EXHIBIT 4.23
Draft of 3/21/94
PAYMENT AND GUARANTEE AGREEMENT
THIS PAYMENT AND GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of
April __, 1994, is executed and delivered by ENSERCH Corporation, a Texas
corporation (the "Guarantor"), for the benefit of the Holders (as defined below)
from time to time of the Preferred Securities (as defined below) of Enserch
Capital L.L.C., a Delaware limited liability company with limited life (the
"Issuer").
WHEREAS, the Issuer is issuing on the date hereof __________ preferred
limited liability company interests of a series designated the __% Cumulative
Monthly Income Preferred Securities, Series A (the "Preferred Securities"), and
the Guarantor desires to issue this Guarantee Agreement for the benefit of the
Holders, as provided herein;
WHEREAS, the Issuer pursuant to the Loan Agreement (as defined below) will
loan the proceeds from the issuance and sale of the Preferred Securities and its
common limited liability company interests (the "Common Securities") to Enserch
Preferred Capital, Inc. ("Enserch Preferred") and Enserch Preferred will reloan
such proceeds to the Guarantor; and
WHEREAS, the Guarantor desires hereby irrevocably and unconditionally to
agree to the extent set forth herein to pay to the Holders the Guarantee
Payments (as defined below) and to make certain other payments on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of the
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders.
ARTICLE I.
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As used in this Guarantee, the terms set forth below shall, unless the
context otherwise requires, have the following meanings. Capitalized terms used
but not otherwise defined herein shall have the meanings assigned to such terms
in the Amended and Restated Limited Liability Company Agreement of the Issuer
dated as of April __, 1994.
"Guarantee Payments" shall mean the following payments, without
duplication, to the extent not paid by the Issuer: (i) any accumulated and
unpaid dividends which have been theretofore
declared on the Preferred Securities out of moneys legally available therefor,
(ii) the Redemption Price payable with respect to any Preferred Securities
called for redemption by the Issuer out of funds legally available therefor,
(iii) upon a liquidation of the Issuer, the lesser of (a) the Liquidation
Distribution and (b) the amount of assets of the Issuer available for
distribution to Holders in liquidation of the Issuer and (iv) any Additional
Amounts (as defined below) payable by the Issuer in respect of the Preferred
Securities.
"Holder" shall mean any holder from time to time of any Preferred
Securities of the Issuer; provided, however, that in determining whether the
Holders of the requisite percentage of Preferred Securities have given any
request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any entity owned more than 50% by the Guarantor, either directly or
indirectly.
"Liquidation Distribution" shall mean the aggregate of the liquidation
preference of $25 per Preferred Security and all accumulated and unpaid
dividends (whether or not declared) to the date of payment.
"Loan Agreement" shall mean the agreement, dated the date hereof, pursuant
to which the Issuer will loan to Enserch Preferred the proceeds received by the
Issuer from the issuance and sale of the Preferred Securities and the Common
Securities.
"Loans" shall mean the loans from the Issuer to Enserch Preferred pursuant
to the Loan Agreement.
"Paying Agent" shall mean ENSERCH Corporation, as registrar, transfer agent
and paying agent.
"Redemption Price" shall mean $25 per Preferred Security plus accumulated
and unpaid dividends (whether or not declared) to the date fixed for redemption.
ARTICLE II.
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SECTION 2.01. (a) The Guarantor irrevocably and unconditionally agrees to
pay in full to the Holders the Guarantee Payments, as and when due (except to
the extent paid by the Issuer), regardless of any defense, right of set-off or
counterclaim which the Issuer may have or assert. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.
(b) All Guarantee Payments shall be made without withholding or deduction
for or on account of any present or future taxes, duties, assessments or
governmental charges of whatever
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nature imposed or levied upon or as a result of such payment by or on behalf of
the United States, any state thereof or any other jurisdiction through which or
from which such payment is made, or any authority therein or thereof having
power to tax, unless the withholding or deduction of such taxes, duties,
assessments or governmental charges is required by law. In that event, the
Guarantor shall pay such additional amounts ("Additional Amounts") as may be
necessary in order that the net amounts received by the Holders after such
withholding or deduction will equal the amount which would have been receivable
in respect of the Preferred Securities in the absence of such withholding or
deduction, except that no such additional amounts will be payable to any Holder
(or a third party on his behalf):
i) if such Holder is liable for such taxes, duties, assessments
or governmental charges in respect of the Preferred Securities by
reason of such Holder's having some connection with the United States,
any state thereof or any other jurisdiction through which or from
which such payment is made, other than being a Holder, or
ii) if the Issuer or the Guarantor has notified such Holder of
the obligation to withhold taxes and requested but not received from
such Holder a declaration of non-residence, a valid taxpayer
identification number, or other claim for exemption, and such
withholding or deduction would have not been required had such
declaration, taxpayer identification number or claim been received.
SECTION 2.02. The Guarantor hereby waives notice of acceptance of
this Guarantee Agreement and of any liability to which it applies or may apply,
presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
SECTION 2.03. The obligations, covenants, agreements and duties of
the Guarantor under this Guarantee Agreement shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities
to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the dividends, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the
extension of time for
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the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt, of or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, any of the
Preferred Securities; or
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred.
There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 2.04. This is a guarantee of payment and not of collection.
A Holder may enforce this Guarantee Agreement directly against the Guarantor,
and the Guarantor will waive any right or remedy to require that any action be
brought against the Issuer or any other person or entity before proceeding
against the Guarantor. Subject to Section 2.05, all waivers herein contained
shall be without prejudice to the Holders' right at the Holders' option to
proceed against the Issuer, whether by separate action or by joinder. The
Guarantor agrees that this Guarantee Agreement shall not be discharged except by
payment of the Guarantee Payments in full (to the extent not paid by the Issuer)
and by complete performance of all obligations of the Guarantor contained in
this Guarantee Agreement.
SECTION 2.05. The Guarantor shall be subrogated to all (if any)
rights of the Holders against the Issuer in respect of any amounts paid to the
Holders by the Guarantor under this Guarantee Agreement and shall have the right
to waive payment of any amount of dividends in respect of which payment has been
made to the Holders by the Guarantor pursuant to Section 2.01; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of a payment under this Guarantee Agreement, if, at the time of any
such
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payment, any amounts are due and unpaid under this Guarantee Agreement. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to pay over such amount to the Holders.
SECTION 2.06. The Guarantor acknowledges that its obligations
hereunder are independent of the obligations of the Issuer with respect to the
Preferred Securities and that the Guarantor shall be liable as principal and
sole debtor hereunder to make Guarantee Payments pursuant to the terms of this
Guarantee Agreement notwithstanding the occurrence of any event referred to in
subsections (a) through (f), inclusive, of Section 2.03 hereof.
ARTICLE III.
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SECTION 3.01. So long as any Preferred Securities remain outstanding,
neither the Guarantor nor any majority-owned subsidiary of the Guarantor shall
declare or pay any dividend on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock or make any
guarantee payments with respect to the foregoing (other than (i) payments under
this Guarantee Agreement or the Payment and Guarantee Agreement of the Guarantor
dated the date hereof for the benefit of Capital, or (ii) dividends or guarantee
payments to the Guarantor by a wholly owned subsidiary) if at such time the
Guarantor shall be in default with respect to its payment or other obligations
hereunder or there shall have occurred any event that, with the giving of notice
or the lapse of time or both, would constitute an Event of Default under the
Loan Agreement. The Guarantor shall take all actions necessary to ensure the
compliance of its subsidiaries with this Section 3.01.
SECTION 3.02. The Guarantor covenants, so long as any Preferred
Securities remain outstanding: (i) to maintain direct or indirect 100% ownership
of the Common Securities; (ii) to cause at least 21% of the total value of the
Issuer and at least 21% of all interests in the capital, income, gain, loss,
deduction and credit of the Issuer to be represented by Common Securities
[PROVIDED THAT FOLLOWING THE MERGER, CONSOLIDATION, AMALGAMATION OR REPLACEMENT
OF ENSERCH CAPITAL BY A SUCCESSOR ENTITY, THIS PERCENTAGE MAY BE REDUCED TO A 1%
INTEREST IN THE GENERAL PARTNER OF SUCH SUCCESSOR ENTITY) -- SULLIVAN &
CROMWELL TO REVIEW AND REVISE LANGUAGE]; (iii) not to voluntarily dissolve,
wind-up or terminate the Issuer; (iv) to remain the Class A Member (as defined
in the Issuer's Amended and Restated Limited Liability Company Agreement) of the
Issuer and to timely perform all of its duties as Class A Member of the Issuer
(including the duty to declare and pay dividends on the Preferred Securities),
provided that any permitted successor of the Guarantor under the Loan Agreement
may succeed to the Guarantor's duties as Class A Member; and (v) to use its
reasonable efforts to cause the Issuer to remain a limited life limited
liability company
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and otherwise continue to be treated as a partnership for United States federal
income tax purposes.
SECTION 3.03. This Guarantee Agreement will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all liabilities of the Guarantor, (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued by the Guarantor
and with any guarantee now or hereafter entered into by the Guarantor in respect
of any preferred or preference stock of any affiliate of the Guarantor and (iii)
senior to the Guarantor's common stock. For purposes of clause (ii) herein,
pari passu means that any payments to which beneficiaries of this Guarantee
Agreement are entitled must be shared with holders of any preferred or
preference stock to which this Guarantee Agreement is stated to be pari passu
("Pari Passu Stock") to the same extent as would be required under applicable
law if instead this Guarantee Agreement constituted a class of preferred or
preference stock of the Guarantor ranking pari passu with such Pari Passu Stock
as to such payments. However, beneficiaries of this Guarantee Agreement are not
conversely entitled to share in payments (to the extent that such payments are
permitted by Section 3.01 hereof) to which the holders of such Pari Passu Stock
are entitled.
ARTICLE IV.
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This Guarantee Agreement shall terminate and be of no further force
and effect upon full payment of the Redemption Price of all Preferred Securities
or upon full payment of the amounts payable to the Holders upon liquidation of
the Issuer; provided, however, that this Guarantee Agreement shall continue to
be effective or shall be reinstated, as the case may be, if at any time any
Holder of Preferred Securities must restore payment of any sums paid under the
Preferred Securities or under this Guarantee Agreement for any reason
whatsoever.
ARTICLE V.
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SECTION 5.01. All guarantees and agreements contained in this
Guarantee Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders.
The Guarantor shall not assign its obligations hereunder without the prior
approval of the Holders of not less than 66-2/3% of all Preferred Securities
then outstanding.
SECTION 5.02. Except with respect to any changes which do not
adversely affect the rights of holders of Preferred Securities (in which case no
vote will be required), this Guarantee Agreement may only be amended by an
instrument in writing signed by the Guarantor with the prior approval of the
Holders of not less than 66-2/3% of all Preferred Securities then outstanding.
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SECTION 5.03. Any notice, request or other communication required or
permitted to be given hereunder to the Guarantor shall be given in writing by
delivering the same against receipt therefor by facsimile transmission
(confirmed by mail) or telex, addressed to the Guarantor, as follows (and if so
given, shall be deemed given when mailed or upon receipt of an answer-back, if
sent by telex), to it:
ENSERCH Corporation
ENSERCH Center
300 South St. Paul Street
Dallas, Texas 75201
Facsimile No.: (214) 573-3351
Attention: Treasurer
Any notice, request or other communication required or permitted to be
given hereunder to the Holders shall be given by the Guarantor in the same
manner as notices sent by the Issuer to the Holders.
SECTION 5.04. The masculine and neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 5.05. This Guarantee Agreement is solely for the benefit of
the Holders and is not separately transferable from the Preferred Securities.
SECTION 5.06. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
ENSERCH Corporation
By ___________________________
Name:
Title:
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