GUARANTEE AGREEMENT
Between
ENSERCH Corporation
(as Guarantor)
and
The Bank of New York
(as Trustee)
dated as of
July 2, 1998
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . 1
SECTION 1.01 Definitions . . . . . . . . . . . . . . . 1
ARTICLE II TRUST INDENTURE ACT . . . . . . . . . . . . . . 4
SECTION 2.01 Trust Indenture Act; Application . . . . . 4
SECTION 2.02 Lists of Holders of Capital Securities . . 4
SECTION 2.03 Reports by the Guarantee Trustee . . . . . 4
SECTION 2.04 Periodic Reports to Guarantee Trustee . . 5
SECTION 2.05 Evidence of Compliance with Conditions
Precedent . . . . . . . . . . . . . . . . 5
SECTION 2.06 Events of Default; Waiver . . . . . . . . 5
SECTION 2.07 Event of Default; Notice . . . . . . . . . 5
SECTION 2.08 Conflicting Interests . . . . . . . . . . 5
ARTICLE III POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE . 6
SECTION 3.01 Powers and Duties of the Guarantee Trustee 6
SECTION 3.02 Certain Rights of Guarantee Trustee . . . 7
SECTION 3.03 Not Responsible for Recitals or Issuance of
Guarantee . . . . . . . . . . . . . . . . 9
ARTICLE IV GUARANTEE TRUSTEE . . . . . . . . . . . . . . . 10
SECTION 4.01 Guarantee Trustee; Eligibility . . . . . . 10
SECTION 4.02 Compensation and Reimbursement . . . . . . 10
SECTION 4.03 Appointment, Removal and Resignation of
Guarantee Trustee . . . . . . . . . . . . 11
ARTICLE V GUARANTEE . . . . . . . . . . . . . . . . . . . 12
SECTION 5.01 Guarantee . . . . . . . . . . . . . . . . 12
SECTION 5.02 Waiver of Notice and Demand . . . . . . . 12
SECTION 5.03 Obligations Not Affected . . . . . . . . . 12
SECTION 5.04 Rights of Holders . . . . . . . . . . . . 13
SECTION 5.05 Guarantee of Payment . . . . . . . . . . . 14
SECTION 5.06 Subrogation . . . . . . . . . . . . . . . 14
SECTION 5.07 Independent Obligations . . . . . . . . . 14
ARTICLE VI SUBORDINATION . . . . . . . . . . . . . . . . . 14
SECTION 6.01 Subordination . . . . . . . . . . . . . . 14
ARTICLE VII TERMINATION . . . . . . . . . . . . . . . . . . 15
SECTION 7.01 Termination . . . . . . . . . . . . . . . 15
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . 15
SECTION 8.01 Successors and Assigns . . . . . . . . . . 15
SECTION 8.02 Amendments . . . . . . . . . . . . . . . . 15
SECTION 8.03 Notices . . . . . . . . . . . . . . . . . 16
SECTION 8.04 Benefit . . . . . . . . . . . . . . . . . 17
SECTION 8.05 Interpretation . . . . . . . . . . . . . . 17
SECTION 8.06 Governing Law . . . . . . . . . . . . . . 17
CROSS-REFERENCE TABLE*
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Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
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310(a) . . . . . . . . . . . . . . . . . . . . 4.01(a)
310(b) . . . . . . . . . . . . . . . . . . . . 4.01(c), 2.08
310(c) . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . 2.02(b)
311(b) . . . . . . . . . . . . . . . . . . . . 2.02(b)
311(c) . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . 2.02(a)
312(b) . . . . . . . . . . . . . . . . . . . . 2.02(b)
313 . . . . . . . . . . . . . . . . . . . . . . 2.03
314(a) . . . . . . . . . . . . . . . . . . . . 2.04
314(b) . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . 2.05
314(d) . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . 1.01, 2.05,
3.02
314(f) . . . . . . . . . . . . . . . . . . . . 2.01, 3.02
315(a) . . . . . . . . . . . . . . . . . . . . 3.01(d)
315(b) . . . . . . . . . . . . . . . . . . . . 2.07
315(c) . . . . . . . . . . . . . . . . . . . . 3.01
315(d) . . . . . . . . . . . . . . . . . . . . 3.01(d)
316(a) . . . . . . . . . . . . . . . . . . . . 5.04(a), 2.06
316(b) . . . . . . . . . . . . . . . . . . . . 5.03
316(c) . . . . . . . . . . . . . . . . . . . . 2.02
317(a) . . . . . . . . . . . . . . . . . . . . Inapplicable
317(b) . . . . . . . . . . . . . . . . . . . . Inapplicable
318(a) . . . . . . . . . . . . . . . . . . . . 2.01(b)
318(b) . . . . . . . . . . . . . . . . . . . . 2.01
318(c) . . . . . . . . . . . . . . . . . . . . 2.01(a)
--------------------
* This Cross-Reference Table does not constitute part of the
Guarantee Agreement and shall not affect the interpretation
of any of its terms or provisions.
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated
as of July 2, 1998, is executed and delivered by ENSERCH
Corporation, a Texas corporation (the "Guarantor"), and The Bank
of New York, as trustee (the "Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of
the Capital Securities (as defined herein) of ENSERCH Capital I,
a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust
Agreement (the "Trust Agreement"), dated as of July 2, 1998 among
the Trustees named therein, ENSERCH Corporation, as Depositor,
and the several Holders (as defined therein), the Issuer is
issuing as of the date hereof $150,000,000 aggregate Liquidation
Amount of its Floating Rate Capital Securities (the "Capital
Securities") representing undivided beneficial interests in the
assets of the Issuer and having the terms set forth in the Trust
Agreement;
WHEREAS, the Capital Securities are to be issued for
sale by the Issuer and the proceeds are to be invested in
$150,000,000 principal amount of Debentures (as defined in the
Trust Agreement); and
WHEREAS, in order to enhance the value of the Capital
Securities, the Guarantor desires irrevocably and unconditionally
to agree, to the extent set forth herein, to pay to the Holders
the Guarantee Payments (as defined herein) and to make certain
other payments on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the purchase of
Debentures, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this
Guarantee Agreement for the benefit of the Holders from time to
time.
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS. As used in this
Guarantee Agreement, the terms set forth below shall, unless the
context otherwise requires, have the following meanings.
Capitalized or otherwise defined terms used but not otherwise
defined herein shall have the meanings assigned to such terms in
the Trust Agreement as in effect on the date hereof.
"Affiliate" of any specified Person means any other
Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified
Person. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct
the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the
foregoing.
"Common Securities" means the securities representing
undivided beneficial interests in the assets of the Issuer and
having the terms set forth in the Trust Agreement.
"Event of Default" means a default by the Guarantor on
any of its payment obligations under this Guarantee Agreement.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Capital
Securities, to the extent not paid or made by or on behalf of the
Issuer: (i) any accrued and unpaid Distributions that are
required to be paid on such Capital Securities but only if and to
the extent that the Property Trustee has available in the Payment
Account funds sufficient to make such payment, (ii) the
redemption price (the "Redemption Price"), and all accrued and
unpaid Distributions to the date of redemption, with respect to
the Capital Securities called for redemption by the Issuer but
only if and to the extent that the Property Trustee has available
in the Payment Account funds sufficient to make such payment,
(iii) upon a voluntary or involuntary dissolution, winding-up or
termination of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for Capital
Securities as provided in the Trust Agreement or upon a
redemption of all of the Capital Securities upon maturity or
redemption of the Debentures as provided in the Trust Agreement),
the lesser of (a) the aggregate of the Liquidation Amount of all
Capital Securities and all accrued and unpaid Distributions on
the Capital Securities to the date of payment but only if and to
the extent that the Property Trustee has available in the Payment
Account funds sufficient to make such payment, and (b) the amount
of assets of the Issuer remaining available for distribution to
Holders in liquidation of the Issuer (in either case, the
"Liquidation Distribution").
"Guarantee Trustee" means The Bank of New York until a
Successor Guarantee Trustee has been appointed and has accepted
such appointment pursuant to the terms of this Guarantee
Agreement and thereafter means each such Successor Guarantee
Trustee.
"Holder" means a Person in whose name a Capital
Security or Capital Securities is registered in the Securities
Register; provided, however, that in determining whether the
holders of the requisite percentage of Capital Securities have
given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the
Guarantor.
"Majority in Liquidation Amount of the Capital
Securities" means a vote by Holders, voting separately as a
class, of more than 50% of the aggregate Liquidation Amount of
all Capital Securities.
"Officer's Certificate" means a certificate signed by
the Chairman of the Board, a Vice Chairman of the Board, the
President, any Vice President, the Treasurer, or any Assistant
Treasurer of the Guarantor, and delivered to the Guarantee
Trustee. Any Officer's Certificate or Opinion of Counsel
delivered with respect to compliance with a condition or covenant
provided for in this Guarantee Agreement shall include:
(a) a statement that the officer or counsel signing
the Officer's Certificate or the Opinion of Counsel has read
the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in
rendering the Officer's Certificate or the Opinion of
Counsel;
(c) a statement that each such officer or counsel has
made such examination or investigation as, in such officer's
or counsel's opinion, is necessary to enable such officer or
counsel to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such officer or counsel, such condition or covenant has been
complied with.
"Opinion of Counsel" means a written opinion of
counsel, who may be counsel for the Guarantee Trustee or the
Guarantor or an Affiliate of the Guarantor, or an employee or any
thereof, who shall be acceptable to the Guarantee Trustee.
"Person" means any individual, corporation,
partnership, joint venture, trust, limited liability company,
unincorporated organization or government, or any agency or
political subdivision thereof, or any other entity of whatever
nature.
"Responsible Officer" means, with respect to the
Guarantee Trustee, any vice-president, any assistant vice-
president, the secretary, any assistant secretary, the treasurer,
any assistant treasurer, any trust officer or assistant trust
officer or any other officer of the Corporate Trust Department of
the Guarantee Trustee customarily performing functions similar to
those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any
other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular
subject.
"Subordinated Indenture" means the Indenture (for
Unsecured Subordinated Debt Securities relating to Trust
Securities) dated as of June 1, 1998, between the Guarantor (the
"Debenture Issuer") and The Bank of New York, as trustee pursuant
to which the Debentures are issued, together with any indenture
supplemental thereto.
"Successor Guarantee Trustee" means a successor
Guarantee Trustee possessing the qualifications to act as
Guarantee Trustee under Section 4.01.
"Trust Indenture Act" means the Trust Indenture Act of
1939, as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01 TRUST INDENTURE ACT; APPLICATION.
(a) This Guarantee Agreement is subject to the
provisions of the Trust Indenture Act that are required or deemed
to be part of this Guarantee Agreement and shall, to the extent
applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this
Guarantee Agreement limits, qualifies or conflicts with the
duties imposed by Section 310 to 317, inclusive, of the Trust
Indenture Act, such imposed duties shall control.
SECTION 2.02 LISTS OF HOLDERS OF CAPITAL SECURITIES.
(a) The Guarantor shall furnish or cause to be
furnished to the Guarantee Trustee (a) semiannually, not later
than December 1 and June 1 in each year, a list, in such form as
the Guarantee Trustee may reasonably require, of the names and
addresses of the Holders ("List of Holders") as of a date not
more than 15 days prior to the delivery thereof, and (b) at such
other times as the Guarantee Trustee may request in writing,
within 30 days after the receipt by the Guarantor of any such
request, a List of Holders as of a date not more than 15 days
prior to the time such list is furnished; provided that, the
Guarantor shall not be obligated to provide such List of Holders
at any time the List of Holders does not differ from the most
recent List of Holders given to the Guarantee Trustee by the
Guarantor. The Guarantee Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its
obligations under Section 311(a) of the Trust Indenture Act,
subject to the provisions of Section 311(b) of the Trust
Indenture Act, and Section 312(b) of the Trust Indenture Act.
SECTION 2.03 REPORTS BY THE GUARANTEE TRUSTEE.
Not later than November 1 in each year, commencing November 1,
1998, the Guarantee Trustee shall provide to the Holders such
reports, if any, as are required by Section 313(a) of the Trust
Indenture Act in the form and in the manner provided by Section
313(a) of the Trust Indenture Act. Any such report shall be
dated as of the next preceding September 15. The Guarantee
Trustee shall also comply with the requirements of Sections
313(b), (c) and (d) of the Trust Indenture Act.
SECTION 2.04 PERIODIC REPORTS TO GUARANTEE
TRUSTEE. The Guarantor shall provide to the Guarantee Trustee
such documents, reports and information, if any, as required by
Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314
of the Trust Indenture Act.
SECTION 2.05 EVIDENCE OF COMPLIANCE WITH
CONDITIONS PRECEDENT. The Guarantor shall provide to the
Guarantee Trustee such evidence of compliance with any conditions
precedent provided for in this Guarantee Agreement as and to the
extent required by Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer and
any opinion of counsel required to be given by counsel, in each
case pursuant to Section 314(c) of the Trust Indenture Act, shall
be given in the form of an Officer's Certificate, and an Opinion
of Counsel, respectively.
SECTION 2.06 EVENTS OF DEFAULT; WAIVER. The
Holders of a Majority in Liquidation Amount of Capital Securities
may, by vote, on behalf of all of the Holders, waive any past
Event of Default and its consequences. Upon such waiver, any
such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for
every purpose of this Guarantee Agreement, but no such waiver
shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon.
SECTION 2.07 EVENT OF DEFAULT; NOTICE.
(a) The Guarantee Trustee shall, within 90 days after
the occurrence of an Event of Default, transmit by mail, first
class postage prepaid, to the Holders, a notice of such Event of
Default known to the Guarantee Trustee, unless such default shall
have been cured or waived before the giving of such notice,
provided that the Guarantee Trustee shall be protected in
withholding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors or
Responsible Officers of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the
interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless a Responsible Officer of
the Guarantee Trustee charged with the administration of the
Trust Agreement shall have received written notice of such Event
of Default.
SECTION 2.08 CONFLICTING INTERESTS. The Trust
Agreement, the Subordinated Indenture and the Indenture dated as
of January 1, 1998 by and between ENSERCH Corporation and The
Bank of New York, as trustee shall be deemed to be specifically
described in this Guarantee Agreement for the purposes of clause
(i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.01 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.
(a) This Guarantee Agreement shall be held by the
Guarantee Trustee for the benefit of the Holders, and the
Guarantee Trustee shall not transfer this Guarantee Agreement or
any rights hereunder to any Person except a Holder exercising his
or her rights pursuant to Section 5.04 or to a Successor
Guarantee Trustee on acceptance by such Successor Guarantee
Trustee of its appointment to act as Successor Guarantee Trustee.
The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant
to the appointment of such Successor Guarantee Trustee.
(b) The Guarantee Trustee, prior to the occurrence of
any Event of Default and after the curing or waiving of all
Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set
forth in this Guarantee Agreement, and no implied covenants or
obligations shall be read into this Guarantee Agreement against
the Guarantee Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.06), and
is actually known to a Responsible Officer of the Guarantee
Trustee, the Guarantee Trustee shall exercise such of the rights
and powers vested in it by this Guarantee Agreement, and use the
same degree of care and skill in its exercise thereof, as a
prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(c) No provision of this Guarantee Agreement shall be
construed to relieve the Guarantee Trustee from liability for its
own negligent action, its own negligent failure to act, or its
own willful misconduct, except that:
(i) prior to the occurrence of any Event of
Default and after the curing or waiving of all such
Events of Default that may have occurred:
(A) the duties and obligations of the
Guarantee Trustee shall be determined solely by
the express provisions of this Guarantee
Agreement, and the Guarantee Trustee shall not be
liable except for the performance of such duties
and obligations as are specifically set forth in
this Guarantee Agreement, and no implied covenants
or obligations shall be read into this Guarantee
Agreement against the Guarantee Trustee; and
(B) in the absence of bad faith on the part
of the Guarantee Trustee, the Guarantee Trustee
may conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon any certificates or
opinions furnished to the Guarantee Trustee and
conforming to the requirements of this Guarantee
Agreement; but in the case of any such
certificates or opinions that by any provision
hereof are specifically required to be furnished
to the Guarantee Trustee, the Guarantee Trustee
shall be under a duty to examine the same to
determine whether or not they conform to the
requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a
Responsible Officer of the Guarantee Trustee, unless it
shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken
by it in good faith in accordance with the direction of
the Holders of a Majority in Liquidation Amount of the
Capital Securities relating to the time, method and
place of conducting any proceeding for any remedy
available to the Guarantee Trustee, or exercising any
trust or power conferred upon the Guarantee Trustee
under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement
shall require the Guarantee 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 the Guarantee Trustee shall have reasonable
grounds for believing that the repayment of such funds
or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate
indemnity, reasonably satisfactory to the Guarantee
Trustee, against such risk or liability is not
reasonably assured to it.
(d) Whether or not therein expressly provided, every
provision of this Guarantee Agreement relating to the conduct or
affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of Sections 3.01(b) and
3.01(c).
SECTION 3.02 CERTAIN RIGHTS OF GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.01:
(i) the Guarantee Trustee may rely and shall be
fully protected in acting or refraining from acting
upon any resolution, certificate, statement,
instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document
reasonably believed by it to be genuine and to have
been signed, sent or presented by the proper party or
parties;
(ii) any direction or act of the Guarantor
contemplated by this Guarantee Agreement shall be
sufficiently evidenced by an Officer's Certificate;
(iii) whenever, in the administration of this
Guarantee Agreement, the Guarantee Trustee shall deem
it desirable that a matter be proved or established
before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence
is herein specifically prescribed) may, in the absence
of bad faith on its part, request and rely upon an
Officer's Certificate which, upon receipt of such
request from the Guarantee Trustee, shall be promptly
delivered by the Guarantor;
(iv) the Guarantee Trustee may consult with counsel
of its choice, and the written advice or Opinion of
Counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or
opinion; such counsel may be counsel to the Guarantor
or any of its Affiliates and may include any of its
employees; the Guarantee Trustee shall have the right
at any time to seek instructions concerning the
administration of this Guarantee Agreement from any
court of competent jurisdiction;
(v) the Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers
vested in it by this Guarantee Agreement at the request
or direction of any Holder, unless such Holder shall
have provided to the Guarantee Trustee such adequate
security and indemnity as would satisfy a reasonable
person in the position of the Guarantee Trustee,
against the costs, expenses (including attorneys' fees
and expenses) and liabilities that might be incurred by
it in complying with such request or direction,
including such reasonable advances as may be requested
by the Guarantee Trustee; provided that, nothing
contained in this Section 3.02(a)(v) shall be taken to
relieve the Guarantee Trustee, upon the occurrence and
continuance of an Event of Default, of its obligation
under the last sentence of Section 3.01(b) to exercise
the rights and powers vested in it by this Guarantee
Agreement;
(vi) the Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the
Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or
matters as it may see fit;
(vii) the Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or
attorneys, and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the
part of any such agent or attorney appointed with due
care by it hereunder;
(viii) whenever in the administration of this
Guarantee Agreement the Guarantee Trustee shall deem it
desirable to receive instructions with respect to
enforcing any remedy or right or taking any other
action hereunder, the Guarantee Trustee (1) may request
instructions from the Holders of a Majority in
Liquidation Amount of the Capital Securities, (2) may
refrain from enforcing such remedy or right or taking
such other action until such instructions are received,
and (3) shall be protected in relying on or acting in
accordance with such instructions;
(ix) the Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any
instrument (including any financing or continuation
statement or any tax or securities form) (or any
rerecording, refiling or re-registration thereof); and
(x) the Guarantee Trustee shall not be liable for
any action taken, suffered or omitted to be taken by it
in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers
conferred upon it by this Guarantee Agreement.
(b) No provision of this Guarantee Agreement shall be
deemed to impose any duty or obligation on the Guarantee Trustee
to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in
which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable
law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or
authority available to the Guarantee Trustee shall be construed
to be a duty to act in accordance with such power or authority.
SECTION 3.03 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE
OF GUARANTEE.
The recitals contained in this Guarantee Agreement
shall be taken as the statements of the Guarantor, and the
Guarantee Trustee does not assume any responsibility for their
correctness. The Guarantee Trustee makes no representation as to
the validity or sufficiency of this Guarantee Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.01 GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing
business under the laws of the United States of America
or any State or Territory thereof or of the District of
Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority.
If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements
of the supervising or examining authority referred to
above, then, for the purposes of this Section
4.01(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Guarantee Trustee shall cease
to be eligible to so act under Section 4.01(a), the
Guarantee Trustee shall immediately resign in the manner and
with the effect set out in Section 4.03(c).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b)
of the Trust Indenture Act, the Guarantee Trustee and
Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.02 COMPENSATION AND REIMBURSEMENT.
The Guarantor agrees:
(a) to pay the Guarantee Trustee from time to time
such reasonable compensation as the Guarantor and the Guarantee
Trustee shall from time to time agree in writing for all services
rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Guarantee Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made
by the Guarantee Trustee in accordance with the provisions of
this Guarantee Agreement (including the reasonable compensation
and expenses of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence
or bad faith; and
(c) to indemnify each of the Guarantee Trustee and any
predecessor Guarantee Trustee for, and to hold it harmless from
and against, any and all loss, damage, claim, liability or
expense, including taxes (other than taxes based upon the income
of the Guarantee Trustee) incurred without negligence or bad
faith on its part, arising out of or in connection with the
acceptance of the trusts created by, or the administration of,
this Guarantee Agreement, including the costs and expenses of
defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties
hereunder.
As security for the performance of the obligations of
the Guarantor under this Section, the Guarantee Trustee shall
have a lien prior to the Capital Securities upon all the property
and funds held or collected by the Guarantee Trustee as such,
except funds held in trust for the payment of principal of, and
premium (if any) or interest on, particular obligations of the
Guarantor under this Guarantee Agreement.
The provisions of this Section shall survive the
termination of this Guarantee Agreement.
SECTION 4.03 APPOINTMENT, REMOVAL AND RESIGNATION OF
GUARANTEE TRUSTEE.
(a) Subject to Section 4.03(b), unless an Event of
Default shall have occurred and be continuing, the Guarantee
Trustee may be appointed or removed without cause at any time by
the Guarantor.
(b) The Guarantee Trustee shall not be removed until a
Successor Guarantee Trustee has been appointed and has accepted
such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall
hold office until a Successor Guarantee Trustee shall have been
appointed or until its removal or resignation. The Guarantee
Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Guarantee
Trustee and delivered to the Guarantor and the resigning
Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section
4.03 within 60 days after delivery to the Guarantor of an
instrument of resignation or removal, the Guarantee Trustee
resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee.
Such court may thereupon, after prescribing such notice, if any,
as it may deem proper, appoint a Successor Guarantee Trustee.
(e) The Guarantor shall give notice of each
resignation and each removal of the Guarantee Trustee and each
appointment of a successor Guarantee Trustee to all Holders in
the manner provided in Section 8.03 hereof. Each notice shall
include the name of the successor Guarantee Trustee and the
address of its Corporate Trust Office.
(f) No Guarantee Trustee shall be liable for the acts
or omissions to act of any Successor Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.01 GUARANTEE. The Guarantor
irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts
theretofore paid by or on behalf of the Issuer), as and when due,
regardless of any defense, right of set-off or counterclaim which
the Issuer may have or assert. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.
SECTION 5.02 WAIVER OF NOTICE AND DEMAND. The
Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a
proceeding first against the Guarantee Trustee, Issuer or any
other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption
and all other notices and demands.
SECTION 5.03 OBLIGATIONS NOT AFFECTED. The
obligation of the Guarantor to make the Guarantee Payments under
this Guarantee Agreement shall in no way be affected or impaired
by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of
any express or implied agreement, covenant, term or
condition relating to the Capital Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the
Issuer of all or any portion of the Distributions,
Redemption Price, Liquidation Distribution or any other sums
payable under the terms of the Capital Securities or the
extension of time for the performance of any other
obligation under, arising out of, or in connection with, the
Capital Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation
Distribution or other sum payable that results from the
extension of any interest payment period on the Debentures
permitted by the Subordinated Indenture);
(c) any failure, omission, delay or lack of diligence
on the part of the Property Trustee or the Holders to
enforce, assert or exercise any right, privilege, power or
remedy conferred on the Property Trustee or the Holders
pursuant to the terms of the Capital Securities, or any
action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership,
insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings
affecting, the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Capital Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or
defense of a guarantor, it being the intent of this Section
5.03 that the obligations of the Guarantor hereunder shall
be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Guarantee Trustee, the
Property Trustee or the Holders to give notice to, or obtain
consent of, the Guarantor or any other Person with respect to the
happening of any of the foregoing.
SECTION 5.04 RIGHTS OF HOLDERS. The Guarantor
expressly acknowledges that: (i) this Guarantee Agreement will be
deposited with the Guarantee Trustee to be held for the benefit
of the Holders; (ii) if an Event of Default has occurred and is
continuing, the Guarantee Trustee has the right to enforce this
Guarantee Agreement on behalf of the Holders; (iii) the Holders
of a Majority in Liquidation Amount of the Capital Securities
have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Guarantee Trustee
in respect of this Guarantee Agreement or exercising any trust or
power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) if the Guarantee Trustee fails to enforce
this Guarantee Agreement, any Holder may enforce this Guarantee
Agreement, or institute a legal proceeding directly against the
Guarantor to enforce the Guarantee Trustee's rights under this
Guarantee Agreement without first instituting a legal proceeding
against the Issuer, the Guarantee Trustee, or any other Person.
SECTION 5.05 GUARANTEE OF PAYMENT. This
Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged
except by payment of the Guarantee Payments in full (without
duplication).
SECTION 5.06 SUBROGATION. The Guarantor shall
be subrogated to all, if any, rights of the Holders against the
Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement; provided, however, that
the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise
any rights which it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a
result of payment under this Guarantee Agreement, if, at the time
of any such payment, any amounts of Guarantee Payments are due
and unpaid under this Guarantee Agreement. If any amount shall
be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders
and to pay over such amount to the Holders.
SECTION 5.07 INDEPENDENT OBLIGATIONS. The
Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the
Capital Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments
pursuant to the terms of this Guarantee Agreement notwithstanding
the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.03.
ARTICLE VI
SUBORDINATION
SECTION 6.01 SUBORDINATION. This Guarantee
Agreement will constitute an unsecured obligation of the
Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, including the
Debentures, except those made pari passu or subordinate by their
terms, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Guarantor and
with any guarantee now or hereafter entered into by the Guarantor
in respect of any preferred or preference stock of any Affiliate
of the Guarantor, and (iii) senior to all common stock of the
Guarantor. Nothing in this Section 6.01 shall apply to claims
of, or payments to, the Guarantee Trustee under or pursuant to
Section 4.02 hereof.
ARTICLE VII
TERMINATION
SECTION 7.01 TERMINATION. Subject to Section
4.02 hereof, this Guarantee Agreement shall terminate and be of
no further force and effect upon: (i) full payment of the
Redemption Price of all Capital Securities, and all accrued and
unpaid Distributions to the date of redemption, (ii) the
distribution of Debentures to Holders in exchange for all of the
Capital Securities, or (iii) full payment of the amounts payable
in accordance with the Trust Agreement upon liquidation of the
Issuer. Notwithstanding the foregoing, this Guarantee Agreement
will continue to be effective or will be reinstated, as the case
may be, if at any time any Holder must restore payment of any
sums paid with respect to Capital Securities or under this
Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 SUCCESSORS AND ASSIGNS. All
guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit
of the Holders of the Capital Securities then outstanding.
Except in connection with a consolidation, merger or sale
involving the Guarantor that is permitted under Article Eleven of
the Subordinated Indenture, the Guarantor shall not assign its
obligations hereunder.
SECTION 8.02 AMENDMENTS. This Guarantee
Agreement may be amended only by an instrument in writing entered
into by the Guarantor and the Guarantee Trustee. Except with
respect to any changes which do not materially adversely affect
the rights of Holders (in which case no consent of Holders will
be required), this Guarantee Agreement may only be amended with
the prior approval of the Holders of not less than 66 2/3% in
aggregate Liquidation Amount of all the outstanding Capital
Securities. The provisions of Article VI of the Trust Agreement
concerning meetings of Holders shall apply to the giving of such
approval. Nothing herein contained shall be deemed to require
that the Guarantee Trustee enter into any amendment of this
Guarantee Agreement.
SECTION 8.03 NOTICES. Any notice, request or
other communication required or permitted to be given hereunder
shall be in writing, duly signed by the party giving such notice,
and delivered, telecopied or mailed by first class mail as
follows:
(a) if given to the Guarantor, to the address set
forth below or such other address as the Guarantor may give
notice of to the Guarantee Trustee and the Holders of the
Capital Securities:
ENSERCH Corporation
Energy Plaza
0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facsimile No: 000-000-0000
Attention: Treasurer
(b) if given to the Issuer, in care of the
Administrative Trustees, at the Issuer's (and the
Administrative Trustees') address set forth below or such
other address as the Administrative Trustees on behalf of
the Issuer may give notice of to the Guarantee Trustee and
the Holders:
ENSERCH Capital I
c/o ENSERCH Corporation
Energy Plaza
0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facsimile No: 000-000-0000
Attention: Administrative Trustees
(c) if given to the Guarantee Trustee, to the address
set forth below or such other address as the Guarantee
Trustee may give notice of to the Guarantor and the Holders
of the Capital Securities:
The Bank of New York
000 Xxxxxxx Xxxxxx
00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No: (000) 000-0000
Attention: Corporate Trust Trustee Administration
(d) if given to any Holder, at the address set forth
on the books and records of the Issuer.
All notices hereunder shall be deemed to have been
given when received in person, telecopied with receipt confirmed,
or mailed by first class mail, postage prepaid, except that if a
notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.
SECTION 8.04 BENEFIT. This Guarantee Agreement
is solely for the benefit of the Holders and, subject to Section
3.01(a), is not separately transferable from the Capital
Securities.
SECTION 8.05 INTERPRETATION. In this Guarantee
Agreement, unless the context otherwise requires:
(a) a term defined anywhere in this Guarantee
Agreement has the same meaning throughout;
(b) all references to "the Guarantee Agreement" or
"this Guarantee Agreement" are to this Guarantee Agreement
as modified, supplemented or amended from time to time;
(c) all references in this Guarantee Agreement to
Articles and Sections are to Articles and Sections of this
Guarantee Agreement unless otherwise specified;
(d) a term defined in the Trust Indenture Act has the
same meaning when used in this Guarantee Agreement unless
otherwise defined in this Guarantee Agreement or unless the
context otherwise requires;
(e) a reference to the singular includes the plural
and vice versa; and
(f) the masculine, feminine or neuter genders used
herein shall include the masculine, feminine and neuter
genders.
SECTION 8.06 GOVERNING LAW. THIS GUARANTEE
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but
one and the same instrument.
THIS GUARANTEE AGREEMENT is executed as of the day and
year first above written.
ENSERCH Corporation
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Treasurer and Assistant
Secretary
The Bank of New York,
as Guarantee Trustee
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
