As filed with the Securities and Exchange Commission on January 5, 2001
Registration Nos. 333- 333- -01, 333- -02 and 333- -03
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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TXU ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Texas 75-1837355
(State of incorporation or organization) (I.R.S. Employer Identification No.)
TXU ELECTRIC CAPITAL VI
TXU ELECTRIC CAPITAL VII
TXU ELECTRIC CAPITAL VIII
(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)
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It is respectfully requested that the Commission also send copies of all
notices, orders and communications to:
RICHARD L. HARDEN, Esq.
Pillsbury Winthrop LLP
One Battery Park Plaza
New York, New York 10004-1490
(212) 858-1000
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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]
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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. [ ]
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CALCULATION OF REGISTRATION FEE
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Proposed
Maximum Proposed
Offering Maximum Amount of
Title of Each Class Amount to be Price Aggregate Registration
of Securities to be Registered Registered Per Unit Offering Price Fee
--------------------------------------------------------------------------------
Cumulative Preferred Stock (1)(3) (2) (1)(2)(3)(4) N/A
(without par value).........
--------------------------------------------------------------------------------
Depositary Shares (1)(5) (2) (1)(2)(4)(5)(6) N/A
--------------------------------------------------------------------------------
First Mortgage Bonds........ (1)(7) (2) (1)(2)(4)(7) N/A
--------------------------------------------------------------------------------
Debt Securities............. (1)(8) (2) (1)(2)(4)(8) N/A
--------------------------------------------------------------------------------
Preferred Trust Securities.. (1)(9) (2) (1)(2)(4)(9) N/A
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Guarantee with respect to N/A
Preferred Trust Securities
(10)(11)....................
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Junior Subordinated N/A
Debentures (10)(12).........
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Total (13)........... $923,850,000(4) (2) $923,850,000(4) $230,963
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(1) In no event will the aggregate offering price of all preferred stock,
depositary shares, first mortgage bonds, debt securities and preferred
trust securities issued from time to time pursuant to this Registration
Statement exceed $923,850,000. If any such securities are issued at an
original issue discount, then the aggregate initial offering price as so
discounted shall not exceed $923,850,000, 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 cumulative preferred stock (without par
value) which may be sold, from time to time, by TXU Electric Company.
(4) Exclusive of accrued interest or distributions, if any.
(5) Subject to footnote (1), there is being registered hereunder an
indeterminate number of depositary shares which may be issued in the event
TXU Electric Company elects to offer fractional interests in shares of the
cumulative preferred stock registered hereunder.
(6) No additional consideration will be received for the depositary shares.
(7) Subject to footnote (1), there is being registered hereunder an
indeterminate principal amount of first mortgage bonds which may be sold,
from time to time, by TXU Electric Company.
(8) 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 Electric Company.
(9) 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 Electric Capital VI, TXU Electric Capital VII and/or
TXU Electric Capital VIII.
(10) This registration is deemed to include the rights of the holders of the
securities under the TXU Electric Company 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.
(11) No separate consideration will be received for the TXU Electric Company
guarantee or the Agreement as to Expenses and Liabilities.
(12) The junior subordinated debentures, to be issued by TXU Electric Company,
will be purchased by TXU Electric Capital VI, TXU Electric Capital VII
and/or TXU Electric Capital VIII with the proceeds of the sale of preferred
trust securities. No separate consideration will be received for the junior
subordinated debentures.
(13) Pursuant to Rule 429 under the Securities Act of 1933, the combined
Prospectus filed as part of this Registration Statement also relates to
$25,000,000 aggregate amount of cumulative preferred stock registered
pursuant to Registration Statement File No. 33-69554. A registration fee
with respect to such registration statement was paid in the amount of
$46,875.
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 , 2001
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PROSPECTUS
$948,850,000
AGGREGATE AMOUNT
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TXU ELECTRIC COMPANY
PREFERRED STOCK, DEPOSITARY SHARES, FIRST MORTGAGE BONDS, DEBT SECURITIES AND
JUNIOR SUBORDINATED DEBENTURES
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TXU ELECTRIC CAPITAL VI
TXU ELECTRIC CAPITAL VII
TXU ELECTRIC CAPITAL VIII
PREFERRED TRUST SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED AS SET
FORTH HEREIN BY
TXU ELECTRIC COMPANY
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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.
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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 , 2001.
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.
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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
$948,850,000. This amount includes $25,000,000 of cumulative preferred stock
registered under an earlier registration statement. 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 Electric Company files annual, quarterly and special reports, proxy
statements and other information with the SEC under File No. 1-11668. 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 Electric Company's Annual Report on Form 10-K for the year ended
December 31, 1999.
o TXU Electric Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2000, June 30, 2000 and September 30, 2000 and on Form
10-Q/A for the quarter ended September 30, 2000.
o TXU Electric Company's Current Reports on Form 8-K filed with the SEC
on March 13, 2000, September 15, 2000 and December 21, 2000.
You may request a copy of these filings at no cost, by writing or
contacting TXU Electric Company at the following address: Secretary, TXU
Electric Company, Energy Plaza, 1601 Bryan Street, Dallas, Texas 75201;
telephone number (214) 812-4600.
TXU ELECTRIC COMPANY
TXU Electric Company is an electric utility engaged in the generation,
purchase, transmission, distribution and sale of electric energy solely within
the State of Texas. TXU Electric Company is a wholly-owned subsidiary of TXU
Corp., a Texas corporation. TXU Corp. is a multinational energy services holding
company with operations primarily in the United States, Europe and Australia.
Through its direct and indirect subsidiaries, TXU Corp. engages in the
generation, purchase, transmission, distribution and sale of electricity; the
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purchase, transmission, distribution and sale of natural gas; energy marketing;
and energy services, telecommunications and other businesses.
TXU Electric Company's service area is located in the north central,
eastern and western parts of Texas, with a population estimated at 6.1 million -
about one-third of the population of Texas. Electric service is provided to
approximately 2.6 million customers in 92 counties and 370 incorporated
municipalities, including Dallas, Fort Worth, Arlington, Irving, Plano, Waco,
Mesquite, Grand Prairie, Wichita Falls, Odessa, Midland, Carrollton, Tyler,
Richardson and Killeen. The area is a diversified commercial and industrial
center with substantial banking, insurance, communications, electronics,
aerospace, petrochemical and specialized steel manufacturing, and automotive and
aircraft assembly. The territory served includes major portions of the oil and
gas fields in the Permian Basin and East Texas, as well as substantial farming
and ranching sections of the state. The service territory also includes the
Dallas-Fort Worth International Airport and the Alliance Airport.
The principal executive offices of TXU Electric Company are located at
Energy Plaza, 1601 Bryan Street, Dallas, Texas 75201; the telephone number is
(214) 812-4600.
ELECTRIC INDUSTRY RESTRUCTURING - Legislation was passed during the 1999
session of the Texas Legislature that will restructure the electric utility
industry in Texas (1999 Restructuring Legislation). Among other matters, the
legislation incorporates the concept contained in the stipulation in Docket No.
18490 that earnings in excess of the earnings cap be used as mitigation to the
cost of nuclear production assets (see Note 13 to Financial Statements in TXU
Electric Company's Annual Report on Form 10-K for the year ended December 31,
1999); authorizes competition in the retail and generation markets for
electricity beginning January 1, 2002; provides for the recovery of
generation-related and purchased power related stranded costs and
generation-related regulatory assets; requires reductions in nitrogen oxide
(NOx) and sulfur dioxide (SO2) emissions; requires a rate freeze for all retail
customers until January 1, 2002 and certain rate reductions for residential and
small commercial customers for up to five years thereafter; and sets certain
limits on capacity owned and controlled by power generation companies. Each
electric utility must separate from its regulated activities its customer energy
services business activities that are otherwise already widely available in the
competitive market. By January 1, 2002, each electric utility must separate
(unbundle) its business into the following units: a power generation company, a
retail electric provider and a transmission and distribution company or separate
transmission and distribution companies. A power generation company generates
electricity that is intended to be sold at wholesale. In general, a power
generation company may not own a transmission or distribution facility and may
not have a certificated service area. A retail electric provider sells electric
energy to retail customers and may not own or operate generation assets. A
transmission and distribution (T&D) company may only own or operate facilities
to transmit or distribute electricity. TXU Electric Company and each other
electric utility in Texas have filed with the Public Utility Commission of Texas
(PUC) a separation of their costs into competitive and regulated components,
proposed tariffs for their proposed T&D utility, and an initial estimate of
their generation-related stranded costs.
In October 1999, the TXU Electric Company filed a petition with the PUC for
a financing order (Docket No. 21527) to permit the issuance by a special purpose
entity of $1.65 billion of transition bonds secured by payments designed to
enable TXU Electric Company to recover its generation-related regulatory assets
and other qualified costs in accordance with the 1999 Restructuring Legislation.
On May 1, 2000, the PUC signed a final order rejecting TXU Electric Company's
request for the $1.65 billion and authorized only $363 million. TXU Electric
Company filed an appeal on May 2, 2000 with the Travis County, Texas District
Court.
On September 7, 2000, the Travis County, Texas District Court issued a
final judgment reversing that part of the PUC's financing order that utilized
regulated asset life (up to 40 years) for purposes of present-valuing the
benefits of securitization. Instead, the District Court ruled that a
present-value period based upon stranded cost and regulatory asset recovery
periods authorized under the 1999 Restructuring Legislation should have been
used by the PUC. The District Court also ruled that the PUC statements in its
financing order concerning the future impact of securitization of loss on
reacquired debt were only an advisory opinion. The judgment affirmed other
aspects of the PUC's financing order and ordered the case remanded to the PUC
for further proceedings consistent with the judgment. TXU Electric Company and
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various other parties have appealed this judgment directly to the Texas Supreme
Court. TXU Electric Company expects that any difference between the $1.65
billion and the amount finally authorized will continue to be deferred until
recovery of generation-related assets is again addressed by the PUC, most likely
in 2001. TXU Electric Company is unable to predict the outcome of these
proceedings.
The constitutionality of the securitization provisions of the 1999
Restructuring Legislation under the Texas constitution has been challenged in
connection with a securitization request made by Central Power and Light
Company. In July 2000, the Travis County, Texas District Court issued its
judgment denying this appeal and finding that the securitization provisions are
constitutional. This judgment has been appealed directly to the Texas Supreme
Court. TXU Electric Company is unable to predict the outcome of such
proceedings.
In January 2000, TXU Electric Company filed with the PUC its business
separation plan as required by the 1999 Restructuring Legislation. This plan
described how TXU Electric Company proposed to separate, by September 1, 2000,
the provision of competitive energy services from its regulated business
activities and how it plans to unbundle its business by January 1, 2002 in
accordance with the 1999 Restructuring Legislation. Only the T&D functions will
continue to be regulated. An independent organization certified by the PUC will
oversee transmission system planning and reliability in the State of Texas.
Beginning January 1, 2002, retail electric customers in Texas will be able to
select their electricity providers. The portion of this plan that describes how
TXU Electric Company proposed to separate the provision of competitive energy
services from its regulated business activities has been severed by the PUC from
Docket No. 21950 and assigned Docket No. 21987. In April 2000, TXU Electric
Company and certain other parties to Docket No. 21987 filed with the PUC a
nonunanimous stipulation concerning matters at issue in that proceeding. In June
2000, the PUC issued an order in Docket No. 21987 approving this stipulation and
the TXU Electric Company plan, as modified by this stipulation.
As required by the 1999 Restructuring Legislation, in March 2000, TXU
Electric Company filed its transition to competition plan with the PUC (Docket
No. 22350). This plan lays the foundation for retail competition to begin in the
Texas electricity market. Under the plan as filed, the generation business unit
and the retail business unit of TXU Electric Company will become unregulated
entities and will be allowed to compete for customers. The T&D business units of
TXU Electric Company will be separated into regulated entities and will together
represent the regulated part of the business. The filing also includes proposed
T&D delivery rates to be charged to retail electric providers. In addition to
the actual T&D charges for delivering electricity, these rates include nuclear
decommissioning fund charges, system benefit fund charges and stranded cost
recovery charges. In that March 2000 filing, TXU Electric Company's stranded
costs were estimated to be approximately $3.7 billion, including the regulatory
assets that were part of the Docket No. 21527 proceedings and amounts related to
the remand of Docket No. 9300 (see TXU Electric Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2000). TXU Electric Company filed
an updated stranded cost estimate on August 28, 2000, to reflect various PUC
decisions made since Docket No. 22350 was filed. In the August 28, 2000 filing,
TXU Electric Company's stranded costs were estimated to be $2.8 billion.
Subsequent to the August 2000 filing, the PUC has required TXU Electric Company
to revise the stranded cost estimate to remove amounts related to regulatory
assets, certain environmental expenditures, and the remand of Docket No. 9300,
which resulted in a revised stranded cost estimate of $14 million. TXU Electric
Company has appealed certain of the PUC's decisions related to this matter to
the Travis County, Texas District Court. Various parties to Docket No. 22350
have presented stranded cost estimates ranging from negative $1.5 billion to
negative $3.5 billion along with recommendations that these amounts be returned
to customers beginning in 2002. The estimate established in Docket No. 22350 is
subject to a future "true-up" in 2004. TXU Electric Company is unable to predict
the outcome of these proceedings.
TXU ELECTRIC CAPITAL VI, TXU ELECTRIC CAPITAL VII
AND TXU ELECTRIC CAPITAL VIII
TXU Electric Capital VI, TXU Electric Capital VII and TXU Electric Capital
VIII are identical Delaware business trusts, and each will be referred to in
this prospectus as TXU Electric Capital. Each was created pursuant to a separate
trust agreement among TXU Electric Company as depositor of TXU Electric Capital,
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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
Electric Company. Each trust agreement will be amended and restated
substantially in the form filed as an exhibit to the registration statement. TXU
Electric Capital exists only to issue its preferred trust securities and common
trust securities and to hold the junior subordinated debentures of TXU Electric
Company as trust assets. All of the common trust securities will be owned by TXU
Electric Company. The common trust securities will represent at least 3% of the
total capital of TXU Electric 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 Electric Capital has a term of
approximately 40 years, but may dissolve earlier as provided in the trust
agreement. TXU Electric 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 Electric Capital is c/o TXU Electric Company, 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 Electric Company, 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 Electric Company for each
of the years ended December 31, 1995 through 1999 and for the nine months ended
September 30, 2000 are set forth in the table below. The ratios for the nine
months ended September 30, 2000 are not necessarily indicative of the results
that may be expected for an entire year.
Ratio of Earnings
Ratio of Earnings to Combined Fixed Charges
Period to Fixed Charges and Preferred Dividends
------ ---------------- -----------------------
Year ended December 31, 1995 2.0 1.7
Year ended December 31, 1996 3.0 2.6
Year ended December 31, 1997 2.9 2.7
Year ended December 31, 1998 3.3 3.1
Year ended December 31, 1999 3.2 3.1
Nine months ended September 30, 2000 4.0 3.9
DESCRIPTION OF PREFERRED STOCK
The Texas Business Corporation Act and the Restated Articles of
Incorporation, as amended, and Restated Bylaws of TXU Electric Company determine
the rights and privileges of holders of preferred 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.
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TXU Electric Company may issue one or more series of preferred stock. The
preferred stock of all series will rank equally as to dividends and
distributions upon liquidation or dissolution of TXU Electric Company.
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 Preferred Stock.
That document will be filed in Texas with the Secretary of State 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 preferred 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 preferred stock;
o Whether the series will be listed on a securities exchange;
o The date or dates on which the series of preferred stock may be
redeemed at the option of TXU Electric Company and any restrictions on
such redemptions;
o Any sinking fund or other provisions that would obligate TXU Electric
Company to repurchase, redeem or retire the series of preferred stock;
o The amount payable on the series of preferred stock in case of the
liquidation, dissolution or winding up of TXU Electric Company and any
additional amount, or method of determining such amount, payable in
case any such event is voluntary;
o Any rights to convert the shares of that series of preferred stock
into shares of another series or into shares of any other class of capital
stock; and
o Any right to vote the shares of that series of preferred stock with
respect to matters that holders of shares of preferred stock may not
otherwise be entitled to vote upon.
Shares of preferred stock issued by TXU Electric Company will be fully paid
and non-assessable.
TXU Electric Company must first pay all dividends due on preferred stock
before it pays dividends to holders of its common stock. Upon any dissolution or
liquidation of TXU Electric Company, amounts due to holders of preferred stock
will be paid before any distribution of assets to holders of common stock.
TXU Electric Company has issued junior subordinated debentures in
connection with preferred trust securities previously issued by its
subsidiaries, TXU Electric Capital I, TXU Electric Capital II, TXU Electric
Capital III, TXU Electric Capital IV, and TXU Electric Capital V. TXU Electric
Company has a right, from time to time, to delay interest payments for those
junior subordinated debentures for up to 20 consecutive quarters. TXU Electric
Company may issue, from time to time, additional junior subordinated debentures
in connection with the preferred trust securities described in this prospectus.
TXU Electric Company may have a similar right to delay interest payments for
those additional junior subordinated debentures. If TXU Electric Company
exercises any right to delay an interest payment, it would not be able to pay
dividends on its common stock or preferred stock during the extension period.
For a further description of TXU Electric Company's rights to delay payment,
read DESCRIPTION OF PREFERRED TRUST SECURITIES AND COMMON TRUST SECURITIES and
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES in this prospectus.
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Unless otherwise provided with respect to a particular series of preferred
stock, the holders of preferred stock have voting rights only in the following
circumstances:
o If dividends have not been paid for six full quarters, holders of
preferred stock may elect a majority of TXU Electric Company's Board of
Directors;
o TXU Electric Company needs the approval of the holders of a majority
of the outstanding shares of the preferred stock in order to make the
following changes in its capital structure:
- Authorizing a new class of stock that ranks senior to the
preferred 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
- Altering any of the express terms of the outstanding preferred
stock in a manner substantially prejudicial to holders of the
outstanding preferred stock, unless the change does not affect
every series of preferred stock, in which case holders of only
those series affected may vote.
In addition, TXU Electric Company needs the approval of the holders of a
majority of the outstanding shares of the preferred stock in order to take any
of the following actions:
o create or assume any unsecured debt (other than refunding,
replacement, retirement or acquisition debt) having a maturity of more than
one year, unless for a period of twelve months out of the immediately
preceding fifteen months, net earnings available for the payment of
interest were at least 2 times the interest charges on all outstanding
indebtedness having a maturity of more than one year; or
o issue, sell or dispose of shares of preferred stock (including those
outstanding) or stock ranking equal or senior to preferred stock, unless
net income available for the payment of dividends for a period of twelve
months within the fifteen months immediately preceding the issuance is at
least 2 times the annual dividend requirements on all outstanding shares of
preferred stock and all other classes of stock ranking equal or senior to
preferred stock, including the shares proposed to be issued; or
o pay any dividend on any stock junior to preferred stock which would
reduce retained earnings to less than 1 1/2 times the annual dividend
requirement on preferred stock and stock ranking equal or prior to
preferred stock outstanding.
TXU Electric Company's Articles of Incorporation limit the payment of
annual dividends on the common stock to 75% of current net income available for
such dividends when the common stock equity is less than (or by the declaration
would become less than) 20% of total capitalization. The payment of dividends on
common stock is unlimited when common stock equity is 20% or more of such total
capitalization, except when paying such dividends would bring common equity
within the limits specified in the preceding sentence. Certain other limitations
on payment of common stock dividends are also contained in TXU Electric
Company's Mortgage and Deed of Trust, as described below under DESCRIPTION OF
FIRST MORTGAGE BONDS.
The preferred stock offered by this prospectus will have no subscription
rights, conversion rights or preemptive rights.
The Transfer Agent and the Registrar for the preferred stock offered by
this prospectus will be TXU Business Services Company, an affiliate of TXU
Electric Company, or such other entity as may be appointed by TXU Electric
Company.
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DESCRIPTION OF DEPOSITARY SHARES
TXU Electric Company may offer preferred stock represented by depositary
shares and issue depositary receipts evidencing the depositary shares. Each
depositary share will represent a fraction of a share of preferred stock. Shares
of preferred stock of each class or series represented by depositary shares will
be deposited under a separate deposit agreement among TXU Electric Company, a
bank or trust company acting as depositary (the depositary) and the holders of
the depositary receipts. Subject to the terms of the deposit agreement, each
holder of a depositary receipt will be entitled, in proportion to the fraction
of a share of preferred stock represented by the depositary shares evidenced by
the depositary receipt, to all the rights and preferences of the preferred stock
represented by those depositary shares. Those rights include any dividend,
voting, conversion, redemption and liquidation rights. Immediately following the
issuance of the preferred stock to the depositary, TXU Electric Company will
cause the depositary to issue depositary receipts on its behalf.
The form of the deposit agreement was filed with the SEC and you should
read the deposit agreement for provisions that may be important to you.
If depositary shares are offered, the applicable prospectus supplement will
describe the terms of such depositary shares, the deposit agreement and, if
applicable, the depositary receipts, including the following, where applicable:
o the payment of dividends or other cash distributions to the holders of
depositary receipts when the dividends or other cash distributions are made
with respect to the preferred stock;
o the voting by a holder of depositary shares of the preferred stock
underlying the depositary shares at any meeting called for that purpose;
o if applicable, the redemption of depositary shares upon the redemption
of shares of preferred stock held by the depositary;
o if applicable, the exchange of depositary shares upon an exchange by
TXU Electric Company of shares of preferred stock held by the depositary
for debt securities or common stock;
o if applicable, the conversion of the shares of preferred stock
underlying the depositary shares into shares of TXU Electric Company's
common stock, other shares of TXU Electric Company's preferred stock or
debt securities;
o the terms upon which the deposit agreement may be amended and
terminated;
o a summary of the fees to be paid by TXU Electric Company to the
depositary;
o the terms upon which a depositary may resign or be removed; and
o any other terms of the depositary shares, the deposit agreement and
the depositary receipts.
Pending the preparation of definitive engraved depositary receipts, the
depositary may, upon the written order of TXU Electric Company, issue temporary
depositary receipts substantially identical to (and entitling its holders to all
the rights pertaining to) the definitive depositary receipts. Definitive
depositary receipts will be prepared thereafter and will be exchangeable for
temporary depositary receipts at TXU Electric Company's expense.
Prospective purchasers of depositary shares should be aware that special
tax, accounting and other considerations may be applicable to instruments such
as depositary shares. The amounts paid as dividends or otherwise distributable
by the depositary with respect to the depositary shares or the underlying shares
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of preferred stock will be reduced by any amounts required to be withheld by TXU
Electric Company or the depositary on account of taxes or other governmental
charges. Any such payment of dividends or distribution by the depositary, or any
transfer, exchange or withdrawal of any depositary shares or shares of preferred
stock may be withheld until such taxes or other governmental charges are paid.
DESCRIPTION OF FIRST MORTGAGE BONDS
The first mortgage bonds will be issued under the TXU Electric Company's
Mortgage and Deed of Trust, dated as of December 1, 1983, with The Bank of New
York, as Trustee (Mortgage Trustee), as supplemented by sixty supplemental
indentures (collectively, the Mortgage). All first mortgage bonds issued or to
be issued under the Mortgage, including the first mortgage bonds offered by this
prospectus, are collectively referred to in this prospectus as First Mortgage
Bonds. Material terms of the First Mortgage Bonds are summarized below. The
Mortgage was filed with the SEC and you should read the Mortgage for provisions
that may be important to you. Whenever particular provisions or defined terms in
the Mortgage are referred to under this DESCRIPTION OF FIRST MORTGAGE BONDS,
such provisions or defined terms are incorporated by reference in this
prospectus.
A prospectus supplement relating to any series of First Mortgage Bonds
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 designation of the series of First Mortgage Bonds and aggregate
principal amount of First Mortgage Bonds;
o the date or dates on which the series will mature;
o the rate or rates per annum at which the series will bear interest;
o the times at which such interest will be payable;
o the redemption terms, if any;
o any provisions relating to any policy of financial guaranty insurance
issued with respect to such series;
o form and denomination; and
o right to tender the First Mortgage Bonds of such series prior to
maturity, or other specific terms.
The First Mortgage Bonds are, or will be, secured by a first mortgage lien
on substantially all of TXU Electric Company's property as described below under
--"Security and Priority." All First Mortgage Bonds are equally secured and rank
equally with respect to each other.
The First Mortgage Bonds offered by this prospectus may be transferred or
exchanged without charge, other than for applicable taxes or other governmental
charges, at The Bank of New York, in the City of New York.
REDEMPTION, REPAYMENT OR PURCHASE OF FIRST MORTGAGE BONDS.
The First Mortgage Bonds may be redeemable, either at the option of TXU
Electric Company or as required by the Mortgage, on not less than 30 days'
notice.
If at the time notice of redemption is given the redemption moneys are not
on deposit with the Mortgage Trustee, the redemption may be made subject to
their receipt on or before the date fixed for redemption and such notice shall
be of no effect unless redemption moneys are so received.
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While the Mortgage contains provisions for the maintenance of the mortgaged
and pledged property, the Mortgage does not permit redemption of First Mortgage
Bonds pursuant to these provisions.
There is no sinking fund under the Mortgage.
Cash deposited under any provisions of the Mortgage may be applied (with
certain exceptions) to the purchase or redemption of First Mortgage Bonds of any
series. (Mortgage, Arts. XII and XIII.)
In addition to or in lieu of any terms of redemption, TXU Electric Company
may grant holders of a particular series of First Mortgage Bonds the right to
tender their First Mortgage Bonds prior to maturity to TXU Electric Company for
repayment at stated prices and at stated times. The prospectus supplement
relating to such a series of First Mortgage Bonds will contain the terms of any
right to tender those First Mortgage Bonds.
SECURITY AND PRIORITY.
The First Mortgage Bonds are, or will be, secured by a first lien on
substantially all of TXU Electric Company's property other than cash and
securities (except those specifically deposited); equipment, materials or
supplies held for sale or other disposition; any fuel and similar consumable
materials and supplies; automobiles, other vehicles, aircraft and vessels;
timber, minerals, mineral rights and royalties; receivables, contracts, leases
and operating agreements; electric energy, gas, water, steam, ice and other
products for sale, distribution or other use; natural gas wells; and gas
transportation lines or other property used in the sale of natural gas to
customers or to a natural gas distribution or pipeline company, up to the point
of connection with any distribution system.
In addition, the first mortgage lien is subject to certain encumbrances,
including tax and construction liens, purchase money liens and certain other
exceptions.
The Mortgage contains provisions that impose the lien of the Mortgage on
property acquired by TXU Electric Company after the date of the Mortgage, other
than the excepted property described above and subject to pre-existing liens
such as purchase money mortgages and other liens or defects in title. However,
if TXU Electric Company consolidates or merges with or conveys or transfers all
or substantially all of the mortgaged property to another corporation, the lien
created by the Mortgage will generally not cover the property of the successor
company, other than the property it acquires from TXU Electric Company and
improvements, extensions, replacements and additions to that property.
(Mortgage, Sec. 18.03.)
The Mortgage provides that the Mortgage Trustee shall have a lien upon the
mortgaged property, prior to the First Mortgage Bonds, for the payment of its
reasonable compensation and expenses and for indemnity against certain
liabilities. (Mortgage, Sec. 19.09.)
ISSUANCE OF ADDITIONAL FIRST MORTGAGE BONDS.
The maximum principal amount of First Mortgage Bonds which may be issued
under the Mortgage is unlimited. First Mortgage Bonds of any series may be
issued from time to time on the basis of:
(1) 70% of qualified property additions after adjustments to offset
retirements;
(2) retirement of First Mortgage Bonds or certain prior lien bonds; and/or
(3) deposits of cash.
With certain exceptions, in the case of (2) above, the issuance of First
Mortgage Bonds must meet an earnings test. The adjusted net earnings before
income taxes for 12 out of the preceding 15 months must be at least twice the
annual interest requirements on all First Mortgage Bonds at the time
outstanding, including the additional issuance and all other senior ranking
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indebtedness. In general, interest on variable interest bonds, if any, is
calculated using the average rate in effect during the 12 month period.
Property additions generally include electric, gas, steam and/or hot water
utility property but not fuel, securities, automobiles, other vehicles or
aircraft, or property used principally for the production or gathering of
natural gas.
As of September 30, 2000, unfunded net property additions of approximately
$8.31 billion were available under the Mortgage. Up to approximately $5.82
billion aggregate principal amount of First Mortgage Bonds could be issued based
on such property additions and on December 20, 2000, $575 million aggregate
principal amount of First Mortgage Bonds were issued based on $821 million of
such property additions. In addition, approximately $4.75 billion aggregate
principal amount of First Mortgage Bonds could be issued on the basis of First
Mortgage Bonds that have been retired, subject, where applicable, to the
earnings test and other requirements of the Mortgage.
The Mortgage contains certain restrictions upon the issuance of First
Mortgage Bonds against property additions subject to prior liens. (Mortgage,
Secs. 1.04 to 1.07 and 3.01 to 7.01.)
It is expected that the First Mortgage Bonds offered by this prospectus
will be issued upon the basis of the retirement of First Mortgage Bonds or
property additions.
RELEASE AND SUBSTITUTION OF PROPERTY.
Property subject to the first mortgage lien may be released upon the basis
of:
(1) the deposit of cash or, to a limited extent, purchase money mortgages;
(2) property additions, after making adjustments in certain cases to offset
retirement and after making adjustments for prior lien bonds outstanding
against property additions; and/or
(3) waiver of the right to issue First Mortgage Bonds,
in each case without applying any earnings test.
Cash may be withdrawn upon the bases stated in (2) and (3) above.
When property released is not funded property, property additions used to
effect the release may be available as credits under the Mortgage. Similar
provisions are in effect as to cash proceeds of such property. The Mortgage
contains special provisions with respect to certain prior lien bonds deposited
and disposition of moneys received on deposited prior lien bonds. (Mortgage,
Secs. 1.05, 7.02, 7.03, 9.05, 10.01 to 10.04 and 13.03 to 13.09.)
DIVIDEND RESTRICTIONS.
The Mortgage provides that TXU Electric Company may declare or pay
dividends (other than dividends payable solely in shares of its common stock) on
any shares of its common stock only out of the unreserved and unrestricted
retained earnings and will not make any such declaration or payment when it is
insolvent, or when the payment thereof would render TXU Electric Company
insolvent. (Mortgage, Sec. 9.07.)
The amount restricted is subject to being increased or decreased on the
basis of various factors, and any restricted retained earnings can be otherwise
used by TXU Electric Company.
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SPECIAL PROVISIONS FOR RETIREMENT OF FIRST MORTGAGE BONDS.
If mortgaged property is condemned or sold (other than in a project to be
jointly owned by TXU Electric Company and others) to any governmental authority
resulting in the receipt of $50,000,000 or more as proceeds, TXU Electric
Company (subject to certain conditions) must apply such proceeds, less certain
deductions, to the retirement of First Mortgage Bonds. (Mortgage, Sec. 9.14.)
MODIFICATION
The rights of bondholders may be modified with the consent of holders of
60% of all First Mortgage Bonds outstanding, or, if less than all series of
First Mortgage Bonds are adversely affected, the consent of the holders of 60%
of the First Mortgage Bonds adversely affected and (unless First Mortgage Bonds
issued prior to 1989 are retired or the holders of those First Mortgage Bonds
otherwise consent) of the holders of a majority of all First Mortgage Bonds. In
general, no modification of the terms of payment of principal, premium, if any,
or interest and no modification affecting the first lien or reducing the
percentage required for modification, is effective against any bondholder
without such holder's consent. (Mortgage, Art. XXI.)
DEFAULTS AND NOTICE OF DEFAULTS
"Defaults" are defined in the Mortgage as:
o default in payment of principal;
o default for 60 days in payment of interest or an installment of any
fund required to be applied to the purchase or redemption of any First
Mortgage Bonds;
o default in payment of principal or interest with respect to certain
prior lien bonds;
o certain events in bankruptcy, insolvency or reorganization; and
o default in other covenants for 90 days after notice. (Mortgage, Sec.
15.01.)
The Mortgage Trustee may withhold notice of default, except in the case of
a default in the payment of principal, interest or an installment of any fund
required to be applied to the purchase or redemption of any First Mortgage
Bonds, if it determines that doing so is in the best interest of the
bondholders. (Mortgage, Sec. 15.02.)
The Mortgage Trustee or the holders of 25% of the First Mortgage Bonds may
declare the principal and interest due and payable on default, but a majority
may annul such declaration if such default has been cured. (Mortgage, Sec.
15.03.)
No holder of First Mortgage Bonds may enforce the lien of the Mortgage
without giving the Mortgage Trustee written notice of a default and unless the
holders of 25% of the First Mortgage Bonds have requested the Mortgage Trustee
to act and have offered it reasonable opportunity to act and indemnity
satisfactory to it against the costs, expenses and liabilities to be incurred
thereby and the Mortgage Trustee shall have failed to act. (Mortgage, Sec.
15.16.)
The holders of a majority of the First Mortgage Bonds may direct the time,
method and place of conducting any proceedings for any remedy available to the
Mortgage Trustee or exercising any trust or power conferred on the Mortgage
Trustee. (Mortgage, Sec. 15.07.)
The Mortgage Trustee is not required to risk its funds or incur personal
liability if there is reasonable ground for believing that repayment is not
reasonably assured. (Mortgage, Sec. 19.08.)
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SATISFACTION AND DISCHARGE
Upon TXU Electric Company making due provision for the payment of all of
the First Mortgage Bonds and paying all other sums due under the Mortgage, the
Mortgage will cease to be of further effect and may be discharged. (Mortgage,
Art. XX.)
ANNUAL REPORT TO THE MORTGAGE TRUSTEE
TXU Electric Company must give the Mortgage Trustee an annual statement as
to whether or not TXU Electric Company has fulfilled its obligations under the
Mortgage throughout the preceding calendar year.
DESCRIPTION OF DEBT SECURITIES
The debt securities will be TXU Electric Company's direct unsecured general
obligations. The debt securities will be issued in one or more series under an
Indenture (For Unsecured Debt Securities) dated as of August 1, 1997 or under
one or more separate indentures between TXU Electric Company 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 Electric Company's
other unsecured and unsubordinated debt. Unless otherwise specified in a
prospectus supplement, the indenture will not limit the amount of unsecured debt
which may be issued by TXU Electric Company. As of the date hereof, TXU Electric
Company's secured indebtedness amounted to approximately $4.39 billion.
TXU Electric Company may from time to time issue, under a separate
indenture, debt securities secured by the First Mortgage Bonds. The First
Mortgage Bonds will be pledged and delivered to the trustee for the benefit of
the holders of debt securities so secured. As holder of the First Mortgage
Bonds, the trustee will be entitled, proportionally with the holders of all
other First Mortgage Bonds outstanding under the Mortgage, to the benefit of a
lien on substantially all the properties of TXU Electric Company.
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;
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o Any right to delay the interest payments for the debt securities;
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 Electric Company and any restrictions on those
redemptions;
o Any sinking fund or other provisions that would obligate TXU Electric
Company 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 Electric Company 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 Electric Company 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 Electric Company may issue.
TXU Electric Company 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 Electric Company.
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 Electric Company 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.)
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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 Electric
Company. TXU Electric Company may change the place of payment on the debt
securities, may appoint one or more additional paying agents (including TXU
Electric Company) and may remove any paying agent, all at the discretion of TXU
Electric Company. (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
and with the same terms and principal amount, at the offices of TXU Business
Services Company in Dallas, Texas. TXU Electric Company 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
Electric Company may require payment to cover any tax or other governmental
charge that may be imposed. TXU Electric Company 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 Electric Company 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.)
ASSIGNMENT OF OBLIGATIONS
If and to the extent permitted under the officer's certificate establishing
a series of debt securities, TXU Electric Company may assign its obligations
under that series of debt securities and the related indenture. The terms and
conditions and any material United States federal income tax consequences of any
permitted assignment shall be described in the prospectus supplement relating to
the series of debt securities.
CONSOLIDATION, MERGER, AND SALE OF ASSETS
Under the terms of the indenture, TXU Electric Company 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
Electric Company'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 Electric Company shall have delivered to the trustee an officer's
certificate and an opinion of counsel as provided in the indenture.
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The terms of the indenture do not restrict TXU Electric Company in a merger
in which TXU Electric Company 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 Electric Company receives written notice
from the trustee, or TXU Electric Company 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 Electric
Company 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.)
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 Electric Company 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
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(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 Electric Company. (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.)
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 Electric Company will provide to the trustee an annual statement by an
appropriate officer as to TXU Electric Company'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 Electric Company 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 Electric Company in the indenture and in the debt securities;
o To add additional covenants of TXU Electric Company or to surrender
any right or power of TXU Electric Company under the indenture;
o To add additional events of default under the indenture;
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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 Electric Company 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
Electric Company 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.)
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
Electric Company 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
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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 Electric Company
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 Electric Company 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
Electric Company shall have no obligation to do so. If TXU Electric Company
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 Electric Company 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 Electric
Company 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 Electric Company. 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 Electric Company has delivered to the trustee a
resolution of its Board of Directors appointing a successor trustee and such
successor has accepted the appointment 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.)
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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 Electric Company, the trustee, and any agent of TXU Electric Company 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 Electric Company and its
affiliates. TXU Electric Company and its 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 PREFERRED TRUST SECURITIES AND COMMON TRUST SECURITIES
TXU Electric 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 Electric
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
Electric Capital will be substantially the same except that, if TXU Electric
Capital fails to make required payments, the rights of TXU Electric Company 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
Electric Capital except for the administrative trustees. All of the common trust
securities of TXU Electric Capital will be owned by TXU Electric Company.
TXU Electric Company will fully and unconditionally guarantee payments due
on the preferred trust securities through a combination of the following:
o TXU Electric Company's obligations under the junior subordinated
debentures;
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o The rights of holders of preferred trust securities to enforce those
obligations;
o TXU Electric Company's agreement to pay the expenses of TXU Electric
Capital; and
o TXU Electric Company's guarantee of payments due on the preferred
trust securities to the extent of TXU Electric 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 Electric Company. It is only the combined operation of these documents
that has the effect of providing a full and unconditional guarantee by TXU
Electric Company of the preferred trust securities.
If and to the extent permitted under the amended and restated trust
agreement of TXU Electric Capital, TXU Electric Company may assign its rights
and obligations relating to preferred trust securities. The obligations which
TXU Electric Company could assign would include its obligations under the junior
subordinated debentures, its agreement to pay expenses of TXU Electric Capital
and its guarantee of payments due on the preferred trust securities to the
extent of TXU Electric Capital's assets. The terms and conditions and any
material United States federal income tax consequences of any permitted
assignment shall be described in the prospectus supplement relating to the
preferred trust securities of TXU Electric Capital.
TXU Electric Capital will use the proceeds from the sale of the preferred
trust securities and common trust securities to purchase junior subordinated
debentures from TXU Electric Company 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 Electric
Company 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 JUNIOR SUBORDINATED DEBENTURES below.
DISTRIBUTIONS
The only income of TXU Electric Capital available for distribution to the
holders of preferred trust securities will be payments on the junior
subordinated debentures. If TXU Electric Company does not make interest payments
on the junior subordinated debentures (or does not pay the expenses of TXU
Electric Capital), TXU Electric Capital will not have funds available to pay
distributions on preferred trust securities. The payment of distributions, if
and to the extent TXU Electric Capital has sufficient funds available for the
payment of such distributions, is guaranteed on a limited basis by TXU Electric
Company.
So long as there is no default in the payment of interest on the junior
subordinated debentures, TXU Electric Company 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 Electric Company extends the interest period or is in default under the
guarantee or with respect to payments on the junior subordinated debentures, TXU
Electric Company 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 Electric
Company;
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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;
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 Electric Company 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 Electric Company 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 Electric Capital has
funds available for the payment of the redemption price plus accrued and unpaid
distributions. (Trust Agreement, Section 4.02(c).)
Notice of redemption of preferred trust securities will be irrevocable. On
or before the redemption date, TXU Electric 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 Electric
Capital or by TXU Electric Company 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 Electric Company 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
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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 Electric 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 Electric Capital;
o The bankruptcy, dissolution or liquidation of TXU Electric Company;
o Redemption of all of the preferred trust securities;
o The entry of an order for dissolution of TXU Electric Capital by a
court of competent jurisdiction; and
o At any time, at the election of TXU Electric Company.
(Trust Agreement, Sections 9.01 and 9.02.)
If an early dissolution occurs because of bankruptcy, dissolution or
liquidation of TXU Electric Company, if all the preferred trust securities are
redeemed, or if TXU Electric Company so elects, TXU Electric 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 Electric 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 Electric Capital has
insufficient assets available to pay in full the aggregate liquidation
distribution, then the amounts payable directly by TXU Electric 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
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hold. TXU Electric Company, 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 Electric 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 be voluntary or involuntary or 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 Electric 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 Electric 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 Electric 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 Electric 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 Electric Company
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).)
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.)
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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 Electric Company 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 Electric 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 Electric 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 Electric Company, any trustee under the
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trust agreement or any affiliate of TXU Electric Company, 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 Electric Capital, who may be
appointed, removed or replaced solely by TXU Electric Company 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 Electric
Capital and TXU Electric Company, 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
o 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 Electric 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 Electric
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 or 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 Electric Company 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 Electric Capital to be
classified for federal income tax purposes as an association taxable as a
corporation or affect TXU Electric 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.)
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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 Electric Capital may at the time be located, TXU Electric Company, 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 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
Electric Company, 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 Electric
Company, 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 TXU Electric Capital 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 Electric Company for such purpose. TXU Electric
Company 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 Electric Company 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 Electric Capital or TXU Electric
Company 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 Electric Company 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 Electric Company will be required to maintain a
transfer agent in each place of payment for preferred trust securities.
TXU Electric 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. (Trust Agreement, Section 5.04)
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 Electric 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 Electric Capital or TXU Electric Company
may require.
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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 Electric Company and its affiliates.
TXU Electric Company and its 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 Electric 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.
The administrative trustees of TXU Electric Capital are authorized and
directed to conduct the affairs of TXU Electric Capital and to operate TXU
Electric Capital so that TXU Electric 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
Electric Company 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 Electric Company 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.
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GENERAL TERMS OF THE GUARANTEE
TXU Electric Company 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 Electric Capital, as and when due,
regardless of any defense, right of set-off or counterclaim that TXU Electric
Company 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 Electric 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 Electric
Capital, to the extent TXU Electric Capital has sufficient funds for
payments; and
o Upon a voluntary or involuntary dissolution, winding-up or termination
of TXU Electric 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 Electric Capital has funds
available therefor; and
(2) the amount of assets of TXU Electric Capital remaining available
for distribution to holders of preferred trust securities in
liquidation of TXU Electric Capital.
TXU Electric Company's obligation to make a guarantee payment may be satisfied
by direct payment of the required amounts by TXU Electric Company to the holders
of preferred trust securities or by causing TXU Electric Capital to pay those
amounts to those holders. (Guarantee Agreement, Sections 1.01 and 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 Electric Capital does not have funds available to make those
payments or to any collection of payment.
If TXU Electric Company does not make interest payments on the junior
subordinated debentures held by TXU Electric Capital, TXU Electric 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 Electric Company except liabilities that are equal in right
of payment by their terms. (Guarantee Agreement, Section 6.01.)
TXU Electric Company will enter into an Agreement as to Expenses and
Liabilities with TXU Electric Capital, to provide funds to TXU Electric Capital
as needed to pay obligations of TXU Electric Capital to parties other than
holders of preferred trust securities. The junior subordinated debentures and
the guarantee, together with the obligations of TXU Electric Company 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 Electric Company. 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 Electric Company
of the preferred trust securities.
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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 Electric Company and will inure to the benefit of the
holders of the preferred trust securities then outstanding. (Guarantee
Agreement, Section 8.01.)
If and to the extent permitted under the guarantee relating to preferred
trust securities of TXU Electric Capital, TXU Electric Company may assign its
obligations under the guarantee. The terms and conditions and any material
United States federal income tax consequences of any permitted assignment shall
be described in the prospectus supplement relating to the preferred trust
securities.
EVENTS OF DEFAULT
An event of default under the guarantee will occur if TXU Electric Company
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 Electric Company to enforce the guarantee
trustee's rights under the guarantee without first instituting a legal
proceeding against TXU Electric Capital, the guarantee trustee or anyone else.
(Guarantee Agreement, Section 5.04.)
TXU Electric Company will be required to provide an annual statement to the
guarantee trustee about TXU Electric Company's performance of some of its
obligations under the guarantee and any default in its performance of the
obligations.
TXU Electric Company will also be required to file annually with the
guarantee trustee an officer's certificate as to TXU Electric Company'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
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 Electric Company
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and its affiliates. TXU Electric Company and its 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 Electric
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 Electric Company and
will rank:
o Subordinate and junior in right of payment to all liabilities of TXU
Electric Company, 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 Electric Company and with any guarantee
that may be entered into by TXU Electric Company in respect of any
preferred or preference stock of any affiliate of TXU Electric Company; and
o Senior to TXU Electric Company'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
Electric Company to enforce its rights under the guarantee without first
instituting a legal proceeding against anyone else.
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.)
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The junior subordinated debentures which the property trustee will hold on
behalf of TXU Electric Capital as trust assets will be subordinated obligations
of TXU Electric Company. The junior subordinated debentures will be issued in
one or more series under an Indenture (For Unsecured Subordinated Debt
Securities relating to Trust Securities), dated as of December 1, 1995 or under
one or more separate subordinated indentures between TXU Electric Company and
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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 Electric Capital will
constitute a separate series of junior subordinated debentures under the
subordinated indenture.
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 Electric Company and any restrictions on
those redemptions;
o Any sinking fund or other provisions that would obligate TXU Electric
Company 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
Electric Company 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 of TXU Electric Company to assign its obligations under the
junior subordinated debentures and the subordinated indenture;
o Any collateral, security, assurance or guarantee for the junior
subordinated debentures; and
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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 Electric
Company for the common trust securities for the related TXU Electric Capital
trust. The junior subordinated debentures are unsecured, subordinated
obligations of TXU Electric Company which rank junior to all of TXU Electric
Company'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 Electric Company, for borrowed
money that is not subordinate or junior in right of payment to any other
indebtedness of TXU Electric Company unless by its terms it is equal in right of
payment to the junior subordinated debentures. The obligations of TXU Electric
Company 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 Electric 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 Electric Company 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 Electric Capital is the holder of all the related
outstanding junior subordinated debentures, the proceeds of any optional
redemption will be used by TXU Electric 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.)
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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 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 Electric Company 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 Electric Company extends the interest period or is in default
under the guarantee or with respect to payments on the junior subordinated
debentures, TXU Electric Company 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 Electric
Company;
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 Electric Company 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 Electric Company may select a new extension period. No interest period may
be extended beyond the maturity of the junior subordinated debentures. TXU
Electric Company will give TXU Electric 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
Electric Company did not make the election to extend or (2) the date TXU
Electric Company is required to give notice to the New York Stock Exchange or
any other applicable self-regulatory organization of the record date. TXU
Electric Company will cause TXU Electric 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
Electric 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 Electric Company 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 Electric Capital after the payment of those
taxes, duties, assessments or governmental charges will be the same as TXU
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Electric 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
If and to the extent permitted under the junior subordinated debentures
relating to preferred trust securities of TXU Electric Capital, TXU Electric
Company may assign its obligations under the junior subordinated debentures and
the subordinated indenture. The terms and conditions and any material United
States federal income tax consequences of any permitted assignment shall be
described in the prospectus supplement relating to the preferred trust
securities.
DEFEASANCE
TXU Electric Company 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 Electric Company (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
Electric Company;
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 Electric Company 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 September 30, 2000 TXU Electric Company
had approximately $2.11 billion principal amount of indebtedness for borrowed
money constituting Senior Indebtedness.
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CONSOLIDATION, MERGER, AND SALE OF ASSETS
Under the terms of the subordinated indenture, TXU Electric Company 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
Electric Company'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 Electric Company 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.)
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
Electric Company receives written notice from the debenture trustee or TXU
Electric Company 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 Electric Company; 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.
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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 Electric Company 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.
There is no automatic acceleration, even in the event of bankruptcy,
insolvency or reorganization of TXU Electric Company. (Subordinated Indenture,
Section 802.)
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
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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
subordinated junior debenture on or after the applicable due date. (Subordinated
Indenture, Section 808.)
TXU Electric Company will provide to the debenture trustee an annual
statement by an appropriate officer as to TXU Electric Company'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 Electric Company as a holder of the
junior subordinated debentures. However, a holder of preferred trust securities
may enforce the subordinated indenture directly against TXU Electric Company 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 Electric Company 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 Electric Company 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
Electric Company and the debenture 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 Electric Company in the subordinated indenture and in the junior
subordinated debentures;
o To add additional covenants of TXU Electric Company or to surrender
any right or power of TXU Electric Company 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
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(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 Electric Company 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 Electric Company 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 Electric Company 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 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;
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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 Electric Company 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 Electric Company 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
Electric Company shall have no obligation to do so. If TXU Electric Company
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 Electric Company 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 Electric Company 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 Electric Company. 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 Electric Company has delivered to the 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.
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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 Electric Company, the debenture trustee, and any agent of TXU Electric
Company 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 Electric Company and its
affiliates. TXU Electric Company 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 the 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 Electric Company and TXU Electric 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, as amended (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 (IRS) 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.
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UNITED STATES HOLDERS
As used in this prospectus, a "United States holder" means a beneficial
owner of a preferred trust security that is:
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 ELECTRIC 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 Electric Capital and other documents, TXU Electric
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 Electric Company
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 IRS 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 Electric Company 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 Electric Company
to defer interest payments on the junior subordinated debentures at any time and
from time to time for up to 20 consecutive quarters. TXU Electric Company
believes that the likelihood of a deferral of interest payments on the junior
subordinated debentures is remote. Under applicable United States federal
Treasury Regulations, a remote contingency may be disregarded in determining the
existence of original issue discount (OID). Disregarding TXU Electric Company's
deferral right, all interest payments on the junior subordinated debentures
should be treated as payments of "qualified stated interest." Accordingly, the
mere existence of the right to defer interest payments on the junior
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subordinated debentures should not cause the junior subordinated debentures to
be treated as issued with an original issue discount.
If, however, TXU Electric Company 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
Electric Company 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 IRS and it is
possible that the IRS could take a contrary 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 the 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 would 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
ELECTRIC CAPITAL
The junior subordinated debentures may be distributed to United States
holders in exchange for the preferred trust securities upon liquidation of TXU
Electric Capital. Unless the liquidation of TXU Electric Capital occurs at a
time when TXU Electric Capital has become 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 Electric Capital were to occur
at a time when TXU Electric Capital had become 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 Electric 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."
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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.
ASSIGNMENT OF OBLIGATIONS
If and to the extent permitted under the amended and restated trust
agreement of TXU Electric Capital, TXU Electric Company may assign its rights
and obligations relating to preferred trust securities, including its
obligations under the junior subordinated debentures, its agreement to pay
expenses of TXU Electric Capital and its guarantee of payments due on the
preferred trust securities to the extent of TXU Electric Capital's assets. Any
material United States federal income tax consequences of a permitted assignment
shall be described in the prospectus supplement relating to the preferred trust
securities of TXU Electric Capital.
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 Electric 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 Electric Capital currently intends to report that information on Form 1099
by 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 Electric Capital. TXU Electric 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 Electric 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 IRS.
PLAN OF DISTRIBUTION
The preferred stock, depositary shares, first mortgage bonds, debt
securities and preferred trust securities described in this prospectus may be
offered (a) through agents; (b) through underwriters or dealers; or (c) directly
to purchasers.
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BY AGENTS
The preferred stock, depositary shares, first mortgage bonds, debt
securities, and preferred trust securities may be sold through agents designated
by TXU Electric Company or TXU Electric Capital.
BY UNDERWRITERS
If underwriters are used in the sale of the preferred stock, depositary
shares, first mortgage bonds, debt securities and 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 Electric Company or TXU Electric 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 preferred stock, depositary shares, first mortgage bonds, debt
securities and preferred trust securities may also be sold directly by TXU
Electric Company or TXU Electric Capital. In that case, no underwriters or
agents would be involved.
GENERAL INFORMATION
Underwriters, dealers and agents that participate in the distribution of
the preferred stock, depositary shares, first mortgage bonds, debt securities
and preferred trust securities may be underwriters as defined in the Securities
Act and any discounts or commissions received by them from TXU Electric Company
or TXU Electric 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 Electric Company or TXU Electric Capital may authorize agents and
underwriters to solicit offers by certain institutions to purchase preferred
stock, depositary shares, first mortgage bonds, debt securities, and preferred
trust securities at the public offering price and on terms described in the
applicable prospectus supplement.
TXU Electric Company 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.
None of the preferred stock, depositary shares, first mortgage bonds, debt
securities or preferred trust securities has an established trading market. TXU
Electric Company may decide to list any series of securities on a securities
exchange. However, TXU Electric Company will not be obligated to list securities
on an exchange unless it states otherwise in a prospectus supplement. TXU
Electric Company cannot assure that there will be any liquidity of the trading
market for any of the preferred stock, depositary shares, first mortgage bonds,
debt securities and preferred trust securities.
Agents, underwriters and dealers may engage in transactions with, or
perform services for, TXU Electric Company, TXU Corp. or TXU Corp.'s
subsidiaries in the ordinary course of business.
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EXPERTS AND LEGALITY
The consolidated financial statements of TXU Electric Company and
subsidiaries included in the latest Annual Report of TXU Electric Company on
Form 10-K, incorporated herein by reference, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report included in said
latest Annual Report of TXU Electric Company on Form 10-K, and have been
incorporated by reference herein in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
With respect to any unaudited condensed consolidated interim financial
information included in TXU Electric Company's Quarterly Reports on Form 10-Q
which are or will be incorporated herein by reference, Deloitte & Touche LLP has
applied limited procedures in accordance with professional standards for reviews
of such information. As stated in any of their reports included in TXU Electric
Company's Quarterly Reports on Form 10-Q, which are or will be incorporated
herein by reference, 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 1933 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 1933 Act with respect to the preferred
stock, depositary shares, first mortgage bonds, debt securities and preferred
trust securities prepared or certified by an accountant within the meaning of
Sections 7 and 11 of the 1933 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
Electric Capital are being passed upon by Richards, Layton & Finger, P.A.,
special Delaware counsel for TXU Electric Company and TXU Electric Capital. The
legality of the other securities offered in this prospectus will be passed upon
for TXU Electric Company and TXU Electric Capital by Worsham Forsythe Wooldridge
LLP, Dallas, Texas and by Thelen Reid & Priest LLP, New York, New York and for
the underwriters by Pillsbury Winthrop LLP, New York, New York. However, all
matters pertaining to the incorporation of TXU Electric Company and all other
matters of Texas law will be passed upon only by Worsham Forsythe Wooldridge
LLP. At December 31, 2000, members of the firm of Worsham Forsythe Wooldridge
LLP owned approximately 48,000 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
Electric Company, and such statements are made upon their authority as experts.
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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 Electric Company
in connection with the issuance and distribution of the securities to be
registered.
Filing fee - Securities and Exchange Commission....... $230,963
Fees of trustees* .................................... 30,000
Fees of TXU Electric Company's counsel
Worsham Forsythe Wooldridge LLP*.................. 500,000
Thelen Reid & Priest LLP*......................... 500,000
Fees of TXU Electric Company's and TXU Electric
Capital's special Delaware counsel*................... 10,000
Accountants' fees*.................................... 50,000
Rating agencies' fees*................................ 150,000
Printing, including Registration Statement,
prospectuses, exhibits, etc.*..................... 60,000
Miscellaneous*........................................ 29,037
----------
Total expenses*....................................... $1,560,000
==========
-------------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article IX of the Restated Articles of Incorporation of TXU Electric
Company 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) from and 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 any 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
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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.
"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 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 Electric
Company, in certain circumstances, to indemnify any present or former director,
officer, employee or agent of TXU Electric Company 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
Electric Company.
Article X of the Restated Articles of Incorporation of TXU Electric Company
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 for:
(a) a breach of a 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 a director to the Corporation or an act or omission that involved intentional
misconduct or a knowing violation of the law;
(c) a transaction from which a 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 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 18 of TXU Electric Company's Restated Bylaws provides as follows:
"Section 18. 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,
II-2
<PAGE>
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 18
shall adversely affect any such arrangement or right to indemnification
existing at the time of such repeal or modification."
TXU Electric Company has entered into agreements with its directors which
provide, among other things, for their indemnification by TXU Electric Company
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 Electric Company 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
Electric Company also have insurance which insures them against certain other
liabilities and expenses.
ITEM 16. EXHIBITS.
PREVIOUSLY FILED*
EXHIBIT WITH FILE AS
------- NUMBER EXHIBIT
------ -------
1(a) -- Form of Underwriting Agreement
for TXU Electric Company
securities.
1(b) -- Form of Underwriting Agreement
(Preferred Trust Securities)
4(a) 0-11442 4 -- Restated Articles of Incorporation
Form 10-Q of TXU Electric Company.
June 30, 1997
4(b) 0-11442 3(a) -- Articles of Amendment, effective
Form 10-Q June 14, 1999, to the (Restated)
June 30, 1999 Articles of Incorporation of TXU
Electric Company.
4(c) 0-11442 -- Bylaws of TXU Electric Company, as
Form 10-Q restated August 1, 1999.
June 30, 1999
4(d) -- Form of Statement of Resolution
Establishing a Series of Preferred
Stock.
4(e) 2-90185 4(a) -- Mortgage and Deed of Trust, dated as of
December 1, 1983, between TXU Electric
Company and Irving Trust Company (now
The Bank of New York), Trustee.
-- Supplemental Indentures to
Mortgage and Deed of Trust:
II-3
<PAGE>
PREVIOUSLY FILED*
EXHIBIT WITH FILE AS NUMBER DATED AS OF
------- NUMBER EXHIBIT ------ -----------
------ -------
2-90185 4(b) First April 1, 1984
2-92738 4(a)-1 Second September 1, 1984
2-97185 4(a)-1 Third April 1, 1985
2-99940 4(a)-1 Fourth August 1, 1985
2-99940 4(a)-2 Fifth September 1, 1985
33-01774 4(a)-2 Sixth December 1, 1985
33-9583 4(a)-1 Seventh March 1, 1986
33-9583 4(a)-2 Eighth May 1, 1986
33-11376 4(a)-1 Ninth October 1, 1986
33-11376 4(a)-2 Tenth December 1, 1986
33-11376 4(a)-3 Eleventh December 1, 1986
33-14584 4(a)-1 Twelfth February 1, 1987
33-14584 4(a)-2 Thirteenth March 1, 1987
33-14584 4(a)-3 Fourteenth April 1, 1987
33-24089 4(a)-1 Fifteenth July 1, 1987
33-24089 4(a)-2 Sixteenth September 1, 1987
33-24089 4(a)-3 Seventeenth October 1, 1987
33-24089 4(a)-4 Eighteenth March 1, 1988
33-24089 4(a)-5 Nineteenth May 1, 1988
33-30141 4(a)-1 Twentieth September 1, 1988
33-30141 4(a)-2 Twenty-first November 1, 1988
33-30141 4(a)-3 Twenty-second January 1, 1989
33-35614 4(a)-1 Twenty-third August 1, 1989
33-35614 4(a)-2 Twenty-fourth November 1, 1989
33-35614 4(a)-3 Twenty-fifth December 1, 1989
33-35614 4(a)-4 Twenty-sixth February 1, 1990
33-39493 4(a)-1 Twenty-seventh September 1, 1990
33-39493 4(a)-2 Twenty-eighth October 1, 1990
33-39493 4(a)-3 Twenty-ninth October 1, 1990
33-39493 4(a)-4 Thirtieth March 1, 1991
33-45104 4(a)-1 Thirty-first May 1, 1991
33-45104 4(a)-2 Thirty-second July 1, 1991
33-46293 4(a)-1 Thirty-third February 1, 1992
33-49710 4(a)-1 Thirty-fourth April 1, 1992
33-49710 4(a)-2 Thirty-fifth April 1, 1992
33-49710 4(a)-3 Thirty-sixth June 1, 1992
33-49710 4(a)-4 Thirty-seventh June 1, 1992
33-57576 4(a)-1 Thirty-eighth August 1, 1992
33-57576 4(a)-2 Thirty-ninth October 1, 1992
33-57576 4(a)-3 Fortieth November 1, 1992
33-57576 4(a)-4 Forty-first December 1, 1992
33-60528 4(a)-1 Forty-second March 1, 1993
33-64692 4(a)-1 Forty-third April 1, 1993
33-64692 4(a)-2 Forty-fourth April 1, 1993
33-64692 4(a)-3 Forty-fifth May 1, 1993
33-68100 4(a)-1 Forty-sixth July 1, 1993
33-68100 4(a)-3 Forty-seventh October 1, 1993
33-68100 4(a)-4 Forty-eighth November 1, 1993
II-4
<PAGE>
33-68100 4(a)-5 Forty-ninth May 1, 1994
33-68100 4(a)-6 Fiftieth May 1, 1994
33-68100 4(a)-7 Fifty-first August 1, 1994
33-83976 4(b) Fifty-second April 1, 1995
33-83976 4(c) Fifty-third June 1, 1995
33-83976 4(d) Fifty-fourth October 1, 1995
33-83976 4(e) Fifty-fifth March 1, 1996
33-83976 4(f) Fifty-sixth September 1, 1996
33-83976 4(g) Fifty-seventh February 1, 1997
0-11442 4(b) Fifty-eighth July 1, 1997
Form 10-Q
June 30, 1997
4(f) -- Fifty-ninth Supplemental
Indenture, dated as of March 1, 1999.
4(g) -- Sixtieth Supplemental Indenture,
dated as of December 1, 2000.
4(h) -- Form of Supplemental Indenture.
4(i) 0-11442 4(a) -- Indenture (For Unsecured Debt
Form 10-Q Securities), dated as of August 1,
Sept. 30, 1997 1997, between TXU Electric
Company and The Bank of New York,
Trustee.
4(j) -- Form of Indenture (for Unsecured
Debt Securities) of TXU Electric
Company.
4(k) -- Form of Officer's Certificate
establishing a series of debt
securities, including a Form of Debt
Security.
4(l) -- Trust Agreement and Certificate of
Trust of TXU Electric Capital VI.
4(m) -- Trust Agreement and Certificate of
Trust of TXU Electric Capital VII.
4(n) -- Trust Agreement and Certificate of
Trust of TXU Electric Capital VIII.
4(o) -- Form of Amended and Restated Trust
Agreement.
4(p) 0-11442 4(f) -- Indenture (For Unsecured
Subordinated Debt Securities relating to
Trust Securities), dated as of December
1, 1995 between TXU Electric Company and
The Bank of New York as Trustee.
4(q) -- Form of Indenture (For Unsecured
Subordinated Debt Securities
relating to Trust Securities) of
TXU Electric Company.
4(r) -- Form of Officer's Certificate
establishing the Junior
Subordinated Debentures, including
Form of Junior Subordinated
Debenture
4(s) -- Form of Guarantee Agreement
relating to the Preferred Trust
Securities.
4(t) -- Form of Agreement as to Expenses
and Liabilities relating to the
Preferred Trust Securities is
contained in Exhibit C of Exhibit
4(o) hereto.
4(u) -- Form of Preferred Trust Securities
is contained in Exhibit D of
Exhibit 4(o) hereto
4(v) -- Form of Deposit Agreement
II-5
<PAGE>
PREVIOUSLY FILED*
EXHIBIT WITH FILE AS
------- NUMBER EXHIBIT
------ -------
5(a) -- Opinion of Worsham Forsythe
Wooldridge LLP, General Counsel
for TXU Electric Company.
5(b) -- Opinion of Thelen Reid & Priest
and 8 LLP, of counsel to TXU Electric
Company.
5(c) -- Opinion of Richards, Layton &
Finger, P.A., Special Delaware
Counsel to TXU Electric Capital
VI and TXU Electric Company.
5(d) -- Opinion of Richards, Layton &
Finger, P.A., Special Delaware
Counsel to TXU Electric Capital
VII and TXU Electric Company.
5(e) -- Opinion of Richards, Layton &
Finger, P.A., Special Delaware
Counsel to TXU Electric Capital
VIII and TXU Electric Company.
12(a) 1-11668 12 -- Computation of Ratio of Earnings
Form 10-K to Fixed Charges and Computation
December 31,1999 of Ratio of Earnings to Combined
Fixed Charges and Preferred
Dividends of TXU Electric Company.
12(b) -- Computation of Ratio of Earnings
to Fixed Charges and Computation
of Ratio of Earnings to Combined
Fixed Charges and Preferred
Dividends of TXU Electric Company
for the nine-month period ended
September 30, 2000.
15 -- Letter of Deloitte & Touche LLP
regarding unaudited condensed
interim financial information.
23(a) -- Consent of Deloitte & Touche LLP.
23(b) -- 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(e), respectively.
24 -- Power of Attorney (see page II-9
and Section 4 of Exhibits 4(l),
(m) and (n)).
25(a) -- Statement of Eligibility on Form
T-1 of The Bank of New York with
respect to the Mortgage of TXU
Electric Company.
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 relating to Trust
Securities), dated as of December
1, 1995, of TXU Electric Company.
25(c) -- Statement of Eligibility on Form
T-1 of The Bank of New York with
respect to the Indenture (For
Unsecured Subordinated Debt
Securities relating to Trust
Securities) of TXU Electric
Company.
II-6
<PAGE>
25(d) -- Statement of Eligibility on Form
T-1 of The Bank of New York with
respect to the Indenture (For
Debt Securities), dated as of
August 1, 1997, of TXU Electric
Company.
25(e) -- Statement of Eligibility on Form
T-1 of The Bank of New York with
respect to the Indenture (For
Debt Securities) of TXU Electric.
25(f) -- Statement of Eligibility on Form
T-1 of The Bank of New York with
respect to the Amended and
Restated Trust Agreement of TXU
Electric Capital VI.
25(g) -- 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
Electric Capital VI.
25(h) -- Statement of Eligibility on Form
T-1 of The Bank of New York with
respect to the Amended and
Restated Trust Agreement of TXU
Electric Capital VII.
25(i) -- 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
Electric Capital VII.
25(j) -- Statement of Eligibility on Form
T-1 of The Bank of New York with
respect to the Amended and
Restated Trust Agreement of TXU
Electric Capital VIII.
25(k) -- 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
Electric Capital VIII.
------------------------
*Incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
a. The undersigned registrant hereby undertakes:
(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
II-7
<PAGE>
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.
b. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the 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 registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933, and will be governed by the final adjudication of such issue.
II-8
<PAGE>
POWER OF ATTORNEY
Each director and/or officer of the registrant whose signature appears
below hereby appoints the Agents for Service named in this registration
statement, and each of them severally, as his or her attorney-in-fact to sign in
his or her 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 5th day of
January, 2001.
TXU ELECTRIC COMPANY
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 )
(Erle Nye, Chairman of the Board and Director )
and Chief Executive) )
)
)
/s/ Kirk R. Oliver Principal Financial )
------------------------------------- Officer )
(Kirk R. Oliver, Vice President) )
)
)
/s/ Biggs C. Porter Principal Accounting )
------------------------------------- Officer )
(Biggs C. Porter, Vice President) )
)
)
/s/ T. L. Baker Director )
------------------------------------- )
(T.L. Baker) )
)
)
/s/ D.W. Biegler Director ) January 5, 2001
------------------------------------- )
(D.W. Biegler ) )
)
)
/s/ Barbara Curry Director )
------------------------------------- )
(Barbara Curry ) )
)
)
/s/ M.S. Greene Director )
------------------------------------- )
(M.S. Greene) )
)
)
/s/ Michael J. McNally Director )
------------------------------------- )
(Michael J. McNally) )
)
)
/s/ W.M. Taylor Director )
------------------------------------- )
(W.M. Taylor) )
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TXU Electric
Capital VI 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 5th day of
January, 2001.
TXU ELECTRIC CAPITAL VI
By /s/ Robert J. Reger, Jr.
--------------------------------------
Robert J. Reger, Jr.
Authorized Representative.
Pursuant to the requirements of the Securities Act of 1933, TXU Electric
Capital VII 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 5th day
of January, 2001.
TXU ELECTRIC CAPITAL VII
By /s/ Robert J. Reger, Jr.
--------------------------------------
Robert J. Reger, Jr.
Authorized Representative.
Pursuant to the requirements of the Securities Act of 1933, TXU Electric
Capital VIII 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 5th day
of January, 2001.
TXU ELECTRIC CAPITAL VIII
By /s/ Robert J. Reger, Jr.
--------------------------------------
Robert J. Reger, Jr.
Authorized Representative.
II-10
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT DESCRIPTION
------- -----------
1(a) Form of Underwriting Agreement for TXU Electric Company
securities.
1(b) Form of Underwriting Agreement (Preferred Trust Securities)
4(d) Form of Statement of Resolution Establishing a Series of
Preferred Stock.
4(f) Fifty-ninth Supplemental Indenture, dated as of March 1,
1999.
4(g) Sixtieth Supplemental Indenture, dated as of December 1,
2000.
4(h) Form of Supplemental Indenture.
4(j) Form of Indenture (for Unsecured Debt Securities) of TXU
Electric Company.
4(k) Form of Officer's Certificate establishing a series of debt
securities, including a Form of Debt Security.
4(l) Trust Agreement and Certificate of Trust of TXU Electric
Capital VI.
4(m) Trust Agreement and Certificate of Trust of TXU Electric
Capital VII.
4(n) Trust Agreement and Certificate of Trust of TXU Electric
Capital VIII.
4(o) Form of Amended and Restated Trust Agreement.
4(q) Form of Indenture (For Unsecured Subordinated Debt
Securities relating to Trust Securities) of TXU Electric
Company.
4(r) Form of Officer's Certificate establishing the Junior
Subordinated Debentures, including Form of Junior
Subordinated Debenture
4(s) Form of Guarantee Agreement relating to the Preferred Trust
Securities.
4(v) Form of Deposit Agreement
5(a) Opinion of Worsham Forsythe Wooldridge LLP, General Counsel
for TXU Electric Company.
5(b) Opinion of Thelen Reid & Priest LLP, of counsel to TXU
and 8 Electric Company.
5(c) Opinion of Richards, Layton & Finger, P.A., Special Delaware
Counsel to TXU Electric Capital VI and TXU Electric Company.
5(d) Opinion of Richards, Layton & Finger, P.A., Special Delaware
Counsel to TXU Electric Capital VII and TXU Electric
Company.
5(e) Opinion of Richards, Layton & Finger, P.A., Special Delaware
Counsel to TXU Electric Capital VIII and TXU Electric
Company.
12(b) Computation of Ratio of Earnings to Fixed Charges and
Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Dividends of TXU Electric Company for the
nine-month period ended September 30, 2000.
15 Letter of Deloitte & Touche LLP regarding unaudited
condensed interim financial information.
23(a) Consent of Deloitte & Touche LLP.
25(a) Statement of Eligibility on Form T-1 of The Bank of New York
with respect to the Mortgage of TXU Electric Company.
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 relating to Trust Securities), dated as of
December 1, 1995, of TXU Electric Company.
<PAGE>
25(c) Statement of Eligibility on Form T-1 of The Bank of New York
with respect to the Indenture (For Unsecured Subordinated
Debt Securities relating to Trust Securities) of TXU
Electric Company.
25(d) Statement of Eligibility on Form T-1 of The Bank of New York
with respect to the Indenture (For Debt Securities), dated
as of August 1, 1997, of TXU Electric Company.
25(e) Statement of Eligibility on Form T-1 of The Bank of New York
with respect to the Indenture (For Debt Securities) of TXU
Electric.
25(f) Statement of Eligibility on Form T-1 of The Bank of New York
with respect to the Amended and Restated Trust Agreement of
TXU Electric Capital VI.
25(g) 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 Electric Capital VI.
25(h) Statement of Eligibility on Form T-1 of The Bank of New York
with respect to the Amended and Restated Trust Agreement of
TXU Electric Capital VII.
25(i) 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 Electric Capital VII.
25(j) Statement of Eligibility on Form T-1 of The Bank of New York
with respect to the Amended and Restated Trust Agreement of
TXU Electric Capital VIII.
25(k) 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 Electric Capital VIII.
