Equivalent, such other security shall not constitute a Common Stock Equivalent. Any obligation, agreement or undertaking to issue Common Stock Equivalents at any time in the future shall be deemed to be an issuance at the time such obligation, agreement or undertaking is made or arises and no additional adjustment of the Note Exercise Price shall be made upon issuance of the Common Stock pertaining thereto. (c) For purposes of this Section 4, the "Net Consideration Per Share" which shall be receivable by the Company for any Common Stock issued upon the exercise or conversion of any Common Stock Equivalents shall be determined as follows: (i) The amount equal to the total amount of consideration, if any, received by the Company for the issuance of such Common Stock Equivalents (without giving effect to any underwriting discounts or commissions), plus the minimum amount of consideration, if any, payable to the Company upon exercise, or conversion or exchange thereof, divided by the aggregate number of shares of Common Stock that would be issued if all such Common Stock Equivalents were exercised, exchanged or converted. (ii) In each instance such determination shall be made as of the date of issuance of Common Stock Equivalents without giving effect to any possible future upward price adjustments or rate adjustments which may be applicable with respect to such Common Stock Equivalents. (d) Section 4(a) shall not apply under any of the circumstances which would constitute an Extraordinary Common Stock Event (as described below). Further, Section 4(a) shall not apply with respect to the issuance or sale of shares of Common Stock, or the grant of options or other Common Stock Equivalents exercisable therefor, (i) to current or former 8 directors, officers, employees and consultants of the Company or any subsidiary pursuant to any qualified or non-qualified stock option plan or agreement, stock purchase plan or agreement, stock restriction agreement, employee stock ownership plan, consulting agreement, or such other options, issuances, arrangements, agreements or plans intended principally as a means of providing compensation for employment or services, provided that in each such case such plan, agreement, or other arrangement or issuance is approved by the vote or consent of the Board, (ii) pursuant to any dividend reinvestment and stock purchase plan of the Company, or (iii) upon settlement of stock purchase contracts of the Company that are outstanding as of November 18, 2002 (as set forth on Schedule 1.2 hereto), or issued after November 18, 2002 with the consent of the Holders of a Majority in Interest. (e) Upon the happening of an Extraordinary Common Stock Event (as described below), simultaneously with the happening of such Extraordinary Common Stock Event, the Note Exercise Price shall be adjusted by multiplying the Note Exercise Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such Extraordinary Common Stock Event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such Extraordinary Common Stock Event, and the product so obtained shall thereafter be the Note Exercise Price. An "Extraordinary Common Stock Event" shall mean (i) the issue of additional shares of Common Stock as a dividend or other distribution on outstanding shares of Common Stock, (ii) a subdivision of outstanding shares of Common Stock into a greater number of shares of Common Stock, or (iii) a combination or reverse stock split of outstanding shares of Common Stock into a smaller number of shares of the Common Stock. (f) If the Company shall make or issue, or shall fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution with respect to the Common Stock payable in (i) securities of the Company other than in an Extraordinary Common Stock Event, or (ii) other assets (including cash and other securities but excluding ordinary cash dividends), then and in each such event the Company shall or shall cause TXU Energy to distribute the number of securities or such other assets of the Company or, at the option of the Company, cash of an equivalent value as reasonably determined in good faith by the Board which each Purchaser would have received had such Purchaser exercised the Exchange Right (in respect of any remaining Notes owned by it represented by the then Current Invested Principal Amount) on the date of such event and had such Purchaser thereafter, during the period from the date of such event to and including the date the Exchange Right is exercised, retained such securities or other assets receivable by such Purchaser, giving application to all other adjustments called for during such period under this Section 4. (g) If the Common Stock shall be changed into the same or a different number of shares of any other class or classes of capital stock, whether by capital reorganization, recapitalization, reclassification or consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets to another corporation or otherwise (other than an Extraordinary Common Stock Event), then in each such event each Purchaser shall have the right thereafter to receive upon exercise hereof, in lieu of the number of shares of Common Stock which such Purchaser would otherwise have been entitled to receive, the kind 9 and amount of shares of capital stock and other securities and property which it would have received upon such reorganization, recapitalization, reclassification or consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets or other change had such Purchaser exercised the Exchange Right immediately prior to such reorganization, recapitalization, reclassification or consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets or change, all subject to further adjustment as provided herein. The provision for such adjustments shall be a condition precedent to the consummation by the Company of any such transaction. (h) Whenever on or after the date of this Agreement the number of shares of Common Stock for which this Exchange Right is exercisable or the Note Exercise Price is adjusted, as herein provided, the Company shall promptly give notice thereof to each Purchaser, in accordance with Section 9, by delivering a certificate which sets forth the Note Exercise Price after such adjustment and a brief statement of the facts requiring such adjustment. Such certificate shall also set forth the kind and amount of stock or other securities or property for which this Exchange Right shall be exercisable following the occurrence of any of the events specified above. The foregoing anti-dilution adjustments shall not apply to any securities outstanding prior to the date hereof. 5. Covenants (a) The Company Reservation of the Common Stock. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purposes of issuance upon exchange of the Notes in accordance with this Agreement, such number of shares of the Common Stock as are issuable upon the exchange of all Notes pursuant to this Agreement. All shares of Common Stock which are so issuable shall, when issued, be duly and validly issued, fully paid and non-assessable and free from all taxes, liens and charges. The Company shall take all such actions as may be necessary to assure that all such shares of Common Stock may be so issued without violation of any applicable Law or Regulation or of any requirements of any domestic securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance, which shall be immediately transmitted by the Company upon issuance). (b) Filings; Etc. Subject to the terms and conditions herein provided, each Purchaser, the Company, and TXU Energy shall: (i) make any required filings under the HSR Act (and shall share equally all filing fees incident thereto), which filings shall be made promptly, and thereafter shall promptly make any other required submissions under the HSR Act and under any applicable non-U.S. competition, antitrust or premerger notification laws (the "Non-U.S. Antitrust Laws"); (ii) make any required filings, and obtain the consents, approvals, permits or authorizations, required to be made or obtained prior to the Closing or a Subsequent Closing, as the case may be, with or from any Governmental Agency; 10 (iii) to the extent permitted by Law and Regulation, agree not to participate in any meeting or discussion with any Governmental Agency in respect of any filings, investigation or other inquiry concerning this Agreement or the transactions contemplated hereby unless they consult with the other parties in advance and, to the extent permitted by such Governmental Agency, gives the other parties the opportunity to attend and participate in such meeting or discussion; (iv) to the extent permitted by Law and Regulation, furnish the other parties with copies of all correspondence, filings and communications (and memoranda setting forth the substance thereof) between them and their subsidiaries and their respective representatives on the one hand, and any Governmental Agency or members of any such agency's staff on the other hand, with respect to this Agreement and the transactions contemplated hereby; and (v) furnish the other parties with such necessary information and reasonable assistance as such other parties and their Affiliates may reasonably request in connection with their preparation of necessary filings, registrations or submissions of information to any governmental or regulatory authorities, including, without limitation, any filings necessary or appropriate under the provisions of the HSR Act or any applicable Non-U.S. Antitrust Laws. (c) Without limiting Section 5(b), Purchaser, the Company and TXU Energy shall: (i) each use reasonable best efforts to avoid the entry of, or to have vacated, terminated or modified, any decree, order or judgment that would restrain, prevent or delay the consummation of the transactions contemplated by this Agreement; and (ii) each use best reasonable efforts to take any and all steps necessary to obtain any consents and approvals or make any required filings under Section 5(b) above or eliminate any impediments to the consummation of the transactions contemplated by this Agreement. 6. Board Representation (a) Subject to and to the extent permitted by applicable Law and Regulations, (i) prior to the next election of directors, and as soon as practicable following the date a vacancy is created on the Board, the Company, through its Board, shall cause to be duly appointed to its Board one individual designated by the DLJ VCOC Fund (the "Purchaser Director") and (ii) thereafter, at each election of directors at which the term of the Purchaser Director will expire, the Board shall recommend for election and cause to be elected to the Board a nominee, and shall use reasonable best efforts to solicit proxies in favor of such nominee consistent with the efforts used to solicit proxies for the other Board nominees, who will be designated by the DLJ VCOC Fund, and upon the election of such nominee, such nominee shall be the Purchaser Director. (b) During any period for which there is no Purchaser Director serving on the Board, the DLJ VCOC Fund, if it is intended to qualify as a "venture capital operating company" within the meaning of the regulations of the United States Department of Labor set forth in 29 11 C.F.R Section 2510.3-101 (the "Plan Asset Regulations")) shall, upon prior written notice to the Company, be entitled to consult with and advise the management and Board of the Company on significant business issues, and management will meet with the DLJ VCOC Fund periodically during each year (but no more frequently than once each calendar quarter) at the Company's executive offices at mutually agreeable times for such consultation and advice. (c) The Company agrees to consider, in good faith, the recommendations of the DLJ VCOC Fund in connection with the matters on which it is consulted as described in subsection (b) above, it being understood and agreed that the ultimate discretion with respect to all such matters shall be retained by the Company. (d) The rights granted to the DLJ VCOC Fund under this Agreement are intended to enable the DLJ VCOC Fund to be operated, where applicable, as a "venture capital operating company" within the meaning of the Plan Asset Regulations, and this Agreement shall be interpreted accordingly. (e) Immediately following the Termination Date the rights of the DLJ VCOC Fund under Section 6(a) shall terminate and the DLJ VCOC Fund shall cause the Purchaser Director to resign from the Company's Board. The DLJ VCOC Fund agrees to take all actions necessary or desirable, including the voting of outstanding Common Stock held by it, in order to effect such action. 7. Conditions (a) Conditions to the Company's and Purchaser's Obligations. The obligations of the Company and each Purchaser to complete the exchange of Notes for Common Stock upon the exercise of an Exchange Right shall be subject to the fulfillment of the following conditions: (i) any waiting period applicable to the consummation of the transactions contemplated by this Agreement under the HSR Act shall have expired or been terminated and any mandatory waiting period under any applicable Non-U.S. Antitrust Laws (where the failure to observe such waiting period referred to in this clause (i) would be, in the reasonable judgment of either the Company or any Purchaser, be reasonably likely to have a material adverse effect on the Company or any Purchaser) shall have expired or been terminated; and (ii) if required by Law or Regulation, approval of any Governmental Agency with respect to the consummation of the transactions contemplated by this Agreement shall have been granted. (b) None of the parties hereto shall be subject to any Law, decree, order or injunction that prohibits the consummation of the transactions contemplated hereby issued by a court of competent jurisdiction of (i) the United States or any state or other jurisdiction in the United States, (ii) the European Union or any member state thereof or Canada or (iii) any other jurisdiction (the "Other Non-U.S. Jurisdictions"); provided, however, that, prior to invoking this condition, each party shall have complied with Section 5(b), and with respect to other matters not covered by Section 5(b), shall have used its reasonable best efforts to have any such decree, order or injunction lifted or vacated; and no Law or Regulation shall have been enacted by any 12 Governmental Agency which prohibits or makes unlawful the consummation of the transactions contemplated by this Agreement; provided, further, that with respect to any decree, order, injunction, Law or Regulation of any Other Non-U.S. Jurisdiction, noncompliance with such decree, order, injunction, Law or Regulation would, in the reasonable judgment of the Company or any Purchaser, be reasonably likely to have a material adverse effect on the Company, Purchaser or their respective Affiliates or operations. 8. Owners of Notes Not Deemed Shareholders. No owner of Notes shall, as such, be entitled to vote or be deemed the holder of Common Stock that may at any time be issuable upon exercise of Exchange Rights for any purpose whatsoever, nor shall anything contained herein be construed to confer upon the owner of the Notes, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issue or reclassification of stock, change of par value, consolidation, merger or conveyance or otherwise), or to receive notice of meetings until such owner shall have exercised Exchange Rights in accordance with the provisions hereof. 9. Acquisition of Additional Common Stock During the period commencing on the date hereof and ending on the termination of the Effective Period (as defined in the Registration Rights Agreement), each of the DLJ Entities hereby agree that neither it or any entity Controlled by it (other than portfolio companies of the DLJ Entities) shall, without the prior approval of the Company's Board of Directors (excluding, for purposes of such approval, the Purchaser Director), (i) acquire, offer or propose to acquire or agree to acquire (whether by purchase, tender or exchange offer, through an acquisition of Control of another Person (including by way of merger or consolidation), by joining a partnership, syndicate or other group, or otherwise), the beneficial ownership of any Common Stock of the Company other than Common Stock issued pursuant to the Exchange Agreement (or any warrants, options or other rights to purchase or acquire, or any securities convertible into, or exchangeable for, any Common Stock of the Company); (ii) make any public announcement with respect to, or submit any proposal for, any merger, consolidation, sale of substantial assets (other than sales made in the ordinary course of business of such Holder) or other business combination or extraordinary transaction involving the Company; (iii) except in connection with the election of the Purchaser Director, make, or in any way participate in, any "solicitation" of "proxies" (as such terms are defined or used in Regulation 14A under Exchange Act) to vote any Common Stock of the Company or seek to advise or influence any Person (other than any Affiliate) with respect to the voting of any Common Stock of the Company; (iv) otherwise act, either alone or in concert with others, to seek control of the Company's Board or (v) publicly disclose any intention, proposal, plan or arrangement with respect to any of the foregoing (collectively, the "Acquisition Restrictions"). The Acquisition Restrictions contained in clause (i) above shall not apply to any acquisition (each, an "Acquisition") of beneficial ownership of any additional Common Stock of the Company: (x) which is by way of stock dividends, stock reclassifications or other distributions or offering made available on a pro rata basis to holders of Common Stock of the Company generally or (y) that involves Common Stock acquired from the Company in accordance with the provisions of this Agreement. 13 10. General Provisions (a) No Short Sales; Hedging. The DLJ Entities agree that they will not sell any shares of Common Stock short or buy any put option (other than "costless collars" after the second anniversary of the date hereof) in respect of shares of Common Stock so long as any of the Notes remain outstanding. The DLJ Entities further agree not to engage in any hedging activities with respect to Common Stock until the second anniversary of the date hereof. (b) Survival of Representation and Warranties. The representations and warranties of the Company and each Purchaser shall survive the Closing and each Subsequent Closing until all of the Notes have been exchanged into shares of Common Stock, paid at maturity or are redeemed in accordance with their terms. (c) Notice Generally. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified by notice given in accordance with this Section 10): (i) If to any Purchaser, at UXT Holdings LLC Eleven Madison Avenue New York, NY 10010-3629 Attention: Ivy Dodes Facsimile: 212-325-8256 and to any Holder, at the address provided by such Holder with a copy to: Shearman & Sterling 599 Lexington Avenue New York, NY 10022 Attention: Stephen Besen Mark Roppel Facsimile: 212-848-7179 (ii) If to the Company, at TXU Corp. 1601 Bryan Street Dallas, TX 75201 Attention: Treasurer Facsimile: 214-812-8998 14 with a copy to: Hunton & Williams 1601 Bryan Street Dallas, Texas 75201 Attention: Timothy A. Mack Facsimile: 214-880-0011 and to: Thelen Reid & Priest LLP 875 Third Avenue New York, NY 10022 Attention: Robert J. Reger, Jr. Facsimile: 212-603-2001 (d) Successors and Assigns; Third Party Beneficiaries. (i) This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto as hereinafter provided. The rights of each Purchaser with respect to the Notes shall be transferred to any Person who is a transferee of such Notes except that the rights of the DLJ VCOC Fund pursuant to Section 6 hereof may not be assigned to any other party other than to a Permitted Transferee thereof without the consent of the Company. All obligations of the Company hereunder shall survive any such transfer. No person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement. (ii) Any transferee (or group of Affiliated transferees) of the Notes or Common Stock that would own or have pursuant to such transfer (assuming the exercise of the Exchange Right) the right to acquire 5% or more of the outstanding Common Stock as of the date of the transfer of such securities shall, before such transfer, agree to be bound by the restrictions set forth in Section 9 and Section 10(a). (e) Headings. The headings and subheadings in this Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof. (f) Governing Law; Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. (i) Any claim, action, suit or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby may be heard and determined in any New York State or federal court sitting in The City of New York, County of Manhattan, and each of the parties hereto hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom in any such claim, action, suit or proceeding) and 15 irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any such claim, action, suit or proceeding in any such court or that any such claim, action, suit or proceeding that is brought in any such court has been brought in an inconvenient forum. (ii) Subject to applicable law, process in any such claim, action, suit or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Nothing herein shall affect the right of any party to serve legal process in any manner permitted by law or at equity. WITH RESPECT TO ANY SUCH CLAIM, ACTION, SUIT OR PROCEEDING IN ANY SUCH COURT, EACH OF THE PARTIES IRREVOCABLY WAIVES AND RELEASES TO THE OTHER ITS RIGHT TO A TRIAL BY JURY, AND AGREES THAT IT WILL NOT SEEK A TRIAL BY JURY IN ANY SUCH PROCEEDING. (g) Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions is not affected in any manner materially adverse to any party. Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible. (h) Entire Agreement. This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto. (i) Cumulative Remedies. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise. (j) Construction. Each party hereto acknowledges and agrees that it has had the opportunity to draft, review and edit the language of this Agreement and that no presumption for or against any party arising out of drafting all or any part of this Agreement will be applied in any dispute relating to, in connection with or involving this Agreement. Accordingly, the parties hereto hereby waive the benefit of any rule of Law or any legal decision that would require, in cases of uncertainty, that the language of a contract should be interpreted most strongly against the party who drafted such language. (k) Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. Each counterpart may consist of a number of copies hereof each signed by less than all, but together signed by all of the parties hereto. 16 IN WITNESS WHEREOF, the parties have executed this Agreement and caused the same to be duly delivered on their behalf on the day and year first written above. TXU CORP. By: ------------------------------------- Name: Title: TXU ENERGY COMPANY LLC By: ------------------------------------- Name: Title: UXT HOLDINGS LLC By: ------------------------------------- Name: Title: 17 SCHEDULE 1.1 THE DLJ ENTITIES Name UXT Holdco 2 LLC UXT Intermediary LLC UXT Holdings LLC UXT Holdings (Offshore) Ltd. UXT-1 Blocker, Inc. UXT-2 Blocker, Inc. UXT-3 Blocker, Inc. UXT-4 Blocker, Inc. UXT-5 Blocker, Inc. UXT AIV, L.P. UXT AIV (Offshore), L.P. DLJ Merchant Banking Partners III, L.P. DLJ Offshore Partners III, C.V. DLJ Offshore Partners III-1, C.V. DLJ Offshore Partners III-2, C.V. Millennium Partners II, L.P. DLJMB Partners III GmbH & Co. KG MBP III Plan Investors, L.P. (but the applicability of Section 9 to this entity shall be limited to activities taken in conjunction with DLJ Merchant Banking Partners III) SCHEDULE 1.2 OUTSTANDING STOCK PURCHASE CONTRACTS AS OF NOVEMBER 18, 2002 (1) 8,800,000 Feline Prides/Growth Prides issued by TXU in June of 2002. (2) 20,000,000 Corporate Units/Treasury Units issued by TXU in October of 2001. 2 EX-4 6 ex4to13d_041503.txt EXHIBIT 4 TO SCHEDULE 13D THE TRANSFER OF THIS NOTE IS SUBJECT TO THE CONDITIONS SPECIFIED IN AN EXCHANGE AGREEMENT AMONG THE COMPANY, TXU CORP. AND THE HOLDER, A COPY OF SUCH AGREEMENT AS IN EFFECT FROM TIME TO TIME WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. TXU ENERGY COMPANY LLC $472,420,757.46 Exchangeable Subordinated Note Dated as of November 22, 2002 FOR VALUE RECEIVED, the undersigned, TXU Energy Company LLC, a Delaware limited liability company (the "Company"), HEREBY PROMISES TO PAY UXT INTERMEDIARY LLC or registered assigns (as further defined herein, the "Holder") the principal amount of $472,420,757.46 on November 22, 2012. The Company hereby promises to pay interest on the unpaid principal amount hereof from the date hereof until such principal amount is paid in full, payable on the dates and at the rates hereinafter set forth. ARTICLE I DEFINITIONS SECTION 1.01. Definitions. The following terms used in this Note shall have the following meanings (unless otherwise expressly provided in this Note): "Affiliate" means with respect to any Person, any other Person controlling, controlled by, or under common control with such first Person. For the avoidance of doubt, the Company and its Affiliates shall be considered Affiliates of the Company and the Holders and their Affiliates shall not be considered Affiliates of the Company. "Affiliated Employee Benefit Trust" means any trust that is a successor to the assets held by a trust established under an employee benefit plan subject to ERISA or any other trust established directly or indirectly under such plan or any other such plan having the same sponsor. "Agreement Value" means, for each hedge agreement, on any date of determination, an amount determined in good faith by the Company equal to: (a) in the case of any hedge agreement documented pursuant to the Master Agreement (Multicurrency-Cross Border) published by the International Swap and Derivatives Association, Inc. (the "Master Agreement"), the amount, if any, that would be payable by or to the Company or any of its Subsidiaries to or from its counterparty to such hedge agreement, as if (i) such hedge agreement was terminated early on such date of determination and, (ii) the Company or such Subsidiary was the sole "Affected Party", and assumes second method and market quotation and adjusts for collateral positions, or (b) in the case of a hedge agreement traded on an exchange, the mark-to-market value of such hedge agreement, which will be the unrealized gain or loss on such hedge agreement to the Company or such Subsidiary to such hedge agreement determined in good faith by the Company based on the settlement price of such hedge agreement on such date of determination, or (c) in all other cases, the mark-to-market value of such hedge agreement, which will be the unrealized gain or loss on such hedge agreement to the Company or such Subsidiary to such hedge agreement determined in good faith by the Company; capitalized terms used and not otherwise defined in this definition shall have the meaning set forth in the above described Master Agreement. "Average Closing Price" means, for any Fiscal Quarter, the average of closing prices of a share of TXU Common Stock on the New York Stock Exchange Corporate Transactions Reporting System, as reported in The Wall Street Journal, for the period commencing on the first day of such Fiscal Quarter and ending on the last day of such Fiscal Quarter. "Bankruptcy" means, with respect to a Person, (a) that such Person has (i) made an assignment for the benefit of creditors; (ii) filed a voluntary petition in bankruptcy; (iii) been adjudged bankrupt, or insolvent; or had entered against such Person an order of relief in any bankruptcy or insolvency proceeding; (iv) filed a petition or an answer seeking for such Person any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation or filed an answer or other pleading admitting or failing to contest the material allegations of a petition filed against such Person in any proceeding of such nature; or (v) sought, consented to, or acquiesced in the appointment of a trustee, receiver or liquidator of such Person or of all or any substantial part of such Person's properties; (b) 60 days have elapsed after the commencement of any proceeding against such Person seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation and such proceeding has not been dismissed; or (c) 60 days have elapsed since the appointment without such Person's consent or acquiescence of a trustee, receiver or liquidator of such Person or of all or any substantial part of such Person's properties and such appointment has not been vacated or stayed or the appointment is not vacated within 60 days after the expiration of such stay. "Board of Managers" has the meaning set forth in the Limited Liability Company Agreement. "Business" means the generation of electricity, wholesale energy trading, retail energy marketing, energy delivery and other energy-related services by the Company or any of their respective Subsidiaries. 2 "Business Day" means any day other than a Saturday, Sunday or any other day which is a legal holiday under the laws of the States of New York or Texas or a day on which national banking associations in such States are authorized or required by law or other governmental action to close. "Capital Expenditures" means expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto that are capitalized on the balance sheet of the applicable Person prepared in accordance with GAAP. "Certificate of Formation" means the Original Certificate of Formation as it may be amended, restated, supplemented or otherwise modified from time to time on or after the date hereof. "Change of Control" means the consummation of any transaction or series of related transactions that will result in any Person or group of Persons, in each case as defined in the Exchange Act: (i) becoming the beneficial owner, directly or indirectly, of more than 30% of the aggregate voting power of the Company, Holdings or TXU Corp. or 30% of the aggregate fair market value of the assets of the Company, Holdings or TXU Corp., (ii) acquiring, by contract or otherwise, the power to direct or cause the direction of the management or policies of the Company, Holdings or TXU Corp., or (iii) otherwise becoming the beneficial owner, directly or indirectly, of more than 30% of the ownership interests in the Company. "Code" means the United States Internal Revenue Code of 1986, as amended from time to time. "Company" has the meaning set forth in the Preamble. "Competitor" means, with respect to the Company or any of its Affiliates, a Person (or an Affiliate of an entity) that is significantly involved in the generation of electricity, wholesale energy trading, retail energy marketing or energy delivery. "Default Interest" shall have the meaning set forth in Section 2.05. "Delaware Act" means the Delaware Limited Liability Company Act, 6 Del.ss. 18-101 et seq., as the same may be amended from time to time. "Distribute" means to make one or more Distributions. "Distribution" means the payment or distribution by the Company of any money or property other than money to a Member (i) on account of such Member's Membership Interest as provided in the Limited Liability Company Agreement or (ii) in redemption or liquidation of all or any portion of such Member's Membership Interest. "DLJ Entity" or "DLJ Entities" means each investor or investors listed on Schedule II. "DLJ VCOC Fund" means UXT AIV, L.P., a Delaware limited partnership, or a DLJ Entity or Affiliate thereof designated by UXT AIV, L.P. 3 "EBITDA" means, without duplication, the consolidated Net Income of the Company and its Subsidiaries determined in accordance with GAAP consistently applied, plus any amounts subtracted in calculating Net Income in respect of interest expense, Taxes, depreciation and amortization, less (i) any gain plus any loss realized in connection with the sale of any assets or disposition of any securities, other than those included in cash flow from operations, (ii) any extraordinary or non-recurring gain plus any loss or (iii) any non-cash extraordinary gain, plus (iv) any non-cash extraordinary loss. "Encumber" means, with respect to a Person, creating or suffering to exist any Encumbrance against any of the property of such Person. "Encumbrance" means any lien, mortgage, pledge, collateral assignment, security interest, hypothecation or other encumbrance. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Agreement" means the Exchange Agreement, dated as of the date hereof, by and among the Company, TXU Corp. and the Holders. "Exchanged Note Principal" means the amount of Notes exchanged into TXU Common Stock pursuant to the Exchange Agreement. "Fiscal Quarter" means any three-month accounting period of the Company in the Fiscal Year. "Fiscal Year" means the annual accounting period of the Company, which shall be the calendar year or such portion of a calendar year during which the Company is in existence. "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time, consistently applied. "Governmental Authority" means any United States or non-United States federal, national, supranational, State, provincial, local, or similar government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body. "Holder" means any Person identified as the registered holder of this Note in the Register. "Holdings" means TXU US Holdings Company, a Texas corporation. "Indebtedness" of any Person means, without duplication, net of restricted cash and cash equivalents off-setting Indebtedness (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services (other than trade payables and accrued liabilities arising in the ordinary course of 4 business), (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all capitalized lease obligations of such Person, (f) all obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities securing Indebtedness and all interest rate or foreign exchange hedging transactions valued at the Agreement Value thereof, (g) all unconditional obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any capital stock of such Person or any warrants, rights or options to acquire such capital stock, (h) all Indebtedness of any other Person of the type referred to in clauses (a) through (g) guaranteed by such Person or for which such Person shall otherwise (including pursuant to any keepwell, makewell or similar arrangement) become directly or indirectly liable (other than indirectly as a result of a performance guarantee not entered into with respect to Indebtedness), and (i) all third party Indebtedness of the type referred to in clauses (a) through (h) above secured by any lien or security interest on property (including accounts and contract rights) owned by the Person whose Indebtedness is being measured, even though such Person has not assumed or become liable for the payment of such third party Indebtedness, the amount of such obligation being deemed to be the lesser of the net book value of such property or the amount of the obligation so secured; provided that (i) true sales of accounts receivable and (ii) the obligation evidenced by this Note and the Other Notes, shall not constitute "Indebtedness" hereunder. "Interest Coverage Ratio" means the ratio of EBITDA of the Company to consolidated cash interest expense of the Company and its Subsidiaries on all Indebtedness. "Interest Payment Date" means (a) prior to the occurrence of a Reset Event in respect of which the Company has elected to make payment under Section 2.01(b), the date five (5) Business Days after each Fiscal Quarter, and if such day is not a Business Day, then the next succeeding Business Day and (b) after the occurrence of a Reset Event in respect of which the Company has elected to make payment under Section 2.01(b), each date on which dividends are paid in respect of the shares of TXU Common Stock. "Law" means any United States or non-United States federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, order, requirement or rule of law (including, without limitation, common law). "Limited Liability Company Agreement" means the limited liability company agreement of TXU Energy Company LLC, as amended pursuant to the Purchase Agreement. "Loss" has the meaning set forth in Section 7.01(a). "Majority in Voting Interest" means, at any time, a Holder or Holders that own a majority of the principal amount of the Notes outstanding at such time, voting together as a single class. "Manager" means a member of the Board of Managers. "Member" means a "member" of the Company. 5 "Membership Interest" of any Member at any time means the entire ownership interest of such Member in the Company at such time, including all benefits to which the owner of such Membership Interest is entitled under the Limited Liability Company Agreement and applicable law, together with all obligations of such Member under the Limited Liability Company Agreement and applicable law. "Net Income" means with respect to any Fiscal Year, or part thereof, the net income (or net loss) of the Company for such period as determined on a consolidated basis and in accordance with GAAP. "Note" means this Exchangeable Subordinated Note, each Other Note and each additional Note issued upon any transfer of an interest in all or any part of this Note; and "Notes" means, collectively, all of the foregoing. "Officer" means an officer of the Company. "Original Certificate of Formation" has the meaning set forth in the Limited Liability Company Agreement. "Other Note" means each Exchangeable Subordinated Note in substantially the form of this Note issued on the date hereof and each additional Note issued upon any transfer of an interest in all or any part of such Other Note. "Payment Default" means any failure by the Company to pay principal or interest when due under this Note. "Permitted Transferee" means in the case of any DLJ Entity, (A) any other DLJ Entity, (B) any general or limited partner of any DLJ Entity (a "DLJ Partner"), and any Affiliated Employee Benefit Trust or Person that is an Affiliate of any DLJ Partner (collectively, the "DLJ Affiliates"), (C) any managing director, general partner, director, limited partner, officer or employee of any DLJ Entity or of any DLJ Affiliate, or the heirs, executors, administrators, testamentary trustees, legatees or beneficiaries of any of the foregoing persons referred to in this clause (C) (collectively, "DLJ Associates"), (D) a trust (to the extent recognized by applicable Law), the beneficiaries of which, or a corporation, limited liability company or partnership, all of the stockholders, members or general or limited partners of which, include only DLJ Entities, DLJ Affiliates, DLJ Associates, their spouses or their lineal descendants or (E) a voting trustee for one or more DLJ Entities, DLJ Affiliates or DLJ Associates under the terms of a voting trust (to the extent recognized by applicable Law). "Person" means any individual, corporation, partnership, limited liability company, trust, joint venture, governmental entity or other unincorporated entity, association or group. "Purchase Agreement" means the Purchase Agreement, dated as of November 18, 2002, by and between the Company and the initial Holder, as amended, restated, supplemented or otherwise modified pursuant to the terms thereof from time to time. "Register" has the meaning set forth in Section 6.03. 6 "Regulation" means any rule or regulation of any Governmental Authority having the effect of Law or any rule or regulation of any self-regulatory organization. "Reset Amount" means with respect to the unpaid principal amount outstanding on the Note for any Fiscal Quarter ending after the occurrence of a Reset Event, an amount equal to the aggregate dividend that would be payable during such Fiscal Quarter in respect of the shares of TXU Common Stock that would be determined by dividing the outstanding principal amount of this Note by the average closing price for TXU Common Stock for such Fiscal Quarter. "Reset Event" means, for any Fiscal Quarter, an Average Closing Price for TXU Common Stock in excess of $39.45, as adjusted to account for stock splits, stock dividends and similar occurrences. "Restricted Securities" means (a) all Membership Interests and Notes issued by the Company and (b) any securities issued with respect to, or in exchange for, the Membership Interests or Notes referred to in clause (a) above in connection with a conversion, combination of units or shares, exchange, recapitalization, merger, consolidation or other reorganization, including in connection with the consummation of any reorganization plan. "State" means any one of the 50 states of the United States of America or the District of Columbia. "Subsidiary" means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof, or (b) if a limited liability company, partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of such Person or entity or a combination thereof. For purposes of this Note, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control any managing director, managing member, or general partner of such limited liability company, partnership, association or other business entity. "Taxes" means all federal, State, local and foreign income, profits, franchise, gross receipts, environmental, customs duty, capital stock, severance, stamp, windfall profit, payroll, sales, use, transfer, employment, unemployment, disability, use, property, withholding, excise, production, value added, occupancy and other taxes, duties or assessments of any nature whatsoever, together with all interest, penalties and additions imposed with respect thereto. "Third Party Claims" has the meaning set forth in Section 7.01(b). "Transfer" means (a) as a noun, the transfer of ownership by sale, exchange, assignment, gift, donation, grant or other conveyance of any kind, whether voluntary or 7 involuntary, including Transfers by operation of law or legal process (and hereby expressly including, with respect to a Holder, assignee or other Person, any voluntary or involuntary appointment of a receiver, trustee, liquidator, custodian or other similar official for such Holder or all or any part of such Holder, assignee or other Person or all or any part of the property of such Holder, assignee or other Person under any bankruptcy, reorganization or insolvency law and (b) as a verb, the act of making any voluntary or involuntary Transfer. "Treasury Regulations" means the income Tax regulations promulgated under the Code as amended. "TXU Common Stock" means the common stock of TXU Corp., without par value. "TXU Corp." means TXU Corp., a Texas corporation. SECTION 1.02. Other Definitional Provisions. (a) All terms in this Note shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. (b) As used in this Note and in any certificate or other documents made or delivered pursuant hereto or thereto, accounting terms not defined in this Note or in any such certificate or other document, and accounting terms partly defined in this Note or in any such certificate or other document to the extent not defined, shall have the respective meanings given to them under GAAP. To the extent that the definitions of accounting terms in this Note or in any such certificate or other document are inconsistent with the meanings of such terms under GAAP, the definitions contained in this Note or in any such certificate or other document shall control. (c) The words "hereof," "herein," "hereunder," and words of similar import when used in this Note shall refer to this Note as a whole and not to any particular provision of this Note; Section references contained in this Note are references to Sections in this Note unless otherwise specified; and the term "including" shall mean "including without limitation." (d) The definitions contained in this Note are applicable to the singular as well as the plural forms of such terms. (e) Common nouns and pronouns and any variations thereof shall be deemed to refer to masculine, feminine, or neuter, singular or plural, as the identity of the Person, Persons or other reference in the context requires. Whenever used herein, "or" shall include both the conjunctive and disjunctive, "any" shall mean "one or more." (f) Any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, modified or supplemented and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; references to a Person are also to its permitted successors and assigns. 8 ARTICLE II TERMS OF PAYMENT SECTION 2.01. Interest Payment. (a) The Company shall pay interest on the unpaid principal amount of this Note at a rate per annum equal to 9.00%, payable quarterly in arrears on each Interest Payment Date; provided, however, that, the Company may, by notice to the Holder, elect to pay all or any portion of such interest by adding it to the principal amount of this Note, whereupon such amount shall bear interest at the rate aforesaid and shall no longer be considered to be interest due under this Section 2.01(a). Upon the receipt by the Holder of a notice of such election by the Company, the Holder shall record the amount, the date such amount is added to the principal amount of this Note and the aggregate principal amount of this Note in accordance with its usual practice and, prior to any transfer of this Note, such information shall be endorsed on the grid attached hereto, which is a part of this Note. (b) Notwithstanding anything provided in Section 2.01(a), from and after the date of a Reset Event, the Company shall have the option to pay interest on the unpaid principal amount of this Note (excluding any additions to the principal amount pursuant to Section 2.01(a) which shall continue to bear interest pursuant to Section 2.01(a) or 2.05, as the case maybe) in an amount equal to the Reset Amount payable in arrears on each Interest Payment Date. SECTION 2.02. No Prepayment. The Company shall not be permitted to prepay this Note in whole or in part; provided, however, that the Company may pay at any time any amounts added to the principal amount of this Note pursuant to Section 2.01(a). SECTION 2.03. Payments and Computations. The Company shall make each payment hereunder not later than 1:00 p.m. (New York City time) on the day when due in U.S. dollars to the Holder at its address referred to on Schedule I attached hereto in same day funds. All computations of interest shall be made on the basis of a year of 360 days comprised of four 90 day quarters; provided, however, that in the case of the first interest payment under this Note, interest shall be computed on the basis of the actual number of days elapsed from the date of the initial funding under this Note to such first Interest Payment Date. Whenever any payment shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall not in such case be included in the computation of payment of interest. SECTION 2.04. Exchange Right. The Company shall have the right by providing written notice to the Holder at any time prior to the date that is 180 days from the date of funding by the Holder under this Note, to require the Holder to exchange its interest in this Note for a preferred equity interest in the Company with substantially identical economic and other terms and otherwise in form and substance satisfactory to the Holder; provided, that, any such exchange must be consummated prior to the date that is 180 days from the date of receipt of such notice by the Holder. SECTION 2.05. Default Interest. Upon the occurrence and during the continuance of either of (a) a Payment Default or (b) the making of any Distribution by the Company during any Fiscal Quarter in respect of which the Company does not pay cash interest on this Note or has not repaid all amounts added to the principal amount of this Note pursuant to Section 2.01(a), the Company shall pay interest on (i) the unpaid principal amount of this Note 9 owing to the Holder, payable in arrears on the dates referred to in Section 2.01(a) or (b) above and on demand, at a rate per annum equal at all times to 5% per annum above the rate per annum required to be paid on such principal amount pursuant to Section 2.01(a) or (b) above and (ii) to the fullest extent permitted by law, the amount of any interest payable under this Note that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 5% per annum above the rate per annum required to be paid pursuant to Section 2.01(a) or (b) above ("Default Interest"). ARTICLE III COVENANTS AND REPRESENTATION AND WARRANTY SECTION 3.01. Accounting Books and Records. (a) The Company shall keep on site at its principal place of business each of the following: (i) separate books of account for the Company which shall show a true and accurate record of all costs and expenses incurred, all charges made, all credits made and received, and all income derived in connection with the conduct of the Company and the operation of the Business in accordance with this Note; (ii) a current list of the full name and last known business, residence, or mailing address of each Member and Holder, both past and present; (iii) a copy of the Certificate of Formation, together with executed copies of any powers of attorney pursuant to which any amendment has been executed; (iv) copies of the Company's federal, State, local and foreign income Tax returns and reports, if any, for the six most recent Fiscal Years; (v) copies of the Limited Liability Company Agreement; (vi) copies of each Note; (vii) copies of any writings permitted or required under Section 18-502 of the Delaware Act regarding the obligation of a Member to perform any enforceable promise to contribute cash or property or to perform services as consideration for such Member's capital contribution; and (viii) any written consents obtained from Members pursuant to Section 18-302 of the Delaware Act regarding action taken by Members without a meeting. (b) The Company shall use the accrual method of accounting for Tax purposes and shall use GAAP in the preparation of its financial reports and shall keep its books and records in accordance with the foregoing. Any Holder that is a DLJ Entity (a "DLJ Holder") or its designated representative has the right to have reasonable access to and inspect and copy the contents of such books or records and shall also have reasonable access during normal business hours to such additional financial information, documents, books and records as 10 such DLJ Holder may reasonably request; provided that the Company shall have no obligation to provide such access if the DLJ Entities together with their Permitted Transferees own, in the aggregate, less than 10% of the original principal amount of the Notes. The rights granted to a DLJ Holder pursuant to this Section 3.01 are expressly subject to compliance by such DLJ Holder with the safety, security and confidentiality procedures and guidelines of the Company, as such procedures and guidelines may be established from time to time. SECTION 3.02. Reports. (a) Periodic and Other Reports. The Company shall cause to be delivered to each Holder and the DLJ VCOC Fund, so long as it directly or indirectly holds any interest in the Notes, financial statements, reports and notices referred to below. The financial statements listed in clauses (i) and (ii) below shall be prepared, in each case on a consolidated basis in accordance with GAAP, and such other reports as any Holder and the DLJ VCOC Fund, so long as it directly or indirectly holds any interest in the Notes, may reasonably request from time to time. The quarterly financial statements referred to in clause (ii) below may be subject to normal period-end adjustments. (i) As soon as practicable following the end of each Fiscal Year (and in any event not later than 120 days after the end of such Fiscal Year, or such earlier date as may be required by law), an audited balance sheet of the Company as of the end of such Fiscal Year and the related statements of operations, Members' capital accounts and changes therein, and cash flows for such Fiscal Year, together with appropriate notes to such financial statements and supporting schedules, and in each case, to the extent the Company was in existence, setting forth in comparative form the corresponding figures for the immediately preceding Fiscal Year end (in the case of the balance sheet) and the two (2) immediately preceding Fiscal Years (in the case of the statements). (ii) As soon as practicable following the end of each of the first three Fiscal Quarters of each Fiscal Year (and in any event not later than 60 days after the end of each such Fiscal Quarter, or such earlier date as may be required by law), an unaudited balance sheet of the Company as of the end of such Fiscal Quarter and the related statements of operations and cash flows for such Fiscal Quarter and for the Fiscal Year to date, in each case, to the extent the Company was in existence, setting forth in comparative form the corresponding figures for the prior Fiscal Year's Fiscal Quarter and the interim period corresponding to the Fiscal Quarter and the interim period just completed, together with a description of all material transactions of the Company, which shall be reviewed annually by an independent auditor. The statements described in clauses (i) and (ii) above shall be accompanied by written certification of an Officer that such statements have been prepared in accordance with GAAP. (iii) As soon as practicable following the end of each month (and in any event not later than 30 days after the end of each month), management reports in a form agreed upon between a Majority in Voting Interest of the Holders and the Company; provided that the Company shall have no obligation to provide such management reports if the DLJ Entities together with their Permitted Transferees own, in the aggregate, less than 10% of the original principal amount of the Note. 11 (iv) A notice of the occurrence of any Event of Default, or to the extent actually known by the Company, of any event that with notice, the passage of time or both would become an Event of Default promptly, but in any event no later than two Business Days, after an Officer of the Company has actual knowledge of such occurrence, and a notice setting forth details of the actions that the Company has taken or proposes to take with respect thereto, as promptly as practicable, but in any event within ten Business Days after such Officer obtains actual knowledge of such event. (v) A notice of the occurrence of a Change of Control, or any event that is reasonably likely to result in a Change of Control, promptly, but in no event later than two Business Days, after an Officer of the Company has actual knowledge of such occurrence. (vi) Promptly following any such request, such other information as is reasonably requested by any Holder or the DLJ VCOC Fund. (b) Each Holder agrees, and the DLJ VCOC Fund shall agree, to keep any non-public information provided to such Holder or the DLJ VCOC Fund by the Company confidential and not to disclose such information unless required by law and acknowledges that the receipt of such information by such Holder or the DLJ VCOC Fund may restrict the ability of such Holder or the DLJ VCOC Fund to trade in securities of the Company, TXU Corp. or their Affiliates; provided, that, such information may be disclosed to such Holder's or the DLJ VCOC Fund's advisors (in the case of financial advisors only, upon three Business Days' advance notice to the Company), members or partners as long as they agree to keep such information confidential. SECTION 3.03. Separateness. (a) The funds and other assets of the Company shall not be commingled with those of any other entity, and the Company shall maintain its accounts separate from each Member and any other Person. (b) The Company shall not hold itself out as being liable for the debts of any other entity other than the Company and its Subsidiaries (collectively, the "Company Group"), and shall conduct its own business in its own name or duly adopted assumed name. (c) The Company shall not form, or cause to be formed, any Subsidiary other than in connection with conducting the Business. (d) The Company shall act solely through its duly authorized Members, Managers, Officers or agents in the conduct of the Business, and shall conduct the Business so as not to confuse others as to the identity or assets of the Company Group with those of any other entity. (e) The Company shall maintain separate records, books of account and financial statements, and shall not commingle its records and books of account with the records and books of account of any other entity. 12 (f) The Managers shall hold appropriate meetings to authorize all of its limited liability company actions, which meetings may be held by telephone conference call or by unanimous written consent. (g) Other than the obligations, guarantees or pledges existing on November 18, 2002 and the guarantees of (A) the Energy Plaza building lease obligations of TXU Corp., (B) an Affiliate's obligations with respect to operations in Mexico not to exceed $15 million and (C) an Affiliate's obligations with respect to leased equipment utilized by the Company not to exceed $25 million, the Company shall not (i) guarantee or become obligated for the debts of any Member or any Manager, any Affiliate thereof or any other Person, or otherwise hold out its credit as being available to satisfy the obligations of any Member, any Manager or any other Person, (ii) pledge its assets for the benefit of any entity, and (iii) other than pursuant to this Note, acquire obligations or securities of any Member, any Manager or any Affiliate, provided, however, that the Company may do all of the foregoing for the benefit of the Company Group. (h) The Company shall pay its own liabilities out of its own funds. (i) The Company Group shall maintain an arms' length relationship or other relationship commercially reasonable under the circumstances and in compliance with all regulatory codes of conduct with their Affiliates outside of the Company Group. (j) The Company Group shall use its own separate stationery, invoices, checks and other business forms. (k) The Company shall correct any known material misunderstanding regarding the separate identity of the Company Group. Nothing in this Section 3.03 or Section 3.04 herein shall be deemed to prohibit (i) the use of an Affiliate for the provision of services that can be performed cost effectively on a shared services basis, including treasury, payroll, accounting, human resources, legal, environmental, engineering, information technology and other administrative services, or (ii) participation in TXU Corp.'s money pool for its system companies in accordance with the guidelines established from time to time therefore, as long as, in each case, such activities are otherwise in compliance with the provisions of this Section 3.03 and Section 3.04. SECTION 3.04. Limited Liability and Separateness. Without limiting the generality of Section 3.03, the Company shall be operated in such a manner as the Managers deem reasonable and necessary or appropriate to preserve (a) the limited liability of each of the Members (or their successors) in the Company and (b) the separateness of the Company from the business of each Member of the Company or any other Affiliate thereof outside of the Company Group. SECTION 3.05. Limitations on Distributions. Notwithstanding any provision to the contrary contained in this Note, the Company shall not make any Distribution if such Distribution would violate Section 18-607 of the Delaware Act or other applicable law, any of the Company's debt financing agreements or any other debt financing agreement of which the Company is a guarantor, but shall instead make such Distribution as soon as practicable after such time as the making of such Distribution would not cause such violation. 13 SECTION 3.06. Restricted Actions. The Company shall not, and shall cause its Subsidiaries not to, without the prior written consent of the Majority in Voting Interest of the Notes: (a) Issue or reclassify any class or series of equity securities or Membership Interests that are, or that are convertible into, a class or series of equity securities, or Membership Interests of the Company or its Subsidiaries, as the case may be, that are, senior to or on parity with this Note. (b) Incur any Indebtedness, if on a pro forma basis after giving effect to the incurrence of such Indebtedness at the date of incurrence and the application of proceeds thereof (i) the ratio of consolidated Indebtedness of the Company to EBITDA for the four Fiscal Quarters ended most recently prior to the date of determination thereof would exceed four times or (ii) the Interest Coverage Ratio for the four Fiscal Quarters ended most recently prior to the date of determination thereof would not exceed three times. (c) Make any amendment to the Limited Liability Company Agreement. (d) Make any investments, other than ordinary course investments relating to the Business; provided, however, that no investments shall be made in the City of New York that shall cause the Company to be deemed to be conducting operations in the City of New York for the purposes of the New York City Tax Law. (e) Enter into operations significantly differing from the Business as conducted on the date hereof or enter into any new lines of business. (f) Unless otherwise required by law, merge, consolidate or otherwise combine the Company with any other Person if such merger, consolidation or combination would result in the disposition of more than 25% of the aggregate voting power of the Company or acquire or dispose of assets that would result in the acquisition or disposition, as the case may be, of more than 25% of the value of the Company. (g) Alter the number of Managers comprising the Board of Managers. (h) Allow any Person to be admitted as a member of the Company. SECTION 3.07. Treatment for Tax Purposes. (a) The Company agrees that, for all U.S. federal, state, local and foreign income Tax purposes, this Note shall be treated as a preferred equity interest in the Company, and unless prohibited by applicable law, the Company shall elect to be classified as a partnership (and not as an association, or publicly-traded partnership, taxable as a corporation). Accordingly, a capital account shall be maintained for the Holder in accordance with section 1.704-2(b)(2) of the Treasury Regulations, which shall be increased to reflect the amounts invested by the Holder in the Company (including amounts deducted from the Purchase Price in respect of the Structuring Fee and Transaction Expenses pursuant to Section 2.04(a) of the Purchase Agreement) and allocations of net profits (or, to the extent required, items of income and gain), and which shall be reduced to reflect distributions by the Company to the Holder (including amounts payable pursuant to the terms of this Note) and allocations of net losses (or, to the extent required, items of deduction or loss). Promptly following the end of each Fiscal Year of the Company (and in no event later than 90 days after 14 the close of such Fiscal Year), the Company shall provide the Holder with IRS Schedule K-1, reporting the Holder's share of the taxable income or loss of the Company, and such separately stated items of income, gain, loss, deduction or credit as required by U.S. federal income Tax law, and the Company also shall provide such information as shall be required or reasonably requested by the Holder for purposes of allowing the Holder to prepare and file its U.S. federal, state, local and foreign income Tax returns. In the event that this Note is exchanged by the Holder for a Membership Interest in the Company (at the option of the Company or otherwise), the Company agrees that, consistent with the U.S. federal, state, local and foreign income Tax treatment of this Note as a preferred equity interest in the Company, such an exchange shall be treated as a "nonrecognition transaction" under section 721 of the Code. Other than any elections made upon the conversion of the Company to a partnership for federal Tax purposes (which shall be made consistent with past practice, where applicable), the Company (including any Tax matters member thereof in its capacity as such) shall not make, revoke or change any express or deemed Tax election or change any method of Tax accounting if objected to in writing by the Holders' Tax Representative within 15 days of receiving notice thereof from the Company (which objection shall not be unreasonably made, and the Company shall consult with the Holders' Tax Representative and keep such Holder reasonably informed as to any material Tax claim, audit or proceeding that, in any case, the Company determines in good faith could affect the tax treatment of a Holder as owner of a preferred equity interest in the Company or the amount or Tax character of any Tax item allocated or to be allocated to the Holder in its capacity as owner. "Holders' Tax Representative" means a representative designated as such by a Majority in Voting Interest. (b) For each Fiscal Year of the Company, net profits (or, if required, items of income and gain) shall be allocated to the Holder for U.S. federal, state, local and foreign income Tax purposes only to the extent of the amount of interest actually paid to the Holder in respect of this Note during such Fiscal Year. No other net profits or losses (or items of income, gain, loss or deduction) shall be allocated to the Holder for such purposes, except that, if no Member of the Company has a positive capital account balance, the Holder may be allocated a proportionate share of the net losses of the Company, if any, until its capital account has been reduced to zero. In the event that the Holder receives an allocation of net losses hereunder, the Holder thereafter shall be entitled to allocations of net profits (and, if required, items of income or gain) so that the Holder's capital account will equal the amount that the Holder would be entitled to receive pursuant to the terms of this Note in connection with the liquidation or winding up of the Company. Notwithstanding anything to the contrary herein, the Holder shall not be allocated any capital losses of the Company. (c) Notwithstanding anything to the contrary herein, prior to any exchange of this Note for a Membership Interest in the Company, the Holder shall not be considered a Member of the Company by reason of its ownership of this Note for any purpose other than U.S. federal, state, local and foreign income Tax purposes, and shall not have the rights and obligations of a Member pursuant to the Limited Liability Company Agreement. SECTION 3.08. Directors. Subject to and to the extent permitted by applicable Law and Regulation, for so long as at least 30% of the original principal amount of the Notes remains held by the DLJ Entities and their Permitted Transferees, the Board of Managers of the Company shall at all times include one Manager (the "Holder Manager") chosen by the DLJ VCOC Fund. 15 SECTION 3.09. Consultation Rights. (a) During any period for which there is no Holder Manager serving on the Board of Managers, the DLJ VCOC Fund, if it directly or indirectly holds any interest in the Notes, and is intended to qualify as a "venture capital operating company" within the meaning of the regulations of the United States Department of Labor set forth in 29 C.F.R. Section 2510.3-101 (the "Plan Asset Regulations") shall, upon prior written notice to the Company, be entitled to consult with and advise the management and Board of Managers of the Company on significant business issues, including management's proposed annual business, strategic and operating budgets and plans, and management will meet with the DLJ VCOC Fund periodically during each year (but no more frequently than once each calendar quarter) at the Company's executive offices at mutually agreeable times for such consultation and advice. (b) The Company agrees to consider, in good faith, the recommendations of the DLJ VCOC Fund in connection with the matters on which it is consulted as described above, it being understood and agreed that the ultimate discretion with respect to all such matters shall be retained by the Company. (c) The rights granted to the DLJ VCOC Fund under this Agreement (including, without limitation, under Article III) are intended to enable the DLJ VCOC Fund to be operated, where applicable, as a "venture capital operating company" within the meaning of the Plan Asset Regulations, and this Note shall be interpreted accordingly. SECTION 3.10. Change of Control Offer. (a) No Member of the Company or any subsequent transferee may Transfer all or any part of its interests in the Company without the prior written consent of the Majority in Voting Interest of the Notes unless the Company offers to purchase all of the outstanding Notes at a price equal to 101% of the sum of the unpaid principal amount thereof; provided, however, that a Member may transfer all or any part of its interest to any direct or indirect wholly-owned subsidiary of TXU Corp. (b) The Company will give written notice of any Transfer by a Member or any subsequent transferee, stating the substance and the intended date of the consummation thereof and irrevocably offering to purchase all of the outstanding Notes at a price equal to 101% of the unpaid principal amount thereof, not more than 20 Business Days nor less than 15 Business Days prior to the date of the consummation thereof, to each Holder of the Notes. Each Holder of the Notes shall have ten Business Days from the date of the receipt of such notice to elect (by written notice to the Company or any subsequent transferee, as applicable) to sell all or any portion of the Notes held by such Holder to the Class Member or such subsequent transferee, as applicable. SECTION 3.11. Representation and Warranty Regarding Nature of Operations. Except as set forth on Section 3.02 of the Disclosure Schedule to the Purchase Agreement, the Company owns more than 50% of (a) the economic interest in the assets, earnings or cash flow and (b) the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof, of each of the entities in which it owns an equity interest. The Company is primarily engaged, directly or through such entities, in the production or sale of a product or service other than the investment of capital. 16 ARTICLE IV EVENTS OF DEFAULT SECTION 4.01. Events of Default. If any of the following events ("Events of Default") shall occur and be continuing: (a) The Company shall fail to pay any installment of principal of, or interest on, this Note when the same becomes due and payable which in the case of a failure to pay interest continues for 5 days; or (b) The Company shall fail to perform or observe (i) any term, covenant or agreement contained in Section 3.05, 3.06, 3.10 or 7.01 or (ii) any other term covenant or agreement contained in this Note if such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Company by any Holder; or (c) The representation and warranty contained in Section 3.10 shall prove to have been incorrect in any material respect when made; or (d) The Company or any of its Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Company or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Company or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (d); then, and in any such event, a Majority in Voting Interest of the Notes may, by notice to the Company, declare the Notes, all interest hereon and all other amounts payable thereunder to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Company; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Company under the Federal Bankruptcy Code, the Notes, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Company. 17 ARTICLE V SUBORDINATION SECTION 5.01. Note Subordinate to Senior Indebtedness. The Company agrees, and each Holder, by his acceptance of this Note, also agrees, that this Note is and shall be subordinate, to the extent and in the manner hereinafter set forth, to the prior payment in full of all obligations of the Company now or hereafter existing, whether for principal, interest (including, without limitation, interest, as provided in such indebtedness, accruing after the filing of a petition initiating any proceeding referred to in Section 5.02, whether or not such interest accrues after the filing of such petition for purposes of the Bankruptcy Code or is an allowed claim in such proceeding), fees, expenses or otherwise (all such obligations being the "Senior Indebtedness"). SECTION 5.02. Events of Subordination. In the event of any dissolution, winding up, liquidation, arrangement, reorganization, adjustment, protection, relief or composition of the Company or its debts, whether voluntary or involuntary, in any bankruptcy, insolvency, arrangement, reorganization, receivership, relief or other similar case or proceeding under any Federal or State bankruptcy or similar law or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities of the Company or otherwise, Senior Indebtedness shall first be paid in full before the Holder shall be entitled to receive any payment of this Note, and any payment or distribution of any kind (whether in cash, property or securities) that otherwise would be payable or deliverable upon or with respect to this Note in any such case, proceeding, assignment, marshalling or otherwise (including any payment that may be payable by reason of any other indebtedness of the Company being subordinated to payment of this Note) shall be paid or delivered directly to the holders or representatives of the Senior Indebtedness for application (in the case of cash) to, or as collateral (in the case of non-cash property or securities) for, the payment or prepayment of the Senior Indebtedness until the Senior Indebtedness shall have been paid in full. SECTION 5.03. In Furtherance of Subordination. (a) All payments or distributions upon or with respect to this Note that are received by the Holder contrary to the provisions of this Article shall be received in trust for the benefit of the Holders and owners of Senior Indebtedness, shall be segregated from other funds and property held by the Holder and shall be forthwith paid over to the holders and owners of Senior Indebtedness in the same form as so received (with any necessary endorsement) to be applied (in the case of cash) to, or held as collateral (in the case of non-cash property or securities) for, the payment or prepayment of the Senior Indebtedness in accordance with its terms. (b) The holders and owners of Senior Indebtedness are hereby authorized to demand specific performance of the provisions of this Article, whether or not the Company shall have complied with any of the provisions hereof applicable to it, at any time when the Holder shall have failed to comply with any of the provisions of this Article applicable to it. The Holder of this Note hereby irrevocably waives any defense based on the adequacy of a remedy at law that might be asserted as a bar to such remedy of specific performance. 18 SECTION 5.04. No Commencement of Any Proceeding. So long as payments or distributions for or on account of this Note are not permitted pursuant to Section 5.02, the Holder will not commence, or join with any creditor other than the holders and owners of Senior Indebtedness in commencing, directly or indirectly cause the Company to commence, or assist the Company in commencing, any proceeding referred to in Section 5.02. SECTION 5.05. Rights of Subrogation. No payment or distribution to the holders and owners of Senior Indebtedness pursuant to the provisions of this Article shall entitle the Holder to exercise any right of subrogation in respect thereof until the Senior Indebtedness shall have been paid in full. SECTION 5.06. Further Assurances. The Holders and the Company each will, at the Company's expense and at any time and from time to time, promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that any holder or owner of Senior Indebtedness may request, in order to protect any right or interest granted or purported to be granted hereby or to enable any holder or owner of Senior Indebtedness to exercise and enforce its rights and remedies hereunder. SECTION 5.07. Agreements in Respect of Subordinated Debt. No amendment, waiver or other modification of this Note, and no agreement supplemental to this Note, may adversely affect the rights or interests of any holder or owner of Senior Indebtedness hereunder. SECTION 5.08. Agreement by the Company. The Company agrees that it will not make any payment of this Note, or take any other action, in contravention of the provisions of this Article. SECTION 5.09. Obligations Hereunder Not Affected. All rights and interests of the holders and owners of Senior Indebtedness hereunder, and all agreements and obligations of the Holder of this Note and the Company under this Article, shall remain in full force and effect irrespective of: (i) any change in the time, manner or place of payment of, or in any other term of, all or any of the Senior Indebtedness, or any other amendment or waiver of or any consent to any departure from any Senior Indebtedness, including, without limitation, any increase in the Company's obligations resulting from the extension of additional credit to the Company or any of its subsidiaries or otherwise; (ii) any taking, exchange, release or non-perfection of any collateral, or any taking, release or amendment or waiver of or consent to departure from any guaranty, for all or any of the Senior Indebtedness; (iii) any manner of application of collateral, or proceeds thereof, to all or any of the Senior Indebtedness, or any manner of sale or other disposition of any collateral for all or any of the Senior Indebtedness or any other assets of the Company or any of its subsidiaries; (iv) any change, restructuring or termination of the corporate structure or existence of the Company or any of its subsidiaries; or 19 (v) any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or a subordinated creditor. The provisions of this Article Five shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Senior Indebtedness is rescinded or must otherwise be returned by any holder or owner of Senior Indebtedness upon the insolvency, bankruptcy or reorganization of the Company or otherwise, all as though such payment had not been made. SECTION 5.10. Waiver. The Holder of this Note and the Company each hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Senior Indebtedness and this Article and any requirement that any holder or owner of Senior Indebtedness protect, secure, perfect or insure any security interest or lien or any property subject thereto or exhaust any right or take any action against the Company or any other person or entity or any collateral. SECTION 5.11. No Waiver; Remedies. No failure on the part of any holder or owner of Senior Indebtedness to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 5.12. Continuing Agreement. The provisions of this Article Five constitute a continuing agreement and shall (i) remain in full force and effect until the payment in full of all Senior Indebtedness, (ii) be binding upon the Holder of this Note, the Company and their respective successors and assigns, and (iii) inure to the benefit of, and be enforceable by, the holders and owners of Senior Indebtedness and their respective successors, transferees and assigns. ARTICLE VI TRANSFER OF NOTE SECTION 6.01. Restrictions. The Holder acknowledges and agrees that it shall not Transfer this Note (i) to any Competitor or (ii) in violation of the Securities Act of 1933, as amended. Any attempted Transfer in violation of the preceding sentence shall be deemed void ab initio and of no force or effect whatsoever, and the Company will not record any such Transfer on its books or treat any purported transferee as the owner of this Note for any purpose. Except as specifically set forth in this Section 6.01, the Holder shall not be restricted from any Transfer of the Note. SECTION 6.02. Legend. (a) Each Note issued upon any Transfer will bear the following legend: "THE TRANSFER OF THIS NOTE IS SUBJECT TO THE CONDITIONS SPECIFIED IN AN EXCHANGE AGREEMENT AMONG THE COMPANY, TXU CORP. AND THE HOLDER, A COPY OF SUCH AGREEMENT AS IN EFFECT FROM TIME TO TIME WILL BE FURNISHED WITHOUT 20 CHARGE BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST." (b) Each certificate or instrument evidencing Restricted Securities and each certificate or instrument issued in exchange for or upon the transfer of any Restricted Securities (if such securities remain Restricted Securities after such Transfer) shall be stamped or otherwise imprinted with a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER." (c) In addition, each certificate or instrument evidencing Restricted Securities and each certificate or instrument issued in exchange for or upon the Transfer of any Restricted Securities (if such securities remain Restricted Securities after such Transfer) shall be stamped or otherwise imprinted with any additional legends as may be required by the Company, as applicable to the holder of such certificate or instrument. SECTION 6.03. Registration of Notes. The Company shall keep at its principal executive office a register (the "Register") for the registration and registration of transfers of Notes. The name and address of each Holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in the Register. Prior to due presentation for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and Holder thereof for all purposes hereof, and the Company shall not be affected by any notice to the contrary. SECTION 6.04. New Notes. Upon surrender of any Note for registration of Transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered Holder of such Note or such Holder's attorney duly authorized in writing and accompanied by the address for notices of each transferee of such Note or part thereof), the Company shall execute and deliver, at the Company's expense, one or more new Notes (as requested by the Holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such Holder may request. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. Notes shall not be transferred in denominations of less than $500,000, in the event that the Holder is transferring to an Affiliate of such Holder, and $10,000,000, in the event that the Holder is transferring to any other Person; provided, that, if necessary to enable the registration of transfer by a Holder of its entire holding of Notes, one Note may be in a denomination of less than the foregoing amounts. 21 ARTICLE VII INDEMNIFICATION SECTION 7.01. Indemnification of Holders. (a) The Company hereby agrees to indemnify and hold harmless the Holder of this Note and its respective shareholders and managers (including any administrative agent or sub-agent) and each of its respective Affiliates, officers, directors, employees, agents, successors and assigns but excluding the Person serving as a Manager pursuant to Section 3.08 hereof to the extent such Person is indemnified by the Company pursuant to the LLC Agreement (each an "Indemnitee"), for and against all claims, losses, damages, costs, expenses, awards, judgments and penalties (including, without limitation, attorneys' fees and expenses) (hereinafter, a "Loss") arising out of, resulting from or with respect to, directly or indirectly, the conduct of the business or affairs of the Company, including without limitation, the operation of the Business. (b) An Indemnitee shall give the Company notice of any matter that an Indemnitee has determined has given or could give rise to a right of indemnification under this Note (a "Claim Notice"), within 25 days after such determination, stating the amount of the Loss, if known, and method of computation thereof. The obligations and liabilities of the Company under this Article VII with respect to Losses arising from claims of any third party that are subject to the indemnification provided for in this Article VII ("Third Party Claims") shall be governed by the following additional terms and conditions: if an Indemnitee shall receive notice of any Third Party Claim, the Indemnitee shall give the Company notice of such Third Party Claim within 25 days after the receipt by the Indemnitee of such notice; provided, however, that the failure to provide such notice shall not release the Company from any of its obligations under this Article VII and shall not relieve the Company from any other obligation or liability that it may have to any Indemnitee otherwise than under this Article VII. If the Company acknowledges in writing its obligation to indemnify the Indemnitee hereunder against any Losses that may result from such Third Party Claim, then the Company shall be entitled to assume and control the defense of such Third Party Claim at its expense and through counsel of its choice if it gives notice of its intention to do so to the Indemnitee within five (5) days of the receipt of such Claim Notice from the Indemnitee; provided, however, that if there exists or is reasonably likely to exist a conflict of interest that would make it inappropriate in the judgment of the Indemnitee in its sole and absolute discretion for the same counsel to represent both the Indemnitee and the Company, then the Indemnitee shall be entitled to retain its own counsel in each jurisdiction for which the Indemnitee determines counsel is required, at the expense of the Company. In the event that the Company exercises the right to undertake any such defense against any such Third Party Claim as provided above, the Indemnitee shall cooperate with the Company in such defense and make available to the Company, at the Company's expense, all witnesses, pertinent records, materials and information in the Indemnitee's possession or under the Indemnitee's control relating thereto as is reasonably required by the Company. Similarly, in the event the Indemnitee is, directly or indirectly, conducting the defense against any such Third Party Claim, the Company shall cooperate with the Indemnitee in such defense and make available to the Indemnitee, at the Company's expense, all such witnesses, records, materials and information in the Company's possession or under the Company's control relating thereto as is reasonably required by the Indemnitee. No such Third Party Claim may be settled by the Company without: (a) the prior written consent (which consent shall not be unreasonably 22 withheld, delayed or conditioned) of the Indemnitee unless such settlement contains a full and unconditional release of the Indemnitee with respect thereto. SECTION 7.02. Nonexclusivitiy of Rights. The indemnification and advancement and payment of expenses provided by this Article VII: (a) shall not be deemed exclusive of any other rights to which a Holder or other Person seeking indemnification may be entitled under any statute, agreement or otherwise both as to action in such Person's official capacity and as to action in another capacity while holding such office, (b) shall continue as to any Person who has ceased to serve in the capacity which initially entitled such Person to indemnity and advancement and payment of expenses, and (c) shall inure to the benefit of the heirs, executors, administrators, successors and assigns of such Holder or such other Person. SECTION 7.03. Contract Rights. The rights granted pursuant to this Article VII shall be deemed to be contract rights, and no amendment, modification or repeal of this Article VII shall have the effect of limiting or denying any such rights with respect to actions taken or Proceedings arising prior to any such amendment, modification or repeal. SECTION 7.04. Savings Clause. If this Article VII or any portion of this Note shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify and hold harmless each Holder or any other Person indemnified pursuant to this Article VII as to costs, charges and expenses (including, without limitation, attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, to the fullest extent permitted by any applicable portion of this Article VII that shall not have been invalidated and to the fullest extent permitted by applicable law. SECTION 7.05. Other Arrangements Not Excluded. The indemnification and advancement of expenses authorized in or ordered by a court pursuant to this Article VII: (a) Does not exclude any other rights to which a Person seeking indemnification or advancement of expenses may be entitled under any other agreement, or otherwise, for either an action of any Holder, officer, employee or agent in the official capacity of such Person or an action in another capacity while holding such position, except that indemnification, unless ordered by a court, may not be made to or on behalf of any Holder if a final adjudication established that its acts or omissions involved intentional misconduct, fraud or gross negligence and was material to the cause of action; and (b) Continues for a person who has ceased to be a Holder, officer, employee or agent and inures to the benefit of the successors, heirs, executors and administrators of such a person. ARTICLE VIII MISCELLANEOUS SECTION 8.01. Notices. 23 (a) All notices, requests, claims, demands and other communications under or in connection with this Note shall be given to or made upon: (i) the Holder, at the Holder's address set forth on Schedule I attached hereto and (ii) the Company at the following addresses (or in any case to such other address as the addressee may from time to time designate in writing to the sender): TXU Energy Company LLC 1601 Bryan Street Dallas, TX 75201 Attention: Treasurer Facsimile: 214-812-8998 with copies to: Hunton & Williams 1601 Bryan Street Dallas, TX 75201 Attention: Timothy A. Mack, Esq. Facsimile: 214-880-0011 and Thelen Reid & Priest LLP 875 Third Avenue New York, NY 10022 Attention: Robert J. Reger, Esq. Facsimile: 212-603-2001 (b) All notices, requests, claims, demands and other communications under or in connection with this Note shall be in writing and shall be deemed effectively given: (i) upon personal delivery or delivery by courier to the party to be notified, (ii) three Business Days after deposit with the United States Post Office, by registered or certified mail, return receipt requested, postage prepaid and addressed as provided in Section 8.01(a) and (iii) one Business Day after receipt of confirmation if such notice is sent by facsimile. SECTION 8.02. Headings and Sections. The descriptive headings in this Note are inserted for convenience only and are in no way intended to describe, interpret, define, or limit the scope, extent or intent of this Note or any provision of this Note. Unless the context requires otherwise, all references in this Note to Sections, Articles, Exhibits or Schedules shall be deemed to mean and refer to Sections, Articles, Exhibits or Schedules of or to this Note. SECTION 8.03. Amendments. This Note may not be amended, supplemented, modified or restated nor may any provision herein be waived without the express unanimous written consent of a Majority in Voting Interest of the Holders. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Note. The failure of the Holder to assert any of its rights hereunder shall not constitute a waiver of any of such rights. All rights and remedies existing under this Note are cumulative to, and not exclusive of, any rights or remedies otherwise available. 24 SECTION 8.04. Binding Effect. Except as otherwise provided in this Note, every covenant, term and provision of this Note shall be binding upon the Company and shall inure to the benefit of the Holder, the DLJ VCOC Fund and their distributees, heirs, legal representatives, executors, administrators, successors and permitted assigns and designees. SECTION 8.05. Remedies. The Holder shall be entitled to enforce its rights under this Note specifically, to recover damages and costs (including reasonable attorneys' fees) caused by any breach of any provision of this Note and to exercise all other rights existing in its favor. The Company agrees and acknowledges that money damages may not be an adequate remedy for any breach of the provisions of this Note and that the Holder may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance or other injunctive relief in order to enforce or prevent any violations of the provisions of this Note. If any time period for giving notice or taking action under this Note expires on a day that is not a Business Day, the time period shall be extended automatically to the immediately succeeding Business Day. SECTION 8.06. Waiver of Jury Trial. THE COMPANY AND, BY ACCEPTING THE BENEFITS OF THIS NOTE, THE HOLDER HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF UNDER OR, IN CONNECTION WITH THIS NOTE. SECTION 8.07. Interpretation. The Holder and the Company have participated jointly in the negotiation and drafting of this Note. In the event an ambiguity or question of intent or interpretation arises, this Note shall be construed as if drafted jointly by the Holder and the Company, and no presumption or burden of proof shall arise favoring or disfavoring the Holder or the Company by virtue of the authorship of any of the provisions of this Note. SECTION 8.08. Governing Law; Consent to Jurisdiction. This Note will be governed by, and construed in accordance with, the laws of the State of New York. In any action or proceeding arising out of, related to, or in connection with this Note, the Company consents to be subject to the jurisdiction and venue of (a) the Supreme Court of the State of New York in and for the County of New York, and (b) the United States District Court for the Southern District of New York. The Company consents to the service of process in any action commenced hereunder by any method or service acceptable under federal law or the laws of the State of New York. SECTION 8.09. Additional Documents and Acts. The Company agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be reasonably necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Note and the transactions contemplated hereby. SECTION 8.10. No Third Party Beneficiaries. Except for the provisions of Article VII relating to indemnification, this Note shall inure solely to the benefit of the Holder, the DLJ VCOC Fund and their successors, assigns and designees, nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, interest, claim or benefit, of any nature whatsoever, under or on account of this Note. SECTION 8.11. Holder ERISA Representation. The Holder represents and warrants that either (i) it is not an "employee benefit plan" within the meaning of Section 3(3) of 25 the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), a "plan" within the meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), or an entity whose assets are treated as "plan assets" under the Plan Asset Regulations or (ii) the purchase and holding of this Note by such Holder will not result in a nonexempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code. 26 IN WITNESS WHEREOF, the Company has caused this Note to be executed by its officers or other representatives thereunto duly authorized, as of the date first above written. TXU ENERGY COMPANY LLC By: ----------------------------------- Name: Title: 27 - ------------------------------------------------------------------------------- Amount Added to Principal Amount of Note Under Date Added to Principal Aggregate Principal Section 2.01(a) Amount of Note Amount of Note - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 28 SCHEDULE I ADMINISTRATIVE DETAILS UXT Intermediary LLC c/o Credit Suisse First Boston Eleven Madison Avenue New York, New York 10010-3629 SCHEDULE II DLJ ENTITIES Name - ---- UXT Holdco 2 LLC UXT Intermediary LLC UXT Holdings (Offshore) Ltd. UXT Holdings LLC UXT-1 Blocker, Inc. UXT-2 Blocker, Inc. UXT-3 Blocker, Inc. UXT-4 Blocker, Inc. UXT-5 Blocker, Inc. UXT AIV, L.P. UXT AIV (Offshore) L.P. DLJ Merchant Banking Partners III, L.P. DLJ Offshore Partners III, C.V. DLJ Offshore Partners III-1, C.V. DLJ Offshore Partners III-2, C.V. Millennium Partners II, L.P. DLJMB Partners III GmbH & Co. KG MBP III Plan Investors, L.P. EX-5 7 ex5to13d_041503.txt EXHIBIT 5 TO SCHEDULE 13D EXECUTION COPY VOTING TRUST I AGREEMENT THIS VOTING TRUST I AGREEMENT (the "Agreement") is made and entered into as of March 21, 2003 by and among UXT Holdings, LLC, a Delaware limited liability company, and UXT Intermediary, LLC, a Delaware limited liability company (together, the "Investors"), DLJ Merchant Banking III, Inc., a Delaware corporation (and its successors, "DLJMB") and Wells Fargo Bank Minnesota, N.A., as trustee (together with its successors in such capacity, the "Trustee"). WHEREAS, the parties hereto desire to record their arrangements with respect to shares of common stock, no par value ("Common Stock"), of TXU Corp., a Texas corporation (the "Corporation"), the principal executive offices of which are presently located at 1601 Bryan Street, Dallas, TX 75201. NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Certain Definitions. In this Agreement: (a) "Administrative Period" means the period commencing on the date of the initial assignment and delivery by a Holder or a DLJMB Affiliate to the Trustee of Shares to be held pursuant to this Agreement and ending on the earlier of (i) the termination of the voting trust created hereby pursuant to Section 8 or (ii) the removal or resignation of the Trustee pursuant to Section 13. (b) "Control Affiliate" means DLJMB and any person or entity controlling, controlled by or under common control with, directly or indirectly, DLJMB. (c) "DLJMB Affiliate" means any person or entity who is a Control Affiliate, Employee Affiliate or Other Affiliate. (d) "Employee Affiliate" means any person employed by (or who is the spouse, relative or relative of a spouse, in each case residing in the home of a person employed by) a Control Affiliate. (e) "Holder" means from time to time, any person or entity for whom Shares are held hereunder by the Trustee. (f) "Other Affiliate" means any person or entity that has a substantial business relationship with a Control Affiliate and which is not itself a Control Affiliate. (g) "Securities Act" means the Securities Act of 1933, as amended. (h) "Share" means a share of Common Stock or a Share Equivalent. (i) "Share Equivalent" means at any time any security convertible into, exchangeable for, or carrying the right to acquire Common Stock or subscriptions, warrants, options, rights or other arrangements obligating the Corporation to issue or dispose of any shares of Common Stock or any shares of any other voting class or series of stock of the Corporation, regardless whether such security is convertible, exchangeable or exercisable at such time. SECTION 2. Deposit. On or after the date hereof, any DLJMB Affiliate may, from time to time, deposit Shares with the Trustee to be held pursuant to this Agreement by assigning and delivering such Shares to the Trustee. SECTION 3. Transfer on Books of Corporation. The Trustee shall, to the extent applicable, cause all Shares transferred to and deposited with it in its capacity as Trustee hereunder (such Shares, the "Trust Shares") to be transferred to it as Trustee on the books of the Corporation and will issue and deliver by first class mail to each Holder a voting trust certificate (a "Trust I Certificate") for the number of Shares so transferred to the Trustee. SECTION 4. Form. Trust I Certificates shall be in substantially the form attached hereto as Schedule A (with such modifications as may be appropriate if the applicable Trust I Certificate represents Share Equivalents). SECTION 5. Additional Trust I Certificates. Any Holder may at any time deposit with the Trustee additional certificates (or the equivalent evidence of ownership in the case of Share Equivalents) for Shares. Any DLJMB Affiliate acquiring Shares may at any time become a Holder by (a) depositing, or causing to be deposited, certificates (or the equivalent evidence of ownership in the case of Share Equivalents) for Shares, duly endorsed for transfer, with the Trustee and (b) accepting a Trust I Certificate in respect of such Shares. SECTION 6. Voting; Powers. At all times prior to the termination of the voting trust created hereby, the Trustee shall have the exclusive right to vote the Trust Shares, or give written consent, in person or by proxy, at all meetings of shareholders of the Corporation, and in all proceedings in which the vote or consent, written or otherwise, of the holders of Shares may be required or authorized by law. The Trustee shall vote all Trust Shares in accordance with this Agreement. The Trustee shall have full power and authority, and it is hereby empowered and authorized, to vote the Trust Shares as in its sole judgment it believes to be in the best interest of the shareholders of the Corporation generally, it being understood that the Trustee will exercise its independent judgment in determining the best interests of the shareholders of the Corporation, and to do any and all other things and take any and all other actions as fully as any shareholder of the Corporation might do if personally present at a meeting of the shareholders of the Corporation. Each Holder agrees that it will not communicate with the Trustee in connection with any proceeding in which the vote or consent of the holders of Shares may be required or authorized by law or otherwise seek to influence the Trustee in the exercise of its right to vote or consent in any such proceedings. Notwithstanding anything herein to the contrary, the Trustee shall vote the Trust Shares (and use its power or right, if any, to designate or remove directors of the Corporation) to prevent the election of more than one DLJMB Affiliate as a director of the Corporation. The duties of the Trustee under this Agreement shall include exercising reasonable effort under this Agreement in a manner that ensures that no DLJMB Affiliate exercises control over the Corporation. DLJMB shall promptly provide to the Trustee from time to time such 2 information as is reasonably necessary (including certificates and/or other documents) in order to enable the Trustee to carry out the foregoing obligations; provided, however, that the Trustee shall not be held responsible for identifying an entity as a DLJMB Affiliate unless it has actual knowledge that such entity is a DLJMB Affiliate. SECTION 7. Dividends. If the Corporation pays or issues dividends or makes other distributions on the Trust Shares, the Trustee shall accept and receive such dividends and distributions. Upon receipt of dividends and distributions the same shall be prorated among the Holders that have a beneficial interest hereunder in the Trust Shares with respect to which such dividend or other distribution was made in accordance with their interests and, subject to the next sentence, the amount shall be distributed promptly pursuant to transfer instructions set forth on Schedule C attached hereto. If the dividend or distribution is in Shares, such Shares shall be held by the Trustee under the voting trust created hereby and new Trust I Certificates representing the Shares received shall be issued to the applicable Holders. Holders entitled to receive such dividends or distributions, or Trust I Certificates in respect thereof, described in this Section 7 shall be those Holders registered as such on the transfer books of the Trustee at the close of business on the day fixed by the Corporation for the taking of a record to determine those holders of its stock entitled to receive such dividends or distributions. In the performance of its duties to deliver cash dividends under this Agreement, the Trustee shall not be obligated to risk its own funds and will not be liable for taxes or other charges related to the delivery of such dividends or distributions. SECTION 8. Termination. The voting trust created hereby shall terminate on the earliest to occur of: (a) ten years from the date hereof; (b) the written election of DLJMB or the Holders of Trust I Certificates representing fifty percent (50%) or more of the Trust Shares thereby; provided, however, that (1) immediately after giving effect to such termination, all DLJMB Affiliates will in the aggregate beneficially own (through record ownership, contract or otherwise), as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended, not more than 4.9% of the total fully diluted number of shares of Common Stock then outstanding; the Trustee will be entitled to rely conclusively on a certificate of an officer of DLJMB to the effect of the foregoing proviso; and (2) DLJMB delivers to the Trustee an opinion of independent, nationally recognized counsel who are experts in matters involving the federal securities law, that, immediately after giving effect to such termination, DLJMB should not be an "affiliate" of the Corporation within the meaning of Rule 144 under the Securities Act; and (c) transfer of all of the Trust Shares in accordance with Section 9. Subject to DLJMB's delivery of the officer's certificate and the opinion of counsel described in Section 8(b) above, an election pursuant to Section 8(b) shall be effective upon delivery of notice thereof to the Trustee. 3 Upon the termination of the voting trust hereby created, the Holders shall surrender their Trust I Certificates to the Trustee, and the Trustee shall deliver by first class mail to the Holders certificates (or the equivalent evidence of ownership in the case of Share Equivalents) for Shares, properly endorsed for transfer (to the extent possible), equivalent to the number and type of Shares represented by the respective Trust I Certificates surrendered. SECTION 9. Transfer. Except as provided in Sections 8 and 10 and in subsections (a), (b) and (c) of this Section 9, certificates (or the equivalent evidence of ownership in the case of Share Equivalents) for Trust Shares may not be delivered to a Holder, a Holder's designee or any other third party prior to the termination of the voting trust created hereby. (a) A Holder may notify the Trustee in writing that the Holder desires to cause a certificate or certificates (or the equivalent evidence of ownership in the case of Share Equivalents) for Trust Shares in which the Holder has a beneficial interest hereunder to be transferred to any person or entity, including such Holder, only if such transfer is an Eligible Transfer as defined herein. Any person or entity that acquires Trust Shares pursuant to an Eligible Transfer is hereinafter referred to as an "Eligible Transferee". For purposes of this Section 9, an "Eligible Transfer" is defined as any transfer of Trust Shares to a person who is not at the time of such transfer a DLJMB Affiliate. Such notice shall name such Eligible Transferee and shall state (i) its mailing address, (ii) the proposed transfer date (which date shall be not less than five days after the Trustee's receipt of such notice), (iii) the number and type of Shares to be transferred and (iv) the consideration, if any, to be paid by such Eligible Transferee therefor. The notice to the Trustee shall also contain a representation that such transferee is an Eligible Transferee and shall be accompanied by a Trust I Certificate or Certificates of the Holder, duly endorsed for transfer, representing not less than the number of Shares of the type to be transferred to the Eligible Transferee. On the date specified in such notice, and upon receipt by the Trustee from such Eligible Transferee of the specified consideration, if any, the Trustee shall deliver: (i) to the Eligible Transferee, a certificate (or the equivalent evidence of ownership in the case of Share Equivalents) for the number of Shares of the type specified in such notice, registered in the name of the Trustee and duly endorsed for transfer, and (ii) to the Holder, (x) a Trust I Certificate representing a number of Shares, if any, equal to the number of Shares of the type represented by the surrendered Trust I Certificate less the number of Shares of the type transferred to such Eligible Transferee, and (y) the consideration, if any, received from such Eligible Transferee. Such consideration shall be distributed promptly to such Holder pursuant to the transfer instructions set forth on Schedule B attached hereto. (b) A Holder (hereinafter referred to as a "Requesting Party" for the purpose of this Section 9(b)) may request of the Trustee in writing that the Trustee transfer to such Requesting Party a certificate or certificates (or the equivalent evidence of ownership in the case of Share Equivalents) for Shares in which the Requesting Party has a beneficial interest hereunder; provided, however, that the Trustee shall not honor such request if immediately after giving effect thereto DLJMB Affiliates will own in the aggregate more than 4.9% of the total number of shares of Common Stock then outstanding, and, provided further, that if the Requesting Party is not DLJMB, the Trustee shall not honor such request, unless DLJMB 4 consents in writing to such request. In determining, for purposes of this Section 9(b) only, whether DLJMB Affiliates will own in the aggregate more than 4.9% of the total number of shares of Common Stock then outstanding, (x) shares of Common Stock underlying Share Equivalents owned by a DLJMB Affiliate shall be deemed to be outstanding and owned by such DLJMB Affiliate and (y) Shares held pursuant to this Agreement shall be excluded. Such written request shall name such Requesting Party and shall state (i) the proposed transfer date (which date shall be not less than four business days after the Trustee's receipt of such request) and (ii) the number and type of Shares to be transferred. The notice to the Trustee shall also be accompanied by (i) a Trust I Certificate or Certificates of the Requesting Party, duly endorsed for transfer, representing not less than the number of Shares of the type to be transferred to the Requesting Party and (ii) a certificate of an officer of DLJMB certifying that immediately after giving effect to such request all DLJMB Affiliates will own in the aggregate not more than 4.9% of the total number of shares of Common Stock then outstanding. The Trustee shall be entitled to conclusively rely upon such certificate. On the date specified in such request, and upon receipt by the Trustee from the Requesting Party of such certificates, the Trustee shall deliver to the Requesting Party a certificate (or the equivalent evidence of ownership in the case of Share Equivalents) for the number of Shares of the type specified in such notice, registered in the name of the Trustee and duly endorsed for transfer. (c) A Holder may at any time direct the Trustee by notice in writing to transfer a certificate or certificates (or the equivalent evidence of ownership in the case of Share Equivalents) for Shares in which the Holder has a beneficial interest hereunder (i) to an underwriter (including DLJMB) in connection with a public offering of the Shares registered under the Securities Act or (ii) in connection with sales made pursuant to Rule 144 (other than subsection (k) thereof) under the Securities Act through a broker-dealer (including DLJMB). Such notice shall state (a) the underwriter's or broker dealer's mailing address, (b) the proposed transfer date (which date shall not be less than five days after the Trustee's receipt of such notice), (c) the number and type of Shares to be transferred, and (d) the consideration, if any, to be paid. The notice shall also be accompanied by a certificate of an officer of the Holder certifying that such request is being made solely for sales made in connection with a public offering of the Shares registered under the Securities Act or sales made pursuant to Rule 144 (other than subsection (k) thereof) under the Securities Act and a Trust I Certificate or Certificates of the Holder, duly endorsed for transfer, representing not less than the number of Shares of the type to be transferred. The Trustee shall be entitled to conclusively rely upon such certificate. On the date specified in such notice, and upon receipt by the Trustee from such underwriter or such other transferee of the specified consideration, if any, the Trustee shall deliver: (x) to the underwriter or such other transferee, a certificate (or the equivalent evidence of ownership in the case of Share Equivalents) for the number of Shares of the type specified in such notice, registered in the name of the Trustee and duly endorsed for transfer, and (y) to the Holder, a Trust I Certificate representing the number of Shares, if any, equal to the number of Shares represented by the surrendered Trust I Certificate less the number of Shares transferred to such underwriter or such other transferee, and (z) to the Holder, the consideration, if any, received from such underwriter or such other transferee. Such consideration shall be distributed promptly to the Holder pursuant to the transfer instructions set forth on Schedule B attached hereto. 5 Notwithstanding the foregoing, if the Holder intends to transfer Shares pursuant to the exercise of the over-allotment option granted to the underwriters in connection with a public offering of shares of Common Stock of the Corporation, the transfer date in the notice may be less than four, but shall not be less than two, business days after the Trustee's receipt of such notice; provided, however, that if the transfer date in the notice is less than four business days after the Trustee's receipt of the notice, the Trustee shall only be obligated to use its reasonable best efforts to effect the transfer of such Shares by such transfer date. Nothing in this Section 9 or elsewhere in this Agreement shall prohibit a Holder from transferring Trust I Certificates in accordance with the terms of the Trust I Certificates. SECTION 10. Exercise, Conversion, Exchange or Cancellation of Shares. The Trustee shall, upon written instruction of a Holder, submit to the Corporation for exercise, conversion, exchange or cancellation any Share in which such Holder has a beneficial interest hereunder. Such notice shall state (a) whether such Shares are to be exercised, converted, exchanged or cancelled, (b) the date on which such Shares are to be submitted to the Corporation (which date shall not be less than five days after the Trustee's receipt of such notice), (c) the number and type of Shares to be submitted to the Corporation and (d) the consideration, if any, to be received upon such exercise, conversion, exchange or cancellation from the Corporation. The notice shall be accompanied by (x) a Trust I Certificate or Certificates of the Holder, duly endorsed for transfer, representing not less than the number of Shares of the type to be submitted to the Corporation and (y) any exercise price or other payment and any agreement, certificate or other documentation required in connection with such exercise, conversion, exchange or cancellation. On the date specified in such notice, and against receipt from the Corporation of the specified consideration, if any, the Trustee shall deliver by first class mail: (i) to the Corporation, (x) a certificate or certificates for the number of Shares of the type specified in such notice, registered in the name of the Trustee and duly endorsed for transfer and (y) any exercise price or other payment and any agreement, certificate or other documentation delivered to the Trustee by such Holder with such notice and (ii) to the Holder, (x) a Trust I Certificate representing a number of Shares equal to the number of Shares represented by the surrendered Trust I Certificate or Certificates less the number of Shares submitted to the Corporation and (y) the consideration, if any, received by the Trustee pursuant to such exercise, conversion, exchange or cancellation; provided, however, that if such consideration includes Shares, such Shares shall be held by the Trustee pursuant to this Agreement and new Trust I Certificates representing such Shares shall be issued to such Holder. SECTION 11. Increase or Decrease in Number of Shares. In the event of an increase in the number of Shares by virtue of a stock split or the decrease in the number of Shares because of a contraction of shares or a change in the number of outstanding Shares as a result of some other recapitalization in which the Corporation receives no consideration for the issuance of the additional or reduced number of Shares, the new additional or changed number of Shares shall be held by the Trustee and new Trust I Certificates representing the appropriate changed number of Shares shall be issued to Holders upon surrender of the then existing Trust I Certificates. SECTION 12. Successor Trustee. There shall initially be one Trustee of the voting trust created hereby. Upon the liquidation, dissolution, winding-up, suspension, 6 incapacity, resignation or removal (in accordance with Section 13 below) of the initial Trustee, DLJMB or the Holders of Trust I Certificates representing fifty percent (50%) or more of the Trust Shares shall appoint a successor Trustee; provided, however, that such successor Trustee may not be a DLJMB Affiliate, unless such Successor Trustee shall be an Other Affiliate that is a bank or trust company. In the event a successor Trustee shall not have been appointed within 30 days of such removal, the Trustee may petition a court of competent jurisdiction to appoint such a successor. In the event that the Trustee consolidates with, merges with or converts into, or transfers all or substantially all of its corporate trust assets to, another corporation that is a bank or trust company, the surviving or transferee corporation may become the successor Trustee upon notice to the signatories hereto but without further action by the signatories or any Holder. SECTION 13. Removal/Resignation of Trustee. (a) A Trustee may be removed by DLJMB or the Holders of Trust I Certificates representing fifty percent (50%) or more of the Trust Shares: (i) if it is determined by a court of competent jurisdiction that either (A) the Trustee has willfully and materially violated the terms of the trust created hereby, or (B) the Trustee has been guilty of malfeasance, misfeasance or dereliction of duty hereunder; (ii) if the Trustee shall have commenced a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect, or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall have consented to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall have made a general assignment for the benefit of creditors, or shall have failed generally to pay its debts as they become due, or shall have taken any corporate action to authorize any of the foregoing; or (iii) if an involuntary case or other proceeding shall have been commenced against the Trustee seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect, or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall have remained undismissed and unstayed for a period of 60 days, or an order for relief shall have been entered against the Trustee under the federal bankruptcy laws as now or hereafter in effect. (b) If DLJMB or the Holders of Trust I Certificates representing fifty percent (50%) or more of the Trust Shares then deposited hereunder determine that a basis exists for removal of the Trustee under Section 13(a) above, they shall deliver written notice of such determination to the Trustee stating the basis for such removal. (c) The Trustee may resign its position as such (i) upon ten days' written notice to DLJMB, but only if a successor Trustee, appointed as provided for in Section 12 above, 7 has agreed to serve as such effective upon the effectiveness of the resignation of the Trustee then acting, or (ii) in any event upon 30 days' written notice to DLJMB. SECTION 14. Trustee May Own Shares. Nothing in this Agreement shall prevent the Trustee from owning Shares or options to purchase Shares in its individual capacity or in any capacity other than as trustee hereunder or for any DLJMB Affiliate. SECTION 15. Trustee Not an Affiliate. The Trustee represents that it is a bank or trust company that is not a Control Affiliate or an Employee Affiliate. SECTION 16. Compensation; Expenses. Reasonable expenses lawfully incurred in the administration of the Trustee's duties hereunder shall be reimbursed to it by DLJMB on behalf of the Holders. In connection with its services to be provided hereunder, the Trustee shall receive a fee from DLJMB as follows: (a) an initial fee of $3,000 payable upon the execution by the parties of this Agreement, (b) during the Administrative Period, a fee of $4,500 per annum, payable quarterly in advance, and (c) thereafter, such fee as the parties may from time to time agree. The provisions of this Section 16 shall survive the termination of this Agreement. SECTION 17. Merger, Etc. Upon any merger, consolidation, reorganization or dissolution of the Corporation or the sale of all or substantially all of the assets of the Corporation pursuant to which shares of capital stock or other voting securities of another corporation are to be issued in payment or exchange for or upon conversion of Shares and other voting securities, the shares of said other corporation shall automatically be and become subject to the terms of this Agreement and be held by the Trustee hereunder in the same manner and upon the same terms as the Trust Shares, and in such event the Trustee shall issue to the Holders that have deposited Shares with the Trustee new Trust I Certificates in lieu of the old Trust I Certificates for the appropriate number of shares and other voting securities of such other corporation. At the request of any Holder, the Trustee may transfer, sell or exchange or join with the Holder in such transfer, sale or exchange of Shares and other voting securities in exchange for shares of another corporation, and in said event the shares and other voting securities of the other corporation received by the transferor shall be and become subject to this Agreement and be held by the Trustee hereunder in the same manner as the Trust Shares. SECTION 18. Notices. All notices, reports, statements and other communications directed to the Trustee from the Corporation, other than communications pertaining to the voting of the Trust Shares, shall be forwarded promptly by the Trustee to DLJMB and each Holder. All notices, notices of election and other communications required hereby shall be given in writing by overnight courier, telegram or facsimile transmission and shall be addressed, or sent, to the appropriate addresses as set forth beneath the signature of each party hereto, or at such other address as to which notice is given in accordance with this Section 18. SECTION 19. Indemnity, Etc. The Trustee shall be indemnified from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing or defending 8 against any litigation, commenced or threatened, or any claims whatsoever) (the "Indemnified Claims") arising out of or based upon this Agreement or the actions or failures to act of the Trustee hereunder or thereunder, except to the extent such loss, liability, claim, damage or expense is caused by or results from the Trustee's gross negligence or willful misconduct (as determined by a final and unappealable order of a court of competent jurisdiction). DLJMB agrees on behalf of the Holders that it will indemnify and hold harmless the Trustee from and against any Indemnified Claims. DLJMB's obligation hereunder shall survive the transfer of all or any portions of its Shares and interests, the termination of the voting trust created hereby, or the resignation or removal of the Trustee. The Trustee shall be entitled to the prompt reimbursement for its out-of-pocket expenses (including reasonable attorneys' fees and expenses) incurred in investigating, preparing or defending against any litigation, commenced or threatened, arising out of or based upon this Agreement, or the actions or failures to act of the Trustee hereunder or thereunder, without regard to the outcome of such litigation; provided, however, that the Trustee shall be obligated to return any such reimbursement if it is subsequently determined by a final and unappealable order of a court of competent jurisdiction that the Trustee was grossly negligent or engaged in willful misconduct in the matter in question. Such expenses payable under this Section 19 shall be prorated among the Holders in accordance with their respective interests in the Shares then deposited hereunder. If a claim under this Section 19 is not paid in full within 30 days after a written claim has been submitted by the Trustee, the Trustee may at any time thereafter bring suit to recover the unpaid amount of the claim and, if successful in whole or in part, the Trustee shall be entitled to be paid also the expense of prosecuting such claims. The Trustee is authorized and empowered to construe this Agreement and its construction of the same, made in good faith, shall be final, conclusive, and binding upon all Holders and all other parties interested. The Trustee may, in its discretion, consult with counsel to be selected and employed by it, and the reasonable fees and expenses of such counsel shall be an expense for which the Trustee is entitled to indemnity hereunder. The Trustee hereby accepts the trust created hereby and agrees to carry out the terms and provisions hereof, but assumes no responsibility for the management of the Corporation or for any action taken by it, by any person elected as a director of the Corporation or by the Corporation pursuant to any vote cast or consent given by the Trustee. The Trustee, whether or not acting upon the advice of counsel, shall incur no liability because of any error of law or fact, mistake of judgment or any matter or thing done or omitted under this Agreement, except its own malfeasance. Anything done or suffered in good faith by the Trustee in accordance with the advice of counsel chosen as indicated above shall be conclusive in favor of the Trustee against the Holders and any other interested party. The Trustee shall not be liable in any event for acts or defaults of any other trustee or trustees (under this or any other voting trust of the Corporation's securities) or for acts or defaults of any employee, agent, proxy or attorney-in-fact of any other trustee or trustees. The Trustee shall be protected and free from liability in acting upon any notice, request, consent, certificate, declaration, guarantee, affidavit or other paper or document or signature reasonably 9 believed by it to be genuine and to have been signed by the proper party or parties or by the party or parties purporting to have signed the same. No provision of this Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. SECTION 20. Certain Calculations. For purposes of Sections 9, 12, 13, 16 and 19, a Holder owning a Trust I Certificate representing Share Equivalents shall, in respect of such ownership, be deemed to be the Holder of a Trust I Certificate representing the number of shares of Common Stock that the Trustee, acting on behalf of such Holder, may acquire, whether by exercise, conversion, subscription or otherwise, pursuant to or by reason of ownership of such Shares. SECTION 21. Counterparts. This Agreement may be executed in multiple counterparts all of which counterparts together shall constitute one agreement. Upon execution of this Agreement and the establishment of the voting trust created hereby, the Trustee shall cause a copy of this Agreement to be filed in the registered office of the Corporation in the State of Texas and the Agreement shall be open to inspection in the manner provided for inspection under the laws of the State of Texas. SECTION 22. Choice of Law. This Agreement is intended by the parties to be governed and construed in accordance with the laws of the State of Texas, except that the Trustee's rights and obligations shall be governed and construed in accordance with the laws of the State of New York. SECTION 23. Bond. The Trustee shall not be required to provide any bond to secure the performance of its duties hereunder. SECTION 24. Reliance. Each Holder acknowledges that DLJMB will rely on this Agreement in complying with the federal securities laws. The Trustee acknowledges that DLJMB will rely on the Trustee abiding by the terms of this Agreement, including, without limitation, that (x) the Trustee will exercise independent judgment in voting the shares and will not consult with any DLJMB Affiliate regarding the voting of such shares and (y) the Trustee will not consent to any amendment or waiver of this Agreement prohibited by Section 25 hereof whether or not such amendment or waiver is approved by each of the parties hereto and all of the Holders. SECTION 25. Amendments and Waivers. This Agreement may not be amended or waived in any material respect, unless an independent, nationally recognized counsel, who are experts in matters involving the federal securities law, provides to DLJMB an opinion (which opinion and counsel shall be satisfactory to DLJMB) that, immediately after such amendment or waiver, DLJMB should not be an "affiliate" of the Corporation within the meaning of Rule 144 under the Securities Act. 10 SECTION 26. Benefits and Assignment. Nothing in this Agreement, expressed or implied, shall give or be construed to give any persons, firm or corporation, other than the parties hereto and their successors and assigns, any legal claim under any covenant, condition or provision hereof, all the covenants, conditions and provisions contained in this Agreement being for the sole benefit of the parties hereto and their successors and assigns. No party may assign any of its rights or obligations under this Agreement without the written consent of all the other parties, which consent may be withheld in the sole discretion of the party whose consent is sought. SECTION 27. Severability. In case any provision in 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. 11 EXECUTED COPY EXECUTED as of the date and year first above written. WELLS FARGO BANK MINNESOTA, N.A., as Trustee By: --------------------------------- Name: Michael G. Slade Title: Corporate Trust Officer Address: Corporate Trust Services MAC N9303-110 Sixth & Marquette Avenue Minneapolis, MN 55479 Attention: Michael G. Slade Facsimile: 612-667-2160 UXT HOLDINGS, LLC By: ------------------------------------- Name: Title: Address: Eleven Madison Avenue New York, New York, 10010 Attention: Ivy Dodes Facsimile: 212-325-8256 UXT INTERMEDIARY, LLC By: ------------------------------------- Name: Title: Address: Eleven Madison Avenue New York, New York, 10010 Attention: Ivy Dodes Facsimile: 212-325-8256 DLJ MERCHANT BANKING III, INC. By: ------------------------------------- Name: Title: Address: Eleven Madison Avenue New York, New York, 10010 Attention: Ivy Dodes Facsimile: 212-325-8256 EXECUTION COPY SCHEDULE A FORM OF TRUST I CERTIFICATE "THE TRANSFER OF THIS TRUST I CERTIFICATE IS SUBJECT TO TERMS AND CONDITIONS SET FORTH IN THE VOTING TRUST I AGREEMENT (THE "AGREEMENT") DATED AS OF MARCH 21, 2003, A COPY OF WHICH HAS BEEN FILED IN THE REGISTERED OFFICE IN THE STATE OF TEXAS OF TXU CORP., A TEXAS CORPORATION (THE "CORPORATION"). SUCH COPY IS OPEN TO INSPECTION DAILY DURING BUSINESS HOURS BY ANY SHAREHOLDER OF THE CORPORATION OR ANY BENEFICIARY OF THE VOTING TRUST CREATED PURSUANT TO THE AGREEMENT. TXU Corp TRUST I CERTIFICATE Certificate No. No. of Shares ----- ----- This certifies that ____________ ("Holder") has transferred to the undersigned Trustee the above-stated number of voting shares of common stock, no par value, of TXU Corp., a Texas corporation (the "Corporation"), to be held by the Trustee pursuant to the terms of the Agreement, a copy of which agreement has been delivered to the above-named Holder and filed in the registered office of the Corporation in the State of Texas. The Holder, or his registered assigns, will be entitled (i) to receive payments equal to any and all cash dividends collected by the Trustee on the above-stated number of shares, (ii) to receive all other dividends or distributions except to the extent that property received is required to be deposited in the trust created by the Agreement, and (iii) to the delivery of a certificate or certificates for that number of shares on the termination of the Agreement, in accordance with its provisions. At all times prior to the termination of the trust created by the Agreement, the Trustee has the exclusive right to vote the above-stated number of shares, or give written consent, in person or by proxy, at all meetings of shareholders of the Corporation, and in all proceedings in which the vote or consent, written or otherwise, of the holders of Shares may be required or authorized by law. Subject to the terms of the Agreement, this Trust I Certificate is transferable on the books maintained by the Trustee at the principal corporate trust office of the Trustee by the Holder hereof, in person or by duly authorized attorney, and upon surrender hereof; and until so transferred the Trustee may treat the registered Holder hereof as the absolute owner hereof for all purposes. The Holder, by the acceptance of this Trust I Certificate, agrees to be bound by all of the provisions of the Agreement as fully as if its terms were set forth in this Trust I Certificate. EXECUTED this day of , --- ----------- ---- -------------------------------- By: ----------------------------- Name: --------------------------- Title: -------------------------- [Form of Assignment for Reverse of Trust I Certificate] For value received, ___________ hereby sells, assigns, and transfers unto ____________ the within Trust I Certificate and all rights and interests represented thereby, and does hereby irrevocably constitute and appoint _______ attorney to transfer such Trust I Certificate on the books of the within-named Trustee with full power of substitution in the premises. Date: -------------------------- Signed: *" ------------------- *Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Trustee, which requirements include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Trustee in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 2 EXECUTION COPY SCHEDULE B TRANSFER INSTRUCTIONS UXT Holdings, LLC All payments shall be made by check mailed to: UXT Holdings, LLC Eleven Madison Avenue New York, New York 10010 Attention: John Cafasso, 13th Floor UXT Intermediary, LLC All payments shall be made by check mailed to: UXT Intermediary, LLC Eleven Madison Avenue New York, New York 10010 Attention: John Cafasso, 13th Floor EX-6 8 ex6to13d_041503.txt EXHIBIT 6 TO SCHEDULE 13D EXECUTION COPY VOTING TRUST II AGREEMENT THIS VOTING TRUST II AGREEMENT (the "Agreement") is made and entered into as of March 21, 2003 by and among UXT Holdings, LLC, a Delaware limited liability company, and UXT Intermediary, LLC, a Delaware limited liability company (together, the "Investors"), DLJ Merchant Banking III, Inc., a Delaware corporation (and its successors, "DLJMB") and Christiana Bank & Trust Company, acting hereunder not in its individual capacity but solely as trustee (together with its successors in such capacity, the "Trustee"). WHEREAS, the parties hereto desire to record their arrangements with respect to shares of common stock, no par value ("Common Stock"), of TXU Corp., a Texas corporation (the "Corporation"), the principal executive offices of which are presently located at 1601 Bryan Street, Dallas, TX 75201. NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Certain Definitions. In this Agreement: (a) "Administrative Period" means the period commencing on the date of the initial assignment and delivery by a Holder or a DLJMB Affiliate to the Trustee of Shares to be held pursuant to this Agreement and ending on the earlier of (i) the termination of the voting trust created hereby pursuant to Section 8 or (ii) the removal or resignation of the Trustee pursuant to Section 13. (b) "Control Affiliate" means DLJMB and any person or entity controlling, controlled by or under common control with, directly or indirectly, DLJMB. (c) "DLJMB Affiliate" means any person or entity who is a Control Affiliate, Employee Affiliate or Other Affiliate. (d) "Employee Affiliate" means any person employed by (or who is the spouse, relative or relative of a spouse, in each case residing in the home of a person employed by) a Control Affiliate. (e) "Holder" means from time to time, any person or entity for whom Shares are held hereunder by the Trustee. (f) "Other Affiliate" means any person or entity that has a substantial business relationship with a Control Affiliate and which is not itself a Control Affiliate. (g) "Securities Act" means the Securities Act of 1933, as amended. (h) "Share" means a share of Common Stock or a Share Equivalent. (i) "Share Certificate" means a certificate evidencing ownership of one or more Shares. (j) "Share Equivalent" means at any time any security convertible into, exchangeable for, or carrying the right to acquire Common Stock or subscriptions, warrants, options, rights or other arrangements obligating the Corporation to issue or dispose of any shares of Common Stock or any shares of any other voting class or series of stock of the Corporation, regardless whether such security is convertible, exchangeable or exercisable at such time. SECTION 2. Deposit. On or after the date hereof, any DLJMB Affiliate may, from time to time, deposit Shares with the Trustee to be held pursuant to this Agreement by assigning and delivering such Shares to the Trustee. SECTION 3. Transfer on Books of Corporation. The Trustee shall, to the extent applicable, cause all Shares transferred to and deposited with it in its capacity as Trustee hereunder (such Shares, the "Trust Shares") to be transferred to it as Trustee on the books of the Corporation and will issue and deliver by first class mail to each Holder a voting trust certificate (a "Trust II Certificate") for the number of Shares so transferred to the Trustee. SECTION 4. Form. Trust II Certificates shall be in substantially the form attached hereto as Schedule A (with such modifications as may be appropriate if the applicable Trust II Certificate represents Share Equivalents). SECTION 5. Additional Trust II Certificates. Any Holder may at any time deposit with the Trustee additional Share Certificates (or the equivalent evidence of ownership in the case of Share Equivalents). Any DLJMB Affiliate acquiring Shares may at any time become a Holder by (a) depositing, or causing to be deposited, Share Certificates (or the equivalent evidence of ownership in the case of Share Equivalents), duly endorsed for transfer, with the Trustee and (b) accepting a Trust II Certificate in respect of the Shares represented by such Share Certificates. SECTION 6. Voting; Powers. At all times prior to the termination of the voting trust created hereby, the Trustee shall have the exclusive right to vote the Trust Shares, or give written consent, in person or by proxy, at all meetings of shareholders of the Corporation, and in all proceedings in which the vote or consent, written or otherwise, of the holders of Shares may be required or authorized by law. The Trustee shall vote all Trust Shares in accordance with this Agreement. The Trustee shall have full power and authority, and it is hereby empowered and authorized, to vote the Trust Shares as in its sole judgment it believes to be in the best interest of the shareholders of the Corporation generally, it being understood that the Trustee will exercise its independent judgment in determining the best interests of the shareholders of the Corporation, and to do any and all other things and take any and all other actions as fully as any shareholder of the Corporation might do if personally present at a meeting of the shareholders of the Corporation; provided, however, that, to the extent the Trustee acts in good faith and in accordance with this Agreement, the Trustee shall not be liable for any action or inaction pursuant this Section 6. 2 Each Holder agrees that it will not communicate with the Trustee in connection with any proceeding in which the vote or consent of the holders of Shares may be required or authorized by law or otherwise seek to influence the Trustee in the exercise of its right to vote or consent in any such proceedings. Notwithstanding anything herein to the contrary, the Trustee shall vote the Trust Shares (and use its power or right, if any, to designate or remove directors of the Corporation) to prevent the election of more than one DLJMB Affiliate as a director of the Corporation. The duties of the Trustee under this Agreement shall include exercising reasonable effort under this Agreement in a manner that ensures that no DLJMB Affiliate exercises control over the Corporation. DLJMB shall promptly provide to the Trustee from time to time such information as is reasonably necessary (including certificates and/or other documents) in order to enable the Trustee to carry out the foregoing obligations; provided, however, that the Trustee shall not be held responsible for identifying an entity as a DLJMB Affiliate unless it has actual knowledge that such entity is a DLJMB Affiliate. SECTION 7. Dividends. If the Corporation pays or issues dividends or makes other distributions on the Trust Shares, the Trustee shall accept and receive such dividends and distributions. Upon receipt of dividends and distributions the same shall be prorated among the Holders that have a beneficial interest hereunder in the Trust Shares with respect to which such dividend or other distribution was made in accordance with their interests and, subject to the next sentence, the amount shall be distributed promptly pursuant to transfer instructions set forth on Schedule C attached hereto. If the dividend or distribution is in Shares, such Shares shall be held by the Trustee under the voting trust created hereby and new Trust II Certificates representing the Shares received shall be issued to the applicable Holders. Holders entitled to receive such dividends or distributions, or Trust II Certificates in respect thereof, described in this Section 7 shall be those Holders registered as such on the transfer books of the Trustee at the close of business on the day fixed by the Corporation for the taking of a record to determine those holders of its stock entitled to receive such dividends or distributions. In the performance of its duties to deliver cash dividends under this Agreement, the Trustee shall not be obligated to risk its own funds and will not be liable for taxes or other charges related to the delivery of such dividends or distributions. SECTION 8. Termination. The voting trust created hereby shall terminate on the earliest to occur of: (a) ten years from the date hereof; (b) the written election of DLJMB or the Holders of Trust II Certificates representing fifty percent (50%) or more of the Trust Shares thereby; provided, however, that the voting trust created hereby shall not terminate pursuant to this Section 8(b) unless (i) immediately after giving effect to such termination, all DLJMB Affiliates will in the aggregate beneficially own (through record ownership, contract or otherwise), as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended, not more than 4.9% of the total fully diluted number of shares of Common Stock then outstanding; the Trustee will be entitled to rely conclusively on a certificate of an officer of DLJMB to the effect of the foregoing proviso, and (ii) DLJMB delivers to the Trustee an opinion of independent, nationally recognized counsel who are experts in matters involving the federal securities law, that, immediately after giving effect to such termination, DLJMB 3 should not be an "affiliate" of the Corporation within the meaning of Rule 144 under the Securities Act; and (c) transfer of all of the Trust Shares in accordance with Section 9. Subject to DLJMB's delivery of the officer's certificate and the opinion of counsel described in Section 8(b) above, an election pursuant to Section 8(b) shall be effective upon delivery of notice thereof to the Trustee. Upon the termination of the voting trust hereby created, the Holders shall surrender their Trust II Certificates to the Trustee, and the Trustee shall deliver by first class mail to the Holders Share Certificates (or the equivalent evidence of ownership in the case of Share Equivalents), properly endorsed for transfer (to the extent possible), equivalent to the number and type of Shares represented by the respective Trust II Certificates surrendered. SECTION 9. Transfer. Except as provided in Sections 8 and 10 and in subsections (a), (b) and (c) of this Section 9, Share Certificates (or the equivalent evidence of ownership in the case of Share Equivalents) representing Trust Shares may not be delivered to a Holder, a Holder's designee or any other third party prior to the termination of the voting trust created hereby. (a) A Holder may notify the Trustee in writing that the Holder desires to cause a Share Certificate or Share Certificates (or the equivalent evidence of ownership in the case of Share Equivalents) representing Trust Shares in which the Holder has a beneficial interest hereunder to be transferred to any person or entity, including such Holder, only if such transfer is an Eligible Transfer as defined herein. Any person or entity that acquires Trust Shares pursuant to an Eligible Transfer is hereinafter referred to as an "Eligible Transferee". For purposes of this Section 9, an "Eligible Transfer" is defined as any transfer of Trust Shares to a person who is not at the time of such transfer a DLJMB Affiliate. Such notice shall name such Eligible Transferee and shall state (i) its mailing address, (ii) the proposed transfer date (which date shall be not less than five days after the Trustee's receipt of such notice), (iii) the number and type of Shares to be transferred and (iv) the consideration, if any, to be paid by such Eligible Transferee therefor. The notice to the Trustee shall also contain a representation that such transferee is an Eligible Transferee and shall be accompanied by a Trust II Certificate or Trust II Certificates of the Holder, duly endorsed for transfer, representing not less than the number of Shares of the type to be transferred to the Eligible Transferee. On the date specified in such notice, and upon receipt by the Trustee from such Eligible Transferee of the specified consideration, if any, the Trustee shall deliver: (i) to the Eligible Transferee, a Share Certificate (or the equivalent evidence of ownership in the case of Share Equivalents) representing the number of Shares of the type specified in such notice, registered in the name of the Trustee and duly endorsed for transfer, and (ii) to the Holder, (x) a Trust II Certificate representing a number of Shares, if any, equal to the number of Shares of the type represented by the surrendered Trust II Certificate less the number of Shares of the type transferred to such Eligible Transferee, and (y) the consideration, if any, received from such 4 Eligible Transferee. Such consideration shall be distributed promptly to such Holder pursuant to the transfer instructions set forth on Schedule B attached hereto. (b) A Holder (hereinafter referred to as a "Requesting Party" for the purpose of this Section 9(b)) may request of the Trustee in writing that the Trustee transfer to such Requesting Party a Share Certificate or Share Certificates (or the equivalent evidence of ownership in the case of Share Equivalents) in which the Requesting Party has a beneficial interest hereunder; provided, however, that the Trustee shall not honor such request if immediately after giving effect thereto DLJMB Affiliates will own in the aggregate more than 4.9% of the total number of shares of Common Stock then outstanding, and, provided further, that if the Requesting Party is not DLJMB, the Trustee shall not honor such request, unless DLJMB consents in writing to such request. In determining, for purposes of this Section 9(b) only, whether DLJMB Affiliates will own in the aggregate more than 4.9% of the total number of shares of Common Stock then outstanding, (x) shares of Common Stock underlying Share Equivalents owned by a DLJMB Affiliate shall be deemed to be outstanding and owned by such DLJMB Affiliate and (y) Shares held pursuant to this Agreement shall be excluded. Such written request shall name such Requesting Party and shall state (i) the proposed transfer date (which date shall be not less than four business days after the Trustee's receipt of such request) and (ii) the number and type of Shares to be transferred. The notice to the Trustee shall also be accompanied by (i) a Trust II Certificate or Certificates of the Requesting Party, duly endorsed for transfer, representing not less than the number of Shares of the type to be transferred to the Requesting Party, (ii) a certificate of an officer of DLJMB certifying that immediately after giving effect to such request all DLJMB Affiliates will own in the aggregate not more than 4.9% of the total number of shares of Common Stock then outstanding and (iii) if the Requesting Party is not DLJMB, the written consent of DLJMB to such request. The Trustee shall be entitled to conclusively rely upon such certificate and, if applicable, such consent. On the date specified in such request, and upon receipt by the Trustee from the Requesting Party of such certificates, the Trustee shall deliver to the Requesting Party a certificate (or the equivalent evidence of ownership in the case of Share Equivalents) for the number of Shares of the type specified in such notice, registered in the name of the Trustee and duly endorsed for transfer. (c) A Holder may at any time direct the Trustee by notice in writing to transfer a Share Certificate or Share Certificates (or the equivalent evidence of ownership in the case of Share Equivalents) representing Shares in which the Holder has a beneficial interest hereunder (i) to an underwriter (including DLJMB) in connection with a public offering of the Shares registered under the Securities Act or (ii) in connection with sales made pursuant to Rule 144 (other than subsection (k) thereof) under the Securities Act through a broker-dealer (including DLJMB). Such notice shall state (a) the underwriter's or broker dealer's mailing address, (b) the proposed transfer date (which date shall not be less than five days after the Trustee's receipt of such notice), (c) the number and type of Shares to be transferred, and (d) the consideration, if any, to be paid. The notice shall also be accompanied by a certificate of an officer of the Holder certifying that such request is being made solely for sales made in connection with a public offering of the Shares registered under the Securities Act or sales made pursuant to Rule 144 (other than subsection (k) thereof) under the Securities Act and a Trust II Certificate or Certificates of the Holder, duly endorsed for transfer, representing not less than the number of Shares of the type to be transferred. The Trustee shall be entitled to conclusively rely upon such 5 certificate. On the date specified in such notice, and upon receipt by the Trustee from such underwriter or such other transferee of the specified consideration, if any, the Trustee shall deliver: (x) to the underwriter or such other transferee, a Share Certificate (or the equivalent evidence of ownership in the case of Share Equivalents) representing the number of Shares of the type specified in such notice, registered in the name of the Trustee and duly endorsed for transfer, and (y) to the Holder, a Trust II Certificate representing the number of Shares, if any, equal to the number of Shares represented by the surrendered Trust II Certificate less the number of Shares transferred to such underwriter or such other transferee, and (z) to the Holder, the consideration, if any, received from such underwriter or such other transferee. Such consideration shall be distributed promptly to the Holder pursuant to the transfer instructions set forth on Schedule B attached hereto. Notwithstanding the foregoing, if the Holder intends to transfer Shares pursuant to the exercise of the over-allotment option granted to the underwriters in connection with a public offering of shares of Common Stock of the Corporation, the transfer date in the notice may be less than four, but shall not be less than two, business days after the Trustee's receipt of such notice; provided, however, that if the transfer date in the notice is less than four business days after the Trustee's receipt of the notice, the Trustee shall only be obligated to use its reasonable best efforts to effect the transfer of such Shares by such transfer date. Nothing in this Section 9 or elsewhere in this Agreement shall prohibit a Holder from transferring Trust II Certificates in accordance with the terms of the Trust II Certificates. SECTION 10. Exercise, Conversion, Exchange or Cancellation of Shares. The Trustee shall, upon written instruction of a Holder, submit to the Corporation for exercise, conversion, exchange or cancellation any Share in which such Holder has a beneficial interest hereunder. Such notice shall state (a) whether such Shares are to be exercised, converted, exchanged or cancelled, (b) the date on which such Shares are to be submitted to the Corporation (which date shall not be less than five days after the Trustee's receipt of such notice), (c) the number and type of Shares to be submitted to the Corporation and (d) the consideration, if any, to be received upon such exercise, conversion, exchange or cancellation from the Corporation. The notice shall be accompanied by (x) a Trust II Certificate or Certificates of the Holder, duly endorsed for transfer, representing not less than the number of Shares of the type to be submitted to the Corporation and (y) any exercise price or other payment and any agreement, certificate or other documentation required in connection with such exercise, conversion, exchange or cancellation. On the date specified in such notice, and against receipt from the Corporation of the specified consideration, if any, the Trustee shall deliver by first class mail: (i) to the Corporation, (x) a Share Certificate or Share Certificates representing the number of Shares of the type specified in such notice, registered in the name of the Trustee and duly endorsed for transfer and (y) any exercise price or other payment and any agreement, certificate or other documentation delivered to the Trustee by such Holder with such notice and (ii) to the Holder, (x) a Trust II Certificate representing a number of Shares equal to the number of Shares represented by the surrendered Trust II Certificate or Certificates less the number of Shares submitted to the Corporation and (y) the consideration, if any, received by the Trustee pursuant to such exercise, conversion, exchange or cancellation; provided, however, that if such 6 consideration includes Shares, such Shares shall be held by the Trustee pursuant to this Agreement and new Trust II Certificates representing such Shares shall be issued to such Holder. SECTION 11. Increase or Decrease in Number of Shares. In the event of an increase in the number of Shares by virtue of a stock split or the decrease in the number of Shares because of a contraction of shares or a change in the number of outstanding Shares as a result of some other recapitalization in which the Corporation receives no consideration for the issuance of the additional or reduced number of Shares, the new additional or changed number of Shares shall be held by the Trustee and new Trust II Certificates representing the appropriate changed number of Shares shall be issued to Holders upon surrender of the then existing Trust II Certificates. SECTION 12. Successor Trustee. There shall initially be one Trustee of the voting trust created hereby. Upon the liquidation, dissolution, winding-up, suspension, incapacity, resignation or removal (in accordance with Section 13 below) of the initial Trustee, DLJMB or the Holders of Trust II Certificates representing fifty percent (50%) or more of the Trust Shares shall appoint a successor Trustee; provided, however, that such successor Trustee may not be a DLJMB Affiliate, unless such Successor Trustee shall be an Other Affiliate that is a bank or trust company. In the event a successor Trustee shall not have been appointed within 30 days of such removal, the Trustee may petition a court of competent jurisdiction to appoint such a successor. In the event that the Trustee consolidates with, merges with or converts into, or transfers all or substantially all of its corporate trust assets to, another corporation that is a bank or trust company, the surviving or transferee corporation may become the successor Trustee upon notice to the signatories hereto but without further action by the signatories or any Holder. SECTION 13. Removal/Resignation of Trustee. (a) A Trustee may be removed by DLJMB or the Holders of Trust II Certificates representing fifty percent (50%) or more of the Trust Shares: (i) if it is determined by a court of competent jurisdiction that either (A) the Trustee has willfully and materially violated the terms of the trust created hereby, or (B) the Trustee has been guilty of malfeasance, misfeasance or dereliction of duty hereunder; (ii) if the Trustee shall have commenced a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect, or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall have consented to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall have made a general assignment for the benefit of creditors, or shall have failed generally to pay its debts as they become due, or shall have taken any corporate action to authorize any of the foregoing; or (iii) if an involuntary case or other proceeding shall have been commenced against the Trustee seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect, 7 or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall have remained undismissed and unstayed for a period of 60 days, or an order for relief shall have been entered against the Trustee under the federal bankruptcy laws as now or hereafter in effect. (b) If DLJMB or the Holders of Trust II Certificates representing fifty percent (50%) or more of the Trust Shares then deposited hereunder determine that a basis exists for removal of the Trustee under Section 13(a) above, they shall deliver written notice of such determination to the Trustee stating the basis for such removal. (c) The Trustee may resign its position as such (i) upon ten days' written notice to DLJMB, but only if a successor Trustee, appointed as provided for in Section 12 above, has agreed to serve as such effective upon the effectiveness of the resignation of the Trustee then acting, or (ii) in any event upon 30 days' written notice to DLJMB. SECTION 14. Trustee May Own Shares. Nothing in this Agreement shall prevent the Trustee from owning Shares or options to purchase Shares in its individual capacity or in any capacity other than as trustee hereunder or for any DLJMB Affiliate. SECTION 15. Trustee Not an Affiliate. The Trustee represents that it is a bank or trust company that is not a Control Affiliate or an Employee Affiliate. SECTION 16. Compensation; Expenses. Reasonable expenses lawfully incurred by the Trustee in the administration of its duties hereunder (including reasonable attorneys' fees and expenses) shall be reimbursed to it by DLJMB on behalf of the Holders. In connection with its services to be provided hereunder, the Trustee shall receive a fee from DLJMB as follows: (a) an initial fee of $2,500 payable upon the execution by the parties of this Agreement, (b) during the Administrative Period, a fee of $5,000 per annum plus 0.0025% of the fair market value of the Trust Shares deposited in the voting trust created hereby, in each case payable quarterly in arrears, and (c) thereafter, such fee as the parties may from time to time agree. The provisions of this Section 16 shall survive the termination of this Agreement. SECTION 17. Merger, Etc. Upon any merger, consolidation, reorganization or dissolution of the Corporation or the sale of all or substantially all of the assets of the Corporation pursuant to which shares of capital stock or other voting securities of another corporation are to be issued in payment or exchange for or upon conversion of Shares and other voting securities, the shares of said other corporation shall automatically be and become subject to the terms of this Agreement and be held by the Trustee hereunder in the same manner and upon the same terms as the Trust Shares, and in such event the Trustee shall issue to the Holders that have deposited Shares with the Trustee new Trust II Certificates in lieu of the old Trust II Certificates for the appropriate number of shares and other voting securities of such other corporation. At the request of any Holder, the Trustee may transfer, sell or exchange or join with the Holder in such transfer, sale or exchange of Shares and other voting securities in exchange for shares of another corporation, and in said event the shares and other voting 8 securities of the other corporation received by the transferor shall be and become subject to this Agreement and be held by the Trustee hereunder in the same manner as the Trust Shares. SECTION 18. Notices. All notices, reports, statements and other communications directed to the Trustee from the Corporation, other than communications pertaining to the voting of the Trust Shares, shall be forwarded promptly by the Trustee to DLJMB and each Holder. All notices, notices of election and other communications required hereby shall be given in writing by overnight courier, telegram or facsimile transmission and shall be addressed, or sent, to the appropriate addresses as set forth beneath the signature of each party hereto, or at such other address as to which notice is given in accordance with this Section 18. SECTION 19. Indemnity, Etc. The Trustee (including in its individual capacity and its officers, directors, employees and agents) shall be indemnified from and against any and all loss, liability, claim, damage, cost and expense whatsoever (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claims whatsoever) (the "Indemnified Claims") arising out of or based upon this Agreement or the actions or failures to act of the Trustee hereunder or thereunder, except to the extent such loss, liability, claim, damage, cost or expense is caused by or results from the Trustee's gross negligence or willful misconduct (as determined by a final and unappealable order of a court of competent jurisdiction). DLJMB agrees on behalf of the Holders that it will indemnify and hold harmless the Trustee from and against any Indemnified Claims. DLJMB's obligation hereunder shall survive the transfer of all or any portions of its Shares and interests, the termination of the voting trust created hereby, or the resignation or removal of the Trustee. The Trustee shall be entitled to the prompt reimbursement for its out-of-pocket expenses (including reasonable attorneys' fees and expenses) incurred in investigating, preparing or defending against any litigation, commenced or threatened, arising out of or based upon this Agreement, or the actions or failures to act of the Trustee hereunder or thereunder, without regard to the outcome of such litigation; provided, however, that the Trustee shall be obligated to return any such reimbursement if it is subsequently determined by a final and unappealable order of a court of competent jurisdiction that the Trustee was grossly negligent or engaged in willful misconduct in the matter in question. Such expenses payable under this Section 19 shall be prorated among the Holders in accordance with their respective interests in the Shares then deposited hereunder. If a claim under this Section 19 is not paid in full within 30 days after a written claim has been submitted by the Trustee, the Trustee may at any time thereafter bring suit to recover the unpaid amount of the claim and, if successful in whole or in part, the Trustee shall be entitled to be paid also the expense of prosecuting such claims. The Trustee is authorized and empowered to construe this Agreement and its construction of the same, made in good faith, shall be final, conclusive, and binding upon all Holders and all other parties interested. The Trustee may, in its discretion, consult with counsel to be selected and employed by it, and the reasonable fees and expenses of such counsel shall be an expense for which the Trustee is entitled to indemnity hereunder. 9 The Trustee hereby accepts the trust created hereby and agrees to carry out the terms and provisions hereof, but assumes no responsibility for the management of the Corporation or for any action taken by it, by any person elected as a director of the Corporation or by the Corporation pursuant to any vote cast or consent given by the Trustee. The Trustee, whether or not acting upon the advice of counsel, shall incur no liability because of any error of law or fact, mistake of judgment or any matter or thing done or omitted under this Agreement, except its own willful misconduct. Anything done or suffered in good faith by the Trustee in accordance with the advice of counsel chosen as indicated above shall be conclusive in favor of the Trustee against the Holders and any other interested party. The Trustee shall not be liable in any event for acts or defaults of any other trustee or trustees (under this or any other voting trust of the Corporation's securities) or for acts or defaults of any employee, agent, proxy or attorney-in-fact of any other trustee or trustees. The Trustee shall be protected and free from liability in acting upon any notice, request, consent, certificate, declaration, guarantee, affidavit or other paper or document or signature reasonably believed by it to be genuine and to have been signed by the proper party or parties or by the party or parties purporting to have signed the same. No provision of this Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. SECTION 20. Certain Calculations. For purposes of Sections 9, 12, 13, 16 and 19, a Holder owning a Trust II Certificate representing Share Equivalents shall, in respect of such ownership, be deemed to be the Holder of a Trust II Certificate representing the number of shares of Common Stock that the Trustee, acting on behalf of such Holder, may acquire, whether by exercise, conversion, subscription or otherwise, pursuant to or by reason of ownership of such Shares. SECTION 21. Counterparts. This Agreement may be executed in multiple counterparts all of which counterparts together shall constitute one agreement. Upon execution of this Agreement and the establishment of the voting trust created hereby, the Trustee shall deliver a copy of this Agreement to be filed in the registered office of the Corporation at 1601 Bryan Street, Dallas, Texas, and the Agreement shall be open to inspection in the manner provided for inspection under the laws of the State of Texas. SECTION 22. Choice of Law. This Agreement is intended by the parties to be governed and construed in accordance with the laws of the State of Texas, except that the Trustee's rights and obligations shall be governed and construed in accordance with the laws of the State of New York. SECTION 23. Bond. The Trustee shall not be required to provide any bond to secure the performance of its duties hereunder. 10 SECTION 24. Reliance. Each Holder acknowledges that DLJMB will rely on this Agreement in complying with the federal securities laws. The Trustee acknowledges that DLJMB will rely on the Trustee abiding by the terms of this Agreement, including, without limitation, that (x) the Trustee will exercise independent judgment in voting the shares and will not consult with any DLJMB Affiliate regarding the voting of such shares and (y) the Trustee will not consent to any amendment or waiver of this Agreement prohibited by Section 25 hereof whether or not such amendment or waiver is approved by each of the parties hereto and all of the Holders. SECTION 25. Amendments and Waivers. This Agreement may not be amended or waived in any material respect, unless an independent, nationally recognized counsel, who are experts in matters involving the federal securities law (as determined by DLJMB), provides to DLJMB an opinion (which opinion and counsel shall be satisfactory to DLJMB) that, immediately after such amendment or waiver, DLJMB should not be an "affiliate" of the Corporation within the meaning of Rule 144 under the Securities Act. SECTION 26. Benefits and Assignment. Nothing in this Agreement, expressed or implied, shall give or be construed to give any persons, firm or corporation, other than the parties hereto and their successors and assigns, any legal claim under any covenant, condition or provision hereof, all the covenants, conditions and provisions contained in this Agreement being for the sole benefit of the parties hereto and their successors and assigns. No party may assign any of its rights or obligations under this Agreement without the written consent of all the other parties, which consent may be withheld in the sole discretion of the party whose consent is sought. SECTION 27. Severability. In case any provision in 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. 11 EXECUTED as of the date and year first above written. CHRISTIANA BANK & TRUST COMPANY as Trustee By: ----------------------------- Name: Title: Address: 1314 King Street Wilmington, Delaware 19899-0957 Attention: Corporate Trust Administration/Debra Balliet Facsimile: (302) 421-9015 UXT HOLDINGS, LLC By: ----------------------------------------- Name: Title: Address: Eleven Madison Avenue New York, New York, 10010 Attention: Ivy Dodes Facsimile: 212-325-8256 UXT INTERMEDIARY, LLC By: ----------------------------------------- Name: Title: Address: Eleven Madison Avenue New York, New York, 10010 Attention: Ivy Dodes Facsimile: 212-325-8256 DLJ MERCHANT BANKING III, INC. By: ----------------------------------------- Name: Title: Address: Eleven Madison Avenue New York, New York, 10010 Attention: Ivy Dodes Facsimile: 212-325-8256 SCHEDULE A FORM OF TRUST II CERTIFICATE "THE TRANSFER OF THIS TRUST II CERTIFICATE IS SUBJECT TO TERMS AND CONDITIONS SET FORTH IN THE VOTING TRUST II AGREEMENT (THE "AGREEMENT") DATED AS OF MARCH 21, 2003, A COPY OF WHICH HAS BEEN FILED IN THE REGISTERED OFFICE IN THE STATE OF TEXAS OF TXU CORP., A TEXAS CORPORATION (THE "CORPORATION"). SUCH COPY IS OPEN TO INSPECTION DAILY DURING BUSINESS HOURS BY ANY SHAREHOLDER OF THE CORPORATION OR ANY BENEFICIARY OF THE VOTING TRUST CREATED PURSUANT TO THE AGREEMENT. TXU Corp . TRUST II CERTIFICATE Certificate No. ____ No. of Shares ______ This certifies that ____________ ("Holder") has transferred to the undersigned Trustee the above-stated number of voting shares of common stock, no par value, of TXU Corp., a Texas corporation (the "Corporation"), to be held by the Trustee pursuant to the terms of the Agreement, a copy of which agreement has been delivered to the above-named Holder and filed in the registered office of the Corporation in the State of Texas. The Holder, or his registered assigns, will be entitled (i) to receive payments equal to any and all cash dividends collected by the Trustee on the above-stated number of shares, (ii) to receive all other dividends or distributions except to the extent that property received is required to be deposited in the trust created by the Agreement, and (iii) to the delivery of a certificate or certificates for that number of shares on the termination of the Agreement, in accordance with its provisions. At all times prior to the termination of the trust created by the Agreement, the Trustee has the exclusive right to vote the above-stated number of shares, or give written consent, in person or by proxy, at all meetings of shareholders of the Corporation, and in all proceedings in which the vote or consent, written or otherwise, of the holders of Shares may be required or authorized by law. Subject to the terms of the Agreement, this Trust II Certificate is transferable on the books maintained by the Trustee at the principal corporate trust office of the Trustee by the Holder hereof, in person or by duly authorized attorney, and upon surrender hereof; and until so transferred the Trustee may treat the registered Holder hereof as the absolute owner hereof for all purposes. The Holder, by the acceptance of this Trust II Certificate, agrees to be bound by all of the provisions of the Agreement as fully as if its terms were set forth in this Trust II Certificate. EXECUTED this ___ day of ___________, ____ ------------------------ By: --------------------- Name: ------------------- Title: ------------------ [Form of Assignment for Reverse of Trust II Certificate] For value received, ___________ hereby sells, assigns, and transfers unto ____________ the within Trust II Certificate and all rights and interests represented thereby, and does hereby irrevocably constitute and appoint _______ attorney to transfer such Trust II Certificate on the books of the within-named Trustee with full power of substitution in the premises. Date: --------------------------- Signed: *" -------------------------- *Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Trustee, which requirements include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Trustee in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 2 SCHEDULE B TRANSFER INSTRUCTIONS UXT Holdings, LLC All payments shall be made by check mailed to: UXT Holdings, LLC Eleven Madison Avenue New York, New York 10010 Attention: John Cafasso, 13th Floor UXT Intermediary, LLC All payments shall be made by check mailed to: UXT Intermediary, LLC Eleven Madison Avenue New York, New York 10010 Attention: John Cafasso, 13th Floor EX-7 9 ex7to13d_041503.txt EXHIBIT 7 TO SCHEDULE 13D EXECUTION COPY -------------------------------------------------------------- -------------------------------------------------------------- PURCHASE AGREEMENT for 9% EXCHANGEABLE SUBORDINATED NOTES DUE 2012 OF TXU ENERGY COMPANY LLC By and Among UXT HOLDINGS LLC, UXT INTERMEDIARY LLC AND THE PURCHASERS (as listed in the Schedule attached hereto as Exhibit A) Dated as of December 19, 2002 -------------------------------------------------------------- -------------------------------------------------------------- PURCHASE AGREEMENT, dated as of December 19, 2002 (the "Agreement"), by and among UXT Holdings LLC and UXT Intermediary LLC, each a Delaware limited liability company (each a "Seller" and collectively, the "Sellers"), and the Purchasers listed in the Schedule attached hereto as Exhibit A (each a "Purchaser" and collectively, the "Purchasers"). WHEREAS, the Sellers own $750 million aggregate principal amount of 9% Exchangeable Subordinated Notes due 2012 of TXU Energy Company LLC (the "Notes"), a form of which is attached hereto as Exhibit B; and WHEREAS, the Sellers desire to sell, and the Purchasers desire to buy, $250 million aggregate principal amount of the Notes. NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants hereinafter set forth, the Sellers and the Purchasers hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.01 Definitions. As used in this Agreement, the following terms shall have the following meanings: "Action" means any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority. "Affiliate" means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person. "Agreement" shall have the meaning set forth in the Preamble. "Business Day" means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in the States of New York or Texas. "Closing" shall have the meaning set forth in Section 2.02. "Closing Date" shall have the meaning set forth in Section 2.02. "Company" means TXU Energy Company LLC, a Delaware limited liability company. "Encumbrance" means any security interest, pledge, hypothecation, mortgage, lien (including, without limitation, environmental and tax liens), violation, charge, lease, license, encumbrance, servient easement, adverse claim, reversion, reverter, preferential arrangement, restrictive covenant, condition or restriction of any kind, including, without limitation, any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership. "Entity" means any individual, partnership, corporation, limited liability company, association, estate, trust, business trust, and Governmental Authority. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Agreement" means the Exchange Agreement, dated as of November 22, 2002, entered into by and between TXU Corp., TXU Energy Company LLC, and the Sellers, pursuant to which the Notes may be exchanged for TXU Common Stock. "Governmental Authority" means any United States or non-United States federal, national, supranational, state, provincial, local, or similar government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body, including the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission, the SEC or the appropriate state public utilities commission. "Governmental Order" means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority. "Law" means any United States or non-United States federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, order, requirement or rule of law (including, without limitation, common law). "Liabilities" means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, including, without limitation, those arising under any Law (including, without limitation, any Environmental Law), Action or Governmental Order and those arising under any contract, agreement, arrangement, commitment or undertaking. "Notes" has the meaning set forth in the Recitals. "Person" means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended. "Purchase Price" shall have the meaning set forth in Section 2.01. "Purchased Notes" shall have the meaning set forth in Section 2.01. "Purchaser" shall have the meaning set forth in the Preamble. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of November 22, 2002, entered into by and among the TXU Corp. and the Sellers, as amended by Amendment No.1 to the Registration Rights Agreement. 2 "Restricted Period" shall have the meaning set forth in Section 5.04. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Shares" shall have the meaning set forth in Section 5.04. "TXU" means TXU Corp., a Texas corporation. --- "TXU Common Stock" means the common stock, without par value, of TXU. "Transfer" shall have the meaning set forth in the Notes. ARTICLE II PURCHASE AND SALE OF INTERESTS SECTION 2.01 Purchase and Sale of Interests. On the date hereof, the Sellers agree to sell to the Purchasers, and each Purchaser agrees to purchase from the Sellers, the aggregate principal amount of the Notes set forth opposite such Purchaser's name on Exhibit A hereto (such Notes purchased pursuant to this Agreement, in the aggregate, the "Purchased Notes") for an aggregate purchase price of $250 million (the "Purchase Price"). SECTION 2.02 Closing. Subject to the terms and conditions of this Agreement, the sale and purchase of the Purchased Notes contemplated by this Agreement shall take place at a closing (the "Closing") to be held at or directed from the offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022, at 10:00 A.M., Eastern Standard Time on December 19, 2002 or at such other place or at such other time or such other date as the Purchasers and the Sellers shall mutually agree upon in writing (the date on which the Closing takes place being the "Closing Date"). SECTION 2.03 Closing Deliveries by the Seller. At the Closing, the Sellers shall deliver, or cause to be delivered, to the Purchasers, the Purchased Notes, in such number and denomination as reasonably requested by the Purchasers in accordance with Section 6.04 of the Notes. SECTION 2.04 Closing Deliveries by the Purchaser. At the Closing, the Purchasers shall deliver, or cause to be delivered, to the Sellers, the Purchase Price by wire transfer in immediately available funds to an account designated in writing by the Sellers to the Purchasers not later than one Business Day prior to the Closing Date. 3 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS As an inducement to the Purchasers to enter into this Agreement, the Sellers hereby represent and warrant to the Purchasers as follows: SECTION 3.01 Organization and Authority of the Sellers. The Sellers are duly organized, validly existing and in good standing under the laws of the jurisdiction of their organization and have all necessary power and authority to enter into this Agreement, to carry out their obligations hereunder and to consummate the transactions contemplated by this Agreement. The execution and delivery by the Sellers of this Agreement, the performance by the Sellers of their obligations hereunder and the consummation by the Sellers of the transactions contemplated by this Agreement have been duly authorized by all requisite action on the part of the Sellers. This Agreement has been duly executed and delivered by the Sellers, and (assuming due authorization, execution and delivery by the Purchasers) this Agreement constitutes legal, valid and binding obligations of the Sellers, enforceable against the Sellers in accordance with its terms. SECTION 3.02 No Conflict. The execution, delivery and performance by the Sellers of this Agreement does not and will not (a) violate, conflict with or result in the breach of any provision of the organizational documents of the Sellers, (b) conflict with or violate any Law or Governmental Order applicable to the Sellers or (c) conflict with, or result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Sellers are a party, which would adversely affect the ability of the Sellers to carry out their obligations under, and to consummate the transactions contemplated by, this Agreement. SECTION 3.03 Governmental Consents. The execution, delivery and performance of this Agreement by the Sellers does not and will not require any consent, approval, authorization or other order of, action by, filing with or notification to any Governmental Authority. SECTION 3.04 Ownership. The Sellers are the legal and beneficial owners of the Purchased Notes and have the right to transfer the Purchased Notes free and clear of any and all Encumbrances. Upon the sale of the Purchased Notes to the Purchasers pursuant hereto, the Purchasers will hold the Purchased Notes free and clear of any and all Encumbrances arising through the Sellers or any of their respective predecessors. There are no contracts, agreements or other arrangements (other than this Agreement) obligating or requiring the Sellers to assign, transfer or convey the Purchased Notes to any other Person. 4 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS As an inducement to the Sellers to enter into this Agreement, the Purchasers hereby represent and warrant to the Sellers as follows: SECTION 4.01 Organization and Authority of the Purchasers. The Purchasers are duly organized, validly existing and in good standing under the laws of the jurisdiction of their organization and have all necessary power and authority to enter into this Agreement, to carry out their obligations hereunder and to consummate the transactions contemplated by this Agreement. The execution and delivery by the Purchasers of this Agreement, the performance by the Purchasers of their obligations hereunder and the consummation by the Purchasers of the transactions contemplated by this Agreement have been duly authorized by all requisite action on the part of the Purchasers. This Agreement has been duly executed and delivered by the Purchasers, and (assuming due authorization, execution and delivery by the Sellers) this Agreement constitutes legal, valid and binding obligations of the Purchasers, enforceable against the Purchasers in accordance with its terms. SECTION 4.02 No Conflict. The execution, delivery and performance by the Purchasers of this Agreement does not and will not (a) violate, conflict with or result in the breach of any provision of the organizational documents of the Purchasers, (b) conflict with or violate any Law or Governmental Order applicable to the Purchasers or (c) conflict with, or result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Purchasers are a party, which would adversely affect the ability of the Purchasers to carry out their obligations under, and to consummate the transactions contemplated by, this Agreement. SECTION 4.03 Governmental Consents. The execution, delivery and performance of this Agreement by the Purchasers does not and will not require any consent, approval, authorization or other order of, action by, filing with or notification to any Governmental Authority. SECTION 4.04 Private Placement. (a) Each Purchaser understands that the offering and sale of the Notes by the Sellers is intended to be exempt from registration under the Securities Act pursuant to Section 4(2) thereof. (b) Each Purchaser is an "accredited investor" as such term is defined in Rule 501(a) of Regulation D under the Securities Act. (c) Each Purchaser is acquiring the Notes hereunder for its own account (or for accounts over which it exercises investment authority), for investment and not with a view to the public resale or distribution thereof, in violation of any securities law. 5 SECTION 4.05 Economic Risks. Each Purchaser is: (a) a sophisticated Person with respect to the purchase of the Notes; (b) is able to bear the economic risk associated with the purchase of the Notes; (c) is able to make informed decisions regarding the purchase of the Notes; (d) has such knowledge and experience, and has made investments of a similar nature, so as to be aware of the risks and uncertainties inherent in the purchase of the Notes as contemplated in this Agreement; (e) has independently and without reliance upon the Sellers, and based on such information as the Purchasers have deemed appropriate, made its own analysis and decision to enter into this Agreement, except that the Purchasers have relied upon the Sellers' express representations and warranties in this Agreement. The Purchasers acknowledge that the Sellers have not given the Purchasers any investment advice, credit information or opinion on whether the purchase of the Notes is prudent. SECTION 4.06 No Reliance. The Purchasers have not relied and will not rely on the Sellers to furnish or make available any documents or other information regarding the credit, affairs, financial condition or business of, or any other matter concerning the Company or TXU, other than a true and complete copy of that certain Purchase Agreement relating to the Notes, dated as of November 18, 2002, by and among TXU, the Company, and UXT Holdings LLC, which, together with a true and complete copy of the Registration Rights Agreement and the Exchange Agreement, has been provided by the Sellers to the Purchasers. SECTION 4.07 Excluded Information. The Purchasers acknowledge that: (a) the Sellers currently may have, and later may come into possession of, information with respect to the Notes, the Company or TXU that is not known to the Purchasers and that may be material to a decision to acquire the Notes (the "Excluded Information"); (b) the Purchasers have determined to purchase the Purchased Notes notwithstanding their lack of knowledge of the Excluded Information; and (c) the Sellers shall have no liability to the Purchasers, and the Purchasers waive and release any claims that they might have against the Sellers, whether under applicable securities laws or otherwise, with respect to the nondisclosure of the Excluded Information in connection with this Agreement; provided however that the Excluded Information shall not and does not affect the truth or accuracy of the Sellers representations or warranties in this Agreement. 6 SECTION 4.08 Non-Exempt Prohibited Transaction. The purchase and holding of the Purchased Notes by the Purchasers will not result in a non-exempt prohibited transaction within the meaning of Section 406 of the Employee Retirement Income Security Act of 1974, as amended, or Section 4975 of the Internal Revenue Code of 1986, as amended. ARTICLE V ADDITIONAL AGREEMENTS SECTION 5.01 Ownership and Control. The Purchasers represent and warrant to the Sellers that they do not own and control, and agree that they will not acquire ownership and control of, installed generation capacity within the Electric Reliability Council of Texas ("ERCOT") in an amount that would cause the Company or TXU (by virtue of Section 39.154(c) of the Texas Utility Code) to be deemed to own and control more than 20% of the installed generation capacity located in ERCOT in violation of Section 39.154 of the Texas Utility Code and the Substantive Rules of the Public Utility Commission of Texas. SECTION 5.02 Provisions in the Exchange Agreement and Registration Rights Agreement. The Purchasers hereby agree to be bound by the provisions contained in both Sections 9, 10(a) and 10(d) (ii) of the Exchange Agreement and Sections 12, 15(a) and 15(e) (iii) of the Registration Rights Agreement. SECTION 5.03 Demand Registration. (a) The Purchasers hereby waive any and all rights they may have to request a Demand Registration (as defined in the Registration Rights Agreement) as provided for in Section 3 of the Registration Rights Agreement and agree that only the Sellers or their Affiliates may request a Demand Registration, until such time (if any) as the Sellers, together with their Affiliates, are no longer permitted to exercise such rights under the Registration Rights Agreement (including as the result of any sale or other Transfer of Notes or Shares to any other party), at which point such waiver shall be of no further force and effect and the Purchasers shall have all rights of a Holder under Section 3 of such agreement. Except as set forth in the preceding sentence and in Section 9(a) of the Assignment Agreement, the Purchasers shall be entitled to all rights, and subject to all obligations, of a Holder (as defined in the Registration Rights Agreement) under the Registration Rights Agreement, including without limitation all rights of a Participating Demand Holder and a Participating Piggy-Back Holder (as defined in the Registration Rights Agreement), and a Purchaser under the Exchange Agreement. (b) The Purchasers acknowledge that pursuant to Section 2.04 of the Notes, at the option of the Company, the Notes may be exchanged for preferred equity interests in the Company on substantially identical economic and other terms. The Purchasers agree that the Sellers shall have the right to consent to the terms of any such preferred equity interests as long as the economic terms remain substantially identical to the Notes, provided, that the Purchasers shall also have the right to consent to the terms of any such preferred equity interests if the Sellers are no longer permitted to exercise such consent right (including as the result of any sale or other Transfer of Notes or Shares to any other party). 7 (c) The Sellers hereby agree not to enter into any agreement which provides any rights to any purchaser of Notes or Shares with respect to the preferred equity consent rights under the Notes which are more favorable to such purchaser than the rights granted to the Purchasers under this Section 5.03. SECTION 5.04 Transfer of Notes or Shares. (a) Notwithstanding anything in this Agreement including the provisions contained in Section 5.03 above, from the date hereof until the first anniversary of the Closing Date (such period, the "Restricted Period"), the Purchasers shall not Transfer all or any portion of the Notes or any shares of TXU Common Stock ("Shares") issuable upon exchange of the Notes pursuant to the Exchange Agreement without the prior written consent of the Sellers, except that the Purchasers may Transfer the Notes or such Shares (i) to any Affiliate that agrees to be bound by the provisions of this Agreement, and (ii) to any Person, to the extent necessary so that, following such Transfer, the Purchasers own, or would own, upon conversion of the Notes owned by them at the time, in the aggregate, less than 5% of the outstanding Shares, but only if one or more of the Purchasers concludes, after consultation with counsel, that it or any of its Affiliates could reasonably be determined to be an affiliate of the Company and/or TXU for purposes of Section 39.154 of the Texas Utility Code or any related provisions of Texas law; provided, however, that the ability of the Purchasers to Transfer the Notes pursuant to Section 3.10 of the Notes shall not be prohibited. (b) In the event any of the Purchasers or their Affiliates propose to Transfer any Notes or shares pursuant to Section 5.04(a)(ii) hereof during the Restricted Period (the "Offered Securities"), they shall provide written notice of such Transfer (the "Notice") to the Sellers which Notice shall constitute an offer to sell the Offered Securities to the Sellers at a purchase price equal to the principal amount of the Notes, in the case of a Transfer of Notes, or the Note Exercise Price per share, in the case of a Transfer of Shares. The Sellers shall have thirty (30) days from the date of receipt of the Notice (the "Notice Period") to deliver written notice to the Purchasers stating its desire to purchase the Offered Securities. If the option to purchase is not exercised within the Notice Period then the Purchasers may Transfer the Offered Securities to a third party, provided that such Transfer must occur within 60 days after the expiration of the applicable Notice Period. SECTION 5.05 Amendments of Other Agreements. The Sellers hereby agree, for themselves and each of their respective successors and assigns, that they will not consent to any amendment to the Notes, the Registration Rights Agreement, or the Exchange Agreement that would adversely affect the rights of any of the Purchasers thereunder differently from any other Holder of Notes or Shares. ARTICLE VI MISCELLANEOUS SECTION 6.01 Amendment; Waiver. This Agreement may not be amended, supplemented, modified or restated except by an instrument in writing signed by, or on behalf of, the parties hereto or by a waiver in accordance with this Section 6.01. Any party to this Agreement may (a) extend the time for the performance of any of the obligations or other 8 acts of any other party, (b) waive any inaccuracies in the representations and warranties of any other party contained herein or in any document delivered by any other party pursuant hereto or (c) waive compliance with any of the agreements of any other party or conditions to such party's obligations contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any of such rights. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available. SECTION 6.02 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by telecopy, facsimile or registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 6.02): if to the Sellers: c/o DLJ Merchant Banking III, Inc. Eleven Madison Avenue New York, NY 10010-3629 Facsimile: (212) 325-8256 Attention: Ivy Dodes, Esq. with a copy to: Shearman & Sterling 599 Lexington Avenue New York, NY 10022-6069 Facsimile: (212) 848-7179 Attention: Stephen M. Besen, Esq. if to the Purchasers: each Purchaser c/o Berkshire Hathaway Inc. 1440 Kiewit Plaza Omaha, Nebraska 68131 Facsimile: (402) 346-3375 Attention: Marc Hamburg Mark Millard with a copy to: 9 Munger, Tolles & Olson LLP 355 South Grand Avenue Los Angeles, CA 90071-1560 Facsimile: (213) 687-3702 Attention: Mary Ann Todd, Esq. SECTION 6.03 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect for so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated by this Agreement are consummated as originally contemplated to the greatest extent possible. SECTION 6.04 Assignment. This Agreement may not be assigned by operation of law or otherwise without the express written consent of the Sellers or the Purchasers (which consent may be granted or withheld in the sole discretion of the Sellers or the Purchasers); provided, however, that the Purchasers may assign this Agreement or any of their rights and obligations hereunder to another Purchaser or to one or more wholly-owned subsidiaries of the Purchasers without the consent of the Sellers. SECTION 6.05 Third Party Beneficiaries and Transfers. This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. SECTION 6.06 Governing Law; Consent to Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. The parties hereto hereby (a) submit to the exclusive jurisdiction of any state or federal court sitting in the Borough of Manhattan of The City of New York for the purpose of any action arising out of or relating to this Agreement brought by any party hereto, and (b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, that the venue of the action is improper, or that this Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the above-named courts. SECTION 6.07 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN 10 CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. SECTION 6.08 Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, among the Sellers and the Purchasers with respect to the subject matter hereof. SECTION 6.09 Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 6.10 Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. SECTION 6.11 Public Announcements. Subject to its legal obligations (including requirements of stock exchanges and other similar regulatory bodies and other than as may be required pursuant to the Exchange Act), no party shall make any public announcement regarding the entering into of this Agreement or the Closing without the prior consent of the other party, which shall not be unreasonably withheld. Notwithstanding the foregoing, upon the Closing the parties shall cooperate with each other to make a public announcement of the transaction and shall agree as to the timing and contents of any such announcement. [Signatures appear on next page] 11 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers or other representatives thereunto duly authorized, as of the date first above written. UXT HOLDINGS LLC By: DLJ Merchant Banking III, Inc., its managing member By: ---------------------------------- Name: Title: UXT INTERMEDIARY LLC By: UXT AIV, L.P. its managing member By: DLJ Merchant Banking III, Inc. as managing general partner By: ---------------------------------- Name: Title: BENJAMIN MOORE PENSION By: ---------------------------------- Name: Title: THE BUFFALO NEWS OFFICE PENSION PLAN By: ---------------------------------- Name: Title: THE BUFFALO NEWS EDITORIAL PENSION PLAN By: ---------------------------------- Name: Title: 12 CORNHUSKER CASUALTY COMPANY By: ---------------------------------- Name: Title: FLIGHTSAFETY INTERNATIONAL INC. RETIREMENT INCOME PLAN By: ---------------------------------- Name: Title: FRUIT OF THE LOOM PENSION TRUST By: ---------------------------------- Name: Title: GEICO CORPORATION PENSION PLAN TRUST By: ---------------------------------- Name: Title: GOVERNMENT EMPLOYEES INSURANCE COMPANY By: ---------------------------------- Name: Title: JOHNS MANVILLE CORPORATION MASTER PENSION TRUST By: ---------------------------------- Name: Title: 13 JUSTIN BRANDS, INC. UNION PENSION PLAN AND JUSTIN BRANDS, INC. PENSION PLAN & TRUST By: ---------------------------------- Name: Title: ACME BRICK COMPANY PENSION TRUST By: ---------------------------------- Name: Title: SCOTT FETZER COMPANY COLLECTIVE INVESTMENT TRUST By: ---------------------------------- Name: Title: 14 Exhibit A
- ----------------------------------------------------------- -------------------------------- ------------------------- THE PURCHASERS PRINCIPAL AMOUNT PURCHASE OF PRICE NOTES PURCHASED - ----------------------------------------------------------- -------------------------------- ------------------------- Benjamin Moore Pension 15,900,000 15,900,000 - ----------------------------------------------------------- -------------------------------- ------------------------- The Buffalo News Office Pension Plan 4,200,000 4,200,000 - ----------------------------------------------------------- -------------------------------- ------------------------- The Buffalo News Editorial Pension Plan 6,400,000 6,400,000 - ----------------------------------------------------------- -------------------------------- ------------------------- Cornhusker Casualty Company 25,000,000 25,000,000 - ----------------------------------------------------------- -------------------------------- ------------------------- FlightSafety International Inc. Retirement 7,400,000 7,400,000 Income Plan - ----------------------------------------------------------- -------------------------------- ------------------------- Fruit of the Loom Pension Trust 13,500,000 13,500,000 - ----------------------------------------------------------- -------------------------------- ------------------------- GEICO Corporation Pension Plan Trust 57,000,000 57,000,000 - ----------------------------------------------------------- -------------------------------- ------------------------- Government Employees Insurance Company 29,000,000 29,000,000 - ----------------------------------------------------------- -------------------------------- ------------------------- Johns Manville Corporation Master Pension 70,000,000 70,000,000 Trust - ----------------------------------------------------------- -------------------------------- ------------------------- Justin Brands, Inc. Union Pension Plan and 4,300,000 4,300,000 Justin Brands, Inc. Pension Plan & Trust - ----------------------------------------------------------- -------------------------------- ------------------------- Acme Brick Company Pension Trust 10,300,000 10,300,000 - ----------------------------------------------------------- -------------------------------- ------------------------- Scott Fetzer Company Collective Investment Trust 7,000,000 7,000,000 - ----------------------------------------------------------- -------------------------------- -------------------------
15 Exhibit B FORM OF NOTE 16 Table of Contents Page ARTICLE I DEFINITIONS SECTION 1.01 Definitions....................................................1 ARTICLE II PURCHASE AND SALE OF INTERESTS SECTION 2.01 Purchase and Sale of Interests.................................3 SECTION 2.02 Closing........................................................3 SECTION 2.03 Closing Deliveries by the Seller...............................3 SECTION 2.04 Closing Deliveries by the Purchaser............................3 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS SECTION 3.01 Organization and Authority of the Sellers......................4 SECTION 3.02 No Conflict....................................................4 SECTION 3.03 Governmental Consents..........................................4 SECTION 3.04 Ownership......................................................4 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS SECTION 4.01 Organization and Authority of the Purchasers...................5 SECTION 4.02 No Conflict....................................................5 SECTION 4.03 Governmental Consents..........................................5 SECTION 4.04 Private Placement..............................................5 SECTION 4.05 Economic Risks.................................................6 SECTION 4.06 No Reliance....................................................6 SECTION 4.07 Excluded Information...........................................6 SECTION 4.08 Non-Exempt Prohibited Transaction..............................7 ARTICLE V ADDITIONAL AGREEMENTS SECTION 5.01 Ownership and Control..........................................7 SECTION 5.02 Provisions in the Exchange Agreement and Registration Rights Agreement......................................................7 SECTION 5.03 Demand Registration............................................7 SECTION 5.04 Transfer of Notes or Shares....................................8 SECTION 5.05 Amendments of Other Agreements.................................8 ARTICLE VI MISCELLANEOUS SECTION 6.01 Amendment; Waiver..............................................8 SECTION 6.02 Notices........................................................9 SECTION 6.03 Severability..................................................10 SECTION 6.04 Assignment....................................................10 SECTION 6.05 Third Party Beneficiaries and Transfers.......................10 SECTION 6.06 Governing Law; Consent to Jurisdiction........................10 SECTION 6.07 Waiver of Jury Trial..........................................10 SECTION 6.08 Entire Agreement..............................................11 SECTION 6.09 Headings......................................................11 SECTION 6.10 Counterparts..................................................11 SECTION 6.11 Public Announcements..........................................11 ii EX-8 10 ex8to13d_041503.txt EXHIBIT 8 TO SCHEDULE 13D EXECUTION COPY ASSIGNMENT, ASSUMPTION AND WAIVER AGREEMENT ASSIGNMENT, ASSUMPTION AND WAIVER AGREEMENT (this "Agreement"), dated as of December 19, 2002, between UXT Holdings LLC, UXT Intermediary LLC (each an "Assignor" and collectively, the "Assignors"), the Purchasers listed on the signature page hereto (each an "Assignee" and collectively, the "Assignees"), TXU Corp., TXU Energy Company LLC (the "TXU Entities") and, solely with respect to Sections 9, 10(b) and 12 of this Agreement, Berkshire Hathaway Inc. (the "Purchaser Parent"). W I T N E S S E T H WHEREAS, the Assignors are selling to the Assignees $250 million aggregate principal amount (the "Purchased Notes") of 9% Exchangeable Subordinated Notes Due 2012 of TXU Energy Company LLC (the "Notes") pursuant to a purchase agreement, dated as of the date hereof, among the Assignors and Assignees (the "Purchase Agreement"). WHEREAS, as a condition to such purchase, the Assignees have requested that the Assignors assign and transfer to the Assignees any and all rights the Assignors may have under the Purchase Agreement dated as of November 18, 2002 among the TXU Entities and the Assignors (the "Original Purchase Agreement"), the Registration Rights Agreement dated November 22, 2002 among TXU Corp. and the Assignors, as amended (the "Registration Rights Agreement"), and the Exchange Agreement dated as of November 22, 2002 among the TXU Entities and the Assignors (the "Exchange Agreement"), in each case with respect to the Purchased Notes. WHEREAS, the Assignees desire to accept such assignment, and in consideration thereof, assume the obligations of the Assignors under the Original Purchase Agreement, the Registration Rights Agreement and the Exchange Agreement with respect to the Purchased Notes. WHEREAS, the TXU Entities have agreed to such assignment. WHEREAS, as a condition to their consent to such assignment, the TXU Entities have requested the Assignors, the Assignees and the Purchaser Parent to make certain representations and agree to certain covenants. NOW, THEREFORE, INTENDING TO BE LEGALLY BOUND and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Any or all capitalized terms not defined in this Agreement shall have the meanings as set forth in the Purchase Agreement, the Original Purchase Agreement, the Registration Rights Agreement, the Exchange Agreement or the Notes, as applicable. 1 2. Except as otherwise provided in the Purchase Agreement or in this Agreement, the Assignors hereby assign, transfer, convey and deliver to the Assignees any and all rights the Assignors may have under and in accordance with each of the Original Purchase Agreement, the Registration Rights Agreement and the Exchange Agreement (other than Section 6 thereof) with respect to the Purchased Notes; provided, however, that no such assignment shall otherwise affect the Assignors rights with respect to any Notes retained by Assignors. 3. The Assignees accept the said assignment by the Assignors and hereby assume and agree to perform and discharge, as and when they become due, the duties and obligations of the Assignors under and in accordance with each of the Original Purchase Agreement, including but not limited to Sections 5.06 and 5.07 of the Original Purchase Agreement, the Registration Rights Agreement and the Exchange Agreement (other than Section 6 thereof) with respect to the Purchased Notes; provided, however, that the Assignees shall not assume any of the Assignors' obligations with respect to any Notes retained by Assignors. 4. The Assignors and the Assignees hereby agree to take any and all actions as may be necessary or appropriate to more fully effectuate the assignment of rights and assumption of obligations hereunder. 5. The TXU Entities hereby agree to the assignment of the rights, benefits and obligations under the Original Purchase Agreement, the Registration Rights Agreement and the Exchange Agreement (other than Section 6 thereof) to the Assignees with respect to the Purchased Notes, including for purposes of Section 9.05 of the Original Purchase Agreement and Section 15(e) of the Registration Rights Agreement, and hereby agree that, except as provided in the Purchase Agreement or in this Agreement, the Assignees shall have all of the rights of a Purchaser under the Original Purchase Agreement, a Holder under the Registration Rights Agreement and a Purchaser under the Exchange Agreement, in each case with respect to the Purchased Notes. 6. The TXU Entities acknowledge that one or more of the Purchasers may be deemed to be a Competitor as defined in the Purchased Notes. The TXU Entities hereby agree to waive the provisions of Section 6.01 of the Purchased Notes (and any corresponding provisions of any preferred membership interest of TXU Energy Company LLC into which the Notes are exchanged) with respect to the Assignees and their Affiliates, but not with respect to MidAmerican Energy Holdings Company or any of its subsidiaries or any other Affiliate of the Purchaser Parent that is significantly involved in the generation of electricity, wholesale energy trading, retail energy marketing or energy delivery or any holding company of such Affiliate that primarily owns entities engaged in such businesses (collectively, the "Restricted Persons"), in order to permit the Transfer of the Purchased Notes to the Assignees; provided, however, that the TXU Entities do not hereby waive the provisions of such Section 6.01 (or any corresponding provisions of any such preferred membership interest) with respect to any future Transfers of the Notes or the Purchased Notes (or any such preferred membership interest), other than to Affiliates of the Assignees who are not Restricted Persons and who agree to be bound by the provisions of the Purchase Agreement and this Agreement. 7. The Assignees acknowledge the existence of, and agree to be bound by and comply with, the restrictions on Transfer contained in Section 6.01 of the Notes; provided, 2 however, that such restrictions shall not apply to any Transfer by the Assignees of the Purchased Notes (or any preferred membership interest of TXU Energy Company LLC into which the Notes are exchanged) to one or more of their Affiliates who are not Restricted Persons and who agree to be bound by the provisions of the Purchase Agreement and this Agreement. 8. The TXU Entities hereby agree to waive the $10,000,000 minimum transfer amount contained in Section 6.04 of the Notes for the purposes of the Transfer of the Notes from the Assignors to the Assignees. 9. The Assignees and the Purchaser Parent (other than with respect to entities Controlled by it which exercise investment discretion independent of the Purchaser Parent) hereby agree to, and the Purchaser Parent agrees to cause, to the extent it has the ability to do so, its Affiliates (other than those Affiliates, and other than with respect to entities Controlled by Affiliates, exercising investment discretion independent of the Purchaser Parent, but otherwise including portfolio companies, if any, of the Assignees and the Purchaser Parent) to, be bound by and comply with the provisions contained in both Sections 9, 10(a) and 10(d)(ii) of the Exchange Agreement and Sections 12, 15(a) and 15(e)(iii) of the Registration Rights Agreement as if such Assignees and the Purchaser Parent were "DLJ Entities" until such time as the Assignees and their Affiliates, as a group, own Notes and Common Stock aggregating less than $75,000,000 in aggregate principal amount (determined, in the case of Common Stock, on the basis of the Note Exercise Price at the date the Exchange Rights are exercised with respect to such Common Stock). 10. (a) The Assignees acknowledge that none of the rights granted to the DLJ VCOC Fund pursuant to Sections 3.08 and 3.09 of the Notes and Section 6 of the Exchange Agreement are being assigned to the Assignees and that, without the consent of the appropriate TXU Entity, they will not be entitled to exercise any of such rights. (b) The Assignees, the Purchaser Parent and the Assignors represent and warrant to the TXU Entities that there does not exist, and they agree that they will not enter into or otherwise be a party to, any voting agreement, voting trust, shareholders agreement, proxy or any other written or oral agreement, arrangement or understanding among the Assignees or any of their Affiliates on the one hand and the Assignor or any of its Affiliates on the other hand regarding the voting of or exercise of rights under the TXU Common Stock, the Notes (or any preferred membership interest of TXU Energy Company LLC into which the Notes are exchanged), the Exchange Agreement or the Registration Rights Agreement; provided, however, that the foregoing shall not prohibit the Assignees, the Assignors and their respective Affiliates from exercising their respective rights under the Original Purchase Agreement, the Notes, the Exchange Agreement or the Registration Rights Agreement, or from consulting with each other in connection with the exercise of such rights other than (i) the rights granted to the DLJ VCOC Fund pursuant to Sections 3.08 and 3.09 of the Notes and Section 6 of the Exchange Agreement and (ii) the rights granted to Holders of the Notes (other than the Assignees) and the DLJ VCOC Fund to request information pursuant to Section 3.02 (a)(vi) of the Notes. 3 11. The Assignees hereby waive their right to request or receive confidential or non-public information regarding the TXU Entities, including, but not limited to, pursuant to Section 3.02(a)(iii) or (vi) of the Notes; provided, however, that any transferee of the Assignees other than an Affiliate of the Assignees, will not be bound by this provision. 12. The Assignees and the Purchaser Parent represent and warrant to the Assignors and the TXU Entities that they do not own and control, and agree that they will not acquire ownership and control of, installed generation capacity within the Electric Reliability Council of Texas ("ERCOT") in an amount that would cause either TXU Entity (by virtue of Section 39.154(c) of the Texas Utility Code) to be deemed to own and control more than 20% of the installed generation capacity located in ERCOT in violation of Section 39.154 of the Texas Utility Code and the Substantive Rules of the Public Utility Commission of Texas. 13. Subject to its legal obligations (including requirements of stock exchanges and other similar regulatory bodies and other than as may be required pursuant to the Exchange Act), no party shall make any public announcement regarding the entering into of this Agreement or the Closing without the prior consent of the other party, which shall not be unreasonably withheld. Notwithstanding the foregoing, upon the Closing the parties shall cooperate with each other to make a public announcement of the transaction and shall agree as to the timing and contents of any such announcement. 14. (a) The Assignees have independently and without reliance upon the TXU Entities, and based on such information as the Assignees have deemed appropriate, made their own analysis and decision to purchase the Notes; provided, however, that the foregoing shall not limit any rights the Assignees might have under the Purchase Agreement or the Original Purchase Agreement. (b) The TXU Entities have not been requested to, and the Assignees have not relied and will not rely on the TXU Entities to, furnish or make available any documents or other information regarding the credit, affairs, financial condition or business of, or any other matter concerning the TXU Entities. (c) The Assignees acknowledge that: (i) the TXU Entities are not making any representations and warranties to the Assignees regarding their business, assets or financial condition as of the date hereof; (ii) there may currently exist information with respect to the Notes or the TXU Entities that is not known to the Assignees and that may be material to a decision to acquire the Notes (the "Excluded Information"); (iii) the Assignees have determined to purchase the Notes notwithstanding their lack of knowledge of the Excluded Information; and (iii) the TXU Entities shall have no liability to the Assignees, and the Assignees waive and release any claims that they might have against the TXU Entities, whether under applicable securities laws or otherwise, with respect to the nondisclosure of the Excluded Information in connection with the purchase of the Purchased Notes by the Assignees, but only to the extent that the Excluded Information does not affect the truth or accuracy of the representations or warranties of the TXU Entities in the Original Purchase Agreement as of the date of the Original Purchase Agreement. 15. The execution, delivery and performance by the Assignees of the Purchase Agreement and this Agreement does not and will not (a) violate, conflict with or result in the 4 breach of any provision of the organizational documents of the Assignees, (b) conflict with or violate any Law or Governmental Order applicable to the Assignees or (c) conflict with, or result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Assignees are a party, which would adversely affect the ability of the Assignees to carry out their obligations under, and to consummate the transactions contemplated by, this Agreement. 16. The execution, delivery and performance of the Purchase Agreement and this Agreement by the Assignees does not and will not require any consent, approval, authorization or other order of, action by, filing with or notification to any Governmental Authority. 17. This Agreement shall be binding on and inure to the benefit of the Assignors, the Assignees and the TXU Entities and their respective successors and assigns. 18. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. [Signatures appear on next page] 5 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written. UXT HOLDINGS LLC By: DLJ Merchant Banking III, Inc., its managing member By: ---------------------------------- Name: Title: UXT INTERMEDIARY LLC By: UXT AIV, L.P. its managing member By: DLJ Merchant Banking III, Inc. as managing general partner By: ---------------------------------- Name: Title: BERKSHIRE HATHAWAY INC. By: ---------------------------------- Name: Title: BENJAMIN MOORE PENSION By: ---------------------------------- Name: Title: THE BUFFALO NEWS OFFICE PENSION PLAN By: ---------------------------------- Name: Title: THE BUFFALO NEWS EDITORIAL PENSION PLAN By: ---------------------------------- Name: Title: 6 CORNHUSKER CASUALTY COMPANY By: ---------------------------------- Name: Title: FLIGHTSAFETY INTERNATIONAL INC. RETIREMENT INCOME PLAN By: ---------------------------------- Name: Title: FRUIT OF THE LOOM PENSION TRUST By: ---------------------------------- Name: Title: GEICO CORPORATION PENSION PLAN TRUST By: ---------------------------------- Name: Title: GOVERNMENT EMPLOYEES INSURANCE COMPANY By: ---------------------------------- Name: Title: 7 JOHNS MANVILLE CORPORATION MASTER PENSION TRUST By: ---------------------------------- Name: Title: JUSTIN BRANDS, INC. UNION PENSION PLAN AND JUSTIN BRANDS, INC. PENSION PLAN & TRUST By: ---------------------------------- Name: Title: ACME BRICK COMPANY PENSION TRUST By: ---------------------------------- Name: Title: SCOTT FETZER COMPANY COLLECTIVE INVESTMENT TRUST By: ---------------------------------- Name: Title: 8 TXU CORP. By: ---------------------------------- Name: Title: TXU ENERGY COMPANY LLC By: ---------------------------------- Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----