Exhibit 10(rr)
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of February 14, 2002 (this "Guaranty
Agreement"), is made by TXU Corp., a Texas corporation (together with its
successors and assigns, including Surviving Entities pursuant to Section 9(b)
and Replacement Guarantors pursuant to Section 21, the "Guarantor"), in favor of
State Street Bank and Trust Company of Connecticut, National Association, as
Owner Trustee of the ZSF/Dallas Tower Trust, a Delaware grantor trust (in such
capacity, together with its successors and assigns, the "Lessor"). Capitalized
terms used herein have the meanings ascribed to such terms in Section 22
(including the incorporation of the definitions of terms that are defined in the
Lease, as defined below), unless otherwise defined elsewhere herein.
WHEREAS, Lessor and TXU Properties Company, a Texas corporation
(together with its successors and permitted assigns, "Lessee"), have entered
into that certain Lease Agreement dated as of even date herewith (as amended,
restated, supplemented or otherwise modified from time to time, the "Lease");
and
WHEREAS, Lessor, LaSalle Bank National Association, as Indenture
Trustee (in such capacity, together with its successors and assigns, the
"Indenture Trustee"), and First Union National Bank, as Servicer (in such
capacity, together with its successors and assigns, the "Servicer"), are parties
to that certain Indenture and Servicing Agreement dated as of even date herewith
(as amended, restated, supplemented or otherwise modified from time to time, the
"Indenture"); and
WHEREAS, in connection with the transactions contemplated by the
Indenture, LaSalle Bank National Association, as Pass-Through Trustee for the
benefit of the Certificateholders (as defined below)(in such capacity, together
with its successors and assigns, the "Pass-Through Trustee"), has executed and
delivered that certain Declaration of Trust dated as of even date herewith (as
amended, restated, supplemented or otherwise modified from time to time, the
"Declaration of Trust") pursuant to which the Energy Plaza Lease Pass-Through
Trust, a Delaware grantor trust (the "Trust") was created; and
WHEREAS, pursuant to the Assignment of Agreements (as defined in the
Indenture) and the Assignment of Lease (as defined in the Indenture), Lessor
shall assign to the Indenture Trustee for the benefit of the registered holders
from time to time of the Secured Notes (the "Holders"), and for the benefit of
the registered holders from time to time (the "Certificateholders") of the Trust
Certificates issued pursuant to the Declaration of Trust (the "Certificates"),
all of its rights, titles, and interests in and to this Guaranty Agreement, the
Lease, and the other Lease Operative Documents (other than the Excepted Payments
and the Excepted Rights) substantially contemporaneous with the execution and
delivery hereof; and
WHEREAS, it is a condition to the effectiveness of the Lease that this
Guaranty Agreement shall have been executed and delivered by the Guarantor and
shall be in full force and effect;
NOW THEREFORE, in order to induce, and in consideration of, the
execution and delivery of the Lease, the Guarantor hereby covenants and agrees
with, and represents and warrants to Lessor for the benefit of each of the
Lessor, the Servicer, the Trust, the Pass-Through Trustee, each other Holder,
each Certificateholder, each Indemnitee, each member of each Indemnitee's Group,
each Tax Indemnitee and each other Person to whom Base Rent or Supplemental Rent
may be payable pursuant to the Lease (together with all successors and assigns
of the foregoing, collectively, the "Beneficiaries," and each individually, a
"Beneficiary") as follows:
1. THE GUARANTY. The Guarantor hereby irrevocably and unconditionally
guarantees to each Beneficiary to which such obligations are owing the
following obligations:
(i) the due, punctual and full payment by the Lessee (whether
at the stated time for payment thereof, by demand or otherwise) of
all amounts to be paid by the Lessee pursuant to the Lease and the
other Lease Operative Documents, including but not limited to Base
Rent, Supplemental Rent, amounts payable by Lessee if Lessee
self-insures pursuant to Section 9.1(g) of the Lease, amounts payable
by Lessee pursuant to Sections 19.1 and 19.2 of the Lease (and other
similar provisions of the other Lease Operative Documents), the
purchase price of the Property if Lessee exercises its right to
purchase the Property pursuant to the Lease, any applicable
Make-Whole Premium, any Termination Value Payment, any Stipulated
Loss Value Payment, any late charges or penalties, interest payable on
late charges or penalties, all amounts payable by Lessee under
Article 17 of the Lease (including but not limited to liquidated
damages), fees, expenses (including but not limited to the reasonable
fees and expenses of attorneys, accountants, experts, and advisors),
or other similar costs (including all such amounts which would become
due but for the operation of the automatic stay under Section 362(a)
of the United States Bankruptcy Code, 11 U.S.C.ss.362(a), and the
operation of Sections 502(b) and 506(b) of the United States
Bankruptcy Code, 11 U.S.C. ss.502(b) andss.506(b)); and
(ii) the due, prompt and faithful performance of, and compliance
with, all other obligations, covenants, terms, conditions and
undertakings of the Lessee contained in each Lease Operative Document
to which Lessee is a party in accordance with the terms thereof (all
such obligations described in clauses (i) and (ii) above are herein
called the "Guaranteed Obligations").
The guaranty in the preceding sentence is an absolute, present and
continuing guaranty of payment and not of collectability and is in no
way conditional or contingent upon any attempt to collect from Lessee
or any other Person or upon any other action, occurrence or
circumstance whatsoever. In the event that the Lessee shall fail so to
pay any of such Guaranteed Obligations, the Guarantor agrees to pay the
same when due to each Beneficiary, without demand, presentment, protest
or notice of any kind. Each default under any Lease Operative Document
shall give rise to a separate cause of action hereunder and separate
suits may be brought hereunder as each cause of action arises.
2
The Guarantor also hereby agrees to pay and to indemnify and save each
Beneficiary harmless from and against any damage, loss, cost or expense
(including but not limited to the reasonable fees and expenses of
attorneys, accountants, and advisors) which such Beneficiary may incur
or be subject to as a consequence, direct or indirect, of (i) any
breach by the Guarantor or Lessee of any covenant, term or condition
in, or the occurrence of any default under, this Guaranty Agreement or
any other Lease Operative Document, together with all expenses
resulting from the compromise or defense of any claims or liabilities
arising as a result of any such breach or default, and (ii) any legal
action threatened or commenced in connection with or relating to this
Guaranty Agreement or any other Lease Operative Document.
2. OBLIGATIONS ABSOLUTE. The obligations of the Guarantor hereunder shall
be primary, absolute, irrevocable and unconditional,irrespective of
the validity, regularity or enforceability of any of the Indenture,
the Lease, or any of the other Operative Documents (collectively, the
"Transaction Documents"), shall not be subject to any counterclaim,
setoff, deduction or defense based upon any claim the Guarantor may
have against the Lessee, any Beneficiary, or otherwise, and shall
remain in full force and effect without regard to, and (subject to the
provisions of Section 21 hereof with respect to the release of
the Guarantor upon the substitution of a Replacement Guarantor
hereunder) shall not be released, discharged or in any way
affected by, any circumstance or condition whatsoever (whether or
not the Guarantor shall have any knowledge or notice thereof),
including, without limitation: (a) any amendment, restatement,
supplement or other modification from time to time to or of the
Transaction Documents or any other instrument referred to therein
(except that the obligations of the Guarantor hereunder shall apply to
the Transaction Documents or such other instruments as so amended,
restated, supplemented or modified) or any assignment or transfer of
any thereof or of any interest therein, or any furnishing, acceptance
or release of any security for the Guaranteed Obligations, (b) any
waiver, consent, extension, indulgence or other action or inaction
under or in respect of the Transaction Documents; (c) any bankruptcy,
insolvency, readjustment, composition, liquidation or similar
proceeding with respect to the Lessor, the owner participant in the
Lessor, the Pass-Through Trustee, or the Lessee or its property; (d)any
merger, amalgamation or consolidation of the Guarantor, the Lessor,
the Pass-Through Trustee, or the Lessee into or with any other Person
or any sale, lease or transfer of any or all of the assets of the
Guarantor, the Lessor, the Pass-Through Trustee, or the Lessee to
any Person; (e) any failure on the part of the Lessor, the Pass-Through
Trustee, or the Lessee for any reason to comply with or perform any of
the terms of any other agreement with the Guarantor; or (f) any other
circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. The Guarantor covenants that its
obligations hereunder will not be discharged except by payment in full
of all of the Guaranteed Obligations.
3. WAIVER. The Guarantor unconditionally waives to the fullest extent
permitted by law, (a) notice of acceptance hereof, of any action
taken or omitted in reliance hereon and of any defaults by the Lessee
in the payment of any amounts due under the Transaction Documents,
and of any of the matters referred to in Section 2 hereof, (b) all
notices which may be required by statute, rule of law or otherwise to
preserve any of the rights of any Beneficiary against the Guarantor,
including, without limitation, presentment to or
3
demand for payment from the Lessee or the Guarantor, notice to the
Lessee or to the Guarantor of default or protest for nonpayment or
dishonor and the filing of claims with a court in the event of the
bankruptcy of the Lessee, the Lessor, the owner participant in the
Lessor or the Pass-Through Trustee, (c) any right to the enforcement,
assertion or exercise by any Beneficiary of any right, power or
remedy conferred in this Guaranty Agreement or the other
Transaction Documents, (d) any requirement or diligence on the part
of any Beneficiary and (e) any other act or omission or thing or delay
to do any other act or thing which might in any manner or to any
extent vary the risk of the Guarantor or which might otherwise
operate as a discharge of the Guarantor.
4. OBLIGATIONS UNIMPAIRED. The Guarantor authorizes each Beneficiary,
without notice or demand to the Guarantor and without affecting its
obligations hereunder, from time to time (a) to renew, compromise,
extend, accelerate or otherwise change the time for payment of, or
otherwise change the terms of, all or any part of the Guaranteed
Obligations and the Transaction Documents or any other instrument
referred to therein, (b) to take and hold security for the payment
of the Guaranteed Obligations, for the performance of the Transaction
Documents, for the performance of this Guaranty Agreement or otherwise
for the indebtedness guaranteed hereby and to exchange, enforce, waive
and release any such security, (c) to obtain additional or
substitute endorsers or guarantors; (d) to exercise or refrain from
exercising any rights against the Lessee, the Lessor, the Pass-Through
Trustee, and others; and (e) to apply any sums, by whomsoever paid or
however realized, to the payment of any Guaranteed Obligation
hereunder. The Guarantor waives any right to require any Beneficiary
to proceed against any additional or substitute endorsers or
guarantors or to pursue or exhaust any security provided by the Lessee,
the Lessor, the Pass-Through Trustee, the Guarantor or any other
Person or to pursue any other remedy available to any Beneficiary.
5. SUBROGATION. The Guarantor will not exercise against the Lessee, any
Additional Guarantor (as defined in Section 9(c)(i) ) or any party
obligated under any Qualified Letter of Credit (as defined in Section
9(c)(iv) ), any rights that it may have acquired by way of subrogation
under this Guaranty Agreement, by any payment made hereunder or
otherwise, or accept any payment on account of such subrogation rights,
or any rights of reimbursement or indemnity or any rights or recourse
to any security for the Guaranteed Obligations unless and until all of
the obligations, undertakings or conditions to be performed or observed
by the Lessee pursuant to the Lease and by the Lessee and the Guarantor
pursuant to the other Transaction Documents at the time of the
Guarantor's exercise of any such right shall have been performed,
observed or paid in full.
For a period of one year after the payment in full of the Guaranteed
Obligations, the Guarantor hereby waives (x) all rights of subrogation
which it may at any time otherwise have as a result of this Guaranty
Agreement (whether statutory or otherwise) to the claims of the Lessor
and the other Beneficiaries against the Lessee or any other guarantor
of the Guaranteed Obligations (each referred to herein as the "Other
Party") and all contractual, statutory or common law rights of
reimbursement, contribution or indemnity from any Other Party which it
may at any time otherwise have as a result of this Guaranty Agreement;
(y) any right to enforce any other remedy which the Lessor and the
other Beneficiaries now have or may hereafter have against any Other
Party; and (z) all claims (as such term is defined in the Bankruptcy
Code) it may at any time otherwise have against any Other Party arising
from any transaction whatsoever, including without limitation its right
to assert or enforce any such claims.
4
6. REINSTATEMENT OF GUARANTY. This Guaranty Agreement shall continue to
be effective, or be reinstated, as the case may be, if and to the
extent at any time payment, in whole or in part, of any of the sums
due to any Beneficiary under the Lease or any other sum constituting
any of the other Guaranteed Obligations is rescinded or must otherwise
be restored or returned by any Beneficiary upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Lessee,
the Lessor, the owner participant in the Lessor, or the Pass-Through
Trustee, or upon or as a result of the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to
the Lessee, the Lessor, such owner participant, the Pass-Through
Trustee or any substantial part of any property of any of the
foregoing, or otherwise, all as though such payments had not been
made. If an event permitting Lessor or any other Beneficiary to
demand payment of any of the Guaranteed Obligations shall at any
time have occurred and be continuing and such demand shall at such
time be prevented or the right of any Beneficiary to receive any
payment under any Transaction Document shall at such time be delayed
or otherwise affected by reason of the pendency against the Lessee of
a case or proceeding under a bankruptcy or insolvency law, the
Guarantor agrees that, for purposes of this Guaranty Agreement and its
obligations hereunder, such Guaranteed Obligation shall be deemed to
have been demanded with the same effect as if Lessor or such other
Beneficiary had demanded the same in accordance with the terms of the
Transaction Documents, and the Guarantor shall forthwith pay such
demanded amount and any other amounts guaranteed hereunder.
7. PAYMENTS. The Guarantor hereby guarantees that the Guaranteed
Obligations will be paid to the Beneficiaries in lawful
currency of the United States of America and in immediately
available funds, at the times and places provided in, and
otherwise strictly in accordance with the terms and provisions of, the
applicable Transaction Documents giving rise to such Guaranteed
Obligations (regardless of any law, regulation or decree now or
hereafter in effect which might in any manner affect the Guaranteed
Obligations, or the rights of any such Beneficiary with respect
thereto as against the Lessee, or cause or permit to be invoked any
alteration in the time, amount or manner of payment by the Lessee of
any or all of the Guaranteed Obligations), without set-off or
counterclaim and free and clear of, and without reduction for or on
account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings now
or hereafter imposed, levied, collected, withheld or assessed by
any country (or by any political subdivision or taxing
authority thereof or therein) excluding taxes and other amounts for
which the Lessee has no obligation to pay pursuant to the Lease or the
other Lease Operative Documents (such non-excluded taxes and other
amounts being called "Taxes"). If any Taxes are required to be
withheld for any amount payable to any Beneficiary under this Guaranty
Agreement, the amounts so payable to the applicable Beneficiary shall
be increased to the extent necessary to yield to such Beneficiary
(after payment of all Taxes) interest or any such other amounts at the
rates or in the amounts specified in the Transaction Documents.
5
8. RANK OF GUARANTY. The Guarantor agrees that its
obligations under this Guaranty Agreement shall rank
at least pari passu with all other unsecured senior
obligations of the Guarantor now or hereafter
existing.
9. ADDITIONAL COVENANTS OF THE GUARANTOR.
(a) General. So long as the Guaranteed Obligations are
outstanding or the Transaction Documents shall remain
in effect, the Guarantor agrees that, unless the
Majority" in Interest of the Certificateholders
otherwise consents in writing:
(i) Maintenance of Corporate Existence, Etc. Subject to Section 9(b),
-------------------------------------------
the Guarantor will at all times do or cause to be done all things
necessary to maintain and preserve its corporate existence, and
maintain, preserve and renew its and its Subsidiaries' licenses,
patents and franchises material to the conduct of the business of the
Guarantor and such Subsidiaries taken as a whole, provided that nothing
contained in this Section 9(a)(i) shall (A) require the Guarantor or
any such Subsidiary to maintain, preserve or renew any license, patent
or franchise not necessary or desirable in the conduct of its business,
or (B) prohibit the Guarantor from terminating the corporate existence
of a Subsidiary (other than the Lessee, in which case the provisions of
the Lease relating to the termination of the corporate existence of the
Lessee shall apply) if in the reasonable opinion of the Guarantor such
termination is in the best interests of the Guarantor and is not
disadvantageous to any Beneficiary.
(ii) Financial Statements. Etc. The Guarantor will furnish
-------------------------
to the Lessor and to each Certificateholder, as
applicable:
(A) as soon as publicly available, and in any event within the
earlier of (1) 120 days after the end of each fiscal year of the
Guarantor or (2) the date by which the annual financial statements of
the Guarantor are required to be delivered pursuant to its primary
revolving credit facility, a consolidated balance sheet of the
Guarantor and its consolidated Subsidiaries as at the end of such
fiscal year and the related consolidated statements of operations and
sources of funds of the Guarantor and its consolidated Subsidiaries
for such fiscal year, prepared in conformity with GAAP (except as
disclosed in the notes thereto) and reported on by independent
accountants of recognized national standing; provided, that delivery
of copies of the annual report on Form 10-K of the Guarantor for such
annual period filed with the Securities and Exchange Commission shall
be deemed to satisfy the requirements of this clause (A) with respect
to consolidated financial statements if such financial statements are
included in such report;
(B) as soon as publicly available, and in any event within the
earlier of (1) 60 days after the end of each quarter (except the
last quarter) of each fiscal year of the Guarantor or (2) the
date by which the quarterly
6
financial statements of the Guarantor are required to be delivered
pursuant to its primary revolving credit facility, a consolidated
balance sheet of the Guarantor and its consolidated Subsidiaries
as at the end of such quarter and the related consolidated statements
of operations and sources of funds of the Guarantor and its
consolidated Subsidiaries for such quarter and for the period from the
beginning of such fiscal year to the end of such quarter, in each case
setting forth comparative figures for the related periods in the
prior fiscal year, certified by the chief financial officer, the chief
accounting officer or the treasurer of the Guarantor to have been
prepared in accordance with GAAP (except as disclosed in the notes
thereto and subject to normal year-end adjustments); provided, that
delivery of copies of the quarterly report on Form 10-Q of the
Guarantor for such quarterly period filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements of this
clause (B) with respect to consolidated financial statements if such
financial statements are included in such report;
(C) concurrently with the delivery each year of the financial
statements furnished pursuant to Section 9(a)(ii)(A), an officer's
certificate of the Guarantor certifying that the signer has reviewed,
or caused to be reviewed by persons under his supervision, the relevant
terms of this Guaranty Agreement and has made, or caused to be made
under his supervision, a review of the transactions and financial
condition of the Guarantor and its consolidated Subsidiaries during the
preceding year, and that such review has not disclosed the existence
during such period, nor does the signer have knowledge of the existence
as at the date of such certificate, of a Lease Default, a Lease Event
of Default or a default hereunder, or of any other default with respect
to the Guaranteed Obligations or, if any such a default existed or
exists, specifying the nature and period of existence thereof and what
action the Guarantor has taken or is taking or proposed to take with
respect thereto;
(D) with reasonable promptness, such other information
relating to the Guarantor, any of its Material Subsidiaries, or the
Lessee that any Certificateholder may from time to time reasonably
request and that the Guarantor may furnish without violating applicable
securities laws (taking into account the Certificateholders'
confidentiality obligations under paragraph 9D of the Certificate
Purchase Agreement pursuant to which the Certificates are being
issued); and
(E) upon the request of any Certificateholder, provide such
Certificateholder, and any qualified institutional buyer designated
by such Certificateholder, such financial and other information as such
Certificateholder may reasonably determine to be necessary in order to
permit compliance with the information requirements of Rule 144A (as
such term is defined in the Indenture) in connection with the resale
of the Trust Certificates (as such term is defined in the Indenture),
except at such
7
times as the Guarantor is subject to the reporting
requirements of section 13 or 15(d) of the Exchange Act (as such term
is defined in the Indenture) (for the purpose of this clause (E), the
term "qualified institutional buyer" shall have the meaning specified
in Rule 144A).
(iii) Inspections, Etc. The Guarantor will permit any
authorized representative of Lessor or any
Certificateholder, upon reasonable prior notice and
at the expense of the Guarantor at such times as a
Lease Default or a Lease Event of Default shall exist
and otherwise at the expense of the Lessor or such
Certificateholder, as the case may be, to visit and
discuss with the Guarantor's officers the financial
condition of the Guarantor and the Guarantor's
ability to comply with its obligations hereunder, all
at such reasonable times and intervals as Lessor or
such Certificateholder may request.
(b) Merger, Consolidation. The Guarantor shall not consolidate
with, or merge with or into, any other Person or convey, transfer or
lease all or substantially all of its assets as an entirety (whether by
one transaction or a series of related transactions) to any Person,
unless each of the following conditions shall be satisfied:
(i) the successor entity formed by such consolidation,
the survivor of such merger (including the Guarantor)
or the successor entity which acquires by conveyance,
transfer or lease all or substantially all of the
assets of the Guarantor as an entirety (each of the
foregoing being referred to as the "Surviving
Entity") shall be a Solvent entity organized and
existing under the laws of the United States of
America, any State thereof or the District of
Columbia and at least $5,000,000,000 of the Surviving
Entity's consolidated assets shall be within the
United States;
(ii) the Surviving Entity (if not the Guarantor), shall
expressly assume in writing by instrument or instruments
reasonably satisfactory to the Majority in Interest of the
Certificateholders, in scope, form and legal effect, the due
and punctual payment, performance and observance of all
obligations of the Guarantor under this Guaranty Agreement,
with the same effect as if such entity had originally been
named Guarantor herein or had been a party hereto;
(iii) prior to and immediately after giving effect to such
transaction, no Lease Default or Lease Event of Default
shall exist;
(iv) the Surviving Entity shall have delivered to the
Lessor an officer's certificate stating that such
consolidation, merger, conveyance, transfer or lease
and the assumption agreement required by clause (ii)
above comply with the provisions of this Section 9(b);
(v)(A) in the case of any consolidation, merger, conveyance,
transfer or lease with an entity that is an Affiliate of the
Guarantor prior to giving effect to such transaction, then
8
immediately after giving effect to such transaction the
tangible net worth (calculated in accordance with GAAP) of
the Successor Entity shall be equal to or greater than
$3,000,000,000, (B) in the case of any consolidation, merger,
conveyance, transfer or lease with any Affiliate of the
Guarantor to which the foregoing subclause (A) does not
apply, the Guarantor shall have first obtained the prior
written consent of the Lessor and the Majority in Interest
of the Certificateholders, and (C) in the case of any
consolidation, merger, conveyance, transfer or lease with any
Person that is not an Affiliate of the Guarantor prior to
giving effect to such transaction,either (1) the tangible
net worth (calculated in accordance with GAAP) of the
Surviving Entity immediately after giving effect to such
transaction shall be equal to or greater than the greater of
$3,000,000,000 and the tangible net worth (calculated in
accordance with GAAP) of the Guarantor immediately prior to
such transaction or (2) the Guarantor shall have first
obtained the prior written consent of the Lessor and the
Majority in Interest of the Certificateholders;
(vi)immediately after giving effect to such transaction,
the Surviving Entity shall have Acceptable Debt
ratings from Standard & Poor's and Xxxxx'x that in
each case are at least as high as the Debt Ratings of
the Guarantor immediately prior to the date of such
transaction; and
(vii)in the case of any such consolidation, merger,
conveyance, transfer or lease in which the Guarantor
is not the Surviving Entity, the Surviving Entity
shall have caused to be delivered to Lessor and the
Indenture Trustee an opinion of counsel reasonably
acceptable to the Majority in Interest of the
Certificateholders, to the effect that all agreements
or instruments effecting the assumption referred to
in clause (ii) above are enforceable in accordance
with their terms and comply with the terms of the
Transaction Documents.
Upon any consolidation or merger, or any conveyance,
transfer or lease of all or substantially all of the assets of
the Guarantor as an entirety, in accordance with this Section
9(b), in a transaction in which the Guarantor is not the
Surviving Entity, the Surviving Entity shall succeed to, and
be substituted for, the Guarantor under this Guaranty Agreement,
with the same effect as if such successor had been
named as the Guarantor herein.
(c) Ratings Decline. If any Ratings Decline occurs, the
Guarantor shall provide written notice thereof to the Lessor, the
Indenture Trustee, the Servicer and each Certificateholder within 10
days thereafter and shall cause an Additional Guaranty or a Qualified
Letter of Credit satisfying the requirements set forth below to be
provided to the Indenture Trustee (as assignee of the Lessor's rights
under the Lease) within 30 days after such Ratings Decline. Any failure
to provide such Additional Guaranty or Qualified Letter of Credit
within such 30-day period shall constitute a Lease Event of Default. In
the event that the Guarantor regains Acceptable Debt. Ratings, and
provided that no Lease Default or Lease Event of Default shall exist at
the time of either such notice or
9
such release, the Guarantor may, upon at least thirty (30) days' prior
written notice to the Lessor, the Indenture Trustee, the Servicer and
each Certificateholder, obtain the release of such Additional Guaranty
or Qualified Letter of Credit, as the case may be, by delivering to the
Lessor, the Indenture Trustee, the Servicer and each Certificateholder
satisfactory evidence that the Guarantor has regained Acceptable Debt
Ratings. In the event of a Ratings Decline occurring after such
release, the provisions of this Section 9(c) requiring the delivery of
an Additional Guaranty or a Qualified Letter of Credit shall again
apply. In addition, at any time that an Additional Guaranty or a
Qualified Letter of Credit shall be in effect, the Guarantor may, upon
at least thirty (30) days' prior written notice to the Lessor, the
Indenture Trustee (as assignee of the Lessor's rights under the Lease),
the Servicer and each Certificateholder, substitute an Additional
Guaranty or a Qualified Letter of Credit for the Additional Guaranty or
the Qualified Letter of Credit then outstanding pursuant hereto,
provided that no Lease Default or Lease Event of Default shall exist
at the time of any such notice or substitution.
(i) "Additional Guaranty" shall mean a guaranty agreement
that has been duly executed and delivered by an Acceptable
Guarantor (an "Additional Guarantor") and is in a form
substantially identical to this Guaranty Agreement (with
appropriate references revised to reflect the identity and
form of business organization of the Additional Guarantor but
with the deletion of Section 21 and references to a Replacement
Guarantor). Without limitation of the foregoing, any
Additional Guaranty shall include credit enhancement
requirements identical to those set forth in this Section 9(c)
to protect the Beneficiaries in the event a Ratings Decline
occurs with respect to any Debt Rating of such Additional
Guarantor.
(ii) "Acceptable Guarantor" shall mean a Solvent entity
organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia that
satisfies all of the following criteria:
(A) at least 35% of such entity's consolidated assets,
properties and operations shall be within the United States;
(B) the tangible net worth (calculated in accordance
with GAAP from audited financial statements reasonably
acceptable to the Majority in Interest of Certificateholders
and provided to the Indenture Trustee, the Servicer and the
holders of the Trust Certificates prior the delivery of such
Additional Guaranty) of such entity must be equal to or greater
than $3,000,000,000; and
(C) such entity must have Acceptable Debt Ratings.
(iii) "Qualified Letter of Credit" shall mean an
uncollateralized, irrevocable, standby letter of credit issued
by an Acceptable Bank, in form and substance satisfactory to
the Majority in Interest of Certificateholders (in their sole
and exclusive judgment exercised in good faith), that
satisfies all of the following criteria:
10
(A) the Servicer, acting on behalf of the Indenture
Trustee, as assignee of the Lessor's rights under the
Lease, shall be the initial beneficiary of such letter of
credit;
(B) such letter of credit shall authorize the Servicer
to draw on the Issuing Bank from time to time immediately
available funds in an aggregate amount which at all times
shall be at least equal to the greater of (1) the aggregate
Base Rent remaining to be paid over the remainder of the
scheduled Base Term (determined initially on the date of the
issuance thereof without discounting) and (2) the largest
Stipulated Loss Value Payment payable by the Lessee
over the remainder of the scheduled Base Term;
(C) such letter of credit shall provide that it may
be drawn as provided in paragraph (vi) below, with each
drawing under this clause (C) or under the foregoing clause
(B) being made by presentation, at an office of the issuing
bank, in person, via courier or other delivery service, on or
before the stated expiry date thereof, of a certificate that
(I) identifies the letter of credit with respect to which such
certificate is being presented, (II) identifies the
event permitting such drawing and certifies that such
event has occurred, and (III) identifies the amount
being drawn thereunder;
(D) such letter of credit shall have a stated expiry
date which is at least one year from date of the issuance
thereof and, if such expiry date is prior to the end of the
Base Term, which shall be automatically extended pursuant to
the terms of such letter of credit for a period of at least
one year from the date of such expiration unless the issuer
thereof shall, not later than 30 days prior to the stated
expiry date, provide written notice to the Servicer, acting on
behalf of the Indenture Trustee (as assignee of the Lessor's
rights under the Lease), in bold face type identifying such
letter of credit with particularity, stating that such notice
is a "Notice of Letter of Credit Expiration" and that such
letter of credit shall expire upon the expiry date stated in
such notice and in such letter of credit; and
(E) such letter of credit shall be transferable by
the beneficiary thereof in its entirety, without any fee
applicable to such transfer that is required to be
paid by any such transferor or transferee, to any
successor Servicer, acting on behalf of the Indenture
Trustee (as assignee of the Lessor's rights under the
Lease) pursuant to the terms of the Indenture.
(iv) "Acceptable Bank" shall mean any bank or trust
company (i) which is organized under the laws of the
United States of America or any State thereof, (ii)
which has capital, surplus and undivided profits
aggregating at least $1,000,000,000, and (iii) which
has a Debt Rating issued by Standard & Poor's of at
least of at least AA- and a Debt Rating issued by
Moody's of at least Aa3 (or such bank or trust
company must have either of such Debt Ratings in the
11
event that either Moody's or Standard & Poor's
(including their respective successors) shall have
ceased to exist).
(v) Any Additional Guaranty shall be delivered with (x)
legal opinions (in form and substance equivalent to
those opinions delivered with respect to this
Guaranty Agreement but consistent with the structure
of the Additional Guarantor), and (y) such
certificates, documents or instruments as the
Indenture Trustee, the Servicer or any
Certificateholder may reasonably request to provide
such Persons the types of legal opinions and such
certificates, documents or instruments it received
with respect to this Guaranty Agreement, each of
which deliveries shall be in form and substance
satisfactory to the Indenture Trustee, the Servicer
and each Certificateholder (in their sole and
exclusive judgments exercised in good faith).
(vi) With respect to any Qualified Letter of Credit, the
Servicer on behalf of the Indenture Trustee (as
assignee of the Lessor's rights under the Lease)
shall be permitted thereunder,
(A) from time to time, if the Lessee and the Guarantor
fail to make any payment of Base Rent on the applicable Rent
Payment Date, to draw upon such Qualified Letter of Credit in
an amount equal to the amount of Base Rent that is not paid on
such Rent Payment Date;
(B) if any event occurs that requires the Lessee to make
a Stipulated Loss Value Payment pursuant to the Lease and the
Lessee and the Guarantor fail to make such payment, to draw
upon such Qualified Letter of Credit in the amount of the
Stipulated Loss Value Payment calculated as of the business
day following the date of such occurrence;
(C) if any Lease Event of Default results in an
acceleration of the Base Rent payable under the Lease, to
draw upon such Qualified Letter of Credit in an amount equal
to the maximum remaining amount available to be drawn
thereunder; and
(D) if thirty (30) or fewer days remain prior to
the stated expiry date of such Qualified Letter of Credit,the
issuer thereof has given the notice of non-extension referred
to in clause (D) of paragraph (iii) above, and the Servicer on
behalf of the Indenture Trustee (as assignee of the Lessor's
rights under the Lease) has not received a Qualified Letter
of Credit or an Additional Guaranty to replace such
Qualified Letter of Credit, to draw upon such Qualified Letter
of Credit in an amount equal to the maximum remaining amount
available to be drawn thereunder.
The proceeds from each drawing under the Qualified
Letter of Credit shall be deposited in the Rent Collection
Account and applied pursuant to the provision of the Indenture
that would have applied in the
12
event that the payment had been made by the Lessee itself under
the circumstances under the Lease giving rise to such payment;
provided, however, that the proceeds from any drawing under
clause (D) above shall, within five (5) Business Days following
the Servicer's receipt of the proceeds of such drawing, be
applied (to the extent of such proceeds) by the Indenture
Trustee to the purchase of United States Treasury securities
identified to the Indenture Trustee by the Guarantor, that are
non-callable, that mature as close as possible prior to each
succeeding Rent Payment Date and that are in the respective
amounts of Base Rent payable on such dates. Upon the
receipt by the Servicer on behalf of the Indenture Trustee (as
assignee of the Lessor's rights under the Lease)of the proceeds
from a drawing under the Qualified Letter of Credit pursuant
clause (A), (B) or (C) above, the obligation of the Lessee or
the Guarantor to make the corresponding payment under the
Lease shall be deemed satisfied, but only to the extent of the
amount of such proceeds and without (a)curing any Lease Default
or Lease Event of Default relating to such corresponding
payment under the Lease except as provided in the final
sentence of this paragraph or (b) affecting the obligation of
the Lessee or the Guarantor to make any other payment of
Base Rent, Supplemental Rent, Stipulated Loss Value
Payment, Termination Value Payment or any other
amount at any time payable under the Lease or the
Guaranty, as the case may be. Upon the purchase by
the Indenture Trustee of the United States Treasury
securities referred to in the first sentence of this
paragraph, the execution of a supplement to the
Indenture to accomplish the defeasance of certain
obligations of the Lessee that is to be effected by
such purchase, the delivery (x) by the Lessee of a
tax opinion relating to the defeasance and (y) by the
Issuer of a security agreement and a legal opinion
relating to such securities and the defeasance
effected by the purchase thereof (which supplement to
the Indenture, security agreement and legal opinions
must be satisfactory in form, scope and substance to
the Indenture Trustee and the Majority in Interest of
Certificateholders, acting through the Pass-Through
Trustee(as such terms are defined in the Indenture)),
the Guarantor will no longer be obligated to provide
an Additional Guaranty or a Qualified Letter of
Credit at such times as it does not maintain
Acceptable Debt Ratings (and no Lease Default or
Lease Event of Default thereafter shall result solely
from its failure to maintain Acceptable Debt Ratings)
and the Lessee will be released from its obligation
to pay Base Rent during the Base Term (to the extent
of the principal amount of such securities at the
respective maturities thereof), but without affecting
the obligation of the Lessee or the Guarantor to make
any other payment of Base Rent or any payment of
Supplemental Rent, Stipulated Loss Value Payment,
Termination Value Payment or any other amount at any
time payable under the Lease or the Guaranty, as the
case may be, except to the extent of the net proceeds
actually realized by the Indenture Trustee at the
respective maturities of such securities or upon the
sale or other disposition of such securities pursuant
13
to such security agreement and the other Debt
Documents under the circumstances provided therein
for such sale or other disposition. To the extent
that the proceeds from any drawing under clause (A)
or (B) above are received by the Servicer on behalf
of the Indenture Trustee (as assignee of the Lessor's
rights under the Lease) before the expiration of the
applicable grace period under Section 16.1(a) of the
Lease, then such receipt shall cure the Lease Default
that resulted from the failure of the Lessee to make
the payment in question under the Lease.
10. REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR.
The Guarantor represents and warrants as follows:
(a) Incorporation, Good Standing and Location.
------------------------------------------
The Guarantor is (i) a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Texas, (ii) duly
qualified and authorized to do business and in good standing in every
other jurisdiction where the nature of its business requires such
qualification and (iii) has all requisite corporate power and
authority, and all governmental licenses and permits, to own and
operate its properties and to carry on its businesses as presently
conducted. The Guarantor has the requisite corporate power to enter
into and perform its obligations under this Guaranty Agreement.
(b) Authorization and Enforceability of Guaranty Agreement.
------------------------------------------------------
The execution, delivery and performance of this Guaranty Agreement have
been duly authorized by all necessary corporate action on the part of
the Guarantor. The Guaranty Agreement has been duly and validly
executed and delivered and constitutes the legal, valid and binding
obligation of the Guarantor, enforceable against it in accordance with
its terms, subject to (i) applicable bankruptcy, insolvency,
moratorium, reorganization, receivership and similar laws affecting the
rights and remedies of creditors generally, and (ii) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(c) Consents and Approvals: No Breach, Adequate Consideration.
------------------------------------------------------------
All consents, approvals, licenses and authorizations of, and
filings and registrations with, any Governmental Authority required
under Applicable Laws for the execution, delivery and performance of
this Guaranty Agreement have been obtained or made and are in full
force and effect. The execution, delivery and performance of this
Guaranty Agreement does not and will not violate the provisions of any
Applicable Laws, and does not and will not result in the breach of,
or constitute a default or require any consent under, any material
agreement, instrument, or document to which it is a party or by which
it or any of its property may be bound or affected. By virtue of
its relationship with Lessee, the execution, delivery and performance
of this Guaranty Agreement is for the direct benefit of Guarantor and
it has received adequate consideration for this Guaranty Agreement.
11. NOTICES. Unless otherwise specifically provided herein, all notices,
consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof shall be in
writing, and any such communication shall
14
become effective when received, addressed in the following manner:
(a) if to the Guarantor, to TXU Corp., Attention: Treasurer,
0000 Xxxxx Xx., Xxxxxx, Xxxxx 00000, with a copy to Hunton & Xxxxxxxx,
0000 Xxxxx Xxxxxx, Xxxxxx, Xxxxx 00000, or (b) if to Lessor or any
other Beneficiary, to the address of Lessor set forth in the Lease
and to the address of each other Beneficiary as set forth in the
Transaction Documents or as otherwise provided to Guarantor by such
other Beneficiary; provided, however, that any such addressee may
-------- -------
change its address for communications by notice given as aforesaid to
the other parties hereto.
12. CONSTRUCTION. The section and subsection headings in this Guaranty
Agreement are for convenience of reference only and shall neither be
deemed to be a part of this Guaranty Agreement nor modify, define,
expand or limit any of the terms or provisions hereof. All references
herein to numbered sections, unless otherwise indicated, are to
sections of this Guaranty Agreement. Words and definitions in the
singular shall be read and construed as though in the plural and vice
----
versa, and words in the masculine, neuter or feminine gender shall be
-----
read and construed as though in either of the other genders where the
context so requires.
13. SEVERABILITY. If any provision of this Guaranty Agreement, or the
application thereof to any Person or circumstances, shall, for any
reason or to any extent, be invalid or unenforceable, such invalidity
or unenforceability shall not in any manner affect or render invalid or
unenforceable the remainder of this Guaranty Agreement, and the
application of that provision to other Persons or circumstances shall
not be affected but, rather, shall be enforced to the extent permitted
by applicable law.
14. SUCCESSORS. The terms and provisions of this Guaranty Agreement shall
be binding upon the Guarantor and its successors and permitted assigns
and shall inure to the benefit of the Lessor, the other Beneficiaries
and their respective successors, transferees and assigns. Without
limitation of the foregoing sentence, Guarantor hereby consents to the
assignment by the Lessor to the Indenture Trustee of all of its rights,
titles, and interests in and to this Guaranty Agreement and the other
Lease Operative Documents.
15. ENTIRE AGREEMENT; AMENDMENT. This Guaranty Agreement expresses the
entire understanding of the subject matter hereof; and all other
understandings, written or oral, are hereby merged herein and
superseded. No amendment of or supplement to this Guaranty Agreement,
or waiver or modification of, or consent under, the terms hereof shall
be effective unless in writing and signed by the Guarantor, the
Indenture Trustee, the Lessor, and each Certificateholder; provided,
however, that the provisions of Section 9 hereof may be amended or
waived if such amendment or waiver is in writing and signed by the
Guarantor, the Indenture Trustee, the Lessor, and Certificateholders
constituting a Majority in Interest of the Certificateholders.
16. TERM OF GUARANTY AGREEMENT. Subject to Section 6, this Guaranty
Agreement and all guarantees, covenants and agreements of the Guarantor
contained herein shall continue in full force and effect and shall not
be discharged until such time as all of the Guaranteed Obligations
shall be paid or otherwise discharged in full.
15
17. SURVIVAL. All warranties, representations and covenants made by the
Guarantor herein or in any certificate or other instrument delivered by
it or on its behalf under this Guaranty Agreement shall be considered
to have been relied upon by each Beneficiary and shall survive the
execution and delivery of this Guaranty Agreement, regardless of any
investigation made by any Beneficiary or on its behalf.
18. FURTHER ASSURANCES. The Guarantor hereby agrees to execute and deliver
all such instruments and take all such action as the Lessor may from
time to time reasonably request in order to effectuate fully the
purposes of this Guaranty Agreement.
19. GOVERNING LAW. This Guaranty Agreement has been executed and delivered
in the State of New York and shall be governed by, construed and
enforced in all respects in accordance with the laws of the State of
New York applicable to contracts made and to be performed entirely
therein, without regard to principles of conflicts of laws.
20. SUBMISSION TO JURISDICTION. The Guarantor hereby irrevocably submits
itself to the nonexclusive jurisdiction of the Supreme Court of the
State of New York, New York County, of the United States of America
and to the jurisdiction of the United States District Court for the
Southern District of New York, for the purpose of any suit, action or
other proceeding arising out of, or relating to, this Guaranty
Agreement or the subject matter hereof, and hereby waives, and agrees
not to assert, by way of motion, as a defense or otherwise, in any
such suit, action or proceedings, (i) any claim that it is not
personally subject to the jurisdiction of the above-named courts for
any reason whatsoever, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action
or proceeding is improper and (ii) any right which it may have to a
trial by a jury.
The Guarantor hereby agrees that the submission to
jurisdiction referred to in this Section 20 shall not limit in any
manner the rights of any of the Certificateholders to take proceedings
against the Guarantor in some other court of competent jurisdiction
whether within or outside the United States.
21. REPLACEMENT OF GUARANTOR. If no Lease Default, Lease Event of Default
or Event of Default shall exist at the time of either such request or
such release, then following the written request of the Guarantor to
the Indenture Trustee and the Certificateholders at least thirty (30)
days prior to the requested date on which the Guarantor is to be
released from its obligations under this Guaranty Agreement, the
Guarantor shall be released from further liability under this Guaranty
Agreement upon its being replaced by a Replacement Guarantor that
satisfies all the conditions contained in the definition of such term
set forth in Section 22.
22. DEFINITIONS. As used herein, the terms listed below shall have the
definitions specified below. Capitalized terms used but not otherwise
defined in this Guaranty Agreement shall have the meanings ascribed to
such terms in the Lease.
"Acceptable Debt Ratings" shall mean, with respect to any
Person, that such Person has a Debt Rating issued by Moody's of at
least Baa3 or better and a Debt Rating from Standard & Poor's of at
least BBB-. If any of the foregoing rating categories used by
16
Moody's or Standard & Poor's is revised or designated differently (such
as by changing letter designations to different letter designations or
to numerical designations), then the references herein to such rating
shall be changed to the revised or redesignated rating for which the
standards are closest to, but not lower than, the standards at the date
hereof for the rating which has been revised or redesignated. If either
(but not both) of Moody's or Standard & Poor's (including their
respective successors) shall cease to exist or shall cease to issue
Debt Ratings generally, then "Acceptable Debt Ratings" shall consist
solely of the above-required Debt Rating issued by whichever of Moody's
and Standard & Poor's shall remain in existence or shall continue to
issue Debt Ratings generally, as the case may be.
"Debt Rating" shall mean, with respect to any Person, the
rating applicable to such Person's senior, unsecured non-credit
enhanced long-term indebtedness for borrowed money issued by Standard &
Poor's or Moody's, as applicable. A Debt Rating, whether public or
private, issued by Standard & Poor's or Moody's shall be deemed to be
in effect on the date of announcement or publication by Standard &
Poor's or Moody's, as the case may be, of such Debt Rating or, in the
absence of such announcement or publication, on the effective date of
such Debt Rating and will remain in effect until the date when any
change in such Debt Rating is deemed to be in effect.
"Event of Default" shall have the meaning specified in the
Indenture.
"Issuing Bank" shall mean the bank that issues a Qualified
Letter of Credit.
"Majority in Interest of the Certificateholders" shall mean
the "Majority in Interest of the Holders" as such term is defined in
the Declaration of Trust.
"Material Subsidiary" shall mean any Subsidiary of the
Guarantor which (i) has contributed more than 5% of the Guarantor's
consolidated net income (calculated in accordance with GAAP) for the
fiscal year then most recently ended or (ii) owns assets which
constitute more than 5% of the Guarantor's consolidated assets
(calculated in . accordance with GAAP) as of the last day of the fiscal
year most recently ended.
"Ratings Decline" shall mean the existence or occurrence of
any of the following events: (i) the Guarantor shall cease to have
Acceptable Debt Ratings; or (ii) either Xxxxx'x or Standard & Poor's ,
or both, shall not have in effect a Debt Rating with respect to the
Guarantor for any reason whatsoever except the failure of either, but
not both, of Xxxxx'x and Standard & Poor's (including their successors)
to continue in existence or to issue Debt Ratings generally, as the
case may be.
"Replacement Guarantor" shall mean a Person that satisfies the
requirements set forth in clauses (i), (ii) (which requirement shall be
satisfied by the execution and delivery by such Person of a guaranty
agreement that is in form identical to this Guaranty Agreement, with
appropriate references revised to reflect the identity and form of
business organization of such Person), (iv), (v)(A), (vi) and (vii) of
Section 9(b) of this Guaranty Agreement, recognizing that such Person
is to replace the Guarantor hereunder
17
as the result of a transaction that is not subject to such Section but
is instead subject to Section 21.
"Secured Notes" shall have the meaning given to such term in
the Indenture.
"Solvent" shall mean, when used with respect to any Person,
means that, as of any date of determination, (a) the amount of the
"fair value" or "present fair saleable value" of the assets of such
Person (on a going-concern basis) will, as of such date, exceed the
amount of all "liabilities of such Person, contingent or otherwise," as
of such date, as such quoted terms are determined in accordance with
applicable federal and state laws governing determinations of the
insolvency of debtors, (b) such fair value or present fair saleable
value of the assets of such Person (on a going-concern basis) will, as
of such date, be greater than the amount that will be required to pay
the liability of such Person on its debts as such debts become absolute
and matured, (c) such Person will not have, as of such date, an
unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they
mature. For purposes of this definition, (i) "debt" means liability on
a "claim," (ii) "claim" means any (x) right to payment, whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or
not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed, undisputed, secured or
unsecured and (iii) unliquidated, contingent, disputed and unmatured
claims shall be valued at the amount that can be reasonably expected to
be actual and matured.
"Subsidiary" shall mean (i) any corporation, at least 50% of
the total combined voting power of all classes of Voting Stock of which
shall, at the time as of which any determination is being made, be
owned by the Guarantor, either directly or through Subsidiaries, and
(ii) any partnership, joint venture or similar entity if at least a 50%
interest in the profits or capital thereof is owned by the Guarantor,
either directly or through Subsidiaries (unless such entity can and
does ordinarily take major business actions without the prior approval,
direct or indirect, of the Guarantor).
"Surviving Entity" shall have the meaning specified in Section
9(b)(i) of this Guaranty Agreement.
"Trust Certificates" shall mean the "Certificates" as such
term is defined in the Declaration of Trust.
"Voting Stock" shall mean, with respect to any corporation,
any shares of stock of such corporation whose holders are entitled
under ordinary circumstances to vote for the election of directors of
such corporation (irrespective of whether at the time stock of any
other class or classes shall have or might have voting power by reason
of the happening of any contingency).
[Remainder of page is intentionally left blank; signature page follows]
18
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement to
be duly executed and delivered as of the date and year first above written.
TXU CORP.
By: /s/Xxxx X. Xxxxxx
----------------------------------------
Xxxx X. Xxxxxx, Treasurer
