EXHIBIT 2.1
AGREEMENT
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THIS AGREEMENT (the "Agreement") dated this 1st day of March, 1998, is
by and between Texas Utilities Company ("Texas Utilities"), a Texas corporation
with its principal place of business in Dallas, Texas, and Lehman Brothers
Merchant Banking Partners II L.P. ("Lehman Merchant" and, together with its
affiliates, "Lehman"), a Delaware limited partnership with its principal place
of business in New York, New York. Such parties will be individually referenced
herein as a "Party" and will be collectively referenced herein as the "Parties."
R E C I T A L S:
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A. Texas Utilities is contemplating that a wholly-owned subsidiary will
make an offer, as more fully described and defined in the Press Announcement
referred to in section 11 hereof (the "Offer"), to the shareholders of The
Energy Group PLC ("TEG"), a diversified energy company with its principal place
of business in London, England, which Offer would be conditioned upon the sale
by Energy Holdings (No. 2) Ltd and Peabody Investments, Inc. (collectively, the
"Seller"), each a subsidiary of TEG, of the outstanding capital stock and
interests of the companies (collectively, the "Acquired Companies") whose shares
and interests are referred to as the Sale Shares (the "Sale Shares") in the
Purchase Agreement (the "Purchase Agreement") attached hereto as Exhibit A, to
P&L Coal Holdings Corporation (the "Purchaser"), an affiliate of Lehman
Merchant, at the time the Offer becomes or is declared wholly unconditional.
The principal assets of the Acquired Companies will be the Peabody Coal
businesses ("Peabody") and Citizens Power business ("Citizens").
B. This Agreement sets forth the terms upon which Lehman Merchant will
cause the Purchaser to consummate the purchase from the Seller of the Sale
Shares, together with certain additional agreements of Texas Utilities and
Lehman Merchant.
1.
T E R M S O F A G R E E M E N T:
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NOW, THEREFORE, in consideration of the premises, together with other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by both Parties, Texas Utilities and Lehman Merchant hereby agree
upon the following terms, conditions and provisions:
1. Lehman Merchant will cause the purchase by the Purchaser from the
Seller of all of the Sale Shares upon and subject to the terms and conditions
contained in the Purchase Agreement. The purchase price which Lehman Merchant
will cause the Purchaser to pay to the Seller for the Sale Shares pursuant to
the Purchase Agreement, will be U.S. $2.2874 billion, which purchase price is
subject to adjustment as hereinafter provided. Such price is based on a
projected combined balance sheet of the Acquired Companies and their
subsidiaries as of March 31, 1998 that the Parties have agreed upon (the
"Benchmark Balance Sheet"). Texas Utilities agrees that it does not and Lehman
Merchant agrees that it does not have actual knowledge of any material
misstatement contained in or omission from the Benchmark Balance Sheet (however
the Parties acknowledge that the amount of cash set forth on the Benchmark
Balance Sheet may be reduced as a result of cash distributions prior to March
31, 1998). In addition, at the closing of the transactions pursuant to the
Purchase Agreement, Lehman Merchant will cause the Purchaser to assume all
outstanding indebtedness (subject to the understanding that any non-recourse
indebtedness will be assumed but only on that basis) of the Acquired Companies
and their direct or indirect wholly-owned subsidiaries (collectively, together
with any of their affiliates, other than the Purchaser and its beneficial
owners, and any subsidiaries which are not wholly-owned subsidiaries, the
"Acquired Group"). Lehman Merchant will cause the Purchaser to comply with its
obligations under the Purchase Agreement and, subject to the terms and
conditions of the Purchase Agreement, purchase the Sale Shares
2.
at the time the Offer becomes or is declared wholly unconditional in
accordance with the terms of the Offer (the "TEG Purchase Date"). The Parties
agree that promptly after the consummation of the Offer, they will jointly cause
a nationally recognized firm of certified public accountants (the "Auditor") to
produce an audited combined balance sheet (the "Audited Balance Sheet"), in
accordance with generally accepted accounting principles in effect in the United
States (with respect to all of the Acquired Group other than Darex Capital Inc.
("Darex"), Peabody Australia Limited ("PAL") and the entities included within
the Acquired Group owned by either of them), the United Kingdom (with respect to
Darex and PAL) and Australia (with respect to the entities included within the
Acquired Group owned by Darex and PAL), of the Acquired Group as of March 31,
1998 (without giving effect to any purchase accounting adjustments or financing
effects in connection with the transaction), which will be prepared on a basis
consistent with the Benchmark Balance Sheet. The Parties agree that the
aforementioned purchase price will be adjusted subsequent to the TEG Purchase
Date by payment to be made promptly by TEG (or on behalf of TEG), which payment
(together with interest thereon from the date of purchase of the Sale Shares at
the rate publicly announced from time to time in New York City by The Chase
Manhattan Bank as its "reference rate") Texas Utilities will cause TEG to make,
or the Purchaser (together with interest as aforesaid), as appropriate, to the
other, at such time (as soon as practicable after the TEG Purchase Date) as the
Parties agree, as follows: (i) if the total assets as shown on the Audited
Balance Sheet are higher than the total assets as shown on the Benchmark Balance
Sheet, the difference shall be paid by the Purchaser to TEG, and, if lower, the
difference shall be paid by TEG (or on behalf of TEG) to the Purchaser and (ii)
if the sum of total current liabilities (including the current portion of
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long-term debt) and long term debt, less current maturities, as shown
on the Audited Balance Sheet is higher than the sum of total current liabilities
(including the current portion of long-term debt) and long term debt, less
current maturities, as shown on the Benchmark Balance Sheet, the difference will
be paid by TEG (or on behalf of TEG) to the Purchaser and, if lower, the
difference shall be paid by the Purchaser to TEG. At the time of the payment of
the adjustment to the purchase price pursuant to the foregoing provision (or at
such time as it is determined that no such adjustment is required), there shall
also be paid by TEG (or on behalf of TEG) or the Purchaser, as the case may be,
any applicable True-Up Payment (together with interest thereon from the date of
the purchase of the Sale Shares at the above-described "reference rate"). True-
up Payment means the net of: (i) in the case of TEG, the sum of all cash or
other assets (valued at the fair market value thereof) distributed by any of the
entities included in the Acquired Group (and any subsidiaries of the Acquired
Group which are not wholly owned) to any entity included in the TEG Group after
March 31, 1998 (whether or not in respect of capital stock, by dividend, loan or
otherwise); and (ii) in the case of the Purchaser, the sum of all cash or other
assets (valued at the fair market value thereof) contributed to the Acquired
Group by the TEG Group after March 31, 1998. The amount of the True-up Payment
shall be calculated by the Auditor with the assistance of Peabody management. It
is also understood and agreed by the Parties that, following the consummation of
the transaction pursuant to the Purchase Agreement, no liability or obligation
will exist on the part of TEG or any of its subsidiaries or affiliates with
respect to any earn-out payments payable to Lehman Brothers Holdings Inc.
("LBHI") and the other sellers contemplated by the Amended and Restated
Agreement for Purchase and Sale of Interests by and among LBHI, Citizens Energy
Corporation and William E. James, Citizens Lehman Power L.L.C. and Gold Fields
American Corporation dated as of March 10, 1997, and the Guarantee in connection
therewith on the part of TEG; and, in order to achieve the foregoing, Lehman
Merchant will cause the Acquired Group to indemnify TEG and its subsidiaries and
affiliates and hold them harmless with respect thereto. The
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Purchaser represents and warrants to the Texas Utilities Group, as hereinafter
defined, that, for United States federal income tax purposes, the adjusted tax
basis of the shares of Peabody Holding Company, Inc. held by Peabody Investments
Inc. at January 31, 1998 was at least equal to the lesser of the amount of the
purchase price allocated to Peabody Holding Company, Inc. and $1.8 billion.
Following the TEG Purchase Date, the Purchaser will cause the Acquired Companies
to guarantee the Purchaser's obligations with respect to any breach of the
foregoing representation and warranty.
2. With respect to the purchase by the Purchaser of the Sale Shares,
Lehman Merchant shall procure financing for the Purchaser, on an unconditionally
available basis drawable at the time specified in the Purchase Agreement, of at
least $1.8074 billion. In addition, Lehman Merchant will cause the Purchaser to
have equity of not less than $480 million available on an unconditional basis,
drawable at the time specified in the Purchase Agreement (it being understood
that the source of such equity may be Lehman Merchant or other investors with
Lehman Merchant investing in the Purchaser with Lehman Merchant, but that the
commitment with respect thereto is now unconditional and will be drawable at the
time specified in the Purchase Agreement). Such financing, which shall consist
of unconditional (debt and equity) commitments, will be in place with the
Purchaser at the time the Offer is announced, subject only to the satisfaction
of the terms and conditions set forth in the Purchase Agreement. Lehman
Merchant shall not be obligated to provide any financing to the Purchaser in
excess of the $480 million equity capital referred to above.
3. Texas Utilities agrees to pay to Lehman Merchant immediately after the
receipt of a written request from Lehman Merchant therefor, the commitment fees
required to be paid by Lehman Merchant to secure certain debt financing for the
Purchaser in amount equal to (i) 1/2% of the amount of bank/commercial paper of
up to $1.3 billion, and (ii) 3% of up to $900
5.
million of long-term financing. In the event that during the one year period
following the lapse or formal abandonment of the Offer, Lehman acquires,
directly or indirectly, all or any substantial portion of the Acquired Group,
other than the jurisdictional assets of Citizens as provided for in FERC Doc No.
ED98-10-000 and other than pursuant to the Purchase Agreement, Lehman Merchant
agrees promptly to repay to or reimburse Texas Utilities for all such fees that
Texas Utilities has previously paid; and in addition, in such circumstance,
Lehman Merchant agrees to pay Texas Utilities the costs which Texas Utilities
incurs for appropriate hedging arrangements with respect to currency risks
relating to the equity of the Purchaser referenced in section 2, for the Sale
Shares being in a dollar amount.
4. Texas Utilities will arrange for TEG or an affiliate of TEG to provide
credit support for the currently existing debt of Citizens to John Hancock
Insurance Company and other lending parties ("John Hancock"), in an amount not
to exceed $300,000,000, which debt is currently guaranteed in part by TEG, if
and to the extent such credit support is required, based upon negotiations
between Texas Utilities and John Hancock, to obtain John Hancock's consent to
the proposed change-in-control of Citizens from TEG to the Purchaser. Texas
Utilities will, prior to the purchase by Purchaser of the Sale Shares, arrange
for the satisfaction of any and all conditions to such consent becoming
effective. Following the TEG Purchase Date, it is understood that TEG and
Citizens will comply in all respects with, and not default with respect to,
their respective obligations under, and will not take any action which would
cause a termination of, the agreements pertaining to the Hartford, Binghamton,
MERC and Ashland projects; and TEG will comply with the terms of those certain
Proposals attached to the consents of the foregoing lenders.
5. It is the intention of the Parties to separate the properties and
operations of the Acquired Group and subsidiaries of the Acquired Group which
are not wholly owned by the
6.
Acquired Group, on the one hand, and TEG and its remaining subsidiaries and
affiliates (the "TEG Group"), on the other hand, incident to the purchases to
occur on the TEG Purchase Date. To this end, following such purchases, the
Parties will cause the TEG Group and the Acquired Group and susidiaries of the
Acquired Group that are not wholly owned by the Acquired Group, respectively, to
take all commercially reasonable steps to effectuate such separation, including,
as soon as reasonably practicable, the termination, except as otherwise
contemplated by this Agreement, of all intercompany contractual obligations,
services, guarantees and other financial accommodations between or in respect to
the various parties in such groups (and payment of any accounts payable) in
accordance with the terms thereof; provided that nothing contained in this
Agreement shall require any party to take steps to terminate any guarantee,
financial accommodation or similar arrangement for the benefit of any third
party, if such termination could reasonably be expected to materially and
adversely affect the business of such party. In such regard, Texas Utilities and
Lehman Merchant will each provide that, following the TEG Purchase Date, each of
the TEG Group and each of the Acquired Group, respectively, will undertake to
co-operate in good faith to ensure that each does such acts and things as may
reasonably be necessary to carry out any appropriate transactions after
completion of the sale and purchase of the Acquired Companies by the Purchaser
and of TEG by Texas Utilities to give effect to the foregoing, and to vest
properties in the proper entity in accordance with the historic businesses of
such entities. At all times after the TEG Purchase Date, Texas Utilities and
Lehman Merchant will provide that each of the TEG Group and each of the Acquired
Group, respectively, will use their reasonable best efforts to ensure that any
third party execute and deliver all such documents, and do all such acts and
things, as may reasonably be required for the purpose of giving to Lehman
Merchant, the Purchaser, Texas Utilities and TEG, respectively, the full benefit
of all the provisions of this Agreement and the transactions
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consummated pursuant to the Offer. In accordance with and subject to the
foregoing terms and conditions, each of Lehman Merchant and Texas Utilities will
provide that each of the Acquired Group and each of the TEG Group, respectively,
after the TEG Purchase Date, will use their reasonable best efforts to obtain
any consent, substitution, approval or amendment required to novate or assign
all agreements, leases, guarantees, licenses and other rights of any nature
whatsoever relating to the assets, rights and other things of the Acquired
Group, on the one hand, and of the TEG Group, on the other hand, including
without limitation the release of any guarantees, performance or other surety
bonds, letters of credit, standby credit facilities or similar items previously
entered into or made. If there is an inability to obtain any such required
consent, approval, substitution or amendment, and any party continues to be
bound by such agreements, leases, licenses and other rights, unless not
permitted by law or the terms thereof, such party shall, as agent for the
appropriate party or as subcontractor, pay, perform and discharge, to the extent
required to do so, all the obligations of the appropriate party thereunder after
the TEG Purchase Date and the appropriate party, and its subsidiaries and
affiliates, jointly and severally, shall indemnify and hold harmless the
performing, i.e. named, party and its subsidiaries and affiliates from and
against, all losses, claims, damages, taxes, liabilities and expenses whatsoever
arising out of or in connection with the named party's performance of or
omission to perform its obligations thereunder and hereunder, and the named
party shall have subrogation rights with respect thereto. The Parties agree that
if after the TEG Purchase Date, any party in either the Acquired Group or the
TEG Group holds books, records or other assets which by the terms hereof were
intended to be assigned, transferred and delivered to, or retained by, a party
in the other group, such first party shall promptly assign, transfer and deliver
or cause to be assigned, transferred and delivered such books, records or other
assets to the other party; and the Parties also agree that, after the TEG
Purchase Date, the Acquired
8.
Group and the TEG Group shall provide to each other reasonable cooperation and
reasonable access to information to the extent necessary for the filing of any
United Kingdom, Australia or United States tax return by any member of either
the Acquired Group or the TEG Group. Except as otherwise provided for herein,
the Acquired Group shall not be liable for any United States, Australia or
United Kingdom tax liability (including federal, state, and local tax
liabilities) of any member of the TEG Group, and the TEG Group shall not be
liable for any United States, Australia or United Kingdom tax liability
(including federal, state, and local tax liabilities) of any member of the
Acquired Group. The Parties specifically acknowledge that Texas Utilities and
the TEG Group, on the one hand and Lehman Merchant and the Acquired Group, on
the other hand shall not be liable to the other for any tax imposed by any
jurisdiction as a result of the allocation of the purchase price as between the
U.S. and Australian tax jurisdictions to be paid by the Purchaser for the
Acquired Companies. The Parties agree that they will cause a Tax Allocation
Agreement they have agreed upon to be entered into on the TEG Purchase Date.
Notwithstanding the foregoing, Texas Utilities agrees that, with respect to any
equity, incentive and bonus plans of TEG which are obligations of TEG at the TEG
Purchase Date in which any employees of the Acquired Group participate, such
plans will be performed by TEG after the TEG Purchase Date in accordance with
the terms and provisions thereof and the employees of the Acquired Group who are
participants in such plans will be treated on a nondiscriminatory basis as
compared to the employees of the TEG Group. In addition to the foregoing, Texas
Utilities agrees that it will use its reasonable best efforts to have the TEG
Group, from and after the TEG Purchase Date, make available to the Purchaser and
the Acquired Group, those rights of recovery relating to the Acquired Group
which are available to the TEG Group pursuant to the Demerger Agreement dated
January 27, 1997 between Hanson plc and TEG (the "Demerger Agreement"), and the
tax sharing and indemnification agreements entered into or required to be
9.
entered into in connection with the Demerger Agreement, including any
indemnification agreements that could inure to the benefit of the Acquired
Companies as formerly part of TEG and indemnification agreements in favor of TEG
(by assignment from Hanson plc) from H.M. Anglo-American Ltd.
6. Effective the TEG Purchase Date, the Purchaser agrees to indemnify
Texas Utilities, its directors, officers, employees, agents, assigns and
successors, together with all affiliates and subsidiaries of Texas Utilities and
of any such assigns and successors, including TEG and its affiliates and
subsidiaries, and their assigns and successors, and each of their respective
officers, directors, agents and employees (the "Texas Utilities Group"), from
and hold them harmless against all claims, demands, suits and liabilities of any
kind (including attorneys' fees and litigation costs) arising from or out of the
Purchaser or the Acquired Group, and their past, present and future activities,
assets, businesses, employees, employees of any signatory parties, or any
persons representing or connected with any such employees, including without
limitation any environmental claims and liabilities, together with all other
claims and liabilities from or out of the Purchaser or the Acquired Group. In
addition to the foregoing, effective the TEG Purchase Date, the Purchaser agrees
to indemnify the Texas Utilities Group in regard to all environmental claims and
liabilities resulting from any activities or operations prior to the TEG
Purchase Date by Peabody Investments, Inc. or Peabody Global Investments, Inc.
or any of their subsidiaries or predecessors (collectively "PII/PGI"), or from
conditions on or relating to any property of or controlled by any such entities
prior to the TEG Purchase Date, such environmental claims and liabilities being,
without limitation, claims that the environment or the health or safety of any
human or animal has been threatened or harmed by contaminants, pollutants or
toxic or hazardous materials or substances, and shall include all attorneys fees
and litigation costs relating thereto (such claims, the "PII/PGI Environmental
Claims"), in each case
10.
to the extent not insured (provided that to the extent any such insurance does
not fully indemnify the Texas Utilities Group, the Purchaser shall indemnify the
Texas Utilities Group in accordance with the foregoing) . In connection with
such indemnity, the Parties agree that following the TEG Purchase Date the
Purchaser shall, and, so long as the Purchaser is in compliance with these
environmental indemnity obligations, only the Purchaser shall be entitled to,
(i) assume the defense of, defend, manage, negotiate and settle, (ii) monitor,
oversee or implement any injunctive relief (including any investigation or
remediation of any kind) with respect to, or (iii) otherwise handle, any PII/PGI
Environmental Claim, all such actions to be taken in the Purchaser's sole
discretion. Texas Utilities, TEG and PII/PGI shall be entitled to participate
in any such defense at their own expense. Texas Utilities shall cause PII/PGI to
(i) promptly forward to the Purchaser all notices, documents, communications or
other information relating to any PII/PGI Environmental Claims, (ii) maintain
and provide, or provide copies or reasonable access to, all records and
documents in its possession relating to any PII/PGI Environmental Claims
(provided that any failure to do so under (i) or (ii) shall not affect this
indemnity except to the extent that the Purchaser is prejudiced thereby), and
(iii) cooperate fully, at the Purchaser's expense, with the purchaser in all
other respects (including authorizing counterclaims, cross-claims, or third-
party claims, and claims for available insurance, with respect to any PII/PGI
Environmental Claim, all the benefit of which shall inure to the benefit of the
Purchaser) to facilitate the Purchaser's discharging its duties hereunder with
respect to all PII/PGI Environmental Claims. Any reasonable costs incurred by
PII/PGI pursuant to the preceding sentence shall be reimbursed by the Purchaser.
Additionally such indemnity shall include benefits claims of any nature owing by
PII/PGI that arise from or with respect to any past or present, as of the TEG
Purchase Date, employee of PII/PGI, or any person connected with or representing
such employee, or any such employee of any signatory party, or any other
11.
such person to whom any kind of benefits are due by virtue of any federal or
state law, rule or regulation, or employee benefit or welfare plan relating to
PII/PGI. Similarly, immediately after the TEG Purchase Date, Texas Utilities
will cause TEG to indemnify Lehman Merchant, the Purchaser, its directors,
officers, employees, agents, assigns and successors and each of their directors,
officers, employees and agents, together with all affiliates and subsidiaries of
Lehman Merchant, and of any such assigns and successors, from and hold them
harmless against all claims, demands, suits and liabilities of any kind
(including attorneys' fees and litigation costs) arising from or out of the TEG
Group and their past, present and future activities, assets, businesses,
employees, or any persons representing or connected with any such employees,
together with all other claims and liabilities from or out of the TEG Group. The
Parties will cause indemnities in written form containing the foregoing terms
and conditions to be delivered by the Purchaser to Texas Utilities and by TEG to
the Purchaser immediately subsequent to the TEG Purchase Date; and to the
Purchaser or Texas Utilities, as appropriate, immediately subsequent to the TEG
Purchase Date, by such of the remaining Acquired Group as TEG may designate and
such of the remaining TEG Group as the Purchaser may designate. All of the
foregoing indemnities will extend for so long as any potential liability with
respect thereto remains legally enforceable as to the matters subject thereto.
7. This Agreement is effective as of the date set forth at the outset
hereof, and shall survive any purchase of TEG.
8. This Agreement is not assignable by either Party, without the express
prior written consent of the other Party.
9. The terms of this Agreement shall be maintained in strictest
confidence by the Parties, and no disclosure of this Agreement or any terms
hereof shall be made by either Party without the express prior written consent
of the other Party, subject to any regulatory or
12.
governmental requirements compelling the disclosure of this Agreement and/or
specified information.
10. Each of the Parties will proceed as expeditiously as reasonably
possible to endeavor to obtain all such regulatory consents and approvals as may
be necessary to provide for the consummation of the transactions referenced
herein.
11. Lehman Merchant understands that the UK Panel on Takeovers and Mergers
(the "Panel") will regard Lehman Merchant and Texas Utilities as "acting in
concert" as regards TEG for the purposes of the City Code on Takeovers and
Mergers ("City Code"). Lehman Merchant agrees to assure that neither it nor any
subsidiary will directly or indirectly (whether itself or through persons acting
in concert, as defined for the purposes of the City Code) be involved in:
(a) acquiring or seeking to acquire an interest (as defined in Part VI
of the Companies Act 1985 of Great Britain) in the share capital of TEG;
(b) announcing or making a general offer for the share capital of TEG;
(c) announcing or taking any step or action which under the City Code
or otherwise would require the announcement of any proposals for any take-
over, merger, consolidation, share exchange or similar transaction
involving the securities of TEG; or
(d) taking any step or action which might give rise to a breach of
Rule 4 of the City Code or any obligation on any person under the City Code
or otherwise (i) to make any offer to acquire all or part of the share
capital of TEG or (ii) to increase, revise or vary the Offer.
The undertakings set out above on the part of Lehman Merchant will
continue in full force and effect for so long as Lehman Merchant and Texas
Utilities are regarded by the Panel as acting in concert as regards TEG. For
the purposes hereof, share capital of TEG shall include ordinary shares of TEG
and securities convertible into such shares, rights to subscribe
13.
for such shares, options (including traded options) in respect of such shares
and derivatives referenced to such shares. Lehman Merchant hereby consents to
the issuance of a Press Announcement incorporating references to it and this
Agreement in the terms set out in the draft Press Announcement previously
submitted to it and agrees to the disclosure and/or display of this Agreement
and (on its own behalf and on behalf of the Purchaser) the Purchase Agreement,
in connection with the Offer and any Offer document issued in connection
therewith. Lehman Merchant agrees promptly on request to provide all such
information regarding itself, the members of its group, i.e. subsidiaries and
affiliates, and its and their directors as may be required to be included in or
for the purposes of any document or announcement concerning or relating to the
Offer (including, without limitation, the document containing the Offer) by all
relevant legislation and regulations (including, without limitation, the City
Code and the United States securities laws). Texas Utilities will comply in
connection with the Offer with the City Code.
12. Texas Utilities agrees that, subject to the provisions of the next
paragraph, it will not after the announcement of the Offer, without Lehman
Merchant's consent, change, whether by revision or amendment, the terms and
conditions of the Offer as announced in a manner that could reasonably be
expected to materially and adversely affect Lehman Merchant, the Acquired Group,
the purchase of the Sale Shares by the Purchaser or the financing therefor (it
being agreed that this shall not (except as contemplated below) restrict the
waiver of any conditions of the Offer and/or an increase of the Offer and/or a
revision or amendment of the Offer so as to include a share alternative).
Lehman Merchant understands and agrees that neither Texas Utilities
nor its subsidiary on whose behalf the Offer is made (the "Offeror") may or will
invoke any condition of the Offer unless the circumstances which give rise to
the right to invoke the condition are of
14.
material significance in the context of the Offer. The waiver of any condition
of the Offer shall, subject as mentioned below, be at the exclusive control and
discretion of the Offeror unless Lehman Merchant can demonstrate that the matter
or circumstance which could give rise to a right to invoke the condition is (a)
a matter or circumstance which Lehman Merchant discovered after the date hereof;
(b) a matter or circumstance which could reasonably be expected to materially
and adversely affect the Acquired Group or the purchase of the Sale Shares by
the Purchaser or the financing thereof; and (c) a matter or circumstance which
is of material significance in the context of the Offer. If so, Texas Utilities
will provide that, subject as mentioned below, the Offeror will not waive any
relevant condition(s) of the Offer without the prior consent of Lehman Merchant.
Notwithstanding the foregoing, this clause shall not require Texas Utilities or
the Offeror to invoke any condition of the Offer so as to cause the Offer to
lapse if the Panel does not agree that any such condition may be invoked and/or
that the Offer may lapse as a result of failure to waive any such condition
provided that Texas Utilities shall give Lehman Merchant all reasonable
opportunity and reasonable assistance in making representations to the Panel
that in such circumstances the conditions of the Offer may be invoked so as to
cause the Offer to lapse. Notwithstanding the foregoing if the Panel does not
agree as aforesaid any such condition may be waived, the Texas Utilities Group
shall not have any obligation or liability to Lehman Merchant or any of its
subsidiaries (including the Purchaser) under this Agreement or otherwise in
respect thereof, and Lehman Merchant will cause the Purchaser to comply with its
obligations under the Purchase Contract.
The Parties agree that after announcement of the Offer and until the
TEG Purchase Date or the Offer is formally abandoned or lapses, each Party will
give the other Party advance notice, if practicable, of any public announcement
such Party proposes to make that specifically refers to the other Party. Texas
Utilities shall not extend the Offer to an expiration
15.
date beyond four months from the announcement thereof, unless the Offer has
become or is declared to be unconditional, without Lehman Merchant's written
consent. Except as pertains to the share alternative mentioned above, the waiver
of any additional conditions not included in the original announcement of the
Offer shall in all cases be jointly determined by Texas Utilities and Lehman
Merchant to the extent such determination could reasonably be expected to
materially and adversely affect Lehman Merchant, the Acquired Group, the
purchase of the Sale Shares by the Purchaser or the financing therefor, it being
understood that any change to or variation in this Agreement or the Purchase
Agreement will require the prior consent of Lehman Merchant.
13. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
14. This Agreement may be executed in separate counterparts, each of which
shall be an original and all of which, taken together, shall constitute one and
the same agreement.
IN WITNESS WHEREOF, each of Lehman Merchant and Texas Utilities have
caused this Agreement to be executed by a duly authorized officer thereof as of
the date set forth at the outset hereof.
LEHMAN BROTHERS MERCHANT BANKING PARTNERS II L.P.
By: Lehman Brothers Merchant Banking Partners II Inc.,
its general partner
By: /s/ Alan Washkowitz
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TEXAS UTILITIES COMPANY
16.
By:
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Executive Vice President and
Chief Financial Officer
17.