EXHIBIT 1.1
ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC
TRANSITION BONDS SERIES 2002-1
ATLANTIC CITY ELECTRIC COMPANY
UNDERWRITING AGREEMENT
New York, New York
_______________, 2002
To the Representative named
in Schedule I hereto of the
Underwriters named in
Schedule II hereto
Ladies and Gentlemen:
1. Introduction. Atlantic City Electric Transition Funding LLC, a
Delaware limited liability company (the "Issuer"), proposes to sell to the
underwriters named in Schedule II hereto (the "Underwriters"), for whom you (the
"Representative") are acting as representative, the principal amount of the
securities identified in Schedule I hereto (the "Transition Bonds"). If the firm
or firms listed in Schedule II hereto include only the firm listed in Schedule I
hereto, then the terms "Underwriters" and "Representative", as used herein,
shall each be deemed to refer to such firm.
The Issuer is a wholly-owned subsidiary of Atlantic City Electric
Company, an operating electric utility incorporated under the laws of the State
of New Jersey (the "Company"), and was formed on March 28, 2001 for the purpose
of purchasing and owning the Bondable Transition Property, issuing the
Transition Bonds, and pledging its interest in the Collateral to __________ (the
"Bond Trustee") under an indenture, to be dated as of _______, 2002 (as amended
and supplemented from time to time, including any Series Supplement, the
"Indenture"), between the Issuer and the Bond Trustee, to secure the Transition
Bonds. The Transition Bonds will be secured primarily by the Bondable Transition
Property. The Initial Bondable Transition Property will be sold by the Company
to the Issuer pursuant to a sale agreement, to be dated as of ________, 2002
(the "Sale Agreement"), and the related bill of sale, between the Company and
the Issuer. Subsequent Bondable Transition Property may be sold to the Issuer by
the Company pursuant to the Sale Agreement and subsequent bills of sale. The
Initial Bondable Transition Property will be serviced pursuant to a servicing
agreement, to be dated as of _________, 2002 (as amended and supplemented from
time to time, the "Servicing Agreement"), between the Company, as servicer, and
the Issuer.
Capitalized terms used and not otherwise defined herein shall have the
meanings given to them in the Indenture.
2. Representations and Warranties. Each of the Company and the Issuer
represents and warrants to, and agrees with, each Underwriter as set forth below
in this Section 2. Certain terms used in this Section 2 are defined in paragraph
(c) hereof.
(a) If the offering of the Transition Bonds is a Delayed Offering (as
specified in Schedule I hereto), paragraph (i) below is applicable and, if
the offering of the Transition Bonds is a Non-Delayed Offering (as so
specified), paragraph (ii) below is applicable.
(i) The Issuer and the Transition Bonds meet the requirements for
the use of Form S-3 under the Securities Act of 1933 (the "Act"), and
the Issuer has filed with the Securities and Exchange Commission (the
"SEC") a registration statement (the file number of which is set forth
in Schedule I hereto) on such Form, including a basic prospectus, for
registration under the Act of the offering and sale of the Transition
Bonds. The Issuer may have filed one or more amendments thereto, and
may have used a Preliminary Final Prospectus, each of which has
previously been furnished to you. Such registration statement, as so
amended, has become effective. The offering of the Transition Bonds is
a Delayed Offering and, although the Basic Prospectus may not include
all the information with respect to the Transition Bonds and the
offering thereof required by the Act and the rules thereunder to be
included in the Final Prospectus, the Basic Prospectus includes all
such information required by the Act and the rules thereunder to be
included therein as of the Effective Date. The Issuer will next file
with the SEC pursuant to Rules 415 and 424(b) (2) or (5) a final
supplement to the form of prospectus included in such registration
statement relating to the Transition Bonds and the offering thereof.
As filed, such final prospectus supplement shall include all required
information with respect to the Transition Bonds and the offering
thereof and, except to the extent the Representative shall agree in
writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the Execution Time or, to the extent
not completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
Basic Prospectus and any Preliminary Final Prospectus) as the Issuer
has advised you, prior to the Execution Time, will be included or made
therein.
(ii) The Issuer and the Transition Bonds meet the requirements
for the use of Form S-3 under the Act and the Issuer has filed with
the SEC a registration statement (the file number of which is set
forth in Schedule I hereto) on such Form, including a basic
prospectus, for registration under the Act of the offering and sale of
the Transition Bonds. The Issuer may have filed one or more amendments
thereto, including a Preliminary Final Prospectus, each of which has
previously been furnished to you. The Issuer will next file with the
SEC either (x) a final prospectus supplement relating to the
Transition Bonds in accordance with Rules 430A and 424(b)(l) or (4),
or (y) prior to the effectiveness of such registration statement, an
amendment to such registration statement, including the form of final
prospectus supplement. In the case of clause (x), the Issuer has
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included in such registration statement, as amended at the Effective
Date, all information (other than Rule 430A Information) required by
the Act and the rules thereunder to be included in the Final
Prospectus with respect to the Transition Bonds and the offering
thereof. As filed, such final prospectus supplement or such amendment
and form of final prospectus supplement shall contain all Rule 430A
Information, together with all other such required information, with
respect to the Transition Bonds and the offering thereof and, except
to the extent the Representative shall agree in writing to a
modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
Basic Prospectus and any Preliminary Final Prospectus) as the Issuer
has advised you, prior to the Execution Time, will be included or made
therein.
(b) On the Effective Date, the Registration Statement did or will, and
when the Final Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date, the Final Prospectus (and any
supplement thereto) will, comply in all material respects with the
applicable requirements of the Act, the Securities Exchange Act of 1934
(the "Exchange Act") and the Trust Indenture Act of 1939 (the "Trust
Indenture Act") and the respective rules thereunder; on the Effective Date,
the Registration Statement did not or will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; on the Effective Date and on the Closing Date, the Indenture
did or will comply in all material respects with the requirements of the
Trust Indenture Act and the rules thereunder; and, on the Effective Date,
the Final Prospectus, if not filed pursuant to Rule 424(b), did not or will
not, and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date, the Final Prospectus (together with any supplement thereto)
will not, include any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that neither the Issuer nor the Company makes any
representations or warranties as to (i) that part of the Registration
Statement which shall constitute the Statements of Eligibility and
Qualification (Forms T-l) under the Trust Indenture Act of the Bond Trustee
or (ii) the information contained in or omitted from the Registration
Statement or the Final Prospectus (or any supplement thereto) in reliance
upon and in conformity with information furnished in writing to the Issuer
by or on behalf of any Underwriter through the Representative specifically
for inclusion in the Registration Statement or the Final Prospectus (or any
supplement thereto).
(c) The terms which follow, when used in this Agreement, shall have
the meanings indicated. The term "Effective Date" shall mean each date that
the Registration Statement and any post-effective amendment or amendments
thereto became or become effective and each date after the date hereof on
which a document incorporated by reference in the Registration Statement is
filed. "Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto. "Basic Prospectus" shall mean
the prospectus referred to in paragraph (a) above contained in the
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Registration Statement at the Effective Date including, in the case of a
Non-Delayed Offering, any Preliminary Final Prospectus. "Preliminary Final
Prospectus" shall mean any preliminary prospectus supplement to the Basic
Prospectus which describes the Transition Bonds and the offering thereof
and is used prior to filing of the Final Prospectus. "Final Prospectus"
shall mean the prospectus supplement relating to the Transition Bonds that
is first filed pursuant to Rule 424(b) after the Execution Time, together
with the Basic Prospectus or, if, in the case of a Non-Delayed Offering, no
filing pursuant to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Transition Bonds, including the Basic
Prospectus, included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statement referred to
in paragraph (a) above, including incorporated documents, exhibits and
financial statements, as amended at the Execution Time (or, if not
effective at the Execution Time, in the form in which it shall become
effective) and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Date (as hereinafter defined), shall also
mean such registration statement as so amended. Such term shall include any
Rule 430A Information deemed to be included therein at the Effective Date
as provided by Rule 430A. "Rule 415", "Rule 424", "Rule 430A" and
"Regulation S-K" refer to such rules or regulation under the Act. "Rule
430A Information" means information with respect to the Transition Bonds
and the offering thereof permitted to be omitted from the Registration
Statement when it becomes effective pursuant to Rule 430A. Any reference
herein to the Registration Statement, the Basic Prospectus, any Preliminary
Final Prospectus or the Final Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12
of Form S-3 which were filed under the Exchange Act on or before the
Effective Date of the Registration Statement or the issue date of the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as
the case may be; and any reference herein to the terms "amend", "amendment"
or "supplement" with respect to the Registration Statement, the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus shall
be deemed to refer to and include the filing of any document under the
Exchange Act after the Effective Date of the Registration Statement or the
issue date of the Basic Prospectus, any Preliminary Final Prospectus or the
Final Prospectus, as the case may be, deemed to be incorporated therein by
reference. A "Non-Delayed Offering" shall mean an offering of securities
which is intended to commence promptly after the effective date of a
registration statement, with the result that, pursuant to Rules 415 and
430A, all information (other than Rule 430A Information) with respect to
the securities so offered must be included in such registration statement
at the effective date thereof. A "Delayed Offering" shall mean an offering
of securities pursuant to Rule 415 which does not commence promptly after
the effective date of a registration statement, with the result that only
information required pursuant to Rule 415 need be included in such
registration statement at the effective date thereof with respect to the
securities so offered. Whether the offering of the Transition Bonds is a
Non-Delayed Offering or a Delayed Offering shall be set forth in Schedule I
hereto.
2A. Each Underwriter represents and warrants severally to and agrees
with the Company and the Issuer that:
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(a) As of the date hereof and as of the Closing Date, each Underwriter
has complied with all of its obligations under Section 11 hereof. Prior to
the delivery of the Preliminary Final Prospectus, no written material of
any kind relating to the Transition Bonds will be delivered to potential
investors other than Computational Materials and ABS Term Sheets (as such
terms are defined in Section 11 hereof). It is understood and agreed
between the parties hereto that the only ABS Term Sheets or Computational
Materials that have been or will be delivered to prospective investors by
the Underwriters are the Computational Materials dated __________, 2002
that have been delivered by the Issuer to the Representative and that are
attached hereto as Exhibit B.
3. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Issuer
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Issuer, at the purchase price set forth in
Schedule I hereto the principal amount of the Transition Bonds set forth
opposite such Underwriter's name in Schedule II hereto. Such purchase shall be
in accordance with the other terms and conditions set forth in Schedule I hereto
4. Delivery and Payment. Delivery of and payment for the Transition
Bonds shall be made on the date and at the time specified in Schedule I hereto,
which date and time may be postponed by agreement between the Representative and
the Issuer or as provided in Section 9 hereof (such date and time of delivery
and payment for the Transition Bonds being herein called the "Closing Date").
Delivery of the Transition Bonds shall be made to the Representative for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representative of the purchase price thereof to the
Issuer by wire transfer of immediately available funds. Delivery of the
Transition Bonds shall be made at such location as the Representative shall
reasonably designate at least one business day in advance of the Closing Date.
The Transition Bonds to be so delivered shall be initially represented by Bonds
registered in the name of Cede & Co., as nominee of The Depository Trust Company
("DTC"). The interests of beneficial owners of the Transition Bonds will be
represented by book entries on the records of DTC and participating members
thereof. Definitive Transition Bonds will be available only under limited
circumstances.
The Issuer agrees to have the Transition Bonds available for
inspection, checking and packaging by the Representative in New York, New York,
not later than 1:00 PM on the business day prior to the Closing Date.
5. Covenants.
(a) Covenants of the Issuer. The Issuer covenants and agrees with the
several Underwriters that:
(i) The Issuer will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and
any amendment thereto, to become effective. Prior to the termination
of the offering of the Transition Bonds, the Issuer will not file any
amendment of the Registration Statement or
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supplement (including the Final Prospectus or any Preliminary Final
Prospectus) to the Basic Prospectus unless the Issuer has furnished
you a copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object.
Subject to the foregoing sentence, the Issuer will cause the Final
Prospectus, properly completed, and any supplement thereto to be filed
with the SEC pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence
satisfactory to the Representative of such timely filing. The Issuer
will promptly advise the Representative (i) when the Registration
Statement, if not effective at the Execution Time, and any amendment
thereto, shall have become effective, (ii) when the Final Prospectus,
and any supplement thereto, shall have been filed with the SEC
pursuant to Rule 424(b), (iii) when, prior to termination of the
offering of the Transition Bonds, any amendment to the Registration
Statement shall have been filed or become effective, (iv) of any
request by the SEC for any amendment of the Registration Statement or
supplement to the Final Prospectus or for any additional information,
(v) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (vi) of the receipt
by the Issuer of any notification with respect to the suspension of
the qualification of the Transition Bonds for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose.
The Issuer will use its best efforts to prevent the issuance of any
such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(ii) If, at any time when a prospectus relating to the Transition
Bonds is required to be delivered under the Act, any event occurs as a
result of which the Final Prospectus as then supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, or if it
shall be necessary to amend the Registration Statement or supplement
the Final Prospectus to comply with the Act or the Exchange Act or the
respective rules thereunder, the Issuer promptly will (i) prepare and
file with the SEC, subject to the second sentence of paragraph (a)(i)
of this Section 5, an amendment or supplement which will correct such
statement or omission or effect such compliance and (ii) supply any
supplemented Prospectus to you in such quantities as you may
reasonably request.
(iii) As soon as practicable, the Issuer will make generally
available to the Bondholders and to the Representative an earnings
statement or statements of the Issuer which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(iv) The Issuer will furnish to the Representative and counsel
for the Underwriters, without charge, copies of the Registration
Statement (including exhibits thereto) and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Act, as
many copies of any Preliminary Final
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Prospectus and the Final Prospectus and any supplement thereto as the
Representative may reasonably request. The Issuer shall furnish or
cause to be furnished to the Representative copies of all reports on
Form SR required by Rule 463 under the Act. The Issuer will pay the
expenses of printing or other production of all documents specifically
relating to the offering of the Transition Bonds under the Act.
(v) The Issuer will cooperate in qualifying the Transition Bonds
for sale under the laws of such jurisdictions as the Representative
may reasonably request, will maintain such qualifications in effect so
long as required for the distribution of the Transition Bonds and will
arrange for the determination of the legality of the Transition Bonds
for purchase by institutional investors; provided that in no event
shall the Issuer (a) submit to any State requirements which it deems
unduly burdensome or (b) be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action
that would subject it to service of process in suits, other than those
arising out of the offering or sale of the Transition Bonds, in any
jurisdiction where it is not now so subject.
(vi) Until the business date set forth on Schedule I hereto, the
Issuer will not, without the consent of the Representative, offer,
sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, any asset-backed securities
of a special purpose vehicle (other than the Transition Bonds).
(vii) For a period from the date of this Agreement until the
retirement of the Transition Bonds, or until such time as the
Underwriters shall cease to maintain a secondary market in the
Transition Bonds, whichever occurs first, the Issuer will deliver to
the Representative the annual statements of compliance and the annual
independent auditor's servicing reports furnished to the Issuer or the
Bond Trustee pursuant to the Servicing Agreement or the Indenture, as
applicable, as soon as such statements and reports are furnished to
the Issuer or the Bond Trustee.
(viii) So long as any of the Transition Bonds are outstanding,
the Issuer will furnish to the Representative (i) as soon as
available, a copy of each report filed with the SEC under the Exchange
Act, or mailed to Bondholders, (ii) a copy of any filings with the New
Jersey Board of Public Utilities (the "BPU") or any other governmental
agency or instrumentality relating to the Transition Bonds, and (iii)
from time to time, any information concerning the Company or the
Issuer, as the Representative may reasonably request.
(ix) To the extent, if any, that any rating necessary to satisfy
the condition set forth in Section 6(o) of this Agreement is
conditioned upon the furnishing of documents or the taking of other
actions by the Issuer on or after the Closing Date, the Issuer shall
furnish such documents and take such other actions as are reasonably
required.
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(x) The Issuer will file with the SEC a report on Form 8-K
setting forth all Computational Materials and ABS Term Sheets (as such
terms are defined in Section 11) provided to the Issuer by an
Underwriter and identified by it as such within the time period
allotted for such filing pursuant to the No-Action Letters (as defined
in Section 11); provided, however, that prior to any filing of the
Computational Materials and ABS Terms Sheets by the Issuer, such
Underwriter must comply with its obligations pursuant to Section 11
and the Issuer must receive a letter from PricewaterhouseCoopers LLP,
certified public accountants, satisfactory in form and substance to
the Issuer and such Underwriter, to the effect that such accountants
have performed specified procedures, all of which have been agreed to
by the Issuer and such Underwriter, as a result of which they have
determined that the information included in the Computational
Materials and ABS Term Sheets (if any), provided by such Underwriter
to the Issuer for filing on Form 8-K pursuant to Section 11 and this
subsection (x), and which the accountants have examined in accordance
with such agreed upon procedures, is accurate except as to such
matters that are not deemed by the Issuer and such Underwriter to be
material. The Issuer shall file any corrected Computational Materials
or ABS Term Sheets described in Section 11(a)(iii) as soon as
practicable following receipt thereof.
(b) Covenants of the Company. The Company covenants and agrees with the
several Underwriters that, to the extent that the Issuer has not already
performed such act pursuant to Section 5 (a):
(i) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereto, to become effective. The Company will use its best efforts to
prevent the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement and, if issued, to obtain as
soon as possible the withdrawal thereof.
(ii) Until the business date set forth on Schedule I hereto, the
Company will not, without the consent of the Representative, offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, or
announce the offering of, any asset-backed securities of a special purpose
vehicle (other than the Transition Bonds).
(iii) So long as any of the Transition Bonds are outstanding and the
Company is the Servicer, the Company will furnish to the Representative (i)
as soon as available, a copy of each report filed with the SEC under the
Exchange Act, or mailed to Bondholders, (ii) a copy of any filings with the
BPU pursuant to the Financing Order relating to the Transition Bonds,
including, without limitation, filings to adjust the Transition Bond Charge
from time to time, and (iii) from time to time, any information concerning
the Company and, to the extent readily available, the Issuer, as the
Representative may reasonably request.
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(iv) To the extent, if any, that any rating necessary to satisfy the
condition set forth in Section 6(o) of this Agreement is conditioned upon
the furnishing of documents or the taking of other actions by the Company
on or after the Closing Date, the Company shall furnish such documents and
take such other actions as are reasonably required.
6. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters to purchase the Transition Bonds shall be subject to the
accuracy of the representations and warranties on the part of the Issuer and the
Company contained herein as of the Execution Time and the Closing Date and on
the part of the Company contained in the Sale Agreement and the Servicing
Agreement as of the Closing Date, to the performance by the Issuer and the
Company of their respective obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Representative agrees in writing to a later
time, the Registration Statement will become effective not later than (i)
6:00 PM New York City time, on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 PM New
York City time on such date, or (ii) 12:00 Noon on the business day
following the day on which the public offering price was determined, if
such determination occurred after 3:00 PM New York City time on such date;
if filing of the Final Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the Final Prospectus, and any such supplement,
shall have been filed in the manner and within the time period required by
Rule 424 (b); and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(b) The Representative shall have received opinions of counsel for the
Company, portions of which may be delivered by LeBoeuf, Lamb, Xxxxxx &
XxxXxx, L.L.P., outside counsel for the Company, and portions of which may
be delivered by ___________________, in-house counsel for the Company, each
dated the Closing Date and each subject to customary qualifications,
exceptions, and limitations, in form and substance reasonably satisfactory
to the Representative, to the effect that:
(i) the Company (a) has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is organized, (b) has all requisite corporate
power to own its properties, conduct its business as presently
conducted and execute, deliver and perform its obligations under this
Agreement, the Sale Agreement, and the Servicing Agreement, as
applicable, and (c) is duly qualified to do business, in all
jurisdictions (and is in good standing under the laws of all such
jurisdictions) to the extent that such qualification and good standing
is or shall be necessary to protect the validity and enforceability of
this Agreement, the Basic Documents to which the Company is party and
each other instrument or agreement necessary or appropriate to the
proper administration of this Agreement and the transactions
contemplated hereby;
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(ii) the Sale Agreement and the Servicing Agreement have been
duly authorized, executed and delivered by the Company and constitute
legal, valid and binding agreements of the Company enforceable against
the Company in accordance with their terms (subject to applicable
bankruptcy, reorganization, insolvency, moratorium and other similar
laws and to equitable principles affecting the rights and remedies of
creditors generally);
(iii) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving the Company or
any of its subsidiaries of a character required to be disclosed in the
Registration Statement which is not adequately disclosed in the Final
Prospectus, and there is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Final Prospectus, or to be filed as an exhibit, which is not described
or filed as required;
(iv) this Agreement has been duly authorized, executed and
delivered by the Company;
(v) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the
Company, of the transactions contemplated herein, except such as have
been obtained under the New Jersey Electric Discount and Energy
Competition Act (the "Competition Act") and such as may be required
under the blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Transition Bonds by the Underwriters
and such other consents, approvals and authorizations as have been
obtained;
(vi) neither the execution and delivery of this Agreement, the
Sale Agreement, or the Servicing Agreement, nor the consummation of
the transactions contemplated by this Agreement, the Sale Agreement or
the Servicing Agreement, nor the fulfillment of the terms of this
Agreement, the Sale Agreement or the Servicing Agreement by the
Company will (A) conflict with, result in any breach of any of the
terms or provisions of, or constitute (with or without notice or lapse
of time) a default under the articles of incorporation, bylaws or
other organizational documents of the Company, or conflict with or
breach any of the material terms or provisions of, or constitute (with
or without notice or lapse of time) a default under, any indenture,
material agreement or other material instrument to which the Company
is a party or by which the Company is bound, (B) result in the
creation or imposition of any lien upon any properties of the Company
pursuant to the terms of any such indenture, agreement or other
instrument (other than as contemplated by the Basic Documents and the
Competition Act), or (C) violate any law or any order, rule or
regulation applicable to the Company of any court or of any federal or
New Jersey regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Company or
any of its properties;
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(vii) all filings, that are necessary to fully preserve and
protect the interests of the Issuer in the Bondable Transition
Property have been executed and filed; and
(viii) neither the execution and delivery of this Agreement, the
Sale Agreement, the Servicing Agreement or the Indenture, nor the
issue and sale of the Transition Bonds, nor the consummation of the
transactions contemplated by this Agreement, the Sale Agreement, the
Servicing Agreement or the Indenture, nor the fulfillment of the terms
of this Agreement, the Sale Agreement, the Servicing Agreement or the
Indenture, by the Issuer will violate the terms of the Mortgage and
Deed of Trust dated _____________, as amended, between the Company and
_______________, as trustee.
In rendering such opinions, such counsel may rely as to matters of fact, to the
extent deemed proper, on certificates of responsible officers of the Company.
References to the Final Prospectus in this paragraph (b) include any supplements
thereto at the Closing Date.
(c) The Representative shall have received opinions of counsel for the
Issuer, portions of which may be delivered by LeBoeuf, Lamb, Xxxxxx &
XxxXxx L.L.P., outside counsel for the Issuer, and portions of which may be
delivered by _______________, in-house counsel for the Company, each dated
the Closing Date, in form and substance reasonably satisfactory to the
Representative, to the effect that:
(i) the Issuer has been duly formed and is validly existing as a
limited liability company and is in good standing under the laws of
the State of Delaware, with all requisite limited liability company
power to execute, deliver and perform its obligations under this
Agreement, the Sale Agreement, the Servicing Agreement, the
Administration Agreement and the Indenture;
(ii) the Sale Agreement, the Servicing Agreement, the
Administration Agreement and the Indenture have been duly authorized,
executed and delivered by the Issuer and constitute legal, valid and
binding agreements of the Issuer enforceable against the Issuer in
accordance with their terms (subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other similar laws and to
equitable principles affecting the rights and remedies of creditors
generally); and the Transition Bonds have been duly authorized and
executed by the Issuer, and when authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will
constitute legal, valid and binding obligations of the Issuer entitled
to the benefits of the Indenture and enforceable against the Issuer in
accordance with their terms (subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other similar laws and to
equitable principles affecting the rights and remedies of creditors
generally);
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(iii) this Agreement has been duly authorized, executed and
delivered by the Issuer;
(iv) the Indenture has been duly qualified under the Trust
Indenture Act;
(v) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving the Issuer, or
relating to the Transition Bonds, the Competition Act, the bondable
stranded costs rate order issued by the BPU to the Company on
___________, 2002 (the "Financing Order") or the use and enjoyment of
Bondable Transition Property of a character required to be disclosed
in the Registration Statement which is not adequately disclosed in the
Final Prospectus, and there is no franchise, contract or other
document of a character required to be described in the Registration
Statement or Final Prospectus, or to be filed as an exhibit to the
Registration Statement, which is not described or filed as required;
(vi) the Registration Statement has become effective under the
Act; any required filing of the Basic Prospectus, any Preliminary
Final Prospectus and the Final Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); to the knowledge of
such counsel (and after being advised by the staff of the Commission
to such effect), no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that
purpose have been instituted or threatened, and the Registration
Statement and the Final Prospectus (other than the financial
statements and the notes and schedules thereto and other financial and
statistical information contained therein and in the Form T-1 as to
which such counsel need express no belief) comply as to form in all
material respects with the applicable requirements of the Act, the
Exchange Act and the Trust Indenture Act and the respective rules
thereunder; in addition, such counsel shall confirm, on the basis of
certain assumptions, that such counsel has no reason to believe that
at the Effective Date the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading or that the Final Prospectus as of its date and the
Closing Date includes any untrue statement of a material fact or omits
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading (other than the financial statements and other financial
and statistical information contained therein as to which such counsel
need express no belief);
(vii) no consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation by the
Issuer of the transactions contemplated herein, except such as have
been obtained under the
12
Competition Act and such as may be required under the blue sky laws of
any jurisdiction in connection with the purchase and distribution of
the Transition Bonds by the Underwriters and such other consents,
approvals and authorizations as have been obtained;
(viii) neither the execution and delivery of this Agreement, the
Sale Agreement, the Servicing Agreement, the Administration Agreement
or the Indenture, nor the issue and sale of the Transition Bonds, nor
the consummation of the transactions contemplated by this Agreement,
the Sale Agreement, the Servicing Agreement, the Administration
Agreement or the Indenture, nor the fulfillment of the terms of this
Agreement, the Sale Agreement, the Servicing Agreement, the
Administration Agreement or the Indenture by the Issuer, will (A)
conflict with, result in any breach of any of the terms or provisions
of, or constitute (with or without notice or lapse of time) a default
under the Issuer LLC Agreement, or conflict with or breach any of the
terms or provisions of, or constitute (with or without notice or lapse
of time) a default under, any indenture, agreement or other instrument
known to such counsel and to which the Issuer is a party or by which
the Issuer is bound, (B) result in the creation or imposition of any
lien upon any properties of the Issuer pursuant to the terms of any
such indenture, agreement or other instrument (other than as
contemplated by the Basic Documents and the Competition Act), or (C)
violate any law or any order, rule or regulation applicable to the
Issuer of any court or of any federal or New Jersey or Delaware
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Issuer, or any of its
properties;
(ix) the Indenture is effective to create in favor of the Bond
Trustee for the benefit of the Transition Bondholders a security
interest in the Collateral (as defined in the Indenture) consisting of
the Bondable Transition Property and (to the extent a security
interest therein can be granted under the New Jersey UCC or the
Delaware UCC, as applicable) in the proceeds of the Bondable
Transition Property; upon the issuance of the Transition Bonds and the
giving of value to the Issuer by the Bond Trustee on behalf of the
purchasers of the Transition Bonds with respect to the Bondable
Transition Property and such proceeds, such security interest in the
Bondable Transition Property, and in the portion of the proceeds of
the Bondable Transition Property in which a security interest can be
perfected by filing in the respective jurisdictions, will be
perfected; and based solely on the Search Reports and factual
certificates, such perfected security interest will rank prior to any
other security interest of any other creditor of the Issuer with
respect to the Bondable Transition Property and such portion of such
proceeds;
(x) the Indenture is effective to create in favor of the Bond
Trustee for the benefit of the Transition Bondholders a security
interest in the Collateral consisting of the Issuer's rights in the
Sale Agreement, the Bill of Sale, the Servicing Agreement and the
Administration Agreement (collectively, the "Pledged Contracts"); upon
the issuance of the Transition Bonds and the giving of value to the
Issuer by the Bond Trustee on behalf of the purchasers of the
13
Transition Bonds with respect to the Pledged Contracts, such security
interest in the Pledge Contracts will be perfected; and based solely
on the Search Reports and factual certificates, such perfected
security interest will rank prior to any other security interest of
any other creditor of the Issuer with respect to the Pledged
Contracts;
(xi) the Indenture is effective to create in favor of the Bond
Trustee for the benefit of the Transition Bondholders a security
interest in (i) the Collection Account and the Subaccounts (each as
defined in the Indenture) for the Series (collectively, the
"Accounts") and (ii) to the extent a security interest therein can be
granted under the New Jersey UCC, all of the Collateral held in or
credited to the Accounts; and assuming that (i) the Bond Trustee in
its capacity as securities intermediary is a "securities intermediary"
within the meaning of Section 8-102(a)(4) of the New Jersey UCC, (ii)
the parties to the Indenture and the Control Agreement (as defined in
the Indenture) comply with the terms thereof, and (iii) no person or
other entity other than the Bond Trustee in its capacity as trustee
under the Indenture obtains and maintains "control" (as defined in
Section 8-106 of the New Jersey UCC) of the Accounts or of any such
Collateral held therein or credited thereto, then, to the extent the
Accounts are "securities accounts" within the meaning of Section
8-501(a) of the New Jersey UCC, the security interests in the Accounts
and in any "securities" and "security entitlements" (within the
meaning of Section 8-102 of the New Jersey UCC) held therein or
credited thereto constituting Collateral will be perfected and will
rank prior to any other security interest of any other creditor of the
Issuer with respect thereto;
(xii) the Issuer is not an "investment company" or under the
"control" of an "investment company" as such terms are defined under
the Investment Company Act of 1940, as amended;
(xiii) the Transition Bonds, the Indenture, the Sale Agreement,
the Servicing Agreement, the Issuer LLC Agreement, the Administration
Agreement, the Competition Act, and the Financing Order conform to the
descriptions thereof contained in the Final Prospectus; and
(xiv) the statements included in the Final Prospectus under the
captions "Material Income Tax Matters" (other than under the
sub-heading "Material State of New Jersey Tax Matters", as to which
such counsel need express no opinion) and "ERISA Considerations", to
the extent that they constitute matters of law or legal conclusions
with respect thereto, provide a fair and accurate summary of such law
and conclusions.
In rendering such opinions, such counsel may rely as to matters of fact, to the
extent deemed proper, on certificates of responsible officers of the Issuer and
public officials. References to the Final Prospectus in this paragraph (c)
include any supplements thereto at the Closing Date.
14
(d) The Representative and the Issuer have received an opinion of
____________, counsel to the Bond Trustee, dated the Closing Date, in form
and substance reasonably satisfactory to the Representative, to the effect
that:
(i) the Bond Trustee is a banking corporation validly existing
under the laws of _________________;
(ii) the Bond Trustee has the requisite power and authority to
execute and deliver the Indenture, and the Indenture has been duly
executed and delivered by the Bond Trustee, and constitutes a legal,
valid and binding obligation of the Bond Trustee enforceable against
the Bond Trustee in accordance with its terms except that such
enforcement may be limited by bankruptcy, reorganization, insolvency,
moratorium, liquidation or other similar laws or equitable principles
affecting creditors' rights generally from time to time in effect; and
(iii) the Transition Bonds have been duly authenticated by the
Trustee.
(e) The Representative shall have received from Xxxxxx & Xxxxxxx,
counsel for the Underwriters, such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the Transition Bonds, the
Indenture, the Registration Statement, the Final Prospectus (together with
any supplement thereto) and other related matters as the Representative may
reasonably require, and the Company and the Issuer shall have furnished to
such counsel such documents as they request for the purpose of enabling
them to pass upon such matters.
(f) The Representative and the Bond Trustee shall have received a
certificate of the Issuer, signed by the President and the principal
financial or accounting officer of the Issuer, dated the Closing Date, to
the effect that the signers of such certificate have carefully examined the
Registration Statement, the Final Prospectus, any supplement to the Final
Prospectus and this Agreement and that:
(i) the representations and warranties of the Issuer in this
Agreement and in the Indenture are true and correct in all material
respects on and as of the Closing Date with the same effect as if made
on the Closing Date, and the Issuer has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Issuer's knowledge,
threatened; and
(iii) since the dates as of which information is given in the
Final Prospectus (exclusive of any supplement thereto), there has been
no material adverse change in (x) the condition (financial or other),
prospects, earnings, business or properties of the Issuer, whether or
not arising from transactions in the ordinary course of business, or
(y) the Bondable Transition Property, except as set
15
forth in or contemplated in the Final Prospectus (exclusive of any
supplement thereto).
(g) The Representative and the Bond Trustee shall have received a
certificate of the Company, signed by a Vice President and the Treasurer of
the Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the Final
Prospectus, any supplement to the Final Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company in this
Agreement, the Sale Agreement and the Servicing Agreement are true and
correct in all material respects on and as of the Closing Date with
the same effect as if made on the Closing Date, and the Company has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the dates as of which information is given in the
Final Prospectus (exclusive of any supplement thereto), there has been
no material adverse change in (x) the condition (financial or other),
prospects, earnings, business or properties of the Company and its
subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business, or (y) the Bondable
Transition Property, except as set forth in or contemplated in the
Final Prospectus (exclusive of any supplement thereto).
(h) At the Closing Date, PricewaterhouseCoopers LLP, shall have
furnished to the Representative (i) a letter or letters (which may refer to
letters previously delivered to the Representative), dated the Closing
Date, in form and substance satisfactory to the Representative, confirming
that they are independent accountants within the meaning of the Act and the
Exchange Act and the respective applicable published rules and regulations
thereunder and they have audited the financial statement of the Issuer
included in the Registration Statement and the Final Prospectus as set
forth in their report included therein and stating in effect that they have
performed certain specified procedures as a result of which they determined
that certain information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical information
derived from the general accounting records of the Company and its
subsidiaries) set forth in the Registration Statement and the Final
Prospectus, agrees with the accounting records of the Company and its
subsidiaries, excluding any questions of legal interpretation, and (ii) the
letter, dated the Closing Date, in form and substance satisfactory to the
Representative, satisfying the requirements of Section 2.10(b)(vi) of the
Indenture.
16
References to the Final Prospectus in this paragraph (i) include any
supplement thereto at the date of the letter.
In addition, except as provided in Schedule I hereto, at the Execution
Time, PricewaterhouseCoopers LLP, shall have furnished to the Representative a
letter or letters, dated the Execution Time, in form and substance satisfactory
to the Representative, to the effect set forth above.
(i) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Final Prospectus (exclusive of any supplement
thereto), there shall not have been any change, or any development
involving a prospective change, in or affecting either (i) the business,
properties or financial condition of the Company or the Issuer or (ii) the
Bondable Transition Property, the Transition Bonds, the Financing Order or
the Competition Act, the effect of which is, in the judgment of the
Representative, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Transition
Bonds as contemplated by the Registration Statement (exclusive of any
amendment thereof) and the Final Prospectus (exclusive of any supplement
thereto).
(j) The Representative and the Issuer shall have received on the
Closing Date an opinion letter or letters of XxXxxxx, Xxxx, Xxxxxx &
XxxXxx, L.L.P., outside counsel to the Company and the Issuer, dated the
Closing Date, in form and substance reasonably satisfactory to the
Representative, (i) with respect to the characterization of the transfer of
the Bondable Transition Property by the Company to the Issuer as a "true
sale" for bankruptcy purposes, and (ii) to the effect that a court would
not order the substantive consolidation of the assets and liabilities of
the Issuer with those of the Company, in the event of a bankruptcy,
reorganization or other insolvency proceeding involving the Company.
(k) The Representative and the Issuer shall have received on the
Closing Date an opinion letter of XxXxxxx, Xxxx, Xxxxxx & XxxXxx, L.L.P.,
outside counsel for the Company and the Issuer, dated the Closing Date, in
form and substance reasonably satisfactory to the Representative, to the
effect that: (i) the Financing Order has been duly authorized and adopted
by the BPU and is irrevocable; (ii) the decisions of the BPU adopting the
Financing Order are non-appealable; and (iii) any state action (whether by
legislative action, BPU action, or otherwise ) to revoke or limit the
Financing Order, the Bondable Transition Property, or the Transition Bond
Charges would be subject to a successful constitutional contract clause and
taking clause challenge under the United States and New Jersey
Constitutions.
(l) The Representative and the Issuer shall have received on the
Closing Date an opinion letter of XxXxxxx, Xxxx, Xxxxxx & XxxXxx, L.L.P.,
special counsel for the Company with respect to the state tax consequences
of the issuance of the Transition Bonds, dated the Closing Date, in form
and substance reasonably satisfactory to the Representative, to the effect
that the statements included in the Final Prospectus under the
17
caption "Material Income Tax Matters - Material State of New Jersey Tax Matters"
to the extent that they constitute matters of law or legal conclusions with
respect thereto, provide a fair and accurate summary of such law and
conclusions.
(m) On or prior to the Closing Date, the Company shall have furnished
to the Representative (i) copies of the private letter ruling, dated July
31, 2001, issued by the Internal Revenue Service to the Company, and (ii)
copies of the order issued by the SEC to the Company on _________, 2002
under the Public Utility Holding Company Act of 1935.
(n) The Representative and the Bond Trustee shall have received on the
Closing Date an opinion letter or letters of Blank Rome Xxxxxxx & XxXxxxxx
LLP, special Delaware counsel to the Issuer, dated the Closing Date, in
form and substance reasonably satisfactory to the Representative, to the
effect that: (i) if properly presented to a Delaware court, a Delaware
court applying Delaware law, would conclude that (x) in order for a person
to file a voluntary bankruptcy petition on behalf of the Issuer, the prior
unanimous consent of the Managers of the Issuer (including the two
Independent Managers), as provided in Section 3.04(b) of the Issuer LLC
Agreement (the " Issuer LLC Agreement"), is required, and (y) such
provision, contained in Section 3.04(b) of the Issuer LLC Agreement, that
requires the unanimous consent of the Managers of the Issuer (including the
two Independent Managers) in order for a person to file a voluntary
bankruptcy petition on behalf of the Issuer, constitutes a legal, valid and
binding agreement of the Member and is enforceable against the Member, in
accordance with its terms; and (ii) the Issuer LLC Agreement constitutes a
legal, valid and binding agreement of the Member, and is enforceable
against the Member in accordance with its terms.
(o) The Transition Bonds shall have been rated in the long-term rating
categories by each of the Rating Agencies set forth in Schedule I hereto.
(p) On or prior to the Closing Date, the Issuer shall have delivered
to the Representative evidence, in form and substance reasonably
satisfactory to the Representative, that appropriate filings have been or
are being made in accordance with the Competition Act and other applicable
law reflecting the grant of a security interest by the Issuer in the
Collateral to the Bond Trustee, including the filing of the UCC financing
statements in the office of the Secretary of the State of New Jersey and
the State of Delaware.
(q) On or prior to the Closing Date, the Issuer shall have delivered
to the Representative a copy of the Financing Order relating to the
Bondable Transition Property.
(r) On or prior to the Closing Date, the Issuer shall have furnished
to the Representative the documents required pursuant to Section 2.10 of
the Indenture.
(s) Prior to the Closing Date, the Issuer and the Company shall have
furnished to the Representative such further information, certificates,
opinions and documents as
18
the Representative may reasonably request, including any documents provided to
the Rating Agencies.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all respects when and as provided in this Agreement, or if any
of the opinions and certificates mentioned above or elsewhere in this Agreement
shall not be in all respects satisfactory in form and substance to the
Representative and counsel for the Underwriters, this Agreement and all
obligations of the Underwriters hereunder may be canceled at, or at any time
prior to, the Closing Date by the Representative. Notice of such cancellation
shall be given to the Issuer in writing or by telephone or telegraph confirmed
in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the offices of LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., 000 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Transition Bonds provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof or because
of any refusal, inability or failure on the part of the Company or the Issuer to
perform any agreement herein or comply with any provision hereof other than by
reason of a default by any of the Underwriters under Section 9 hereof, the
Company and the Issuer will, jointly and severally, reimburse the Underwriters
upon demand for all out-of -pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Transition Bonds.
8. Indemnification and Contribution.
(a) The Company and the Issuer will, jointly and severally, indemnify
and hold harmless each Underwriter, the directors, officers, members,
employees and agents of each Underwriter, and each person who controls any
Underwriter, within the meaning of either the Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in the registration statement for the registration of the
Transition Bonds as originally filed or in any amendment thereof, or in the
Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus,
or in any amendment thereof or supplement thereto, or the Computational
Materials and ABS Term Sheets (as defined in Section 11 hereof), or arise
out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, and will reimburse each such indemnified party, as
incurred, for any legal or other expenses incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that neither the Company nor the Issuer will be
liable in any such case to the
19
extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Issuer or the Company
by or on behalf of any Underwriter through the Representative specifically
for inclusion therein; provided further, that with respect to any untrue
statement or omission of material fact made in any Preliminary Final
Prospectus, the indemnity agreement contained in this Section 8(a) shall
not inure to the benefit of any Underwriter or any person controlling such
Underwriter from whom the person asserting any such loss, claim, damage or
liability purchased the Transition Bonds that are the subject thereof, to
the extent that any such loss, claim, damage or liability of such
Underwriter occurs under the circumstance where it shall have been
determined by a court of competent jurisdiction by final and nonappealable
judgment that (w) the Company or the Issuer had previously furnished copies
of the Final Prospectus to the Representative, (x) delivery of the Final
Prospectus was required by the Act to be made to such person, (y) the
untrue statement or omission of a material fact contained in the
Preliminary Final Prospectus was corrected in the Final Prospectus and (z)
there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Transition Bonds to such person, a copy of
the Final Prospectus. This indemnity agreement will be in addition to any
liability which the Company and the Issuer may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company and the Issuer, each of their directors, each of their officers
who signs the Registration Statement, and each person who controls the
Company or the Issuer within the meaning of either the Act or the Exchange
Act, to the same extent as the foregoing indemnity from the Company and the
Issuer to each Underwriter, but only with reference to written information
relating to such Underwriter furnished to the Issuer or the Company by or
on behalf of such Underwriter through the Representative specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any
Underwriter may otherwise have. The Issuer and the Company acknowledge that
the statements set forth in the third, fourth, fifth, sixth and seventh
paragraphs under the heading "Underwriting The Series 2002-1 Bonds" and in
the fourth paragraph under the heading "Plan of Distribution" in any
Preliminary Final Prospectus or the Final Prospectus constitute the only
information furnished in writing by or on behalf of the several
Underwriters for inclusion in the documents referred to in the foregoing
indemnity.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party
(i) will not relieve it from liability under paragraph (a) or (b) above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than
the indemnification obligation provided
20
in paragraph (a) or (b) above. The indemnifying party shall be entitled to
appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to
the indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the use
of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest, (ii) the
actual or potential defendants in, or targets of, any such action include
both the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are different from
or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a
reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party
will not, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect
to any pending or threatened claim, action, suit or proceeding in respect
of which indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company, the Issuer and the
Underwriters agree to contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses") to
which the Issuer and one or more of the Underwriters may be subject in such
proportion as is appropriate to reflect the relative benefits received by
the Issuer on the one hand and by the Underwriters on the other hand from
the offering of the Transition Bonds. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company,
the Issuer and the Underwriters shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the
relative fault of the Issuer and of the Underwriters in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Issuer shall be
deemed to be equal to the total net proceeds from the offering (before
deducting expenses) of the Transition Bonds, and benefits received by the
Underwriters shall be deemed to be equal to the total underwriting
discounts and commissions, in each case as set forth on the cover page of
the Final Prospectus. Relative fault shall be determined by reference to
whether any alleged untrue statement
21
or omission relates to information provided by the Issuer or the
Underwriters. The Company, the Issuer and the Underwriters agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total
underwriting discounts and commissions received by such Underwriter in
connection with the offering of the Transition Bonds exceeds the amount of
damages that such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Underwriter within the meaning
of either the Act or the Exchange Act and each director, officer, employee
and agent of an Underwriter shall have the same rights to contribution as
such Underwriter, and each person who controls the Issuer or the Company
within the meaning of either the Act or the Exchange Act, each officer of
the Issuer or the Company who shall have signed the Registration Statement
and each director of the Issuer or the Company shall have the same rights
to contribution as the Issuer or the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
(e) The Underwriters' respective obligations to contribute pursuant to
this Section 8 are several in proportion to the respective principal amount
of Transition Bonds they have purchased hereunder, and not joint.
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Transition Bonds agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the nondefaulting Underwriters shall be obligated severally to take
up and pay for (in the respective proportions which the amount of Transition
Bonds set forth opposite their names in Schedule II hereto bears to the
aggregate amount of Transition Bonds set forth opposite the names of all the
remaining Underwriters) the Transition Bonds which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the event
that the aggregate amount of Transition Bonds which the defaulting Underwriter
or Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
amount of Transition Bonds set forth in Schedule II hereto, the nondefaulting
Underwriters shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Transition Bonds, and if such nondefaulting
Underwriters do not purchase all the Transition Bonds, this Agreement will
terminate without liability to any nondefaulting Underwriter, the Issuer or the
Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
three days, as the Representative shall determine in order that the required
changes in the Registration Statement and the Final Prospectus or in any other
documents or arrangements may be effected. Nothing contained in this Agreement
shall relieve any defaulting Underwriter of its liability, if any, to the Issuer
and the Company and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
22
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representative, by notice given to the Issuer prior
to delivery of and payment for the Transition Bonds, if prior to such time (i)
there shall have occurred any change, or any development involving a prospective
change, in or affecting either (A) the business, properties or financial
condition of the Issuer or the Company or (B) the Bondable Transition Property,
the Transition Bonds, the Financing Order or the Competition Act, the effect of
which, in the judgment of the Representative, materially impairs the investment
quality of the Transition Bonds or makes it impractical or inadvisable to market
the Transition Bonds, (ii) trading in the Company's Common Stock shall have been
suspended by the SEC or the New York Stock Exchange or trading in securities
generally on the New York Stock Exchange shall have been suspended or limited or
minimum prices shall have been established on such Exchange, (iii) a banking
moratorium shall have been declared either by federal, New York State or New
Jersey State authorities, or (iv) there shall have occurred a material
disruption in securities settlement, payment or clearance services in the United
States, or (v) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
any change in financial markets or other calamity or crisis the effect of which
on financial markets is such as to make it, in the judgment of the
Representative, impracticable or inadvisable to proceed with the offering or
delivery of the Transition Bonds as contemplated by the Final Prospectus
(exclusive of any supplement thereto).
11. Computational Materials and ABS Term Sheets.
(a) In connection with the offering of the Transition Bonds, each
Underwriter may prepare and provide to prospective investors (i) items
similar to computational materials ("Computational Materials") as defined
in the no-action letter of May 20, 1994 issued by the SEC to Xxxxxx,
Xxxxxxx Acceptance Corporation I, Xxxxxx, Xxxxxxx & Co. Incorporated and
Xxxxxx Structured Asset Corporation, as made applicable to other issuers
and underwriters by the SEC in response to the request of the Public
Securities Association dated May 24, 1994, as well as the PSA Letter
referred to below (collectively, the "No-Action Letters") and (ii) items
similar to ABS term sheets ("ABS Term Sheets") as defined in the no-action
letter of February 17, 1995 issued by the SEC to the Public Securities
Association, subject to the following conditions:
(i) All Computational Materials and ABS Terms Sheets provided to
prospective investors that are required to be filed pursuant to the
No-Action Letters shall bear a legend substantially in the form
attached hereto as Exhibit A. The Issuer shall have the right to
require additional specific legends or notations to appear on any
Computational Materials or ABS Terms Sheets, the right to require
changes regarding the use of terminology and the right to determine
the types of information appearing therein. Notwithstanding the
foregoing, this subsection (i) will be satisfied if all Computational
Materials and ABS Term Sheets referred to herein bear a legend in a
form previously approved in writing by the Issuer.
(ii) Such Underwriter shall provide to the Issuer, for approval
by the Issuer, representative forms of all Computational Materials and
ABS Term Sheets
23
at least two business days prior to their first use. Such Underwriter
shall provide to the Issuer, for filing on Form 8-K as provided in
Section 5(a)(x), copies (in such format as required by the Issuer) of
all Computational Materials and ABS Term Sheets that are required to
be filed with the SEC pursuant to the No-Action Letters. The
Underwriter may provide copies of the foregoing in a consolidated or
aggregated form including all information required to be filed if
filing in such format is permitted by the No-Action Letters. All
Computational Materials and ABS Term Sheets described in this
subsection (ii) must be provided to the Issuer not later than 10:00
a.m. New York City time at least two business days before filing
thereof is required pursuant to the terms of this Agreement. Such
Underwriter shall not provide to any investor or prospective investor
in the Transition Bonds any Computational Materials or ABS Term Sheets
on or after the day on which Computational Materials or ABS Term
Sheets are required to be provided to the Issuer pursuant to this
paragraph (ii) (other than copies of Computational Materials or ABS
Term Sheets previously submitted to the Issuer in accordance with this
paragraph (ii) for filing pursuant to Section 5(a)(x)), unless such
Computational Materials or ABS Term Sheets are preceded or accompanied
by the delivery of a Final Prospectus to such investor or prospective
investor.
(iii) The Issuer shall not be obligated to file any Computational
Materials or ABS Term Sheets that have been determined to contain any
material error or omission, provided that, at the request of any
Underwriter, the Issuer will file Computational Materials or ABS Term
Sheets that contain a material error or omission if clearly marked
`SUPERSEDED BY MATERIALS DATED _________" and accompanied by corrected
Computational Materials or ABS Term Sheets that are marked, "MATERIAL
PREVIOUSLY DATED _________, AS CORRECTED." If, within the period
during which a prospectus relating to the Transition Bonds is required
to be delivered under the Act, any Computational Materials or ABS Term
Sheets are determined, in the reasonable judgment of the Issuer or
such Underwriter, to contain a material error or omission, such
Underwriter shall prepare a corrected version of such Computational
Materials or ABS Term Sheets, shall circulate such corrected
Computational Materials or ABS Term Sheets to all recipients of the
prior versions thereof that either indicated orally to such
Underwriter they would purchase all or any portion of the Transition
Bonds, or actually purchased all or any portion thereof, and shall
deliver copies of such corrected Computational Materials or ABS Term
Sheets (marked, "AS CORRECTED") to the Issuer for filing with the SEC
in a subsequent Form 8-K submission (subject to the Issuer's obtaining
an accountant's comfort letter in respect of such corrected
Computational Materials or ABS Term Sheets).
(iv) Each Underwriter shall be deemed to have represented, as of
the Closing Date, that, except for Computational Materials and ABS
Term Sheets provided to the Issuer pursuant to subsection (ii) above,
such Underwriter did not provide any prospective investors with any
information in written or electronic
24
form in connection with the offering of the Transition Bonds that is
required to be filed with the SEC in accordance with the No-Action
Letters.
(v) In the event of any delay in the delivery by any Underwriter
to the Issuer of all Computational Materials and ABS Term Sheets
required to be delivered in accordance with subsection (ii) above, or
in the delivery of the accountant's comfort letter in respect thereof
pursuant to Section 5(a)(x), the Issuer shall have the right to delay
the release of the Final Prospectus to investors or to any
Underwriter, to delay the Closing Date and to take other appropriate
actions, in each case set forth in Section 5(a)(x), to file the
Computational Materials and ABS Term Sheets by the time specified
therein.
(b) Each Underwriter further represents and warrants that, if and to
the extent it has provided any prospective investors with any Computational
Materials or ABS Term Sheets prior to the date hereof in connection with
the offering of the Transition Bonds, all of the conditions set forth in
clause (a) of this Section 11 have been satisfied with respect thereto.
12. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, the Issuer or its officers and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or of the Company, the Issuer or any of the officers, directors or controlling
persons referred to in Section 9 hereof, and will survive delivery of and
payment for the Transition Bonds. The provisions of Sections 3, 7 and 8 hereof
shall survive the termination or cancellation of this Agreement.
13. Notices. All communications hereunder will be in writing and may
be given by United States mail, courier service, telegram, telex, telemessage,
telecopy, telefax, cable or facsimile (confirmed by telephone or in writing in
the case of notice by telegram, telex, telemessage, telecopy, telefax, cable or
facsimile) or any other customary means of communication, and any such
communication shall be effective when delivered, or if mailed, three days after
deposit in the United States mail with proper postage for ordinary mail prepaid,
and if sent to the Representative, to them at the address specified in Schedule
I hereto; and if sent to the Company, to it at Atlantic City Electric Company,
000 Xxxx Xxxxxx, Xxxx Xxxxxx Xxx 000, Xxxxxxxxxx, Xxxxxxxx 00000-0000,
Attention: Treasurer; and if sent to the Issuer, to it at Atlantic City Electric
Transition Funding LLC, P.O. Box 15597, Wilmington, Delaware 19850-5597,
Attention: President. The parties hereto, by notice to the others, may designate
additional or different addresses for subsequent communications.
14. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
25
15. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York.
16. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be deemed an original, which taken together
shall constitute one and the same instrument.
26
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the Issuer and the several Underwriters.
Very truly yours,
ATLANTIC CITY ELECTRIC COMPANY,
by
--------------------------
Name:
Title:
ATLANTIC CITY ELECTRIC TRANSITION
FUNDING LLC,
by
--------------------------
Name:
Title:
27
The foregoing Agreement
is hereby confirmed and accepted
as of the date specified in
Schedule I hereto.
XXXXXX XXXXXXX & CO.
INCORPORATED
by
--------------------------
Name:
Title:
for themselves and the other several
Underwriters, if any, named in
Schedule II to the foregoing Agreement.
28
SCHEDULE I
Underwriting Agreement dated ________, 2002
Registration Statement No. 333-59558
Representative:
Xxxxxx Xxxxxxx & Co.
Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 10036
Attention: Xxxx Xxxxxx
with a copy to:
Xxxxxx Xxxxxxx & Co.
Incorporated
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxx, Esq.
Title, Purchase Price and Description of Bonds:
Title: Atlantic City Electric Transition Funding LLC $____________
Transition Bonds, Series 2002-1
Principal Xxxxxx, Price to Public, Underwriting Discounts and
Commissions, Purchase Price to the Issuer, and Required Ratings:
Required
Underwriting Purchase Ratings
Principal Price to Discounts and Price to (Xxxxx'x/S&P/
Amount of Class Public Commissions the Issuer Fitch)
--------------- ---------- -------------- ------------ -------------
Class A-1 Bonds $ % % %
Class A-2 Bonds $ % % %
Class A-3 Bonds $ % % %
Class A-4 Bonds $ % % %
Total $
Expenses: The Issuer will pay or cause to be paid all expenses
incident to the performance of the obligations of the Issuer and the
Company under this Agreement,
including, without limitation, (i) the fees, disbursements and
expenses of counsel for the Issuer and the Company in connection with
the issuance and sale of the Transition Bonds, (ii) all fees and
expenses incurred in connection with the registration and delivery of
the Transition Bonds under the Act, and all other fees or expenses in
connection with the preparation and filing of the Registration
Statement, the Preliminary Final Prospectus, the Final Prospectus and
amendments and supplements to any of the foregoing, including all
printing costs associated therewith, and the mailing and delivering of
copies thereof to the Underwriters and dealers, in the quantities
specified, (iii) all costs and expenses related to the transfer and
delivery of the Transition Bonds to the Underwriters, including any
transfer or other taxes payable thereon, (iv) the costs of printing or
producing any "blue sky" memorandum in connection with the offer and
sale of the Transition Bonds under state securities laws and all
expenses in connection with the qualification of the Transition Bonds
for the offer and sale under state securities laws as provided in
Section 5(a)(v), including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the "blue sky" memorandum, (v)
the cost of printing the Transition Bonds, (vi) the costs and charges
of any transfer agent, registrar or depository, (vii) the fees and
expenses of the rating agencies incurred in connection with the
issuance and sale of the Transition Bonds, (viii) the costs arising
out of any Computational Materials and ABS Term Sheets distributed by
the Underwriters in connection with the purchase and sale of the
Transition Bonds, and (xi) all other costs and expenses incident to
the performance of the obligations of the Issuer and the Company under
this Agreement for which provision is not otherwise made herein. The
Underwriters will be reimbursed by the Issuer for reasonable
out-of-pocket expenses and Underwriters' Counsel fees. [In addition,
Xxxxxx Xxxxxxx & Co. Incorporated will be paid an advisory fee of
$___________ by the Issuer].
Original Issue Discount (if any):
Redemption provisions:
Closing Date, Time and Location: _________, 2002, 10:00 a.m., Eastern Standard
Time, at the offices of LeBoeuf, Lamb, Xxxxxx &
XxxXxx, L.L.P., 000 Xxxx 00xx Xxxxxx, Xxx Xxxx,
XX 00000-0000
Type of Offering:
Date referred to in Section 5(a) (vi) and Section 5(b)(ii) after which the
Issuer and the Company may offer or sell asset-backed securities in a
special purpose vehicle without the consent of the Representative:
SCHEDULE II
Principal Amount of Bonds to be Purchased
Class A-1 Class A-2 Class A-3 Class A-4
Underwriters Bonds Bonds Bonds Bonds Total
------------ ------------- ------------- ------------ ------------ ------------
Xxxxxx Xxxxxxx & Co. $ $ $ $ $
Incorporated
Total..................$..... $ $ $ $
EXHIBIT A
This information has been prepared in connection with the issuance of the
securities described herein, and is based on information provided by Atlantic
City Electric Transition Funding LLC and Atlantic City Electric Company with
respect to the expected characteristics of the bondable transition property
securing these securities. The actual characteristics and performance of the
bondable transition property will differ from the assumptions used in preparing
these materials, which are hypothetical in nature. Changes in the assumptions
may have a material impact on the information set forth in these materials. No
representation is made that any performance or return indicated herein will be
achieved. This information may not be used or otherwise disseminated in
connection with the offer or sale of these or any other securities, except in
connection with the initial offer or sale of these securities to you to the
extent set forth below. NO REPRESENTATION IS MADE AS TO THE APPROPRIATENESS,
USEFULNESS, ACCURACY OR COMPLETENESS OF THESE MATERIALS OR THE ASSUMPTIONS ON
WHICH THEY ARE BASED. The underwriters disclaim any and all liability relating
to this information, including without limitation any express or implied
representations and warranties for statements contained in, and omissions from,
this information. Additional information is available upon request. These
materials do not constitute an offer to buy or sell or a solicitation of an
offer to buy or sell any security or instrument or to participate in any
particular trading strategy. ANY SUCH OFFER TO BUY OR SELL ANY SECURITY WOULD BE
MADE PURSUANT TO A DEFINITIVE PROSPECTUS AND PROSPECTUS SUPPLEMENT PREPARED BY
THE ISSUER WHICH WOULD CONTAIN MATERIAL INFORMATION NOT CONTAINED IN THESE
MATERIALS. SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT WILL CONTAIN ALL MATERIAL
INFORMATION IN RESPECT OF ANY SUCH SECURITY OFFERED THEREBY AND ANY DECISION TO
INVEST IN SUCH SECURITIES SHOULD BE MADE SOLELY IN RELIANCE UPON SUCH PROSPECTUS
AND PROSPECTUS SUPPLEMENT. ANY CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN ARE
TO BE READ IN CONJUNCTION WITH SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. In the
event of any such offering, these materials, including any description of the
bondable transition property contained herein, shall be deemed superseded,
amended and supplemented in their entirety by such Prospectus and Prospectus
Supplement. To Our Readers Worldwide: In addition, please note that this
information has been provided by Xxxxxx Xxxxxxx & Co., Incorporated and approved
by Xxxxxx Xxxxxxx & Co. International Limited, a member of the Securities and
Futures Authority, and Xxxxxx Xxxxxxx Japan Ltd. We recommend that investors
obtain the advice of their Xxxxxx Xxxxxxx & Co. International Limited or Xxxxxx
Xxxxxxx Japan Ltd. representative about the investment concerned. NOT FOR
DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES AND FUTURES
AUTHORITY.
EXHIBIT B
[Computational Materials]
