As filed with the Securities and Exchange Commission on November 7, 2000
Registration Nos. 333- , 333- -01 and 333- -02
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------------
TXU CORP.
(Exact name of registrant as specified in its charter)
Texas 75-2669310
(State of incorporation or organization) (I.R.S. Employer Identification No.)
TXU CAPITAL III
TXU CAPITAL IV
(Exact name of registrants as specified in their charters)
Delaware To Be Applied For
(State of incorporation or organization) (I.R.S. Employer Identification No's.)
Energy Plaza
1601 Bryan Street
Dallas, Texas 75201
(214) 812-4600
(Address, including zip code, and telephone number, including area code,
of registrants' principal executive offices)
ROBERT A. WOOLDRIDGE, Esq. PETER B. TINKHAM, Esq. ROBERT J. REGER, JR., Esq.
Worsham Forsythe Secretary and Assistant Thelen Reid & Priest LLP
Wooldridge LLP Treasurer 40 West 57th Street
1601 Bryan Street TXU Corp. New York, New York 10019
Dallas, Texas 75201 1601 Bryan Street (212) 603-2000
(214) 979-3000 Dallas, Texas 75201
(214) 812-4600
(Names and addresses, including zip codes, and telephone numbers, including
area codes, of agents for service)
----------------------------
It is respectfully requested that the Commission also send
copies of all notices, orders and communications to:
RICHARD L. HARDEN, Esq.
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
(212) 858-1000
----------------------------
Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective when warranted by
market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
----------------------------
CALCULATION OF REGISTRATION FEE
================================================================================
Proposed
Maximum Proposed
Title of Each Class Offering Maximum Amount of
of Securities to be Amount to be Price Aggregate Registration
Registered Registered Per Unit Offering Price Fee
--------------------------------------------------------------------------------
Preference Stock.......... (1)(3) (2) (1)(2)(3)(4) N/A
--------------------------------------------------------------------------------
Debt Securities........... (1)(5) (2) (1)(2)(4)(5) N/A
--------------------------------------------------------------------------------
Preferred Trust Securities (1)(6) (2) (1)(2)(4)(6) N/A
--------------------------------------------------------------------------------
Guarantee with respect to N/A
Preferred Trust
Securities(7)(8)..........
--------------------------------------------------------------------------------
Junior Subordinated N/A
Debentures(7)(9)..........
--------------------------------------------------------------------------------
Total(10)............ $275,000,000(4)(2) $275,000,000(4) $72,600
================================================================================
(1) In no event will the aggregate offering price of all preference stock, debt
securities and preferred trust securities issued from time to time pursuant
to this Registration Statement exceed $275,000,000. If any such securities
are issued at an original issue discount, then the aggregate initial
offering price as so discounted shall not exceed $275,000,000,
notwithstanding that the stated principal amount of such securities may
exceed such amount.
(2) The proposed maximum offering price per unit and the proposed maximum
aggregate offering price will be determined, from time to time, by the
registrants in connection with the issuance of the securities registered
hereunder.
(3) Subject to footnote (1), there is being registered hereunder an
indeterminate number of shares of preference stock which may be sold, from
time to time, by TXU Corp.
(4) Exclusive of accrued interest or distributions, if any.
(5) Subject to footnote (1), there is being registered hereunder an
indeterminate principal amount of debt securities which may be sold, from
time to time, by TXU Corp.
(6) Subject to footnote (1), there is being registered hereunder an
indeterminate amount of preferred trust securities which may be sold, from
time to time, by TXU Capital III and/or TXU Capital IV.
(7) This registration is deemed to include the rights of the holders of the
securities under the TXU Corp. guarantee, the Trust Agreement, the junior
subordinated debentures, the Subordinated Indenture and the Agreement as to
Expenses and Liabilities, together constituting the backup undertakings as
described in this Registration Statement.
(8) No separate consideration will be received for the TXU Corp. guarantee or
the Agreement as to Expenses and Liabilities.
(9) The junior subordinated debentures, to be issued by TXU Corp., will be
purchased by TXU Capital III and/or TXU Capital IV with the proceeds of the
sale of preferred trust securities. No separate consideration will be
received for the junior subordinated debentures.
(10) Pursuant to Rule 429 under the Securities Act of 1933, the combined
Prospectus filed as part of this Registration Statement also relates to
$170,000,000 aggregate amount of debt securities registered pursuant to
Registration Statement File No. 333-56055, to $170,000,000 of debt
securities registered pursuant to Registration Statement File Nos.
333-68663 and 333-68663-01 and to $60,000,000 aggregate amount of
preference stock, debt securities and preferred trust securities and the
related guarantee and junior subordinated debentures registered pursuant to
Registration File Nos. 333-79221, 333-79221-01, 333-79221-02 and
333-79221-03. Registration fees with respect to those registration
statements were paid in the amounts of $265,500, $111,200 and $141,780,
respectively.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION, DATED , 2000
----------
PROSPECTUS
$675,000,000
AGGREGATE AMOUNT
---------------
TXU CORP.
PREFERENCE STOCK
AND
DEBT SECURITIES
---------------
TXU CAPITAL III
TXU CAPITAL IV
PREFERRED TRUST SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED AS SET
FORTH HEREIN BY
TXU CORP.
-----------------------------------------------------
We will provide specific terms of these securities, their offering prices
and how they will be offered in supplements to this prospectus.
You should read this prospectus and any supplement carefully
before you invest.
-----------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAVE THESE ORGANIZATIONS
DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
This prospectus is dated , 2000.
--------
The information in this Prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an offer
to sell or a solicitation of an offer to buy these securities in any
jurisdiction in which an offer, solicitation or sale is not permitted.
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission, or SEC, using a "shelf" registration
process. Under this shelf process, we may, over a period we currently do not
expect to exceed two years, sell combinations of the securities described in
this prospectus in one or more offerings up to a total dollar amount of
$675,000,000. This amount includes $400,000,000 of debt securities, preference
stock and preferred trust securities registered under earlier registration
statements. This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with additional information described
under the heading WHERE YOU CAN FIND MORE INFORMATION.
For more detailed information about the securities, you can read the
exhibits to the registration statement. Those exhibits have been either filed
with the registration statement or incorporated by reference to earlier SEC
filings listed in the registration statement.
WHERE YOU CAN FIND MORE INFORMATION
TXU Corp., a Texas corporation which changed its name from Texas
Utilities Company on May 15, 2000, was formed in 1997 as a holding company. TXU
Corp. owns all of the outstanding common stock of its predecessor company, Texas
Energy Industries, Inc. now known as TXU Energy Industries Company. TXU Corp.
files annual, quarterly and special reports, proxy statements and other
information with the SEC under File No. 1-12833. Before TXU Corp. began filing
quarterly and annual reports with the SEC, TXU Energy Industries Company filed
those reports under its old name, Texas Utilities Company, File No. 1-3591.
These SEC filings are available to the public over the Internet at the SEC's
website at http://www.sec.gov. You may also read and copy any of these SEC
filings at the SEC's public reference rooms in Washington, D.C., New York, New
York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we
file with the SEC, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we make with the
SEC under Section 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of
1934, as amended, until we sell all of the securities described in this
prospectus.
o TXU Corp.'s Annual Report on Form 10-K for the year ended December 31,
1999.
o TXU Corp.'s Quarterly Reports on Form 10-Q for the quarters ended March 31,
2000 and June 30, 2000.
o TXU Corp.'s Current Reports on Form 8-K filed with the SEC on March 13,
2000, March 15, 2000, May 16, 2000, August 1, 2000, August 18, 2000 and
September 15, 2000.
You may request a copy of these filings at no cost, by writing or
contacting TXU Corp. at the following address: Secretary, TXU Corp., Energy
Plaza, 1601 Bryan Street, Dallas, Texas 75201; telephone number (214) 812-4600.
2
<PAGE>
TXU CORP.
TXU Corp. is a multinational energy services holding company with
operations primarily in the United States, Europe and Australia.
TXU Corp. engages in:
o the generation, purchase, transmission, distribution and sale of
electricity;
o the purchase, transmission, distribution and sale of natural
gas;
o energy marketing; and
o energy services, telecommunications and other businesses.
TXU Corp.'s principal subsidiaries are:
o TXU Electric Company, an electric utility company engaged in the
generation, purchase, transmission, distribution and sale of
electric energy in the north-central, eastern and western parts
of Texas;
o TXU Gas Company, an integrated company focused on natural gas
gathering, transmission and distribution, and the marketing of
natural gas and electricity in the north-central, eastern and
western parts of Texas and wholesale and retail marketing of
natural gas and electricity in several areas of the United
States; and
o TXU Europe Limited, which is the holding company for TXU Corp.'s
United Kingdom and other European operations and includes Eastern
Electricity plc, the largest supplier (retailer) and distributor
of electricity in England and Wales. Subsidiaries of TXU Europe
Limited also include one of the largest generators of electricity
and one of the largest retail suppliers of natural gas in the
United Kingdom, and an energy trading company that manages price
and volume risks associated with energy related businesses.
TXU Corp.'s Australian operations are owned by TXU Australia Holdings
(Partnership) Limited Partnership. Its principal operating subsidiaries include
TXU Electricity Limited (formerly known as Eastern Energy Limited), which
purchases, distributes and retails electricity in the State of Victoria,
Australia, the gas operations of TXU Networks (Gas) Pty. Ltd. (formerly known as
Westar Limited), which distributes natural gas in Victoria, and TXU Pty. Ltd.
(formerly known as Kinetik Energy Limited) which retails natural gas in
Victoria. In June 2000, a subsidiary of TXU Australia Holdings (Partnership)
Limited Partnership entered into a 100-year lease of the assets of the South
Australian electricity generator, Optima Energy Pty. Ltd, which operates power
stations in South Australia that have total power generating capacity of 1,280
megawatts and supply approximately 28% of South Australia's electricity needs.
TXU Corp. also owns 50% of Pinnacle One Partners, L.P., a joint
venture that owns TXU Communications Ventures Company, a diversified
telecommunications provider competing primarily in the Texas market.
Other wholly-owned subsidiaries perform specialized functions within
the TXU Corp. system.
The principal executive offices of TXU Corp. are located at 1601 Bryan
Street, Dallas, Texas 75201 and its telephone number is (214) 812-4600.
TXU CAPITAL III AND TXU CAPITAL IV
TXU Capital III and TXU Capital IV are identical Delaware business
trusts, and each will be referred to in this prospectus as TXU Capital. Each was
created pursuant to a separate trust agreement among TXU Corp. as depositor of
TXU Capital, The Bank of New York as the property trustee, The Bank of New York
(Delaware) as the Delaware trustee and one or more administrative trustees
appointed by TXU Corp. Each trust agreement will be amended and restated
substantially in the form filed as an exhibit to the registration statement. TXU
3
<PAGE>
Capital exists only to issue its preferred trust securities and common trust
securities and to hold the junior subordinated debentures of TXU Corp. as trust
assets. All of the common trust securities will be owned by TXU Corp. The common
trust securities will represent at least 3% of the total capital of TXU Capital.
Payments on any distribution payment date or redemption date will be made on
the common trust securities pro rata with the preferred trust securities,
except that the common trust securities' right to payment will be subordinated
to the rights of the preferred trust securities if there is a default under
the trust agreement. TXU Capital has a term of approximately 40 years, but
may dissolve earlier as provided in the trust agreement. TXU Capital's
business and affairs will be conducted by its administrative trustees.
The office of the Delaware trustee in the State of Delaware is White Clay
Center, Route 273, Newark, Delaware 19711. The principal place of business of
TXU Capital is c/o TXU Corp., Energy Plaza, 1601 Bryan Street, Dallas, Texas
75201.
USE OF PROCEEDS
Unless otherwise described in a prospectus supplement, the net
proceeds from the offering of the securities will be used for general corporate
purposes of TXU Corp., which may include the repayment of short-term
indebtedness.
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS
The ratio of earnings to fixed charges and the ratio of earnings to
combined fixed charges and preferred dividends for TXU Corp. for each of the
years ended December 31, 1995 through 1999 and for the six months ended June 30,
2000 are set forth in the table below. The ratios for the six months ended June
30, 2000 are not necessarily indicative of the results that may be expected for
an entire year. For the year ended December 31, 1995, fixed charges exceeded
earnings by $235 million. The year ended December 31, 1995 was affected by the
write-down in value of some of the nonperforming assets of TXU Corp.'s
subsidiaries, including TXU Electric Company's partially completed Twin Oak and
Forest Grove lignite-fueled facilities and the New Mexico coal reserves of a
subsidiary, as well as several minor assets. That write-down, on an after-tax
basis, amounted to $802 million.
Ratio of
Earnings to Combined
Ratio of Earnings Fixed Charges and
Period to Fixed Charges Preferred Dividends
------ ----------------- --------------------
Year ended December 31, 1995 0.72 0.72
Year ended December 31, 1996 2.18 2.18
Year ended December 31, 1997 2.14 2.14
Year ended December 31, 1998 1.84 1.84
Year ended December 31, 1999 1.87 1.87
Six months ended June 30, 2000 1.72 1.72
DESCRIPTION OF TXU CORP. PREFERENCE STOCK
TXU Corp. is authorized to issue 50,000,000 shares of preference
stock, $25 par value. Currently, 10,000,000 shares of TXU Corp.'s Series A
Preference Stock are authorized and are reserved for issuance pursuant to TXU
Corp.'s share rights plan described below, 3,000 shares of TXU Corp.'s Flexible
Money Market Cumulative Preference Stock, Series B, are authorized and are
outstanding and 810,000 shares of TXU Corp.'s Mandatorily Convertible Single
Reset Preference Stock, Series C, are authorized and are outstanding.
TXU Corp. has adopted a share rights plan pursuant to which
shareholders were given rights to purchase TXU Corp.'s Series A preference
stock. These rights have certain anti-takeover effects. Unless and until certain
events occur, these rights are not exercisable and trade with shares of the
common stock.
4
<PAGE>
Because TXU Corp. is a holding company that conducts all of its
operations through subsidiaries, holders of preference stock will generally have
a position junior to claims of creditors and preferred shareholders of the
subsidiaries of TXU Corp. as well as to all holders of debt of TXU Corp. Many of
these subsidiaries have outstanding indebtedness, and TXU Gas Company and TXU
Electric Company have outstanding shares of preferred stock.
The Texas Business Corporation Act and the Restated Articles of
Incorporation and Restated Bylaws of TXU Corp. determine the rights and
privileges of holders of preference stock. The information below is a summary of
those terms. For a fuller understanding of those terms, you should read the
corporate documents, which have been filed with the SEC, and the Texas corporate
law.
TXU Corp. may issue one or more series of preference stock without the
approval of its shareholders. The preference stock of all series will rank
equally as to dividends and distributions upon liquidation or dissolution of TXU
Corp.
Some terms of a series may differ from those of another series. A
prospectus supplement will describe those different terms. They will also be
described in a Statement of Resolution Establishing a Series of Preference
Stock. That document also will be filed in Texas and with the SEC, and you
should read it for a full understanding of any special terms of a series. These
terms will include any of the following that apply to that series:
o The title of that series of preference stock;
o The number of shares in the series;
o The dividend rate or how such rate will be determined and the
dividend payment dates for the series of preference stock;
o Whether the series will be listed on a securities exchange;
o The date or dates on which the series of preference stock may be
redeemed at the option of TXU Corp. and any restrictions on such
redemptions;
o Any sinking fund or other provisions that would obligate TXU
Corp. to repurchase, redeem or retire the series of preference
stock;
o The amount payable on the series of preference stock in case of
the liquidation, dissolution or winding up of TXU Corp. and any
additional amount, or method of determining such amount, payable
in case any such event is voluntary; and
o Any rights to convert the shares of that series of preference
stock into shares of another series or into shares of any other
class of capital stock.
Shares of preference stock issued by TXU Corp. will be fully paid and
non-assessable.
TXU Corp. must first pay all dividends due on preference stock before
it pays dividends to holders of its common stock. Upon any dissolution or
liquidation of TXU Corp., amounts due to holders of preference stock will be
paid before any distribution of assets to holders of common stock.
TXU Corp. has issued junior subordinated debentures in connection with
preferred trust securities previously issued by its subsidiaries, TXU Capital I
and TXU Capital II. TXU Corp. has a right, from time to time, to delay interest
payments for those junior subordinated debentures for up to 20 consecutive
quarters. TXU Corp. may issue, from time to time, additional junior subordinated
debentures in connection with the preferred trust securities described in this
prospectus. TXU Corp. may have a similar right to delay interest payments for
those additional junior subordinated debentures. If TXU Corp. exercises any
right to delay an interest payment, it would not be able to pay dividends on its
common stock or preference stock during the extension period. For a further
description of TXU Corp.'s rights to delay payment, read DESCRIPTION OF TXU
CAPITAL'S PREFERRED TRUST SECURITIES AND COMMON TRUST SECURITIES and DESCRIPTION
OF THE JUNIOR SUBORDINATED DEBENTURES in this prospectus.
5
<PAGE>
The holders of preference stock have voting rights only in the
following circumstances:
o If dividends have not been paid for four full quarters, holders
of preference stock may elect one-third of TXU Corp.'s Board of
Directors or two directors, whichever is greater;
o If dividends have not been paid for eight full quarters, holders
of preference stock may elect a majority of TXU Corp.'s full
Board of Directors;
o TXU Corp. needs the approval of the holders of two-thirds of the
outstanding shares of the preference stock in order to make the
following changes in its capital structure:
- Authorizing a new class of stock that ranks senior to the
preference stock as to dividends or liquidation rights or
any security that could be converted into or exercised to
acquire any new senior class of stock, and
- Materially altering the Restated Articles of Incorporation
in such a way as to change the terms of the preference
stock, unless the change does not affect every series of
preference stock, in which case holders of only those series
affected may vote.
TXU Corp. will notify holders of preference stock of any meeting at which they
may vote. Shares of preference stock have no preemptive rights.
DESCRIPTION OF DEBT SECURITIES
The debt securities will be TXU Corp.'s direct unsecured general
obligations. The debt securities will be senior debt securities. The debt
securities will be issued under one or more separate indentures between TXU
Corp. and The Bank of New York as trustee under each indenture.
Material terms of the debt securities and each indenture are
summarized below. The form of the indenture was filed with the SEC, and you
should read the indenture for provisions that may be important to you. The
indenture will be qualified under the Trust Indenture Act of 1939. You should
refer to the Trust Indenture Act for provisions that apply to the debt
securities. Whenever particular provisions or defined terms in the indenture are
referred to under this DESCRIPTION OF DEBT SECURITIES, those provisions or
defined terms are incorporated by reference in this prospectus.
The debt securities will rank equally with all of TXU Corp.'s other
senior and unsubordinated debt.
Because TXU Corp. is a holding company that conducts all of its
operations through subsidiaries, holders of debt securities will generally have
a position junior to claims of creditors and preferred shareholders of the
subsidiaries of TXU Corp. All these subsidiaries have outstanding indebtedness,
and TXU Gas Company and TXU Electric Company have outstanding shares of
preferred stock.
A prospectus supplement and an officer's certificate relating to any
series of debt securities being offered will include specific terms relating to
that offering. These terms will include any of the following terms that apply to
that series:
o The title of the debt securities;
o Any limit upon the total principal amount of the debt securities;
o The dates on which the principal of the debt securities will be
payable and how it will be paid;
o The interest rate or rates which the debt securities will bear, or how
the rate or rates will be determined, the interest payment dates for
the debt securities and the regular record dates for interest
payments;
o Any right to delay the interest payments for the debt securities;
6
<PAGE>
o The percentage, if less than 100%, of the principal amount of the debt
securities that will be payable if the maturity of the debt securities
is accelerated;
o Any date or dates on which the debt securities may be redeemed at the
option of TXU Corp. and any restrictions on those redemptions;
o Any sinking fund or other provisions that would obligate TXU Corp. to
repurchase or otherwise redeem the debt securities;
o Any changes or additions to the events of default under the indenture
or changes or additions to the covenants of TXU Corp. under the
indenture;
o If the debt securities will be issued in denominations other than
multiples of $1,000;
o If payments on the debt securities may be made in a currency or
currencies other than United States dollars;
o Any rights or duties of another person to assume the obligations of
TXU Corp. with respect to the debt securities;
o Any collateral, security, assurance or guarantee for the debt
securities; and
o Any other terms of the debt securities not inconsistent with the terms
of the indenture.
(Indenture, Section 301.)
The indenture does not limit the principal amount of debt securities
that TXU Corp. may issue.
TXU Corp. may sell debt securities at a discount below their principal
amount. United States federal income tax considerations applicable to debt
securities sold at an original issue discount may be described in the prospectus
supplement. In addition, important United States federal income tax or other tax
considerations applicable to any debt securities denominated or payable in a
currency or currency unit other than United States dollars may be described in
the prospectus supplement.
Except as may otherwise be described in the applicable prospectus
supplement, the covenants contained in the indenture will not afford holders of
debt securities protection in the event of a highly-leveraged transaction
involving TXU Corp.
PAYMENT AND PAYING AGENTS
Except as may be provided in the prospectus supplement, interest, if
any, on each debt security payable on each interest payment date will be paid to
the person in whose name that debt security is registered as of the close of
business on the regular record date for the interest payment date. However,
interest payable at maturity will be paid to the person to whom the principal is
paid. If there has been a default in the payment of interest on any debt
security, the defaulted interest may be paid to the holder of such debt security
as of the close of business on a date between 10 and 15 days before the date
proposed by TXU Corp. for payment of such defaulted interest or in any other
manner permitted by any securities exchange on which that debt security may be
listed, if the trustee finds it workable. (Indenture, Section 307.)
Unless otherwise specified in the prospectus supplement, principal,
premium, if any, and interest on the debt securities at maturity will be payable
upon presentation of the debt securities at the corporate trust office of The
Bank of New York, in The City of New York, as paying agent for TXU Corp. TXU
Corp. may change the place of payment on the debt securities, may appoint one or
more additional paying agents (including TXU Corp.) and may remove any paying
agent, all at the discretion of TXU Corp. (Indenture, Section 602.)
REGISTRATION AND TRANSFER
Unless otherwise specified in the prospectus supplement, the transfer
of debt securities may be registered, and debt securities may be exchanged for
other debt securities of the same series or tranche, of authorized denominations
7
<PAGE>
and with the same terms and principal amount, at the offices of TXU Business
Services Company in Dallas, Texas. TXU Corp. may change the place for
registration of transfer and exchange of the debt securities and may designate
additional places for registration and exchange. (Indenture, Section 602.)
Unless otherwise provided in the prospectus supplement, no service charge will
be made for any transfer or exchange of the debt securities. However, TXU Corp.
may require payment to cover any tax or other governmental charge that may be
imposed. TXU Corp. will not be required to execute or to provide for the
registration of transfer of, or the exchange of, (a) any debt security during
the 15 days before giving any notice of redemption or (b) any debt security
selected for redemption except the unredeemed portion of any debt security being
redeemed in part. (Indenture, Section 305.)
DEFEASANCE
TXU Corp. will be discharged from its obligations on the debt
securities of a particular series if it deposits with the trustee sufficient
cash or government securities to pay the principal, interest, any premium and
any other sums when due on the stated maturity date or a redemption date of that
series of debt securities. (Indenture, Section 701.)
LIMITATION ON LIENS
The indenture provides that, except as otherwise specified with
respect to a particular series of debt securities, TXU Corp. will not pledge,
mortgage, hypothecate or grant a security interest in, or permit any mortgage,
pledge, security interest or other lien upon, any capital stock of any
Subsidiary, as defined below, now or hereafter owned by TXU Corp., to secure any
Indebtedness, as defined below, without also securing the outstanding debt
securities, and all other Indebtedness entitled to be so secured, equally and
ratably with the Indebtedness and any other indebtedness similarly entitled to
be equally and ratably secured.
This restriction does not apply to, or prevent the creation or any
extension, renewal or refunding of:
(1) any mortgage, pledge, security interest, lien or encumbrance upon
any capital stock created at the time it is acquired by TXU Corp.
or within one year after that time to secure the purchase price
for the capital stock;
(2) any mortgage, pledge, security interest, lien or encumbrance upon
any capital stock existing at the time it is acquired by TXU
Corp., whether or not the secured obligations are assumed by TXU
Corp.; or
(3) any judgment, levy, execution, attachment or other similar lien
arising in connection with court proceedings, provided that
either:
(a) the execution or enforcement of the lien is effectively
stayed within 30 days after entry of the corresponding
judgment, or the corresponding judgment has been discharged
within that 30 day period, and the claims secured by the
lien are being contested in good faith by appropriate
proceedings timely commenced and diligently prosecuted;
(b) the payment of each lien is covered in full by insurance and
the insurance company has not denied or contested coverage
thereof; or
(c) so long as each lien is adequately bonded, any appropriate
and duly initiated legal proceedings for the review of the
corresponding judgment, decree or order shall not have been
fully terminated or the period within which these
proceedings may be initiated shall not have expired.
For purposes of the restriction described in the preceding paragraph,
"Indebtedness" means:
(1) all indebtedness created or assumed by TXU Corp. for the
repayment of money borrowed;
(2) all indebtedness for money borrowed secured by a lien upon
property owned by TXU Corp. and upon which indebtedness for money
borrowed TXU Corp. customarily pays interest, although TXU Corp.
8
<PAGE>
has not assumed or become liable for the payment of the
indebtedness for money borrowed; and
(3) all indebtedness of others for money borrowed which is guaranteed
as to payment of principal by TXU Corp. or in effect guaranteed
by TXU Corp. through a contingent agreement to purchase the
indebtedness for money borrowed, but excluding from this
definition any other contingent obligation of TXU Corp. in
respect of indebtedness for money borrowed or other obligations
incurred by others.
"Subsidiary" means a corporation in which more than 50% of the
outstanding voting stock is owned, directly or indirectly, by TXU Corp. and/or
by one or more other Subsidiaries. For the purposes of this definition, "voting
stock" means stock that ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of stock has
that voting power by reason of any contingency.
Notwithstanding the foregoing, except as otherwise specified in the
officer's certificate setting out the terms of a particular series of debt
securities, TXU Corp. may, without securing the debt securities, pledge,
mortgage, hypothecate or grant a security interest in, or permit any mortgage,
pledge, security interest or other lien, in addition to liens expressly
permitted as described in the preceding paragraphs, upon, capital stock of any
Subsidiary now or hereafter owned by TXU Corp. to secure any Indebtedness, which
would otherwise be subject to the foregoing restriction, in an aggregate amount
which, together with all other such Indebtedness, does not exceed 5% of
Consolidated Capitalization. For this purpose, "Consolidated Capitalization"
means the sum of:
(1) Consolidated Shareholders' Equity;
(2) Consolidated Indebtedness for money borrowed, which is total
indebtedness as shown on the consolidated balance sheet of the
Company and its Subsidiaries, exclusive of any that is due and
payable within one year of the date the sum is determined; and,
without duplication
(3) any preference or preferred stock of TXU Corp. or any
Consolidated Subsidiary which is subject to mandatory redemption
or sinking fund provisions.
The term "Consolidated Shareholders' Equity", as used above, means the
total Assets of TXU Corp. and its Consolidated Subsidiaries less all liabilities
of TXU Corp. and its Consolidated Subsidiaries that would, in accordance with
generally accepted accounting principles in the United States, be classified on
a balance sheet as liabilities, including without limitation:
(1) indebtedness secured by property of TXU Corp. or any of its
Consolidated Subsidiaries whether or not TXU Corp. or the
Consolidated Subsidiary is liable for the payment of the
indebtedness unless, in the case that TXU Corp. or the
Consolidated Subsidiary is not so liable, the property has not
been included among the Assets of TXU Corp. or the Consolidated
Subsidiary on the balance sheet;
(2) deferred liabilities; and
(3) indebtedness of TXU Corp. or any of its Consolidated Subsidiaries
that is expressly subordinated in right and priority of payment
to other liabilities of TXU Corp. or such Consolidated
Subsidiary.
As used in this definition, "liabilities" includes preference or
preferred stock of TXU Corp. or any Consolidated Subsidiary only to the extent
of any preference or preferred stock that is subject to mandatory redemption or
sinking fund provisions.
The term "Consolidated Subsidiary", as used above, means at any date
any Subsidiary the financial statements of which under generally accepted
accounting principles would be consolidated with those of TXU Corp. in its
consolidated financial statements as of that date.
The "Assets" of any person means the whole or any part of its
business, property, assets, cash and receivables. The term "Consolidated
Indebtedness" means total indebtedness as shown on the consolidated balance
sheet of TXU Corp. and its Consolidated Subsidiaries.
9
<PAGE>
As of June 30, 2000, the Consolidated Capitalization of TXU Corp. was
approximately $25.7 billion.
For situations in which the limitation on liens will not apply, see --
"Assignment of Obligations" below.
ASSIGNMENT OF OBLIGATIONS
TXU Corp. may assign its obligations under the debt securities and the
indenture to a wholly-owned subsidiary, provided that no event of default under
the indenture, or event which with the passage of time or the giving of required
notice, or both, would become an event of default under the indenture, has
occurred and is continuing. The subsidiary must assume in writing TXU Corp.'s
payment obligations under the debt securities and under the indenture. TXU
Corp. must fully and unconditionally guarantee payment of the obligations of
the assuming subsidiary under the debt securities and the indenture.
If such an assignment is made, unless the terms of the assigned debt
securities state otherwise, TXU Corp. will be released and discharged from all
its other obligations under the debt securities and the indenture. In that case,
any covenants made by TXU Corp. with respect to the debt securities would become
solely covenants of, and would relate only to, the subsidiary. Unless the terms
of the assigned debt securities state otherwise, there would be no limitation on
liens on the capital stock of TXU Corp.'s subsidiaries.
CONSOLIDATION, MERGER, AND SALE OF ASSETS
Under the terms of the indenture, TXU Corp. may not consolidate with
or merge into any other entity or convey, transfer or lease its properties and
assets substantially as an entirety to any entity, unless:
o The surviving or successor entity is organized and validly
existing under the laws of any domestic jurisdiction and it
expressly assumes TXU Corp.'s obligations on all debt securities
and under the indenture;
o Immediately after giving effect to the transaction, no event of
default under the indenture or no event which, after notice or
lapse of time or both, would become an event of default, shall
have occurred and be continuing; and
o TXU Corp. shall have delivered to the trustee an officer's
certificate and an opinion of counsel as provided in the
indenture.
The terms of the indenture do not restrict TXU Corp. in a merger in
which TXU Corp. is the surviving entity. (Indenture, Section 1101.)
EVENTS OF DEFAULT
"Event of default" when used in the indenture with respect to any
series of debt securities, means any of the following:
o Failure to pay interest on any debt security for 30 days after it
is due;
o Failure to pay the principal of or any premium on any debt
security when due;
o Failure to perform any other covenant in the indenture, other
than a covenant that does not relate to that series of debt
securities, that continues for 90 days after TXU Corp. receives
written notice from the trustee, or TXU Corp. and the trustee
receive a written notice from the holders of 33% in aggregate
principal amount of the debt securities of that series;
o Events of bankruptcy, insolvency or reorganization of TXU Corp.
specified in the indenture; or
o Any other event of default included in any supplemental indenture
or officer's certificate for a specific series of debt
securities.
(Indenture, Section 801.)
10
<PAGE>
An event of default for a particular series of debt securities does
not necessarily constitute an event of default for any other series of debt
securities issued under the indenture. The trustee may withhold notice to the
holders of debt securities of any default, except default in the payment of
principal or interest, if it considers the withholding of notice to be in the
interests of the holders.
REMEDIES
If an event of default under the indenture for any series of debt
securities occurs and continues, the trustee or the holders of at least 33% in
aggregate principal amount of all the debt securities of the series may declare
the entire principal amount of all the debt securities of that series, together
with accrued interest, to be due and payable immediately. However, if the event
of default is applicable to all outstanding debt securities under the indenture,
only the trustee or holders of at least 33% in aggregate principal amount of all
outstanding debt securities of all series, voting as one class, and not the
holders of any one series, may make that declaration of acceleration.
At any time after a declaration of acceleration with respect to the
debt securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained, the event of default under the
indenture giving rise to the declaration of acceleration will be considered
waived, and the declaration and its consequences will be considered rescinded
and annulled, if:
o TXU Corp. has paid or deposited with the trustee a sum sufficient
to pay:
(1) all overdue interest on all debt securities of the series;
(2) the principal of and premium, if any, on any debt securities
of the series which have otherwise become due and interest
that is currently due;
(3) interest on overdue interest; and
(4) all amounts due to the trustee under the indenture; and
o Any other event of default under the indenture with respect to
the debt securities of that series has been cured or waived as
provided in the indenture.
There is no automatic acceleration, even in the event of bankruptcy,
insolvency or reorganization of TXU Corp. (Indenture, Section 802.)
Other than its duties in case of an event of default under the
indenture, the trustee is not obligated to exercise any of its rights or powers
under the indenture at the request, order or direction of any of the holders,
unless the holders offer the trustee a reasonable indemnity. (Indenture, Section
903.) If they provide this reasonable indemnity, the holders of a majority in
principal amount of any series of debt securities will have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the trustee, or exercising any power conferred upon the trustee. However, if
the event of default under the indenture relates to more than one series, only
the holders of a majority in aggregate principal amount of all affected series
will have the right to give this direction. (Indenture, Section 812.) The
trustee is not obligated to comply with directions that conflict with law or
other provisions of the indenture.
No holder of debt securities of any series will have any right to
institute any proceeding under the indenture, or any remedy under the indenture,
unless:
o The holder has previously given to the trustee written notice of
a continuing event of default under the indenture;
o The holders of a majority in aggregate principal amount of the
outstanding debt securities of all series in respect of which an
event of default under the indenture shall have occurred and be
continuing have made a written request to the trustee, and have
offered reasonable indemnity to the trustee to institute
proceedings; and
o The trustee has failed to institute any proceeding for 60 days
after notice.
(Indenture, Section 807.)
11
<PAGE>
However, these limitations do not apply to a suit by a holder of a
debt security for payment of the principal, premium, if any, or interest on the
debt security on or after the applicable due date. (Indenture, Section 808.)
TXU Corp. will provide to the trustee an annual statement by an
appropriate officer as to TXU Corp.'s compliance with all conditions and
covenants under the indenture. (Indenture, Section 606.)
MODIFICATION AND WAIVER
Without the consent of any holder of debt securities issued under an
indenture, TXU Corp. and the trustee may enter into one or more supplemental
indentures for any of the following purposes:
o To evidence the assumption by any permitted successor of the
covenants of TXU Corp. in the indenture and in the debt
securities;
o To add additional covenants of TXU Corp. or to surrender any
right or power of TXU Corp. under the indenture;
o To add additional events of default under the indenture;
o To change or eliminate or add any provision to the indenture;
provided, however, if the change will adversely affect the
interests of the holders of debt securities of any series in any
material respect, the change, elimination or addition will become
effective only:
(1) when the consent of the holders of debt securities of such
series has been obtained in accordance with the indenture;
or
(2) when no debt securities of the affected series remain
outstanding under the indenture;
o To provide collateral security for all but not part of the debt
securities;
o To establish the form or terms of debt securities of any other
series as permitted by the indenture;
o To provide for the authentication and delivery of bearer
securities and coupons appertaining thereto;
o To evidence and provide for the acceptance of appointment of a
successor trustee;
o To provide for the procedures required for use of a
noncertificated system of registration for the debt securities of
all or any series;
o To change any place where principal, premium, if any, and
interest shall be payable, debt securities may be surrendered for
registration of transfer or exchange and notices to TXU Corp. may
be served; or
o To cure any ambiguity or inconsistency or to make any other
provisions with respect to matters and questions arising under
the indenture; provided that the action does not adversely affect
the interests of the holders of debt securities of any series in
any material respect.
(Indenture, Section 1201.)
The holders of at least a majority in aggregate principal amount of
the debt securities of all series then outstanding may waive compliance by TXU
Corp. with some restrictive provisions of the indenture. (Indenture, Section
607.) The holders of not less than a majority in principal amount of the
outstanding debt securities of any series may waive any past default under the
indenture with respect to that series, except a default in the payment of
principal, premium, if any, or interest and certain covenants and provisions of
the indenture that cannot be modified or be amended without the consent of the
holder of each outstanding debt security of the series affected. (Indenture,
Section 813.)
12
<PAGE>
If the Trust Indenture Act is amended after the date of the indenture
in such a way as to require changes to the indenture, the indenture will be
deemed to be amended so as to conform to that amendment to the Trust Indenture
Act. TXU Corp. and the trustee may, without the consent of any holders, enter
into one or more supplemental indentures to evidence the amendment. (Indenture,
Section 1201.)
The consent of the holders of a majority in aggregate principal amount
of the debt securities of all series then outstanding is required for all other
modifications to the indenture. However, if less than all of the series of debt
securities outstanding are directly affected by a proposed supplemental
indenture, then the consent only of the holders of a majority in aggregate
principal amount of all series that are directly affected will be required. No
such amendment or modification may:
o Change the stated maturity of the principal of, or any
installment of principal of or interest on, any debt security, or
reduce the principal amount of any debt security or its rate of
interest or change the method of calculating the interest rate or
reduce any premium payable upon redemption, or change the
currency in which payments are made, or impair the right to
institute suit for the enforcement of any payment on or after the
stated maturity of any debt security, without the consent of the
holder;
o Reduce the percentage in principal amount of the outstanding debt
securities of any series the consent of the holders of which is
required for any supplemental indenture or any waiver of
compliance with a provision of the indenture or any default
thereunder and its consequences, or reduce the requirements for
quorum or voting, without the consent of all the holders of the
series; or
o Modify some of the provisions of the indenture relating to
supplemental indentures, waivers of some covenants and waivers of
past defaults with respect to the debt securities of any series,
without the consent of the holder of each outstanding debt
security affected thereby.
(Indenture, Section 1202.)
A supplemental indenture which changes the indenture solely for the
benefit of one or more particular series of debt securities, or modifies the
rights of the holders of debt securities of one or more series, will not affect
the rights under the indenture of the holders of the debt securities of any
other series.
The indenture provides that debt securities owned by TXU Corp. or
anyone else required to make payment on the debt securities shall be disregarded
and considered not to be outstanding in determining whether the required holders
have given a request or consent. (Indenture, Section 101.)
TXU Corp. may fix in advance a record date to determine the required
number of holders entitled to give any request, demand, authorization,
direction, notice, consent, waiver or other such act of the holders, but TXU
Corp. shall have no obligation to do so. If TXU Corp. fixes a record date, that
request, demand, authorization, direction, notice, consent, waiver or other act
of the holders may be given before or after that record date, but only the
holders of record at the close of business on that record date will be
considered holders for the purposes of determining whether holders of the
required percentage of the outstanding debt securities have authorized or agreed
or consented to the request, demand, authorization, direction, notice, consent,
waiver or other act of the holders. For that purpose, the outstanding debt
securities shall be computed as of the record date. Any request, demand,
authorization, direction, notice, consent, election, waiver or other act of a
holder will bind every future holder of the same debt securities and the holder
of every debt security issued upon the registration of transfer of or in
exchange of these debt securities. A transferee will be bound by acts of the
trustee or TXU Corp. in reliance thereon, whether or not notation of that action
is made upon the debt security. (Indenture, Section 104.)
RESIGNATION OF A TRUSTEE
A trustee may resign at any time by giving written notice to TXU Corp.
or may be removed at any time by act of the holders of a majority in principal
amount of all series of debt securities then outstanding delivered to the
trustee and TXU Corp. No resignation or removal of a trustee and no appointment
of a successor trustee will be effective until the acceptance of appointment by
a successor trustee. So long as no event of default or event which, after notice
or lapse of time, or both, would become an event of default has occurred and is
continuing and except with respect to a trustee appointed by act of the holders,
if TXU Corp. has delivered to the trustee a resolution of its Board of Directors
appointing a successor trustee and such successor has accepted the appointment
13
<PAGE>
in accordance with the terms of the respective indenture, the trustee will be
deemed to have resigned and the successor will be deemed to have been appointed
as trustee in accordance with the indenture. (Indenture, Section 910.)
NOTICES
Notices to holders of debt securities will be given by mail to the
addresses of such holders as they may appear in the security register for debt
securities. (Indenture, Section 106.)
TITLE
TXU Corp., the trustee, and any agent of TXU Corp. or the trustee, may
treat the person in whose name debt securities are registered as the absolute
owner thereof, whether or not the debt securities may be overdue, for the
purpose of making payments and for all other purposes irrespective of notice to
the contrary. (Indenture, Section 308.)
GOVERNING LAW
The indenture and the debt securities will be governed by, and
construed in accordance with, the laws of the State of New York. (Indenture,
Section 112.)
INFORMATION ABOUT THE TRUSTEE
The trustee under the indenture will be The Bank of New York. In
addition to acting as trustee, The Bank of New York, as described in this
prospectus, also acts as property trustee under the trust agreement, the
guarantee trustee under the guarantee and the debenture trustee under the
subordinated indenture; The Bank of New York (Delaware) acts as the Delaware
trustee under the trust agreement. The Bank of New York also acts, and may act,
as trustee under various other indentures, trusts and guarantees of TXU Corp.
and its affiliates. TXU Corp. and other affiliates maintain deposit accounts and
credit and liquidity facilities and conduct other banking transactions with the
trustee in the ordinary course of their businesses.
DESCRIPTION OF TXU CAPITAL'S PREFERRED TRUST SECURITIES AND COMMON
TRUST SECURITIES
TXU Capital will issue preferred trust securities and common trust
securities under a trust agreement. The preferred trust securities will
represent preferred undivided beneficial interests in the assets of TXU Capital
and will entitle their holders to a preference over the common trust securities
with respect to distributions and amounts payable on redemption or liquidation.
Material terms of the trust agreement are summarized below. The form of trust
agreement was filed with the SEC and you should read the trust agreement for
provisions that may be important to you. The trust agreement will be qualified
as an indenture under the Trust Indenture Act. You should also refer to the
Trust Indenture Act for provisions that apply to the preferred trust securities.
Wherever particular defined terms of the trust agreement are referred to, those
defined terms are incorporated in this prospectus by reference.
The preferred trust securities and common trust securities issued by
TXU Capital will be substantially the same except that, if TXU Capital fails to
make required payments, the rights of TXU Corp. as the holder of the common
trust securities to payment of distributions and upon liquidation or redemption
will be subordinated to the rights of the holders of the preferred trust
securities. If there is a continuing event of default under the subordinated
indenture described below, holders of the preferred trust securities may vote to
appoint, remove or replace any of trustees of TXU Capital. All of the common
trust securities of TXU Capital will be owned by TXU Corp.
TXU Corp. will fully and unconditionally guarantee payments due on the
preferred trust securities through a combination of the following:
o TXU Corp.'s obligations under the junior subordinated debentures;
o The rights of holders of preferred trust securities to enforce
those obligations;
o TXU Corp.'s agreement to pay the expenses of TXU Capital; and
14
<PAGE>
o TXU Corp.'s guarantee of payments due on the preferred trust
securities to the extent of TXU Capital's assets.
No single one of the documents listed above standing alone or
operating in conjunction with fewer than all of the other documents
constitutes the guarantee by TXU Corp. It is only the combined operation of
these documents that has the effect of providing a full and unconditional
guarantee by TXU Corp. of the preferred trust securities.
TXU Capital will use the proceeds from the sale of the preferred trust
securities and common trust securities to purchase junior subordinated
debentures from TXU Corp. in an aggregate principal amount equal to the
aggregate liquidation preference amount of the preferred trust securities and
the common trust securities. The junior subordinated debentures will be issued
under one or more separate subordinated indentures between TXU Corp. and The
Bank of New York, as debenture trustee under each indenture. The property
trustee will hold the junior subordinated debentures in trust for the benefit of
the holders of the preferred trust securities and common trust securities.
(Trust Agreement, Section 2.09.)
A prospectus supplement relating to the preferred trust securities
will include specific terms of those securities and of the junior subordinated
debentures. For a description of some specific terms that will affect both the
preferred trust securities and the junior subordinated debentures and your
rights under each, see DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES below.
DISTRIBUTIONS
The only income of TXU Capital available for distribution to the
holders of preferred trust securities will be payments on the junior
subordinated debentures. If TXU Corp. does not make interest payments on the
junior subordinated debentures (or does not pay the expenses of TXU Capital),
TXU Capital will not have funds available to pay distributions on preferred
trust securities. The payment of distributions, if and to the extent TXU Capital
has sufficient funds available for the payment of such distributions, is
guaranteed on a limited basis by TXU Corp.
So long as there is no default in the payment of interest on the
junior subordinated debentures, TXU Corp. may extend the interest payment period
from time to time on the junior subordinated debentures for one or more periods.
As a consequence, distributions on preferred trust securities would be deferred
during any such period. Interest would, however, continue to accrue. If TXU
Corp. extends the interest period or is in default under the guarantee or with
respect to payments on the junior subordinated debentures, TXU Corp. may not:
o Declare or pay any dividend or distribution on its capital stock,
other than dividends paid in shares of Common Stock of TXU Corp.;
o Redeem, purchase, acquire or make a liquidation payment with
respect to any of its capital stock; or
o Make any guarantee payments with respect to any of the above.
Any extension period with respect to payment of interest on the junior
subordinated debentures, or any extended interest payment period in respect of
other securities issued under the subordinated indenture or on any similar
securities, will apply to all securities of the same type. Those extensions will
also apply to distributions on preferred trust securities and common trust
securities and all other securities with terms substantially the same as
preferred trust securities and common trust securities. Before an extension
period ends, TXU Corp. may further extend the interest payment period. No
extension period as further extended may exceed 20 consecutive quarters. After
any extension period and the payment of all amounts then due, TXU Corp. may
select a new extended interest payment period. No interest period may be
extended beyond the maturity of the junior subordinated debentures.
REDEMPTION OF PREFERRED TRUST SECURITIES AND COMMON TRUST SECURITIES
Whenever junior subordinated debentures are repaid, whether at
maturity or earlier redemption, the proceeds will be applied to redeem a like
amount of preferred trust securities and common trust securities. Holders of
preferred trust securities and common trust securities will be given not less
than 30 nor more than 60 days' notice of any redemption.
REDEMPTION PROCEDURES
Preferred trust securities will be redeemed at the redemption price
plus accrued and unpaid distributions with the proceeds from the contemporaneous
redemption of junior subordinated debentures. Redemptions of the preferred trust
securities shall be made on a redemption date only if TXU Capital has funds
available for the payment of the redemption price plus accrued and unpaid
distributions. (Trust Agreement, Section 4.02(c).)
15
<PAGE>
Notice of redemption of preferred trust securities will be
irrevocable. On or before the redemption date, TXU Capital will irrevocably
deposit with the paying agent for preferred trust securities sufficient funds
and will give the paying agent irrevocable instructions and authority to pay the
redemption price plus accrued and unpaid distributions to the holders upon
surrender of their preferred trust securities. Distributions payable on or
before a redemption date will be payable to the holders on the record date for
the distribution payment. If notice is given and funds are deposited as
required, then on the redemption date all rights of holders of the preferred
trust securities called for redemption will cease, except the right of the
holders to receive the redemption price plus accrued and unpaid distributions,
and the preferred trust securities will cease to be outstanding. No interest
will accrue on amounts payable on the redemption date. In the event that any
date fixed for redemption of preferred trust securities is not a business day,
then payment will be made on the next business day. No interest will be payable
because of any such delay. If payment of preferred trust securities called for
redemption is improperly withheld or refused and not paid either by TXU Capital
or by TXU Corp. pursuant to the guarantee, distributions on such preferred trust
securities will continue to accrue to the date of payment. That date will be
considered the date fixed for redemption for purposes of calculating the
redemption price plus accrued and unpaid distributions. (Trust Agreement,
Section 4.02(d).)
Subject to applicable law, including United States federal securities
law, TXU Corp. may purchase outstanding preferred trust securities by tender, in
the open market or by private agreement.
If preferred trust securities are partially redeemed on a redemption
date other than as a result of an event of default under the trust agreement, a
corresponding percentage of the common trust securities will be redeemed. The
particular preferred trust securities to be redeemed shall be selected not more
than 60 days before the redemption date by the property trustee by such method
as the property trustee shall deem fair, taking into account the denominations
in which they were issued. The property trustee shall promptly notify the
preferred trust security registrar in writing of the preferred trust securities
selected for redemption and, where applicable, the partial amount to be
redeemed. (Trust Agreement, Section 4.02(f).)
SUBORDINATION OF COMMON TRUST SECURITIES
Payment of distributions on, and the redemption price, plus accrued
and unpaid distributions, of, the preferred trust securities and common trust
securities shall be made proportionally based on the liquidation preference
amount. However, if on any distribution payment date or redemption date an event
of default under the trust agreement has occurred and is continuing, no payment
on any common trust security shall be made until all payments due on the
preferred trust securities have been made. In that case, funds available to the
property trustee will first be applied to the payment in full of all
distributions on, or the redemption price plus accrued and unpaid distributions,
of, preferred trust securities then due and payable. (Trust Agreement, Section
4.03(a).)
If an event of default under the trust agreement results from an event
of default under the subordinated indenture, the holders of common trust
securities cannot take action with respect to the trust agreement default until
the effect of all defaults with respect to preferred trust securities has been
cured, waived or otherwise eliminated. Until the event of default under the
trust agreement with respect to preferred trust securities has been cured,
waived or otherwise eliminated, the property trustee shall act solely on behalf
of the holders of preferred trust securities and not the holders of the common
trust securities. Only holders of preferred trust securities will have the right
to direct the property trustee to act on their behalf. (Trust Agreement, Section
4.03(b).)
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
TXU Capital will be dissolved and shall be liquidated by the property
trustee on the first to occur of:
o The expiration of the term of TXU Capital;
o The bankruptcy, dissolution or liquidation of TXU Corp.;
o Redemption of all of the preferred trust securities;
o The entry of an order for dissolution of TXU Capital by a court
of competent jurisdiction; and
o At any time, at the election of TXU Corp.
16
<PAGE>
(Trust Agreement, Sections 9.01 and 9.02.)
If an early dissolution occurs because of bankruptcy, dissolution or
liquidation of TXU Corp., if all the preferred trust securities are redeemed, or
if TXU Corp. so elects, TXU Capital will be liquidated by the property trustee
as expeditiously as the property trustee determines to be appropriate. The
property trustee will provide for the satisfaction of liabilities of creditors,
if any, and distribute to each holder of the preferred trust securities and
common trust securities a proportionate amount of junior subordinated
debentures. If a distribution of junior subordinated debentures is determined by
the property trustee not to be practical, holders of the preferred trust
securities will be entitled to receive, out of the assets of TXU Capital after
adequate provision for the satisfaction of liabilities of creditors, if any, an
amount equal to the aggregate liquidation preference of the preferred trust
securities plus accrued and unpaid distributions thereon to the date of payment.
If this liquidation distribution can be paid only in part because TXU Capital
has insufficient assets available to pay in full the aggregate liquidation
distribution, then the amounts payable directly by TXU Capital on the preferred
trust securities shall be paid to the holders proportionally based on the total
liquidation preference amount of the preferred trust securities they hold. TXU
Corp., as holder of the common trust securities, will be entitled to receive
distributions upon any dissolution proportionally with the holders of the
preferred trust securities, except that if an event of default has occurred and
is continuing under the subordinated indenture or if a default has occurred
under the subordinated indenture but has not become an event of default solely
because of the requirement that time lapse or notice be given, the preferred
trust securities shall have a preference over the common trust securities upon
dissolution of TXU Capital. (Trust Agreement, Section 9.04.)
EVENTS OF DEFAULT; NOTICE
Any one of the following events will be an event of default under the
trust agreement whether it will be voluntary or involuntary or be effected by
operation of law or in accordance with any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body:
o The occurrence of an event of default under the subordinated
indenture;
o Default by TXU Capital in the payment of any distribution when it
becomes due and payable, and continuation of that default for a
period of 30 days;
o Default by TXU Capital in the payment of any redemption price,
plus accrued and unpaid distributions, of any preferred trust
security or common trust security when it becomes due and
payable;
o Default in the performance, or breach, in any material respect,
of any covenant or warranty of the trustees in the trust
agreement which is not dealt with above, and the continuation of
that default or breach for a period of 60 days after notice to
TXU Capital by the holders of preferred trust securities having
at least 10% of the total liquidation preference amount of the
outstanding preferred trust securities; or
o The occurrence of specified events of bankruptcy or insolvency
with respect to TXU Capital.
(Trust Agreement, Section 1.01.)
Within ninety business days after the occurrence of any event of
default under the trust agreement, the property trustee will transmit to the
holders of preferred trust securities and common trust securities and TXU Corp.
notice of any default actually known to the property trustee, unless that
default has been cured or waived. (Trust Agreement, Section 8.02.)
A holder of preferred trust securities may directly institute a
proceeding to enforce payment when due directly to the holder of the preferred
trust securities of the principal of or interest on junior subordinated
debentures having a principal amount equal to the aggregate liquidation
preference amount of the holder's preferred trust securities. The holders of
preferred trust securities have no other rights to exercise directly any other
remedies available to the holder of the junior subordinated debentures unless
the trustees under the trust agreement fail to do so. (Trust Agreement, Section
6.01(a).)
17
<PAGE>
Unless an event of default under the subordinated indenture has
occurred and is continuing, the holder of the common trust securities may remove
the property trustee at any time. If an event of default under the subordinated
indenture has occurred and is continuing, the holders of a majority of the total
liquidation preference amount of the outstanding preferred trust securities may
remove the property trustee. Any resignation or removal of the property trustee
will take effect only on the acceptance of appointment by the successor property
trustee. (Trust Agreement, Section 8.10.)
MERGER OR CONSOLIDATION OF THE PROPERTY TRUSTEE OR THE DELAWARE TRUSTEE
If the property trustee or the Delaware trustee merge, consolidate
with another entity, or if any entity succeeds to all or substantially all the
corporate trust business of the property trustee or the Delaware trustee, the
successor or surviving company shall be the successor to the property trustee or
the Delaware trustee under the trust agreement, so long as it is otherwise
qualified and eligible. (Trust Agreement, Section 8.12.)
VOTING RIGHTS
Except with respect to amendments to the trust agreement and
amendments and assignment of the guarantee, the holders of preferred trust
securities will have no voting rights not otherwise required by law or the trust
agreement. (Trust Agreement, Section 6.01(a).)
While junior subordinated debentures are held by the property trustee,
the property trustee will not:
o Direct the time, method and place to conduct any proceeding for
any remedy available to the debenture trustee, or to execute any
trust or power conferred on the debenture trustee with respect to
the junior subordinated debentures;
o Waive any past default under the subordinated indenture;
o Exercise any right to rescind or annul a declaration that the
principal of all the junior subordinated debentures will be due
and payable; or
o Consent to any amendment, modification or termination of the
subordinated indenture or the junior subordinated debentures,
where that consent will be required;
without, in each case, obtaining the prior approval of the holders of preferred
trust securities having at least 66 2/3% of the liquidation preference amount of
the outstanding preferred trust securities. Where a consent of each holder of
junior subordinated debentures affected is required, no consent will be given by
the property trustee without the prior consent of each holder of the preferred
trust securities. The property trustee shall not revoke any action previously
authorized or approved by a vote of the holders of preferred trust securities.
If the property trustee fails to enforce its rights under the junior
subordinated debentures or the trust agreement, to the fullest extent permitted
by law, a holder of the preferred trust securities may institute a legal
proceeding directly against TXU Corp. to enforce the property trustee's rights
under the junior subordinated debentures or the trust agreement without first
instituting any legal proceeding against the property trustee or any one else.
The property trustee shall notify all holders of preferred trust securities of
any notice of default received from the debenture trustee. The property trustee
will not take any action approved by the consent of the holders of the preferred
trust securities without an opinion of counsel experienced in those matters to
the effect that TXU Capital will not be classified as an association taxable as
a corporation for United States federal income tax purposes on account of that
action. (Trust Agreement, Sections 6.01(a) and 6.01(b).)
Holders of preferred trust securities may give any required approval
at a meeting convened for that purpose or by written consent without prior
notice. (Trust Agreement, Section 6.06.) The administrative trustees will give
notice of any meeting at which holders of preferred trust securities are
entitled to vote.
No vote or consent of the holders of preferred trust securities will
be required for TXU Capital to redeem and cancel preferred trust securities in
accordance with the trust agreement.
Although holders of preferred trust securities are entitled to vote or
consent under any of the circumstances described above, any of the preferred
trust securities that are owned by TXU Corp., any trustee under the trust
18
<PAGE>
agreement or any affiliate of TXU Corp., shall be treated as if they were not
outstanding for purposes of that vote or consent. (Trust Agreement, Section
1.01.)
Holders of preferred trust securities will have no rights to appoint
or remove the administrative trustees of TXU Capital, who may be appointed,
removed or replaced solely by TXU Corp. as the holder of the common trust
securities. (Trust Agreement, Section 8.10.)
AMENDMENTS
The trust agreement may be amended from time to time by TXU Capital
and TXU Corp., without the consent of any holders of preferred trust securities
and common trust securities:
o To cure any ambiguity, correct or supplement inconsistent
provisions, make any other provisions with respect to matters or
questions arising under the trust agreement that do not conflict
with the other provisions of the trust agreement or any
amendments of the trust agreement; or to change the name of the
trust; or
o To modify, eliminate or add to any provisions of the trust
agreement to the extent necessary to ensure that TXU Capital will
not be classified for United States federal income tax purposes
as an association taxable as a corporation at any time that any
preferred trust securities and common trust securities are
outstanding or to ensure TXU Capital's exemption from the status
of an "investment company" under the Investment Company Act of
1940.
No amendment described above may materially adversely affect the interests of
any holder of preferred trust securities and common trust securities. The
amendments of the trust agreement which cure ambiguity, correct inconsistencies
or supplement existing provisions will become effective when notice of the
amendment is given to the holders of preferred trust securities and common trust
securities.
Except as provided below, any provision of the trust agreement may be
amended by the trustees and TXU Corp. with:
o The consent of holders of preferred trust securities and common
trust securities representing not less than a majority in
aggregate liquidation preference amount of the preferred trust
securities and common trust securities then outstanding; and
o Receipt by the trustees of an opinion of counsel to the effect
that such amendment or the exercise of any power granted to the
trustees in accordance with the amendment will not cause TXU
Capital to be classified for federal income tax purposes as an
association taxable as a corporation or affect TXU Capital's
exemption from status of an "investment company" under the
Investment Company Act.
Each holder of preferred trust securities or common trust securities
must consent to any amendment to the trust agreement that:
o Changes the amount or timing of any distribution with respect to
preferred trust securities or common trust securities or
otherwise adversely affects the amount of any distribution
required to be made in respect of preferred trust securities and
common trust securities as of a specified date; or
o Restricts the right of a holder of preferred trust securities or
common trust securities to institute suit for the enforcement of
any such payment on or after that date.
(Trust Agreement, Section 10.03.)
CO-TRUSTEES AND SEPARATE TRUSTEE
If no event of default under the trust agreement has occurred and is
continuing, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the trust property of
TXU Capital may at the time be located, TXU Corp., as depositor, and the
property trustee may appoint one or more persons approved by the property
trustee either to act as co-trustee, jointly with the property trustee, of all
19
<PAGE>
or any part of the trust property, or to act as separate trustee of any trust
property. Upon the written request of the property trustee, TXU Corp., as
depositor, will for that purpose join with the property trustee in the
execution, delivery and performance of all instruments necessary or proper to
make that appointment. The appointment will vest in that person or persons in
that capacity, any property, title, right or power deemed necessary or
desirable, subject to the provisions of the trust agreement. If TXU Corp., as
depositor, does not join in that appointment within 15 days after the receipt by
it of a request so to do, or in case an event of default under the subordinated
indenture has occurred and is continuing, the property trustee alone shall have
power to make that appointment. (Trust Agreement, Section 8.09.)
FORM, EXCHANGE, AND TRANSFER
Preferred trust securities of any TXU Capital trust may be exchanged
for other preferred trust securities of that trust in any authorized
denomination and with the same terms and total liquidation preference.
Subject to the terms of the trust agreement, preferred trust
securities may be presented for exchange as provided above or for registration
of transfer, duly endorsed or accompanied by a duly executed instrument of
transfer, at the office of the preferred trust security registrar or at the
office of any transfer agent designated by TXU Corp. for such purpose. TXU Corp.
may designate itself the preferred trust security registrar. No service charge
will be made for any registration of transfer or exchange of preferred trust
securities, but TXU Corp. may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection with the transfer. In
that case, the holder requesting transfer must pay the tax or charges and give
any indemnity that TXU Capital or TXU Corp. may require. (Trust Agreement,
Section 5.04.) A transfer or exchange will be made when the transfer agent is
satisfied with the documents of title and identity of the person making the
request. TXU Corp. may at any time designate additional transfer agents or
rescind the designation of any transfer agent or approve a change in the office
through which any transfer agent acts, except that TXU Corp. will be required to
maintain a transfer agent in each place of payment for preferred trust
securities.
TXU Capital will not be required to (1) issue, register the transfer
of, or exchange any preferred trust securities during the period beginning 15
calendar days before the mailing of a notice of redemption of any preferred
trust securities called for redemption and ending at the close of business on
the day the notice is mailed or (2) register the transfer of or exchange any
preferred trust securities so selected for redemption, in whole or in part,
except the unredeemed portion of any preferred trust securities being redeemed
in part.
REGISTRAR AND TRANSFER AGENT
TXU Business Services Company will act as registrar and transfer agent
for the preferred trust securities.
Registration of transfers of the preferred trust securities will be
made without charge by TXU Capital, unless tax or other governmental charges are
imposed. In that case, the holder requesting transfer must pay the tax or
charges and give such indemnity as TXU Capital or TXU Corp. may require.
INFORMATION ABOUT THE PROPERTY TRUSTEE AND THE DELAWARE TRUSTEE
The property trustee and the Delaware trustee under the trust
agreement will be The Bank of New York and The Bank of New York (Delaware),
respectively. In addition to acting as property trustee, The Bank of New York,
as described in this prospectus, also acts as trustee under the indenture, the
guarantee trustee under the guaranty and the debenture trustee under the
subordinated indenture. The Bank of New York also acts, and may act, as trustee
under various other indentures, trusts and guarantees of TXU Corp. and other
affiliates. TXU Corp. and other affiliates maintain deposit accounts and credit
and liquidity facilities and conduct other banking transactions with the
property trustee in the ordinary course of their businesses.
DUTIES OF THE TRUSTEES
The Delaware trustee will act as the resident trustee in the State of
Delaware and will have no other significant duties. (Trust Agreement, Section
2.06.) The property trustee will hold the junior subordinated debentures on
behalf of TXU Capital and will maintain a payment account with respect to the
preferred trust securities and common trust securities, and will also act as
trustee under the trust agreement for the purposes of the Trust Indenture Act.
20
<PAGE>
The administrative trustees of TXU Capital are authorized and directed
to conduct the affairs of TXU Capital and to operate TXU Capital so that TXU
Capital will not be deemed to be an "investment company" required to be
registered under the Investment Company Act or taxed as a corporation for United
States federal income tax purposes and so that the junior subordinated
debentures will be treated as indebtedness of TXU Corp. for United States
federal income tax purposes. In this regard, the administrative trustees are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust or the trust agreement, that the administrative trustees
determine in their discretion to be necessary or desirable for those purposes,
as long as the action does not materially adversely affect the interests of the
holders of the preferred trust securities. (Trust Agreement, Section 2.07(d).)
GOVERNING LAW
The trust agreement and the preferred trust securities will be
governed by, and construed in accordance with, the laws of the State of
Delaware. (Trust Agreement, Section 10.05.)
MISCELLANEOUS
Holders of the preferred trust securities have no preemptive or
similar rights.
DESCRIPTION OF THE GUARANTEE
Material terms of the guarantee that TXU Corp. will execute and
deliver for the benefit of the holders of the preferred trust securities are
summarized below. The form of guarantee was filed with the SEC, and you should
read the guarantee for provisions that may be important to you. The guarantee
will be qualified as an indenture under the Trust Indenture Act. You should
refer to the Trust Indenture Act for provisions that apply to the guarantee.
Whenever particular provisions or defined terms of the guarantee are referred to
in this prospectus, those defined terms are incorporated herein by reference.
The Bank of New York will act as guarantee trustee under the
guarantee. The guarantee trustee will hold the guarantee for the benefit of the
holders of the preferred trust securities.
GENERAL TERMS OF THE GUARANTEE
TXU Corp. will irrevocably and unconditionally agree to make the
guarantee payments listed below in full to the holders of the preferred trust
securities if they are not made by TXU Capital, as and when due, regardless of
any defense, right of set-off or counterclaim that TXU Corp. may have or assert.
The following payments will be subject to the guarantee (without duplication):
o Any accrued and unpaid distributions required to be paid on
preferred trust securities, to the extent TXU Capital has funds
available therefor;
o The redemption price, plus all accrued and unpaid distributions,
for any preferred trust securities called for redemption by TXU
Capital, to the extent TXU Capital has sufficient funds for
payments; and
o Upon a voluntary or involuntary dissolution, winding-up or
termination of TXU Capital except in connection with the
distribution of junior subordinated debentures to the holders in
exchange for preferred trust securities as provided in the trust
agreement or upon a redemption of all of the preferred trust
securities upon maturity or redemption of the junior subordinated
debentures as provided in the trust agreement, the lesser of:
(1) the aggregate of the liquidation preference and all accrued
and unpaid distributions on preferred trust securities to
the date of payment, to the extent that TXU Capital has
funds available therefor; and
(2) the amount of assets of TXU Capital remaining available for
distribution to holders of preferred trust securities in
liquidation of TXU Capital. (Guarantee Agreement, Section
5.01.)
21
<PAGE>
TXU Corp.'s obligation to make a guarantee payment may be satisfied by direct
payment of the required amounts by TXU Corp. to the holders of preferred trust
securities or by causing TXU Capital to pay those amounts to those holders.
(Guarantee Agreement, Section 5.01.)
The guarantee will be a guarantee with respect to the preferred trust
securities, but will not apply to any payment of distributions if and to the
extent that TXU Capital does not have funds available to make those payments or
to any collection of payment.
If TXU Corp. does not make interest payments on the junior
subordinated debentures held by TXU Capital, TXU Capital will not have funds
available to pay distributions on the preferred trust securities. The guarantee
will rank subordinate and junior in right of payment to all liabilities of TXU
Corp. except liabilities that are equal in right of payment by their terms.
(Guarantee Agreement, Section 6.01.)
TXU Corp. will enter into an Agreement as to Expenses and Liabilities
with TXU Capital, to provide funds to TXU Capital as needed to pay obligations
of TXU Capital to parties other than holders of preferred trust securities.
The junior subordinated debentures and the guarantee, together with the
obligations of TXU Corp. with respect to the preferred trust securities under
the subordinated indenture, the trust agreement, the guarantee and the agreement
as to expenses and liabilities, constitute a full and unconditional guarantee
of the preferred trust securities by TXU Corp. No single document standing alone
or operating in conjunction with fewer than all of the other documents
constitutes that guarantee. It is only the combined operation of these documents
that has the effect of providing a full and unconditional guarantee by TXU
Corp. of the preferred trust securities.
AMENDMENTS AND ASSIGNMENT
No vote is required for changes to the guarantee that do not
materially adversely affect the rights of holders of preferred trust securities.
Other terms of the guarantee may be changed only with the prior approval of the
holders of the preferred trust securities having at least 66 2/3% of the total
liquidation preference amount of the outstanding preferred trust securities.
(Guarantee Agreement, Section 8.02.) All guarantees and agreements contained in
the guarantee will bind the successors, assigns, receivers, trustees and
representatives of TXU Corp. and will inure to the benefit of the holders of the
preferred trust securities then outstanding. (Guarantee Agreement, Section
8.01.)
EVENTS OF DEFAULT
An event of default under the guarantee will occur if TXU Corp. fails
to perform any of its payment obligations under the guarantee. The holders of
the preferred trust securities having a majority of the liquidation preference
of the preferred trust securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the guarantee
trustee under the guarantee or to direct the exercise of any trust or power
conferred upon the guarantee trustee under the guarantee. (Guarantee Agreement,
Section 5.04.)
If the guarantee trustee fails to enforce the guarantee, any holder of
the preferred trust securities may enforce the guarantee, or institute a legal
proceeding directly against TXU Corp. to enforce the guarantee trustee's rights
under the guarantee without first instituting a legal proceeding against TXU
Capital, the guarantee trustee or anyone else. (Guarantee Agreement, Section
5.04.)
TXU Corp. will be required to provide an annual statement to the
guarantee trustee about TXU Corp.'s performance of some of its obligations under
the guarantee and any default in its performance of the obligations.
TXU Corp. will also be required to file annually with the guarantee
trustee an officer's certificate as to TXU Corp.'s compliance with all
conditions under the guarantee. (Guarantee Agreement, Section 2.04.)
INFORMATION ABOUT THE GUARANTEE TRUSTEE
The guarantee trustee will undertake to perform only those duties
specifically set forth in the guarantee until a default occurs. After a default
under the guarantee, the guarantee trustee must exercise the same degree of care
in its duties as a prudent individual would exercise in the conduct of his or
her own affairs. (Guarantee Agreement, Section 3.01(b).) Otherwise, the
guarantee trustee is under no obligation to exercise any of the powers vested in
it by the guarantee at the request of any holder of the preferred trust
22
<PAGE>
securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that it might incur. (Guarantee Agreement, Section 3.01(c).)
The guarantee trustee under the guarantee will be The Bank of New
York. In addition to acting as guarantee trustee, The Bank of New York, as
described in this prospectus, also acts as trustee under the indenture, property
trustee under the trust agreement, the debenture trustee under the subordinated
indenture; The Bank of New York (Delaware) acts as the Delaware trustee under
the trust agreement. The Bank of New York also acts, and may act, as trustee
under various other indentures, trusts and guarantees of TXU Corp. and its
affiliates. TXU Corp. and other affiliates maintain deposit accounts and credit
and liquidity facilities and conduct other banking transactions with the
guarantee trustee in the ordinary course of their businesses.
TERMINATION OF THE GUARANTEE
The guarantee will terminate and be of no further force and effect
upon:
o Full payment of the redemption price, plus accrued and unpaid
distributions, for all the preferred trust securities;
o The distribution of junior subordinated debentures to holders of
the preferred trust securities in exchange for all of the
preferred trust securities; or
o Full payment of the amounts payable upon liquidation of TXU
Capital.
The guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any holder of preferred trust securities must
restore payment of any sums paid under the preferred trust securities or the
guarantee. (Guarantee Agreement, Section 7.01.)
STATUS OF THE GUARANTEE
The guarantee will be an unsecured obligation of TXU Corp. and will
rank:
o Subordinate and junior in right of payment to all liabilities of
TXU Corp., except any liabilities that are equal in right of
payment by their terms;
o Equal in right of payment with the most senior preferred or
preference stock that may be issued by TXU Corp. and with any
guarantee that may be entered into by TXU Corp. in respect of any
preferred or preference stock of any affiliate of TXU Corp.; and
o Senior to TXU Corp.'s common stock.
(Guarantee Agreement, Section 6.01.)
The trust agreement provides that by accepting preferred trust
securities, a holder agrees to the subordination provisions and other terms of
the guarantee.
The guarantee will be a guarantee of payment and not of collection,
that is, the guaranteed party may institute a legal proceeding directly against
TXU Corp. to enforce its rights under the guarantee without first instituting a
legal proceeding against anyone else.
Because TXU Corp. is a holding company that conducts all of its
operations through subsidiaries, obligations under the guarantee, as obligations
of a holding company, will generally have a position junior to claims of
creditors and preferred stockholders of the subsidiaries of TXU Corp.
GOVERNING LAW
The guarantee will be governed by and construed in accordance with the
laws of the State of New York. (Guarantee Agreement, Section 8.06.)
23
<PAGE>
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
The junior subordinated debentures which the property trustee will
hold on behalf of TXU Capital as trust assets will be subordinated obligations
of TXU Corp. The junior subordinated debentures will be issued under one or more
separate subordinated indentures between TXU Corp. and The Bank of New York, as
debenture trustee with respect to the junior subordinated debentures.
Material terms of the junior subordinated debentures are summarized
below. The form of the subordinated indenture has been filed with the SEC, and
you should read the subordinated indenture for provisions that may be important
to you. The subordinated indenture will be qualified under the Trust Indenture
Act. You should refer to the Trust Indenture Act for provisions that apply to
the junior subordinated debentures. Whenever particular provisions or defined
terms in a subordinated indenture are referred to in this prospectus, those
provisions or defined terms are incorporated by reference in this prospectus.
The subordinated indenture provides for the issuance of junior
subordinated debentures, and other subordinated debt in an unlimited amount
from time to time. The junior subordinated debentures issued to TXU Capital
will constitute a separate series of junior subordinated debentures under the
subordinated indenture.
The junior subordinated debentures, as debt of a holding company, will
generally have a position junior to claims of creditors and preferred
shareholders of the subsidiaries of TXU Corp.
A prospectus supplement and an officer's certificate relating to the
junior subordinated debentures being offered will include specific terms
relating to that offering. These terms will include some or all of the
following:
o The title of the junior subordinated debentures;
o Any limit upon the total principal amount of the junior
subordinated debentures;
o The dates on which the principal of the junior subordinated
debentures will be payable and how it will be paid;
o The interest rate or rates which the junior subordinated
debentures will bear, or how the rate or rates will be
determined, the interest payment dates for the junior
subordinated debentures and the regular record dates for interest
payments;
o Any right to extend the interest payment periods for the junior
subordinated debentures;
o The percentage, if less than 100%, of the principal amount of the
junior subordinated debentures, which will be payable if the
maturity of the junior subordinated debentures is accelerated;
o Any date or dates on which the junior subordinated debentures may
be redeemed at the option of TXU Corp. and any restrictions on
those redemptions;
o Any sinking fund or other provisions that would obligate TXU
Corp. to repurchase or otherwise redeem the junior subordinated
debentures;
o Any changes or additions to the Events of Default under the
subordinated indenture or changes or additions to the covenants
of TXU Corp. under the subordinated indenture;
o If the junior subordinated debentures will be issued in
denominations other than $25 or a multiple thereof;
o If payments on the junior subordinated debentures may be made in
a currency or currencies other than United States dollars;
o Any rights or duties of another person to assume the obligations
of TXU Corp. with respect to the junior subordinated debentures;
24
<PAGE>
o Any collateral, security, assurance or guarantee for the junior
subordinated debentures; and
o Any other terms of the junior subordinated debentures not
inconsistent with the terms of the subordinated indenture.
(Subordinated Indenture, Section 301.)
The junior subordinated debentures of each series will be limited in
total principal amount to the sum of the aggregate liquidation preference amount
of the preferred trust securities and the consideration paid by TXU Corp. for
the common trust securities for the related TXU Capital trust. The junior
subordinated debentures are unsecured, subordinated obligations of TXU Corp.
which rank junior to all of TXU Corp.'s Senior Indebtedness. (Subordinated
Indenture Section 1501.) Senior Indebtedness is defined in the subordinated
indenture to include all notes and other obligations, including guarantees of
TXU Corp. for borrowed money that is not subordinate or junior in right of
payment to any other indebtedness of TXU Corp. unless by its terms it is equal
in right of payment to the junior subordinated debentures. The obligations of
TXU Corp. under the guarantee and the junior subordinated debentures will not be
deemed to be Senior Indebtedness. (Subordinated Indenture, Section 101.) The
amounts payable as principal and interest on the junior subordinated debentures
will be sufficient to provide for payment of distributions payable on preferred
trust securities and common trust securities.
If junior subordinated debentures are distributed to holders of
preferred trust securities in a dissolution of TXU Capital, the junior
subordinated debentures will be issued in fully registered certificated form in
the denominations and integral multiples of the denominations in which the
preferred trust securities have been issued, and they may be transferred or
exchanged at the offices of the debenture trustee. (Subordinated Indenture
Section 201.)
Payments of principal and interest on junior subordinated debentures
will be payable, at the corporate trust office of the debenture trustee in The
City of New York. However, TXU Corp. may choose to make payment of interest by
check mailed to the address of the persons entitled to it and may require that
the payment in full of principal with respect to any junior subordinated
debenture be made only upon surrender of the junior subordinated debenture to
the debenture trustee. The transfer of junior subordinated debentures will be
registrable, and junior subordinated debentures will be exchangeable for junior
subordinated debentures of other denominations of the same aggregate principal
amount at the offices of TXU Business Services Company in Dallas, Texas.
OPTIONAL REDEMPTION
For so long as TXU Capital is the holder of all the related
outstanding junior subordinated debentures, the proceeds of any optional
redemption will be used by TXU Capital to redeem preferred trust securities and
common trust securities in accordance with their terms.
The debenture trustee will give notice to the holders of any optional
redemption of junior subordinated debentures, not less than 30 nor more than 60
days prior to that redemption. All notices of redemption will state the
redemption date and the redemption price plus accrued and unpaid interest. If
less than all the junior subordinated debentures are to be redeemed, the notice
will identify those to be redeemed and the portion of the principal amount of
any junior subordinated debentures to be redeemed in part. The notice will state
that on the redemption date, subject to the debenture trustee's receipt of the
redemption monies, the redemption price plus accrued and unpaid interest will
become due and payable on each junior subordinated debenture to be redeemed and
that interest thereon will cease to accrue on and after that date. It will name
the place or places where the junior subordinated debentures are to be
surrendered for payment of the redemption price plus accrued and unpaid
interest. (Subordinated Indenture, Section 4.04.)
INTEREST
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months and for any period shorter than
a full month, on the basis of the actual number of days elapsed. In the event
that any date on which interest is payable on the junior subordinated debentures
is not a business day, then payment will be made on the next business day. No
interest will be paid in respect of any such delay. However, if the delayed
payment date is in the next calendar year, the payment will be made on the last
25
<PAGE>
business day of the earlier year. These payments will have the same force and
effect as if made on the date the payment was originally payable. (Subordinated
Indenture, Section 113.)
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as there is no default in the payment of interest on the
junior subordinated debentures, TXU Corp. may extend the interest payment period
from time to time on the junior subordinated debentures for one or more periods.
As a consequence, distributions on preferred trust securities would be deferred
during any extension period. Interest would, however, continue to accrue. If TXU
Corp. extends the interest period or is in default under the guarantee or with
respect to payments on the junior subordinated debentures, TXU Corp. may not:
o Declare or pay any dividend or distribution on its capital stock,
other than dividends paid in shares of common stock of TXU Corp.;
o Redeem, purchase, acquire or make a liquidation payment with
respect to any of its capital stock;
o Redeem any indebtedness that is equal in right of payment with
the junior subordinated debentures; or
o Make any guarantee payments with respect to any of the above.
(Subordinated Indenture, Section 608.)
Any extension period with respect to payment of interest on the junior
subordinated debentures, or any extended interest payment period in respect of
other securities issued under the subordinated indenture or on any similar
securities, will apply to all securities of the same type. Those extensions will
also apply to distributions on preferred trust securities and common trust
securities and all other securities with terms substantially the same as
preferred trust securities and common trust securities. Before an extension
period ends, TXU Corp. may further extend the interest payment period. No
extension period as further extended may exceed 20 consecutive quarters. After
any extension period and the payment of all amounts then due, TXU Corp. may
select a new extension period. No interest period may be extended beyond the
maturity of the junior subordinated debentures. TXU Corp. will give TXU Capital
and the debenture trustee notice of its election of an extension period prior to
the earlier of (1) one business day before the record date for the distribution
which would occur if TXU Corp. did not make the election to extend or (2) the
date TXU Corp. is required to give notice to the New York Stock Exchange or any
other applicable self-regulatory organization of the record date. TXU Corp. will
cause TXU Capital to send notice of that election to the holders of preferred
trust securities.
ADDITIONAL INTEREST
So long as any preferred trust securities remain outstanding, if TXU
Capital is required to pay any taxes, duties, assessments or governmental
charges imposed by the United States or any other taxing authority on income
derived from the interest payments on the junior subordinated debentures, then
TXU Corp. will pay as interest on the junior subordinated debentures any
additional interest that may be necessary in order that the net amounts retained
by TXU Capital after the payment of those taxes, duties, assessments or
governmental charges will be the same as TXU Capital would have had in the
absence of the payment of those taxes, duties, assessments or governmental
charges. (Subordinated Indenture, Section 312.)
ASSIGNMENT OF OBLIGATIONS
TXU Corp. may assign its obligations under the junior subordinated
debentures and the subordinated indenture to a wholly-owned subsidiary, provided
that no event of default under the subordinated indenture, or event which with
the passage of time or the giving of required notice, or both, would become an
event of default under the subordinated indenture, has occurred and is
continuing. The subsidiary must assume in writing TXU Corp.'s payment
obligations under the junior subordinated debentures and under the subordinated
indenture. TXU Corp. must fully and unconditionally guarantee payment of the
obligations of the assuming subsidiary under the junior subordinated debentures
and the subordinated indenture.
If such an assignment is made, TXU Corp. will be released and
discharged from all its other obligations under the junior subordinated
debentures and the subordinated indenture. Any covenants made by TXU Corp. with
26
<PAGE>
respect to the junior subordinated debentures would become solely covenants of,
and would relate only to, the subsidiary.
DEFEASANCE
TXU Corp. will be discharged from its obligations on the junior
subordinated debentures of a particular series if it deposits with the debenture
trustee sufficient cash or government securities to pay the principal, interest,
any premium and any other sums when due on the stated maturity date or a
redemption date of that series of the junior subordinated debentures.
(Subordinated Indenture, Section 701.)
SUBORDINATION
The junior subordinated debentures will be subordinate and junior in
right of payment to all Senior Indebtedness of TXU Corp. (Subordinated
Indenture, Section 1501.) No payment of the principal of the junior subordinated
debentures (including redemption and sinking fund payments), or interest on the
junior subordinated debentures may be made until all holders of Senior
Indebtedness have been paid, if any of the following occurs:
o Specified events of bankruptcy, insolvency or reorganization of
TXU Corp.;
o Any Senior Indebtedness is not paid when due and that default
continues without waiver;
o Any other default has occurred and continues without waiver
pursuant to which the holders of Senior Indebtedness have
accelerated the maturity of the indebtedness; or
o The maturity of any other series of junior subordinated
debentures under the subordinated indenture has been accelerated,
because of an event of default under the subordinated indenture
which remains uncured.
(Subordinated Indenture, Section 1501.)
Upon any distribution of assets of TXU Corp. to creditors in
connection with any insolvency, bankruptcy or similar proceeding, all principal
of, and premium, if any, and interest due or to become due on all Senior
Indebtedness must be paid in full before the holders of the junior subordinated
debentures are entitled to receive or retain any payment. (Subordinated
Indenture, Section 1504.)
The subordinated indenture does not limit the aggregate amount of
Senior Indebtedness that may be issued. As of June 30, 2000 TXU Corp. had
approximately $2.623 billion principal amount of indebtedness for borrowed money
constituting Senior Indebtedness.
CONSOLIDATION, MERGER, AND SALE OF ASSETS
Under the terms of the subordinated indenture, TXU Corp. may not
consolidate with or merge into any other entity or convey, transfer or lease its
properties and assets substantially as an entirety to any entity, unless:
o The surviving or successor entity is organized and validly
existing under the laws of any domestic jurisdiction and it
expressly assumes TXU Corp.'s obligations on all junior
subordinated debentures issued under the subordinated indenture;
o Immediately after giving effect to the transaction, no event of
default under the subordinated indenture or no event which, after
notice or lapse of time or both, would become an event of
default, shall have occurred and be continuing; and
o TXU Corp. shall have delivered to the debenture trustee an
officer's certificate and an opinion of counsel as provided in
the subordinated indenture.
(Subordinated Indenture, Section 1101.)
27
<PAGE>
EVENTS OF DEFAULT
"Event of default" when used in the subordinated indenture or junior
subordinated debentures, will mean any of the following:
(1) Failure to pay interest on any junior subordinated debenture for
30 days after it is due;
(2) Failure to pay the principal of or any premium on any junior
subordinated debenture when due;
(3) Failure to perform any other covenant in the subordinated
indenture, other than a covenant that does not relate to that
series of junior subordinated debentures, that continues for 90
days after TXU Corp. receives written notice from the debenture
trustee or TXU Corp. and the debenture trustee receives a written
notice from 33% of the holders of the junior subordinated
debentures of that series;
(4) Specified events of bankruptcy, insolvency or reorganization of
TXU Corp.; or
(5) Any other event of default included in any supplemental indenture
or officer's certificate for that series of junior subordinated
debentures.
(Subordinated Indenture, Section 801.)
An event of default under the subordinated indenture for a particular
series of junior subordinated debentures does not necessarily constitute an
event of default for any other series of junior subordinated debentures issued
under the subordinated indenture. The debenture trustee may withhold notice to
the holders of junior subordinated debentures of any default except a default in
the payment of principal or interest if it considers such withholding of notice
to be in the best interests of the holders.
REMEDIES
If an event of default under the subordinated indenture for any series
of junior subordinated debentures occurs and continues, the debenture trustee
or the holders of at least 33% in aggregate principal amount of the junior
subordinated debentures of the series may declare the entire principal amount
of all the junior subordinated debentures of that series, together with accrued
interest thereon, to be due and payable immediately. However, if the event of
default is applicable to all outstanding junior subordinated debentures under
the subordinated indenture, only the debenture trustee or holders of
at least 33% in aggregate principal amount of all outstanding junior
subordinated debentures of all series, voting as one class, and not the
holders of any one series, may make that declaration of acceleration.
(Subordinated Indenture, Section 802.)
At any time after a declaration of acceleration with respect to the
junior subordinated debentures of any series has been made and before a judgment
or decree for payment of the money due has been obtained, the event of default
under the subordinated indenture giving rise to the declaration of acceleration
will be considered waived, and the declaration and its consequences will be
considered rescinded and annulled, if:
o TXU Corp. has paid or deposited with the debenture trustee a sum
sufficient to pay:
(1) all overdue interest on all junior subordinated debentures
of the series;
(2) the principal of and premium, if any, on any junior
subordinated debentures of the series which have
otherwise become due and interest that is currently due;
(3) interest on overdue interest; and
(4) all amounts due to the debenture trustee under the
subordinated indenture; and
o Any other event of default with respect to the junior
subordinated debentures of that series has been cured or
waived as provided in the subordinated indenture.
(Subordinated Indenture, Section 802.)
28
<PAGE>
There is no automatic acceleration, even in the event of bankruptcy,
insolvency or reorganization of TXU Corp.
Other than its duties in case of an event of default under the
subordinated indenture, the debenture trustee is not obligated to exercise any
of its rights or powers under the subordinated indenture at the request, order
or direction of any of the holders, unless the holders offer the debenture
trustee a reasonable indemnity. If they provide this reasonable indemnity, the
holders of a majority in principal amount of any series of junior subordinated
debentures will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the debenture trustee or
exercising any power conferred upon the debenture trustee. However, if the event
of default under the subordinated indenture relates to more than one series,
only the holders of a majority in aggregate principal amount of all affected
series, voting as one class, will have the right to give this direction. The
debenture trustee is not obligated to comply with directions that conflict with
law or other provisions of the subordinated indenture. (Subordinated Indenture,
Section 812.)
No holder of junior subordinated debentures of any series will have
any right to institute any proceeding under the subordinated indenture, or
any remedy under the subordinated indenture, unless:
o The holder has previously given to the debenture trustee written
notice of a continuing event of default under the subordinated
indenture;
o The holders of a majority in aggregate principal amount of the
outstanding junior subordinated debentures of all series in
respect of which an event of default under the subordinated
indenture will have occurred and be continuing have made a
written request to the debenture trustee, and have offered
reasonable indemnity to the debenture trustee to institute
proceedings; and
o The debenture trustee has failed to institute any proceeding for
60 days after notice.
(Subordinated Indenture, Section 807.)
However, these limitations do not apply to a suit by a holder of a junior
subordinated debenture for payment of the principal, premium or interest
on a junior subordinated debenture on or after the applicable due date.
(Subordinated Indenture, Section 808.)
TXU Corp. will provide to the debenture trustee an annual statement by
an appropriate officer as to TXU Corp.'s compliance with all conditions and
covenants under the subordinated indenture. (Subordinated Indenture, Section
606.)
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED TRUST SECURITIES
If there is an event of default under the subordinated indenture, then
the holders of preferred trust securities will rely on the property trustee or
the debenture trustee, acting for the benefit of the property trustee, to
enforce the property trustee's rights against TXU Corp. as a holder of the
junior subordinated debentures. However, a holder of preferred trust securities
may enforce the subordinated indenture directly against TXU Corp. to the same
extent as if the holder of preferred trust securities held a principal amount of
junior subordinated debentures equal to the aggregate liquidation preference
amount of its preferred trust securities. (Subordinated Indenture, Section 610.)
The holders of preferred trust securities would not be able to
exercise directly against TXU Corp. any other rights unless the property trustee
or the debenture trustee failed to do so for 60 days. Upon that failure, the
holders of a majority of the aggregate liquidation amount of the outstanding
preferred trust securities would have the right to directly institute
proceedings for enforcement of all other rights against TXU Corp. to the fullest
extent permitted by law. (Subordinated Indenture, Section 807.)
MODIFICATION AND WAIVER
Without the consent of any holder of junior subordinated debentures,
TXU Corp. and the debenture trustee may enter into one or more supplemental
indentures for any of the following purposes:
29
<PAGE>
o To evidence the assumption by any permitted successor of the
covenants of TXU Corp. in the subordinated indenture and in the
junior subordinated debentures;
o To add additional covenants of TXU Corp. or to surrender any
right or power of TXU Corp. under the subordinated indenture;
o To add additional events of default;
o To change or eliminate or add any provision to the subordinated
indenture; provided, however, if the change will adversely affect
the interests of the holders of junior subordinated debentures
of any series in any material respect, the change, elimination
or addition will become effective only:
(1) when the consent of the holders of junior subordinated
debentures of that series has been obtained in accordance
with the subordinated indenture; or
(2) when no junior subordinated debentures of the affected
series remain outstanding under the subordinated indenture;
o To provide collateral security for all but not part of the
junior subordinated debentures;
o To establish the form or terms of junior subordinated debentures
of any other series as permitted by the subordinated indenture;
o To provide for the authentication and delivery of bearer
securities with or without coupons;
o To evidence and provide for the acceptance of appointment of a
successor trustee;
o To provide for the procedures required for use of a
noncertificated system of registration for the junior
subordinated debentures of all or any series;
o To change any place where principal, premium and interest shall
be payable, junior subordinated debentures may be surrendered for
registration of transfer or exchange and notices to TXU Corp. may
be served; or
o To cure any ambiguity or inconsistency or to make any other
provisions with respect to matters and questions arising under
the subordinated indenture; provided that the action will not
adversely affect the interests of the holders of junior
subordinated debentures of any series in any material respect.
(Subordinated Indenture, Section 1201.)
The holders of at least a majority in aggregate principal amount of
the junior subordinated debentures of all series then outstanding may waive
compliance by TXU Corp. with some restrictive provisions of the
subordinated indenture. The holders of not less than a majority in principal
amount of the outstanding junior subordinated debentures of any series may waive
any past default under the subordinated indenture with respect to that series,
except a default in the payment of principal, premium, if any, or interest and
some covenants and provisions of the subordinated indenture that cannot be
modified or be amended without the consent of the holder of each outstanding
junior subordinated debenture of the series affected. (Subordinated Indenture,
Section 813.)
If the Trust Indenture Act is amended after the date of the
subordinated indenture in such a way as to require changes to the subordinated
indenture, the subordinated indenture will be deemed to be amended so as to
conform to that amendment of the Trust Indenture Act. TXU Corp. and the
debenture trustee may, without the consent of any holders, enter into one or
more supplemental indentures to evidence the amendment. (Subordinated Indenture,
Section 1201.)
The consent of the holders of a majority in aggregate principal amount
of the junior subordinated debentures of all series then outstanding is required
for all other modifications to the subordinated indenture. However, if
less than all of the series of junior subordinated debentures outstanding are
directly affected by a
30
<PAGE>
proposed supplemental indenture, then the consent only of the holders of a
majority in aggregate principal amount of all series that are directly affected
will be required. No such amendment or modification may:
o Change the stated maturity of the principal of, or any
installment of principal of or interest on any junior
subordinated debenture, or reduce the principal amount of any
junior subordinated debenture or its rate of interest or change
the method of calculating that interest rate or reduce any
premium payable upon redemption, or change the currency in which
payments are made, or impair the right to institute suit for the
enforcement of any payment on or after the stated maturity of any
junior subordinated debenture, without the consent of the holder;
o Reduce the percentage in principal amount of the outstanding
junior subordinated debentures of any series whose consent is
required for any supplemental indenture, or any waiver of
compliance with a provision of the subordinated indenture or any
default thereunder and its consequences, or reduce the
requirements for quorum or voting, without the consent of all the
holders of the series; or
o Modify some of the provisions of the subordinated indenture
relating to supplemental indentures, waivers of some covenants
and waivers of past defaults with respect to the junior
subordinated debentures of any series, without the consent of
the holder of each outstanding junior subordinated debenture
affected by them. (Subordinated Indenture, Section 1202.)
A supplemental indenture which changes the subordinated
indenture solely for the benefit of one or more particular series of junior
subordinated debentures, or modifies the rights of the holders of junior
subordinated debentures of one or more series, will not affect the rights under
the subordinated indenture of the holders of the junior subordinated debentures
of any other series. So long as any preferred trust securities remain
outstanding, the debenture trustee may not consent to a supplemental indenture
without the prior consent of the holders of a majority in aggregate liquidation
preference of all preferred trust securities or, in the case of changes
described in the clauses immediately above, 100% in aggregate liquidation
preference of all such preferred trust securities then outstanding which would
be affected. (Subordinated Indenture, Section 1202.)
The subordinated indenture provides that junior subordinated
debentures owned by TXU Corp. or anyone else required to make payments on the
junior subordinated debentures shall be disregarded and considered not to be
outstanding in determining whether the required holders have given a request or
consent. (Subordinated Indenture, Section 101.)
TXU Corp. may fix in advance a record date to determine the required
number of holders entitled to give any request, demand, authorization,
direction, notice, consent, waiver or other such act of holders, but TXU Corp.
shall have no obligation to do so. If TXU Corp. fixes a record date, the
request, demand, authorization, direction, notice, consent, waiver or other act
of the holders may be given before or after that record date, but only the
holders of record at the close of business on the record date will be considered
to be holders for the purposes of determining whether holders of the required
percentage of the outstanding junior subordinated debentures have authorized
or agreed or consented to the request, demand, authorization, direction,
notice, consent, waiver or other act of the holders. For that purpose the
outstanding junior subordinated debentures shall be computed as of the
record date. Any request, demand, authorization, direction, notice, consent,
election, waiver or other act of a holder will bind every future holder of
the same junior subordinated debenture and the holder of every junior
subordinated debenture issued upon the registration of transfer of or exchange
of junior subordinated debentures. A transferee will be bound by acts of the
debenture trustee or TXU Corp. in reliance thereon, whether or not notation
of that action is made upon the junior subordinated debenture. (Subordinated
Indenture, Section 104.)
RESIGNATION OF THE DEBENTURE TRUSTEE
The debenture trustee may resign at any time by giving written notice
to TXU Corp. or may be removed at any time by act of the holders of a majority
in principal amount of all series of junior subordinated debentures then
outstanding delivered to the debenture trustee and TXU Corp. No resignation or
removal of the debenture trustee and no appointment of a successor trustee will
be effective until the acceptance of appointment by a successor trustee. So long
as no event of default under the subordinated indenture or event which, after
notice or lapse of time, or both, would become an event of default under the
subordinated indenture has occurred and is continuing and except with respect to
a trustee appointed by act of the holders, if TXU Corp. has delivered to the
31
<PAGE>
debenture trustee a resolution of its Board of Directors appointing a successor
trustee and the successor has accepted that appointment in accordance with the
terms of the respective subordinated indenture, the debenture trustee will be
deemed to have resigned and the successor will be deemed to have been appointed
as trustee in accordance with the subordinated indenture.
NOTICES
Notices to holders of junior subordinated debentures will be given by
mail to the addresses of the holders as they may appear in the security
register. (Subordinated Indenture, Section 106.)
TITLE
TXU Corp., the debenture trustee, and any agent of TXU Corp. or the
debenture trustee, may treat the person in whose name junior subordinated
debentures are registered as the absolute owner thereof, whether or not the
subordinated debt may be overdue, for the purpose of making payments and for all
other purposes irrespective of notice to the contrary. (Subordinated Indenture,
Section 308.)
GOVERNING LAW
The subordinated indenture and the junior subordinated debentures will
be governed by, and construed in accordance with, the laws of the State of New
York. (Subordinated Indenture, Section 112.)
INFORMATION ABOUT THE DEBENTURE TRUSTEE
The debenture trustee under the subordinated indenture will be The
Bank of New York. In addition to acting as debenture trustee, The Bank of New
York, as described in this prospectus, also acts as trustee under the indenture,
property trustee under the trust agreement and the guarantee trustee under the
guaranty; The Bank of New York (Delaware) acts as the Delaware trustee under the
trust agreement. The Bank of New York also acts, and may act, as trustee under
various other indentures, trusts and guarantees of TXU Corp. and its affiliates.
TXU Corp. and its affiliates maintain deposit accounts and credit and liquidity
facilities and conduct other banking transactions with the debenture trustee in
the ordinary course of their business.
MATERIAL UNITED STATES FEDERAL INCOME TAX MATTERS
WITH RESPECT TO THE PREFERRED TRUST SECURITIES
The following summary describes material United States federal income
tax consequences of the ownership and disposition of preferred trust securities
as of the date of this prospectus and represents the opinion of Thelen Reid &
Priest LLP, counsel to TXU Corp. and TXU Capital, insofar as it relates to
matters of law or legal conclusions. Except where noted, it deals only with
preferred trust securities held as capital assets within the meaning of ss.1221
of the Internal Revenue Code of 1986, (the Code), and does not deal with special
situations, such as those of dealers in securities or currencies, financial
institutions, life insurance companies, tax exempt entities, persons holding
preferred trust securities as a part of a hedging or conversion transaction or a
straddle, United States holders (as defined in this prospectus) whose
"functional currency" is not the United States dollar, or persons who are not
United States holders. In addition, this discussion does not address the tax
consequences to persons who purchase preferred trust securities other than in
their initial issuance and distribution. Furthermore, the discussion below is
based upon the provisions of the Code and Treasury regulations, administrative
rulings and judicial decisions under the Code and those regulations as of the
date of this prospectus. Those authorities may be repealed, revoked or modified
so as to result in United States federal income tax consequences different from
those discussed below. The opinion of Thelen Reid & Priest LLP is not binding on
the Internal Revenue Service or the courts.
PROSPECTIVE PURCHASERS OF PREFERRED TRUST SECURITIES, INCLUDING
PERSONS WHO ARE NOT UNITED STATES HOLDERS AND PERSONS WHO PURCHASE PREFERRED
TRUST SECURITIES IN THE SECONDARY MARKET, ARE ADVISED TO CONSULT WITH THEIR TAX
ADVISORS AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE
OWNERSHIP AND DISPOSITION OF PREFERRED TRUST SECURITIES IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR OTHER TAX
LAWS.
UNITED STATES HOLDERS
As used in this prospectus supplement, a "United States holder" means
a beneficial owner of a preferred trust security that is:
32
<PAGE>
o A citizen or resident of the United States;
o A corporation, partnership or other entity created or organized
in or under the laws of the United States or any political
subdivision of the United States;
o An estate the income of which is subject to United States federal
income taxation regardless of its source; or
o A trust the administration of which is subject to the primary
supervision of a court within the United States and for which one
or more United States persons have the authority to control all
substantial decisions.
CLASSIFICATION OF TXU CAPITAL
Thelen Reid & Priest LLP is of the opinion that, under current law and
assuming full compliance with the terms of the subordinated indenture and the
instruments establishing TXU Capital and other documents, TXU Capital will be
classified as a "grantor trust" for United States federal income tax purposes
and will not be classified as an association taxable as a corporation. Each
United States holder will be treated as owning an undivided beneficial interest
in the junior subordinated debentures.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
Based on the advice of Thelen Reid & Priest LLP, TXU Corp. believes
and intends to take the position that the junior subordinated debentures will
constitute indebtedness for United States federal income tax purposes. No
assurance can be given that this position will not be challenged by the Internal
Revenue Service or, if challenged, that such a challenge will not be successful.
By purchasing and accepting preferred trust securities, each United States
holder covenants to treat the junior subordinated debentures as indebtedness and
the preferred trust securities as evidence of an indirect beneficial ownership
in the junior subordinated debentures. The remainder of this discussion assumes
that the junior subordinated debentures will be classified as indebtedness of
TXU Corp. for United States federal income tax purposes.
PAYMENTS OF INTEREST
Except as described below, stated interest on a junior subordinated
debenture will generally be taxable to a United States holder as ordinary income
at the time it is paid or accrued in accordance with the United States holder's
method of accounting for tax purposes.
ORIGINAL ISSUE DISCOUNT
The terms of the junior subordinated debentures permit TXU Corp. to
defer interest payments on the junior subordinated debentures at any time and
from time to time for up to 20 consecutive quarters. TXU Corp. believes that the
likelihood of a deferral of interest payments on the junior subordinated
debentures is remote and that all such payments should therefore constitute
payments of "qualified stated interest" as defined in applicable United States
Federal Treasury regulations. Accordingly, the right to defer interest payments
on the junior subordinated debentures should not cause the junior subordinated
debentures to be treated as issued with an original issue discount (OID).
If, however, TXU Corp. exercises the option to defer interest
payments, then, solely for purposes of determining the yield and maturity of the
junior subordinated debentures, the junior subordinated debentures will be
treated as having been retired and reissued on the date the option is exercised.
In that case, the junior subordinated debentures will be treated as reissued
with OID at that time. After the deemed reissuance, all United States holders
will be required to accrue interest income as OID even if they use the cash
method of accounting, and actual interest payments will not be included in
taxable income. Consequently, a United States holder will be required to include
OID in income on an economic accrual basis, notwithstanding the fact that TXU
Corp. does not make any interest payments on the junior subordinated debentures
during a deferral period.
It should be noted that the Treasury regulations described above have
not yet been addressed in any rulings or other interpretations by the Internal
Revenue Service (IRS) and it is possible that the IRS could take a contrary
33
<PAGE>
position. If the likelihood of a deferral of interest payments on the junior
subordinated debentures were not treated as remote, then the junior subordinated
debentures would be treated as issued with OID in an amount equal to sum of all
interest payable over the term of the junior subordinated debentures, plus the
excess, if any, of the principal amount of the junior subordinated debentures
over their issue price, and a United States holder would be required to include
the OID in income over the term of the junior subordinated debentures on an
economic accrual basis, regardless of the holder's regular method of accounting
for tax purposes. In that case, the amount and timing of inclusion of the
interest income that a United States holder will be required to include in
taxable income in a particular taxable year could differ from the amount and
timing of inclusion of the interest payments that the United States holder
received in that year. United States holders should consult their tax advisors
regarding the tax consequences to them, in light of their particular situations,
of treating the junior subordinated debentures as issued with OID.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF TXU
CAPITAL
The junior subordinated debentures may be distributed to United States
holders in exchange for the preferred trust securities upon liquidation of TXU
Capital. Unless the liquidation of TXU Capital occurs as a result of TXU Capital
being subject to United States federal income tax with respect to interest on
the junior subordinated debentures, for United States federal income tax
purposes, the distribution would be treated as a non-taxable event to each
United States holder, and each United States holder would receive an aggregate
tax basis in the junior subordinated debentures equal to the holder's aggregate
tax basis in its preferred trust securities. A United States holder's holding
period for the junior subordinated debentures received would include the period
during which the holder held the preferred trust securities. If, however, the
liquidation of TXU Capital were to occur because TXU Capital was subject to
United States federal income tax with respect to interest on the junior
subordinated debentures, the distribution of the junior subordinated debentures
to a United States holder by TXU Capital would likely be a taxable event to the
holder, and the holder would recognize gain or loss as if the holder had
exchanged its preferred trust securities for junior subordinated debentures in a
taxable exchange. See -- "Sale, Exchange and Redemption of the Preferred Trust
Securities."
In specific situations, the junior subordinated debentures may be
redeemed for cash and the proceeds of the redemption distributed to holders of
preferred trust securities in redemption of the preferred trust securities. The
redemption would, for United States federal income tax purposes, constitute a
taxable disposition of the preferred trust securities, and a holder would
recognize gain or loss as if the holder had sold such redeemed preferred trust
securities. See -- "Sale, Exchange and Redemption of the Preferred Trust
Securities."
SALE, EXCHANGE AND REDEMPTION OF THE PREFERRED TRUST SECURITIES
Upon the sale, exchange or redemption of preferred trust securities, a
United States holder will recognize gain or loss equal to the difference between
the amount realized upon the sale, exchange or redemption, except for amounts
attributable to accrued and unpaid interest, and the holder's adjusted tax basis
in the preferred trust securities. A holder's adjusted tax basis in the
preferred trust securities will generally equal the amount paid for the
preferred trust securities, increased by any OID included in income and
decreased by any subsequent distributions on the preferred trust securities. The
gain or loss will be capital gain or loss and will be long-term capital gain or
loss if, at the time of sale, exchange or redemption, the preferred trust
securities have been held for more than one year. Generally, for non-corporate
United States holders, net long-term capital gains are subject to United States
federal income tax at a maximum rate of 20%. Under current law, the
deductibility of capital losses is subject to limitations.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Subject to the qualification discussed below, income on the preferred
trust securities will be reported to United States holders on Forms 1099, which
should be mailed to holders by January 31 following each calendar year.
If required by law, TXU Capital will report annually to the holders of
record of the preferred trust securities the interest income paid or OID accrued
during the year with respect to the junior subordinated debentures. TXU Capital
currently intends to report that information on Form 1099 prior to January 31
following each calendar year. Under current law, holders of record of preferred
trust securities who hold as nominees for beneficial holders will not have any
obligation to report information regarding the beneficial holders to TXU
34
<PAGE>
Capital. TXU Capital, moreover, will not have any obligation to report to
beneficial holders who are not also record holders. Thus, beneficial holders of
preferred trust securities who hold their preferred trust securities through
nominee holders will typically receive Forms 1099 reflecting the income on their
preferred trust securities from the nominee holders rather than from TXU
Capital.
Payments made in respect of, and proceeds from the sale of, preferred
trust securities (or junior subordinated debentures distributed to holders of
preferred trust securities) may be subject to "backup" withholding tax of 31% if
the holder fails to comply with specified identification requirements, or has
previously failed to report in full dividend and interest income, or does not
otherwise establish its entitlement to an exemption. Any withheld amounts will
be allowed as a refund or a credit against the holder's United States federal
income tax liability, provided the required information is provided to the
Internal Revenue Service.
PLAN OF DISTRIBUTION
The debt securities, the preference stock and the preferred trust
securities described in this prospectus may be offered (a) through agents; (b)
through underwriters or dealers; or (c) directly to purchasers.
BY AGENTS
The debt securities, the preference stock and preferred trust
securities may be sold through agents designated by TXU Corp.
BY UNDERWRITERS
If underwriters are used in the sale of the debt securities, the
preference stock and the preferred trust securities, the underwriters will
acquire the securities sold for their own account. The underwriters may resell
those securities in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time of
sale. Underwriters may sell the securities directly or through underwriting
syndicates represented by managing underwriters. The obligations of the
underwriters to purchase the securities will be subject to certain conditions.
The underwriters in an underwritten offering will be obligated to purchase all
the offered securities if any are purchased. If a dealer is used in the sale,
TXU Corp. or TXU Capital will sell the securities to the dealer as principal.
The dealer may then resell the securities at varying prices determined at the
time of resale.
DIRECT SALES
The debt securities, the preference stock and preferred trust
securities may also be sold directly by TXU Corp. In that case, no underwriters
or agents would be involved.
GENERAL INFORMATION
Underwriters, dealers and agents that participate in the distribution
of the debt securities, the preference stock and preferred trust securities may
be underwriters as defined in the Securities Act and any discounts or
commissions received by them from TXU Corp. or TXU Capital and any profit on the
resale by them of those securities may be treated as underwriting discounts
under the Securities Act. Any underwriters, dealers or agents will be identified
and their compensation described in a prospectus supplement.
TXU Corp. or TXU Capital may authorize agents and underwriters to
solicit offers by certain institutions to purchase debt securities, the
preference stock and preferred trust securities at the public offering price and
on terms described in the applicable prospectus supplement.
TXU Corp. may have agreements with agents, underwriters and dealers to
indemnify them against certain civil liabilities, including liabilities under
the Securities Act, or to contribute with respect to payments which the agents,
underwriters, dealers and remarketing firms may be required to make.
35
<PAGE>
None of the debt securities, the preference stock or preferred trust
securities has an established trading market. TXU Corp. may decide to list any
series of securities on a securities exchange. However, TXU Corp. will not be
obligated to list securities on an exchange unless it states otherwise in a
prospectus supplement. TXU Corp. cannot assure that there will be any liquidity
of the trading market for any of the debt securities, the preference stock and
preferred trust securities.
Agents, underwriters and dealers may engage in transactions with, or
perform services for, TXU Corp. or its subsidiaries in the ordinary course of
business.
EXPERTS AND LEGALITY
The consolidated financial statements of TXU Corp. and subsidiaries,
except TXU Eastern Holdings Limited (now known as TXU Europe Limited) with
respect to the year ended December 31, 1998, included in the latest Annual
Report of TXU Corp. on Form 10-K, and incorporated in this prospectus by
reference, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report included in the TXU Corp. Annual Report on Form 10-K for
the year ended December 31, 1999. The consolidated financial statements of TXU
Europe Limited for the year ended December 31, 1998, have been audited by
PricewaterhouseCoopers LLP, independent accountants, as stated in their report
included in the TXU Corp. Annual Report on Form 10-K for the year ended December
31, 1999. The TXU Europe Limited financial statements referred to above are not
included in the TXU Corp. Annual Report on Form 10-K for the year ended December
31, 1999. The consolidated financial statements of TXU Corp. and subsidiaries
have been incorporated by reference in this prospectus in reliance upon the
respective reports of such firms given upon their authority as experts in
accounting and auditing.
With respect to any unaudited condensed consolidated interim financial
information of TXU Corp. included in TXU Corp.'s Quarterly Reports on Form 10-Q
which are or will be incorporated in this prospectus by reference, Deloitte &
Touche LLP has applied limited procedures in accordance with professional
standards for a review of such information. As stated in any of their reports
included in TXU Corp.'s Quarterly Reports on Form 10-Q which are or will be
incorporated by reference in this prospectus, Deloitte & Touche LLP did not
audit and did not express an opinion on that interim financial information.
Accordingly, the degree of reliance on the reports on that information should be
restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP is not subject to the liability provisions of Section 11
of the Securities Act for any of their reports on the unaudited condensed
consolidated interim financial information because those reports are not
"reports" or a "part" of the registration statement filed under the Securities
Act with respect to the debt securities, preference stock or preferred trust
securities prepared or certified by an accountant within the meaning of Sections
7 and 11 of the Securities Act.
Matters of Delaware law relating to the validity of the preferred
trust securities, the enforceability of the trust agreement and the creation of
TXU Capital are being passed upon by Richards, Layton & Finger, P.A., special
Delaware counsel for TXU Corp. and TXU Capital. The legality of the other
securities offered in this prospectus will be passed upon for TXU Corp. and TXU
Capital by Worsham Forsythe Woolridge LLP, Dallas, Texas and by Thelen Reid &
Priest LLP, New York, New York and for the underwriters by Winthrop, Stimson,
Putnam & Roberts, New York, New York. However, all matters pertaining to
incorporation of TXU Corp. and all other matters of Texas law will be passed
upon only by Worsham Forsythe Woolridge LLP. At June 30, 2000, members of the
firm of Worsham Forsythe Woolridge LLP owned approximately 47,000 shares of the
common stock of TXU Corp.
The statements of law and legal conclusions under the caption MATERIAL
UNITED STATES FEDERAL INCOME TAX MATTERS WITH RESPECT TO THE PREFERRED TRUST
SECURITIES have been reviewed by Thelen Reid & Priest LLP, counsel to TXU Corp.,
and such statements are made upon their authority as experts.
36
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses payable by TXU Corp. in
connection with the issuance and distribution of the securities to be
registered.
Filing fee - Securities and Exchange Commission....... $72,600
Fees of trustees* .................................... 30,000
Fees of TXU Corp.'s counsel
Worsham Forsythe Wooldridge LLP................... 200,000
Thelen Reid & Priest LLP*......................... 200,000
Fees of TXU Corp.'s and TXU Capital's special Delaware 10,000
counsel*..............................................
Accountants' fees*.................................... 50,000
Rating agencies' fees*................................ 150,000
Printing, including Registration Statement,
prospectuses, exhibits, etc.*..................... 60,000
Miscellaneous*........................................ 27,400
--------
Total expenses*....................................... $800,000
========
------------------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article IX of the Restated Articles of Incorporation of TXU Corp. provides
as follows:
"The Corporation shall reimburse or indemnify any former, present
or future director, officer or employee of the Corporation, or any person
who may have served at its request as a director, officer or employee of
another corporation, or any former, present or future director, officer or
employee of the Corporation who shall have served or shall be serving as an
administrator, agent or fiduciary for the Corporation or for another
corporation at the request of the Corporation (and his heirs, executors and
administrators) for or against all expenses and liabilities incurred by him
or them, or imposed on him or them, including, but not limited to,
judgments, settlements, court costs and attorneys' fees, in connection
with, or arising out of, the defense of any action, suit or proceeding in
which he may be involved by reason of his being or having been such
director, officer or employee, except with respect to matters as to which
he shall be adjudged in such action, suit or proceeding to be liable
because he did not act in good faith, or because of dishonesty or conflict
of interest in the performance of his duty.
No former, present or future director, officer or employee of the
Corporation (or his heirs, executors and administrators) shall be liable
for any act, omission, step or conduct taken or had in good faith, which is
required, authorized or approved by an order or orders issued pursuant to
the Public Utility Holding Company Act of 1935, the Federal Power Act, or
any other federal or state statute regulating the Corporation or its
subsidiaries, or any amendments to any thereof. In any action, suit or
proceeding based on any act, omission, step or conduct, as in this
paragraph described, the provisions hereof shall be brought to the
attention of the court. In the event that the foregoing provisions of this
paragraph are found by the court not to constitute a valid defense, each
such director, officer or employee (and his heirs, executors and
administrators) shall be reimbursed for, or indemnified against, all
expenses and liabilities incurred by him or them, or imposed on him or
them, including, but not limited to, judgments, settlements, court costs
and attorneys' fees, in connection with, or arising out of, any such
action, suit or proceeding based on any act, omission, step or conduct
taken or had in good faith as in this paragraph described."
II-1
<PAGE>
"The foregoing rights shall not be exclusive of other rights to
which any such director, officer or employee (or his heirs, executors and
administrators) may otherwise be entitled under any bylaw, agreement, vote
of shareholders or otherwise, and shall be available whether or not the
director, officer or employee continues to be a director, officer or
employee at the time of incurring such expenses and liabilities. In
furtherance, and not in limitation of the foregoing provisions of this
Article IX, the Corporation may indemnify and may insure any such persons
to the fullest extent permitted by the Texas Business Corporation Act, as
amended from time to time, or the laws of the State of Texas, as in effect
from time to time."
Article 2.02-1 of the Texas Business Corporation Act permits TXU Corp., in
certain circumstances, to indemnify any present or former director, officer,
employee or agent of TXU Corp. against judgments, penalties, fines, settlements
and reasonable expenses incurred in connection with a proceeding in which any
such person was, is or is threatened to be, made a party by reason of holding
such office or position, but only to a limited extent for obligations resulting
from a proceeding in which the person is found liable on the basis that a
personal benefit was improperly received or in circumstances in which the person
is found liable in a derivative suit brought on behalf of TXU Corp.
Article X of the Restated Articles of Incorporation of TXU Corp. provides
as follows:
"A director of the Corporation shall not be liable to the
Corporation or its shareholders for monetary damages for any act or
omission in the director's capacity as a director, except that this
provision does not eliminate or limit the liability of a director to the
extent the director is found liable for:
(a) a breach of the director's duty of loyalty to the Corporation or its
shareholders;
(b) an act or omission not in good faith that constitutes a breach of duty
of the director to the Corporation or an act or omission that involves
intentional misconduct or a knowing violation of the law;
(c) a transaction from which the director received an improper benefit,
whether or not the benefit resulted from an action taken within the scope
of the director's office; or
(d) an act or omission for which the liability of a director is expressly
provided for by an applicable statute.
If the laws of the State of Texas are amended to authorize action further
eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited
to the fullest extent permitted by such laws as so amended. Any repeal or
modification of this Article X shall not adversely affect any right of
protection of a director of the Corporation existing at the time of such
repeal or modification."
Section 22 of TXU Corp.'s restated bylaws provides as follows:
"Section 22. Insurance, Indemnification and Other Arrangements.
Without further specific approval of the shareholders of the Corporation,
the Corporation may purchase, enter into, maintain or provide insurance,
indemnification or other arrangements for the benefit of any person who is
or was a director, officer, employee or agent of the Corporation or is or
was serving another entity at the request of the Corporation as a director,
officer, employee, agent or otherwise, to the fullest extent permitted by
the laws of the State of Texas, including without limitation Art. 2.02-1 of
the Texas Business Corporation Act or any successor provision, against any
liability asserted against or incurred by any such person in any such
capacity or arising out of such person's service in such capacity whether
or not the Corporation would otherwise have the power to indemnify against
any such liability under the Texas Business Corporation Act. If the laws of
the State of Texas are amended to authorize the purchase, entering into,
maintaining or providing of insurance, indemnification or other
arrangements in the nature of those permitted hereby to a greater extent
than presently permitted, then the Corporation shall have the power and
authority to purchase, enter into, maintain and provide any additional
arrangements in such regard as shall be permitted from time to time by the
laws of the State of Texas without further approval of the shareholders of
the Corporation. No repeal or modification of such laws or this Section 22
II-2
<PAGE>
shall adversely affect any such arrangement or right to indemnification
existing at the time of such repeal or modification."
TXU Corp. has entered into agreements with its directors which provide,
among other things, for their indemnification by TXU Corp. to the fullest extent
permitted by Texas law, unless a final adjudication establishes that the
indemnitee's acts were committed in bad faith, were the result of active and
deliberate dishonesty or that the indemnitee personally gained a financial
profit to which the indemnitee was not legally entitled. These agreements
further provide, under certain circumstances, for the advancement of expenses
and the implementation of other arrangements for the benefit of the indemnitee.
TXU Corp. has insurance covering its expenditures which might arise in
connection with its lawful indemnification of its directors and officers for
their liabilities and expenses. Directors and officers of TXU Corp. also have
insurance which insures them against certain other liabilities and expenses.
II-3
<PAGE>
ITEM 16. EXHIBITS.
PREVIOUSLY FILED*
------------------
WITH
FILE AS
EXHIBIT NUMBER EXHIBIT
------- ------ -------
1(a) -- Form of Underwriting Agreement for TXU Corp.
Securities.
1(b) -- Form of Underwriting Agreement for Preferred
Trust Securities.
4(a) 333-37652 4(a) -- Amended and Restated Articles of
Incorporation of TXU Corp.
4(b) 333-37652 4(b) -- Restated Bylaws of TXU Corp., as amended.
4(c) 1-12833 3(b) -- Statement of Resolution Establishing Flexible
Form 10-Q Money Market Cumulative Preference Stock
for the Series B of TXU Corp.
quarter
ended June
30, 2000
4(d) -- Statement of Resolution Establishing
Mandatorily Convertible Single Reset
Preference Stock, Series C of TXU Corp.
4(e) -- Form of Statement of Resolution Establishing
a Series of Preference Stock.
4(f) -- Form of Indenture (For Unsecured Debt
Securities) of TXU Corp.
4(g) -- Form of Officer's Certificate Establishing a
Series of Unsecured Debt Securities,
including Form of Debt Security.
4(h) 333-79221 4(g) -- Trust Agreement and Certificate of Trust of
333-79221-01 TXU Capital III.
333-79221-02
333-79221-03
4(i) 333-79221 -- Trust Agreement and Certificate of Trust of
333-79221-01 4(h) TXU Capital IV.
333-79221-02
333-79221-03
4(j) -- Form of Amended and Restated Trust Agreement.
4(k) -- Indenture (For Unsecured Subordinated Debt
Securities relating to Trust Securities) of
TXU Corp.
4(l) -- Form of Officer's Certificate establishing
the Junior Subordinated Debentures, including
Form of Junior Subordinated Debenture
4(m) -- Form of Guarantee Agreement relating to the
preferred trust securities.
4(n) -- Form of Agreement as to Expenses and
Liabilities relating to the preferred trust
securities is contained in Exhibit C of
Exhibit 4(j) hereto.
4(o) -- Form of preferred trust securities is
contained in Exhibit D of Exhibit 4(j) hereto
5(a) -- Opinion of Worsham Forsythe Wooldridge LLP,
General Counsel for TXU Corp.
5(b) -- Opinion of Thelen Reid & Priest LLP, of
and 8 counsel to TXU Corp.
5(c) -- Opinion of Richards, Layton & Finger, P.A.,
Special Delaware Counsel to TXU Capital III
and TXU Corp.
5(d) -- Opinion of Richards, Layton & Finger, P.A.,
Special Delaware Counsel to TXU Capital IV
and TXU Corp.
12(a) 1-12833 12(a) -- Computation of Ratio of Earnings to Fixed
Form 10-K Charges and Computation of Ratio of Earnings
(1999) to Combined Fixed Charges and Preferred
Dividends of TXU Corp.
12(b) -- Computation of Ratio of Earnings to Fixed
Charges and Computation of Ratio of Earnings
to Combined Fixed Changes and Preferred
Dividends of TXU Corp. for the six-month
period ended June 30, 2000.
15 -- Letter of Deloitte & Touche LLP regarding
II-4
<PAGE>
unaudited condensed interim financial
information.
23(a) -- Consent of Deloitte & Touche LLP.
23(b) -- Consent of PricewaterhouseCoopers.
23(c) -- Consents of Worsham Forsythe Wooldridge LLP,
Thelen Reid & Priest LLP and Richards, Layton
and Finger, P.A. are contained in Exhibits
5(a), 5(b)-8 and 5(c)-5(d), respectively.
24 -- Power of Attorney (see page II-7 and Section
4 of Exhibits 4(h) and (i)).
25(a) -- Statement of Eligibility on Form T-1 of The
Bank of New York relating to Indenture (For
Unsecured Debt Securities).
25(b) -- Statement of Eligibility on Form T-1 of The
Bank of New York with respect to the
Indenture (For Unsecured Subordinated Debt
Securities) of TXU Corp.
25(c) -- Statement of Eligibility on Form T-1 of The
Bank of New York with respect to the Amended
and Restated Trust Agreement of TXU Capital
III.
25(d) -- Statement of Eligibility on Form T-1 of The
Bank of New York with respect to the
Guarantee Agreement relating to the Preferred
Trust Securities of TXU Capital III.
25(e) -- Statement of Eligibility on Form T- I of The
Bank of New York with respect to the Amended
and Restated Trust Agreement of TXU Capital
IV.
25(f) -- Statement of Eligibility on Form T-1 of The
Bank of New York with respect to the
Guarantee Agreement relating to the Preferred
Trust Securities of TXU Capital IV.
------------------------
* Incorporated herein by reference.
II-5
<PAGE>
ITEM 17. UNDERTAKINGS.
THE UNDERSIGNED REGISTRANTS HEREBY UNDERTAKE:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act of 1933 if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Exchange
Act that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's Annual Report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS AND CONTROLLING PERSONS OF THE
REGISTRANTS PURSUANT TO THE PROVISIONS DESCRIBED UNDER ITEM 15 ABOVE, OR
OTHERWISE, THE REGISTRANTS HAVE BEEN ADVISED THAT IN THE OPINION OF THE
SECURITIES AND EXCHANGE COMMISSION SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY
AS EXPRESSED IN THE ACT AND IS, THEREFORE, UNENFORCEABLE. IN THE EVENT THAT A
CLAIM FOR INDEMNIFICATION AGAINST SUCH LIABILITIES (OTHER THAN THE PAYMENT BY
THE REGISTRANTS OF EXPENSES INCURRED OR PAID BY A DIRECTOR, OFFICER OR
CONTROLLING PERSON OF ANY REGISTRANT IN THE SUCCESSFUL DEFENSE OF ANY ACTION,
SUIT OR PROCEEDING) IS ASSERTED BY SUCH DIRECTOR, OFFICER OR CONTROLLING PERSON
IN CONNECTION WITH THE SECURITIES BEING REGISTERED, THE REGISTRANTS WILL, UNLESS
IN THE OPINION OF THEIR COUNSEL THE MATTER HAS BEEN SETTLED BY CONTROLLING
PRECEDENT, SUBMIT TO A COURT OF APPROPRIATE JURISDICTION THE QUESTION WHETHER
SUCH INDEMNIFICATION BY THEM IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT
AND WILL BE GOVERNED BY THE FINAL ADJUDICATION OF SUCH ISSUE.
II-6
<PAGE>
POWER OF ATTORNEY
Each director and/or officer of TXU Corp. whose signature appears below
hereby appoints the Agents for Service named in this registration statement, and
each of them severally, as his attorney-in-fact to sign in his name and behalf,
in any and all capacities stated below, and to file with the Securities and
Exchange Commission, any and all amendments, including post-effective
amendments, to this registration statement, and the registrant hereby also
appoints each such Agent for Service as its attorney-in-fact with like authority
to sign and file any such amendments in its name and on its behalf.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, and State of Texas, on the 6th of November,
2000.
TXU CORP.
By: /s/ Erle Nye
------------------------------------
(Erle Nye, Chairman of the Board
and Chief Executive)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Erle Nye Principal Executive
------------------------------------------ Officer and
(Erle Nye Chairman of the Board Director
and Chief Executive Officer)
/s/ Michael J. McNally Principal Financial
------------------------------------------ Officer
(Michael J. McNally, Executive Vice
President and Chief Financial Officer)
/s/ Jerry W. Pinkerton Principal
------------------------------------------ Accounting
(Jerry W. Pinkerton, Controller) Officer Director
/s/ Derek C. Bonham Director
------------------------------------------
(Derek C. Bonham)
/s/ J.S. Farrington Director
------------------------------------------
(J.S. Farrington)
/s/ William M. Griffin Director November 6, 2000
------------------------------------------
(William M. Griffin)
/s/ Kerney Laday Director
------------------------------------------
(Kerney Laday)
/s/ Margaret N. Maxey Director
------------------------------------------
(Margaret N. Maxey)
Director
------------------------------------------
(James A. Middleton)
/s/ J. E. Oesterreicher Director
------------------------------------------
(J. E. Oesterreicher)
/s/ Charles R. Perry Director
------------------------------------------
(Charles R. Perry)
/s/ Herbert H. Richardson Director
------------------------------------------
(Herbert H. Richardson)
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TXU Capital III
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in The City of New York, and State of New York on the 6th day of
November, 2000.
TXU CAPITAL III
By: /s/ Robert J. Reger, Jr.
------------------------------------
Robert J. Reger, Jr.
Authorized Representative
Pursuant to the requirements of the Securities Act of 1933, TXU Capital IV
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in The City of New York, and State of New York on the 6th day of
November, 2000.
TXU CAPITAL IV
By: /s/ Robert J. Reger, Jr.
------------------------------------
Robert J. Reger, Jr.
Authorized Representative
II-8
<PAGE>
EXHIBIT INDEX
1(a) -- Form of Underwriting Agreement for TXU Corp.
Securities.
1(b) -- Form of Underwriting Agreement for Preferred
Trust Securities.
4(d) -- Statement of Resolution Establishing
Mandatorily Convertible Single Reset
Preference Stock, Series C of TXU Corp.
4(e) -- Form of Statement of Resolution Establishing
a Series of Preference Stock.
4(f) -- Form of Indenture (For Unsecured Debt
Securities) of TXU Corp.
4(g) -- Form of Officer's Certificate Establishing a
Series of Unsecured Debt Securities,
including Form of Debt Security.
4(j) -- Form of Amended and Restated Trust Agreement.
4(k) -- Indenture (For Unsecured Subordinated Debt
Securities relating to Trust Securities) of
TXU Corp.
4(l) -- Form of Officer's Certificate establishing
the Junior Subordinated Debentures, including
Form of Junior Subordinated Debenture
4(m) -- Form of Guarantee Agreement relating to the
preferred trust securities.
4(n) -- Form of Agreement as to Expenses and
Liabilities relating to the preferred trust
securities is contained in Exhibit C of
Exhibit 4(j) hereto.
4(o) -- Form of preferred trust securities is
contained in Exhibit D of Exhibit 4(j) hereto
5(a) -- Opinion of Worsham Forsythe Wooldridge LLP,
General Counsel for TXU Corp.
5(b) -- Opinion of Thelen Reid & Priest LLP, of
and 8 counsel to TXU Corp.
5(c) -- Opinion of Richards, Layton & Finger, P.A.,
Special Delaware Counsel to TXU Capital III
and TXU Corp.
5(d) -- Opinion of Richards, Layton & Finger, P.A.,
Special Delaware Counsel to TXU Capital IV
and TXU Corp.
12(b) -- Computation of Ratio of Earnings to Fixed
Charges and Computation of Ratio of Earnings
to Combined Fixed Changes and Preferred
Dividends of TXU Corp. for the six-month
period ended June 30, 2000.
15 -- Letter of Deloitte & Touche LLP regarding
unaudited condensed interim financial
information.
23(a) -- Consent of Deloitte & Touche LLP.
23(b) -- Consent of PricewaterhouseCoopers.
23(c) -- Consents of Worsham Forsythe Wooldridge LLP,
Thelen Reid & Priest LLP and Richards, Layton
and Finger, P.A. are contained in Exhibits
5(a), 5(b)-8 and 5(c)-5(d), respectively.
24 -- Power of Attorney (see page II-7 and Section
4 of Exhibits 4(h) and (i)).
25(a) -- Statement of Eligibility on Form T-1 of The
Bank of New York relating to Indenture (For
Unsecured Debt Securities).
25(b) -- Statement of Eligibility on Form T-1 of The
Bank of New York with respect to the
Indenture (For Unsecured Subordinated Debt
Securities) of TXU Corp.
25(c) -- Statement of Eligibility on Form T-1 of The
Bank of New York with respect to the Amended
and Restated Trust Agreement of TXU Capital
III.
25(d) -- Statement of Eligibility on Form T-1 of The
Bank of New York with respect to the
Guarantee Agreement relating to the Preferred
Trust Securities of TXU Capital III.
25(e) -- Statement of Eligibility on Form T- I of The
Bank of New York with respect to the Amended
and Restated Trust Agreement of TXU Capital
IV.
25(f) -- Statement of Eligibility on Form T-1 of The
Bank of New York with respect to the
Guarantee Agreement relating to the Preferred
Trust Securities of TXU Capital IV.
