This
Electronotes ® Selling Agent Agreement has been filed to
provide investors with information regarding its terms. It is not
intended to provide any other factual information about the
Tennessee Valley Authority. The representations and warranties of
the parties in this Electronotes ® Selling Agent Agreement were made to, and solely
for the benefit of, the other parties to this Electronotes
® Selling Agent Agreement. The assertions embodied
in the representations and warranties may be qualified by
information included in schedules, exhibits or other materials
exchanged by the parties that may modify or create exceptions to
the representations and warranties. Accordingly, investors should
not rely on the representations and warranties as characterizations
of the actual state of facts at the time they were made or
otherwise.
MAXIMUM AGGREGATE PRINCIPAL
AMOUNT OUTSTANDING
TENNESSEE VALLEY AUTHORITY POWER
BONDS WITH MATURITIES OF ONE
YEAR TO THIRTY YEARS FROM DATE OF ISSUE
LaSalle
Financial Services, Inc.
327 Plaza Real, Suite 225
Boca Raton, Florida 33432
A.G. Edwards
& Sons, Inc.
One North Jefferson
St. Louis, Missouri 63103
Citigroup
Global Markets Inc.
388 Greenwich Street
New York, New York 10013
Edward D. Jones
& Co., L.P.
12555 Manchester Road
St. Louis, Missouri 63131
First Tennessee
Bank National Association
845 Crossover Lane, Suite 150
Memphis, Tennessee 38117
J.J.B.
Hilliard, W.L. Lyons, Inc.
Hilliard Lyons Center, 5th Floor
P.O. Box 32760
Louisville, Kentucky 40232
Merrill Lynch,
Pierce, Fenner & Smith Incorporated
4 World Financial Center, Floor 15
New York, New York 10080
Morgan Stanley
& Co. Incorporated
Second Floor
1585 Broadway
New York, New York 10036
Wachovia
Securities, LLC
301 South College Street
One Wachovia Center
Charlotte, North Carolina 28288
Tennessee Valley
Authority, a wholly owned corporate agency and instrumentality of
the United States of America (“TVA” or the
“Company”), has established a program to issue and sell
its Tennessee Valley Authority Power Bonds with Maturities of One
Year to Thirty Years from Date of Issue (the
“electronotes ® ”) in an aggregate principal amount of up
to $3,000,000,000 outstanding at any one time pursuant to the
Tennessee Valley Authority Act of 1933, as amended (the “TVA
Act”), and under the Basic Tennessee Valley Authority Power
Bond Resolution adopted by the Board of Directors of TVA (the
“Board”) on October 6, 1960, and amended on
September 28, 1976, October 17, 1989, and March 25,
1992 (as so amended, the “Basic Resolution”), and a
Supplemental Resolution adopted by the Board as of
February 23, 2001, as amended on July 23, 2002, and on
March 14, 2006, authorizing the issuance and sale of the
electronotes ® and designating and delegating authority to
certain officers to specify and determine the terms and conditions
of the electronotes ® (the “Supplemental Resolution” and
together with the Basic Resolution, the
“Resolutions”).
As of June 1,
2006, there are $1,058,053,000 of electronotes
® outstanding. The electronotes
® hereinafter issued (herein referred to as the
“Bonds”) may be issued from time to time in one or more
installments. The terms and conditions of each installment of Bonds
shall be established in accordance with Section 2.2 of the
Supplemental Resolution by the Company’s Chief Financial
Officer or Vice President and Treasurer (the “Designated
Officers”) or the duly authorized representative of either
such officer in an Officer’s Certificate executed prior to
the issuance of each installment of Bonds (a “Designated
Officer’s Certificate”). If the Bonds are to be issued
in multiple installments, the title of the Bonds and the general
terms thereof shall be set forth in the initial Designated
Officer’s Certificate. Prior to the issuance of any
installment of Bonds, the specific terms of said installment of
Bonds shall be set forth in a subsequent Designated Officer’s
Certificate or a supplement to the initial Designated
Officer’s Certificate. The Bonds shall have the maturity
ranges, interest rates, and other terms set forth in the Offering
Circular referred to below as it may be amended or supplemented
from time to time. The Bonds will be issued, and the terms thereof
established, from time to time by the Company in accordance with
the Resolutions.
The Company has
prepared an Information Statement dated November 18, 2005 (the
“Information Statement”), and the Power Bonds Offering
Circular dated June 1, 2006, relating to the Bonds (the
“Power Bonds Offering Circular”) for the purpose of
supplying information in
2
respect of the
offering of the Bonds. The Power Bonds Offering Circular, as most
recently amended, supplemented, or revised, together with the
Information Statement which is attached thereto and made a part
thereof, as most recently amended, supplemented, or revised, and
together with the applicable Pricing Supplement or Permitted Free
Writing, in either case, as most recently amended, supplemented, or
revised, is referred to herein as the “Offering
Circular.” The term “Permitted Free Writing” as
used herein means the documents, if any, prepared by the Company
that (i) contain the final terms of the offering and
(ii) are attached to the applicable Terms Agreement for a
tranche of Bonds. The term “Pricing Supplement” refers
to the applicable supplement to the Offering Circular that
(i) sets forth only the terms of a particular installment of
Bonds and (ii) is prepared or approved by the Company.
The “Pricing
Disclosure Material” as used herein shall mean either
(i) a Permitted Free Writing with the final terms of the
offering and the Offering Circular or (ii) the Pricing
Supplement prepared or approved by the Company and the Offering
Circular, in either case, in the last form conveyed to a purchaser
prior to or simultaneously with the confirmation of
sale.
This Selling Agent
Agreement amends and restates in its entirety (i) the Selling
Agent Agreement dated as of February 13, 2004, between TVA and
the agents referred to therein and (ii) the letter agreement
between TVA and A.G. Edwards & Sons, Inc. dated as of
January 5, 2005, under which TVA appointed A.G. Edwards &
Sons, Inc. as an agent under the Selling Agent Agreement referred
to in clause (i) of this paragraph.
Subject to the
terms and conditions contained in this Selling Agent Agreement (the
“Agreement”), the Company hereby appoints or confirms
the appointment, as the case may be, of each of you as an agent of
the Company (individually, an “Agent” and collectively,
the “Agents”) for the purpose of soliciting and
receiving offers to purchase Bonds from the Company; and you hereby
agree to use your reasonable best efforts to solicit and receive
offers to purchase Bonds upon terms acceptable to the Company at
such times and in such amounts as the Company shall from time to
time specify and in accordance with the terms hereof. The Company
reserves the right, after consultation with LaSalle Financial
Services, Inc. (the “Purchasing Agent”), to enter into
agreements substantially identical hereto with other
agents.
Whenever the
Company determines to sell Bonds pursuant to this Agreement, such
Bonds shall be sold pursuant to a Terms Agreement (as defined in
Section IV(b) below) relating to such sale in accordance with
the provisions of Section IV(b) hereof between the Company and
the Purchasing Agent with the Purchasing Agent purchasing such
Bonds as principal for resale to others.
This Agreement
shall not be construed to create either an obligation on the part
of the Company to sell any Bonds or an obligation of any of the
Agents to purchase Bonds. Each Terms Agreement shall create an
obligation on the part of the Company to sell, and an obligation on
the part of the Purchasing Agent to purchase, the Bonds identified
in such Terms Agreement.
3
II.
Conditions of the Obligations of the Agents
Your obligations
hereunder are subject at all times to the accuracy of the
representations and warranties of the Company herein and the
performance and observance by the Company of all covenants and
agreements herein contained to be performed and observed by the
Company and to the additional conditions set forth in this
Section II, which additional conditions shall be satisfied
prior to June 15, 2006 or such later date agreed to by the
Company and the Purchasing Agent (the date the last of such
conditions are satisfied is hereinafter referred to as the
“Commencement Date”).
(a) (i) No
litigation or proceeding shall be threatened or pending to restrain
or enjoin the issuance or delivery of the Bonds, or which in any
way questions or affects the validity of the Bonds, and
(ii) there shall have been no material adverse change in the
financial condition or the results of operations of the Company or
in its business prospects from that set forth in the Offering
Circular; and you shall have received a certificate of the Company
dated as of or prior to the Commencement Date and signed by a
Designated Officer of the Company or a duly authorized
representative of a Designated Officer to the foregoing effect. The
Designated Officer or the representative of such Designated Officer
making such certificate may rely upon the best of his or her
knowledge as to proceedings threatened.
(b) You shall
have received a favorable opinion of Maureen H. Dunn, Esq.,
Executive Vice President and General Counsel for the Company, or
Michael L. Wills, Assistant General Counsel, Finance, for the
Company, dated as of or prior to the Commencement Date, to the
effect that:
(i) The Company is
an instrumentality and agency of the United States of America duly
created and validly existing under the provisions of the TVA Act
and under the Constitution of the United States, with full power
and authority to hold properties and conduct its business as
described in the Offering Circular.
(ii) The Company
has the right and power under the TVA Act and under the
Constitution of the United States to issue the Bonds and to adopt
the Resolutions, the Resolutions have been duly and lawfully
adopted by the Company in accordance with the provisions of the TVA
Act and are, except as provided in the last paragraph of this
Section II(b), in full force and effect, and no other
authorization for the adoption of the Resolutions is
required.
(iii) The
Secretary of the Treasury has approved the time of issuance and
maximum rate of interest of the Bonds in compliance with
Section 15d of the TVA Act, and such approval remains in full
force and effect; the Bonds have been duly authorized and executed,
and when the terms of a particular Bond and of the issuance and
sale thereof have been established in accordance with the
Resolutions and delivered against payment as contemplated by this
Agreement, such Bond will have been duly issued and delivered, in
each case, in accordance with the provisions of the TVA Act and the
Resolutions, and will constitute a valid and legally binding
obligation of the Company, enforceable in accordance with its
terms, subject to fraudulent transfer, moratorium, and other laws
of general applicability relating to or affecting
creditors’
4
rights and to
general equity principles, payable, however, solely from the Net
Power Proceeds of the Company, as defined and set forth in the
Basic Resolution; and when so issued, such Bond will, except as
provided in the last paragraph of this Section II(b), be
entitled to the benefits provided by the Resolutions.
(iv) When issued,
the Bonds will be subject to Federal income taxation, but under the
TVA Act the Bonds will be exempt as to principal and interest from
all taxation now or hereafter imposed by any state of the United
States or local taxing authority of any such state, except estate,
inheritance, and gift taxes. The exemption from state and local
taxation may not apply to franchise or other nonproperty taxes in
lieu thereof imposed on corporations or to gain or loss on the sale
or exchange of a Bond.
(v) No consent,
approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required (except any
that may be required to be obtained by any Agent or any purchaser
of the Bonds) for the consummation of this Agreement or the
transactions contemplated by this Agreement in connection with the
issuance or sale of the Bonds by the Company, except such as have
been obtained and made under the TVA Act and such as may be
required under state securities laws in connection with
qualification of the Bonds pursuant to Section III (d) of
this Agreement.
(vi) This
Agreement has been duly authorized, executed, and delivered by the
Company and is enforceable, subject, as to enforcement, (1) to
fraudulent transfer, moratorium, and other laws of general
applicability relating to or affecting creditors’ rights,
(2) to general equity principles, and (3) to rights to
indemnification and contributions which may be limited by
applicable law or equitable principles.
(vii) The
execution, delivery, and performance of this Agreement and the
issuance and sale of the Bonds and compliance with the terms and
provisions thereof will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, the
TVA Act, any statute, any rule, regulation, or order of any
governmental agency or body or any court having jurisdiction over
the Company or any properties held by the Company, or any agreement
or instrument to which the Company is a party or by which the
Company is bound or to which any of the properties held by the
Company is subject, or the regulations of the Company, and the
Company has full power and authority to authorize, issue, and sell
the Bonds as contemplated by this Agreement.
(viii) When
issued, the Bonds will be exempt from the registration requirements
of the Securities Act of 1933, as amended (the “Securities
Act”), and will be exempted securities within the meaning of
the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) (other than for the purposes of
Section 17A thereof).
(ix) The priority
granted to the United States by 31 U.S.C. § 3713 in the case
of the insolvency of certain persons indebted to the United States
does not establish a priority in favor of the United States with
respect to Evidences of Indebtedness (as defined in the Offering
Circular) to the United States over other Evidences of Indebtedness
of the Company, including the Bonds.
5
(x) Such counsel
has no reason to believe that the Offering Circular, as of its date
and the date of such opinion, contained any untrue statement of a
material fact or omitted to state any material fact necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading; the descriptions in the
Offering Circular of the Bonds, the TVA Act, the Resolutions,
statutes, legal and governmental proceedings, and contracts and
other documents are accurate and fairly present the information set
forth therein, it being understood that such counsel need express
no opinion as to (a) the financial statements, schedules, or
other financial or statistical data contained in the Offering
Circular and (b) the information set forth in the Offering
Circular under the heading “Tax Matters.”
(xi) In addition,
such counsel may also state in such opinion that its opinions in
paragraphs (ii) and (iii) regarding the force and effect
of the Resolutions and the Bonds’ entitlement to the benefits
thereof, respectively, are qualified to the extent that the
Resolutions may be affected by the paragraph captioned
“TENNESSEE VALLEY AUTHORITY” in Title IV of the Energy
and Water Development Appropriations Act, 1998, Pub. L.
No. 105-62, 111 Stat. 1320, 1338 (1997) (such paragraph being
hereinafter referred to as the “Appropriations Act
paragraph”) and TVA’s actions taken pursuant thereto,
relating to, among other things, the use of revenues from
TVA’s Power Program, as defined in the Basic Resolution, for
“essential stewardship activities,” as such term is
used in the Appropriations Act paragraph. Furthermore, such counsel
may state in such opinion that its opinions are based on facts and
laws in existence on the date of such opinion.
(c) You shall
have received a letter dated as of or prior to the Commencement
Date from PricewaterhouseCoopers LLP, independent auditors, or
another independent auditor reasonably satisfactory to the
Purchasing Agent, to the effect that:
(i) they have
inquired of Company officials who have responsibility for financial
and accounting matters regarding whether:
(A) at the date of
the latest available balance sheet, there was any decrease in the
total proprietary capital in excess of $100,000,000 or any increase
in short-term indebtedness (excluding issuances of Discount Notes
(as defined in the Offering Circular)) in excess of $100,000,000 or
any increase in the principal amount of long-term debt of
(excluding issuances of electronotes ® and adjustments to the principal of
inflation-indexed bonds) or any increase (not including any
increase resulting from the issuance of Discount Notes (as defined
in the Offering Circular) or adjustments to the principal of
inflation-indexed bonds) in net current liabilities (current
liabilities less current assets) in excess of $150,000,000 or any
decrease in net assets in excess of $100,000,000, as compared with
amounts shown on the balance sheet included in the Offering
Circular; or
(B) at a
subsequent specified date not more than five business days prior to
the date of such letter, there was any decrease in the total
proprietary capital in excess of $200,000,000 or any increase in
short-term indebtedness
6
(excluding
issuances of Discount Notes (as defined in the Offering Circular))
in excess of $100,000,000 or any increase in the principal amount
of long-term debt of the Company (excluding issuances of
electronotes ® and adjustments to the principal of inflation
indexed bonds), as compared with amounts shown on the balance sheet
included in the Offering Circular; or
(C) for the
period from the closing date of the income statement included in
the Offering Circular to the closing date of the latest available
income statement there were any decreases, as compared with the
corresponding period of the previous year, in (1) operating
revenues in an amount greater than $75 million, or (2)
operating income in an amount greater than $75 million, or
(3) net income in an amount greater than
$75 million;
and those
Company officials have advised them that there were no such
decreases or increases (to the extent quantifiable), except, in all
cases set forth in clauses (A), (B) and (C) above, for
changes, increases, or decreases which the Offering Circular
discloses have occurred or may occur or which are described in such
letter; and
(ii) they have
compared the dollar amounts (or percentages derived from such
dollar amounts) and other financial information contained in the
Offering Circular (in each case to the extent that such dollar
amounts, percentages, and other financial information are derived
from the general accounting records of the Company subject to the
internal controls of the Company’s accounting system or are
derived directly from such records by analysis or computation) with
the results obtained from inquiries, a reading of such general
accounting records and other procedures specified in such letter
and have found such dollar amounts, percentages, and other
financial information to be in agreement in all material aspects
with such results, except for material items as otherwise specified
in such letter. For purposes of this provision, no item will be
deemed material unless it exceeds 3 percent of the financial
statement classification.
(d) You shall
have received a favorable opinion of Orrick, Herrington &
Sutcliffe LLP, counsel for the Agents, dated as of or prior to the
Commencement Date, to the effect that:
(i) The Company is
an instrumentality and agency of the United States of America duly
created and validly existing under the provisions of the TVA Act
and under the Constitution of the United States.
(ii) The Company
has the right and power under the TVA Act and under the
Constitution of the United States to issue the Bonds and to adopt
the Resolutions, the Resolutions have been duly and lawfully
adopted by the Company in accordance with the provisions of the TVA
Act and are, except as provided in the second to last paragraph of
this Section II(d), in full force and effect and no other
authorization for the adoption of the Resolutions is
required.
(iii) The
Secretary of the Treasury has approved the time of issuance and
maximum rate of interest of the Bonds in compliance with
Section 15d of the TVA
7
Act; the Bonds
have been duly authorized and executed and when the terms of a
particular Bond and of the issuance and sale thereof have been
established in accordance with the Resolutions and delivered
against payment as contemplated by this Agreement, such Bond will
have been duly issued and delivered, in each case, in accordance
with the provisions of the TVA Act and the Resolutions, and will
constitute a valid and legally binding obligation of the Company,
enforceable in accordance with its terms, subject, as to
enforcement, to fraudulent transfer, moratorium, and other laws of
general applicability relating to or affecting creditors’
rights and to general equity principles, payable, however, solely
from the Net Power Proceeds of the Company, as defined and set
forth in the Basic Resolution; and, except as provided in the
second to last paragraph of this Section II(d), such Bond will,
when issued, be entitled to the benefits provided by the
Resolutions.
(iv) When issued,
the Bonds will be subject to Federal income taxation, but under the
TVA Act the Bonds will be exempt both as to principal and interest
from all taxation now or hereafter imposed by any state of the
United States or local taxing authority of any such state, except
estate, inheritance, and gift taxes. The exemption from state and
local taxation may not apply to franchise or other nonproperty
taxes in lieu thereof imposed on corporations or to gain or loss on
the sale or exchange of a Bond.
(v) This Agreement
has been duly authorized, executed, and delivered by the
Company.
(vi) When issued,
the Bonds will be exempt from the registration requirements of the
Securities Act of 1933, as amended, and will be exempted securities
within the meaning of the Securities Exchange Act of 1934, as
amended, and no indenture need be qualified with respect to the
Bonds under the Trust Indenture Act of 1939, as amended.
(vii) Such counsel
shall state that they have examined the statements with respect to
the Bonds and the Resolutions contained in the Offering Circular
and, in the opinion of such counsel, such statements, insofar as
they relate to the provisions of statutes or documents therein
described, are true and correct in all material
respects.
In addition, such
counsel shall state in such opinion that during the course of the
preparation of the Offering Circular, they reviewed the Offering
Circular and participated in conferences with representatives of
the Company and its counsel, at which the contents of the Offering
Circular and related matters were discussed. Although such counsel
may state that they are not passing upon or assuming any
responsibility for the accuracy, completeness, or fairness of any
of the statements made in the Offering Circular, on the basis of
the information which they gained in the course of the services
referred to above, nothing which has come to their attention in the
course of such review has caused them to believe that the Offering
Circular, as of its date and the date of such opinion, contained an
untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Notwithstanding the foregoing, such counsel may state that they are
not expressing any opinion or belief as to the financial
statements, schedules, or other financial data contained in the
Offering Circular.
8
In addition, such
counsel may also state in such opinion that its opinions in
paragraphs (ii) and (iii) regarding the force and the effect
of the Resolutions and the Bonds’ entitlement to the benefits
thereof, respectively, are qualified to the extent that the
Resolutions may be affected by the Appropriations Act paragraph and
the Company’s actions taken pursuant thereto, relating to,
among other things, the use of revenues from the Company’s
Power Program, as defined in the Basic Resolution, for
“essential stewardship activities,” as such term is
used in the Appropriations Act paragraph.
Furthermore, such
counsel may state in such opinion that its opinions are based on
facts and laws in existence on the date of such opinion.
(e) You shall
have received a favorable opinion of Orrick, Herrington &
Sutcliffe LLP, special tax counsel for the Company, dated as of or
prior to the Commencement Date, confirming their tax opinion as
described in the Offering Circular.
(f) You shall
have received a certificate of the Secretary or an Assistant
Secretary of the Company, dated as of or prior to the Commencement
Date, as to the Resolutions authorizing the issuance and sale of
the Bonds and certain related matters.
The obligation of
the Purchasing Agent to purchase Bonds under any Terms Agreement is
subject to the conditions that (i) no litigation or proceeding
shall be threatened or pending to restrain or enjoin the issuance
or delivery of the Bonds, or which in any way questions or affects
the validity of the Bonds, and (ii) there shall have been no
material adverse change in the financial condition or results from
operations of the Company or in its business prospects from that
set forth in the Offering Circular, each of which conditions shall
be met on the corresponding Settlement Date (as defined in
Section IV(b) hereof). Further, if specifically called for by
any Terms Agreement, the Purchasing Agent’s obligations with
respect to such Bonds under such Terms Agreement shall be subject
to the satisfaction on the corresponding Settlement Date of the
conditions set forth above in clause (a) as it relates to the
officer’s certificate of a Designated Officer or
representative thereof, clause (b) as it relates to the
opinion of the Executive Vice President and General Counsel to the
Company or the Assistant General Counsel, Finance, for the Company,
clause (c) as it relates to the letter of the independent
auditor, clause (d) as it relates to the opinion of counsel to
the Agents, clause (e) as it relates to the tax opinion of
special counsel to the Company, and clause (f) as it relates
to the certificate of the Secretary or an Assistant Secretary of
the Company; provided, however, that each shall be dated as of the
Settlement Date, and to the extent appropriate such opinions,
letters, and certificates may reconfirm matters set forth in prior
opinions, letters, and certificates, with such changes as may be
necessary to reflect changes in the financial statements and other
information derived from the accounting records of the Company;
provided, further, that to the extent opinions of counsel referred
to in clauses (b) and (d) are required to be delivered,
references in such clauses to the Offering Circular shall be deemed
to refer to the Offering Circular and the Pricing Disclosure
Material.
9
III.
Covenants of the Company
In further
consideration of your agreements herein contained, the Company
covenants as follows:
(a) To
furnish to you, without charge, a copy of (i) the resolutions
of the Board of Directors of the Company authorizing the issuance
and sale of the Bonds, certified by the Secretary or an Assistant
Secretary of the Company as having been duly adopted and
(ii) as many copies of the Offering Circular and the Pricing
Disclosure Material as you may reasonably request.
(b) Before
amending or supplementing the Offering Circular (other than by
means of a Pricing Supplement), to furnish you a copy of each such
proposed amendment or supplement, and to afford you a reasonable
opportunity to comment on any such proposed amendment or
supplement.
(c) To
furnish you copies of each amendment to the Offering Circular and
the Pricing Disclosure Material in such quantities as you may from
time to time reasonably request; and if at any time when an
Offering Circular or Pricing Disclosure Material is being used in
connection with the initial offering of any of the Bonds, any event
shall have occurred as a result of which the Offering Circular or
the Pricing Disclosure Material would either include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, the
Company will (A) notify you to suspend the solicitation of offers
to purchase Bonds and if notified by the Company, you shall
forthwith suspend such solicitation and cease using the Offering
Circular or the Pricing Disclosure Material, as applicable, as then
amended or supplemented, and (B) if the Company notifies you
that it would like you to resume the solicitation of offers to
purchase, promptly prepare an amendment or supplement to the
Offering Circular or the Pricing Disclosure Material which will
correct such statement or omission, and furnish you copies of any
such amendment or supplement in such quantities as you may
reasonably request.
(d) To
furnish the necessary information, execute all proper applications
and other requisite forms, and otherwise cooperate in qualifying
the Bonds under the securities or Blue Sky laws of such states as
may be designated by the Purchasing Agent and in determining their
eligibility for investment; provided, however, the Company shall
not be obligated to file any general consent to service of process
or to qualify as a foreign corporation in connection with any such
qualifications. The Company shall cooperate in continuing such
qualifications in effect so long as required for the distribution
of the Bonds.
(e) Prior to
the termination of this Agreement pursuant to Article VII
hereof, to furnish to the Agents, as soon as practicable after the
end of each fiscal year, a copy of its annual financial statements
for such year, and to furnish to the Purchasing Agent, from time to
time, such other information concerning the Company as the
Purchasing Agent may reasonably request.
(f) (i) If
the Company and the Purchasing Agent agree to list Bonds on any
stock exchange (a “Stock Exchange”), to use its
reasonable efforts, in cooperation with the Purchasing
10
Agent, to cause
such Bonds to be accepted for listing on any such Stock Exchange,
in each case as the Company and the Purchasing Agent shall deem to
be appropriate. In connection with any such agreement to list Bonds
on a Stock Exchange, the Company shall use its reasonable efforts
to obtain such listing promptly and shall furnish any and all
documents, instruments, information, and undertakings that may be
reasonably necessary or advisable in order to obtain and maintain
the listing.
(ii) So long as
any Bond remains outstanding and listed on a Stock Exchange, if the
Offering Circular or the Pricing Disclosure Material, in each case
as then amended or supplemented, would include any untrue statement
of a material fact or omit to state any material fact relating to
any matter described in the Offering Circular or the Pricing
Disclosure Material the inclusion of which was required by the
listing rules and regulations of such Stock Exchange on which any
Bonds are listed (the “Listing Rules”) or by such Stock
Exchange, to provide to the Purchasing Agent information about the
change or matter and to amend or supplement the Offering Circular
or the Pricing Disclosure Material in order to comply with the
Listing Rules or as otherwise requested by the Stock
Exchange.
(iii) To use
reasonable efforts to comply with any undertakings given by it from
time to time to any Stock Exchange on which any Bonds are
listed.
(g) To notify
the Purchasing Agent promptly in writing in the event that the
Company does not have a security listed on the New York Stock
Exchange.
(h) To notify
the Agents immediately, and confirm such notice in writing, of any
change in the rating assigned by any nationally recognized
statistical rating organization, as such term is defined in
Rule 436(g)(2) under the Securities Act, to the program under
which the Bonds are issued (the “Program”) or any debt
securities (including the Bonds) of the Company, or the public
announcement by any nationally recognized statistical rating
organization that it has under surveillance or review, with
possible negative implications, its rating of the Program or any
such debt securities, or the withdrawal by any nationally
recognized statistical rating organization of its rating of the
Program or any such debt securities.
(i) Semiannually
as soon as practicable after March 31 and September 30 of
each year that this Agreement remains in effect (each, a
“Bring Down Date”), to deliver, or cause to be
delivered, to each of the Agents (i) a certificate of the
Company, dated as of the applicable Bring Down Date, to the effect
that the representations and warranties of the Company in this
Agreement are true and correct, (ii) the opinion of the
General Counsel or Assistant General Counsel, Finance, of the
Company, dated as of the applicable Bring Down Date, to the effect
set forth in Section II(b), and (iii) the letter of the
independent accountant, dated as of the applicable Bring Down Date,
to the effect set forth in Section II(c), provided, however,
that (a) the obligation to deliver the letter of the
independent accountant is contingent upon each Agent’s
providing the Company with a representation letter that is
satisfactory to the independent accountant and (b) to the
extent appropriate, such opinion, letters, and certificates may
reconfirm matters set forth in prior opinions, letters, and
certificates, with such changes as may be necessary to reflect
changes in the financial statements and other information derived
from the accounting records of the Company.
11
(a)
Solicitations as Agent . You hereby agree, as Agents
hereunder, to use your reasonable best efforts to solicit and
receive offers to purchase Bonds upon the terms and conditions set
forth herein and in the Offering Circular and the Pricing
Disclosure Material. For the purpose of such solicitation you will
use the Offering Circular which has been most recently distributed
to you by the Company or any entity acting on behalf of the Company
and the Pricing Disclosure Material, and you will solicit offers to
purchase only as permitted or contemplated thereby and herein and
only as permitted by the applicable securities laws or regulations
of any jurisdiction. The Company reserves the right, in its sole
discretion, to suspend solicitation of offers to purchase Bonds
commencing at any time for any period of time or permanently. Upon
receipt of instructions (which may be given orally) from the
Company, you will as soon as practicable, but in any event no later
than one business day after receipt of such instructions, suspend
solicitation of offers to purchase until such time as the Company
has advised you that such solicitation may be resumed.
You are authorized
to solicit orders for the Bonds only in denominations of $1,000 or
more (in multiples of $1,000). You are not authorized to appoint
subagents or to engage the service of any other broker or dealer in
connection with the offer or sale of the Bonds without the consent
of the Company; provided, however, the Purchasing Agent may engage
the service of any other broker or dealer without the consent of
the Company. The Purchasing Agent will, however, on a periodic
basis, provide the Company with a listing of those brokers or
dealers so engaged. In addition, unless otherwise instructed by the
Company, the Purchasing Agent shall communicate to the Company,
orally or in writing, each offer to purchase Bonds. The Company
shall have the sole right to accept offers to purchase Bonds
offered through the Purchasing Agent and may reject any proposed
purchase of Bonds as a whole or in part. Moreover, the Company may
not accept orders to purchase Bonds (or any payment for Bonds)
which (i) bear interest at a rate above the maximum rate of
interest approved by the Secretary of the Treasury or permitted in
the applicable authorizing resolutions or (ii) exceed the
principal amount of Bonds permitted to be issued during any period
under the applicable authorizing resolutions. You shall have the
right, in your discretion reasonably exercised, to reject any offer
to purchase Bonds, as a whole or in part, and any such rejection
shall not be deemed a breach of your agreements contained
herein.
(b)
Purchases as Principal . Each sale of Bonds to the
Purchasing Agent as principal for resale to others shall be made in
accordance with the terms of this Agreement and a separate
agreement, substantially in the form of Exhibit C hereto (or
such other form as the Purchasing Agent and the Company shall agree
to), which will provide for the sale of such Bonds to, and the
purchase and reoffering thereof by, the Purchasing Agent. Each such
separate agreement (which may be an oral agreement and confirmed in
writing as described below between the Purchasing Agent and the
Company) is herein referred to as a “Terms Agreement.”
A Terms Agreement may also specify certain provisions relating to
the reoffering of such Bonds by the Purchasing Agent. The Terms
Agreement shall not be effective, and the Agents agree that no
confirmation of a sale of Bonds shall be delivered to a prospective
purchaser, until the Company has made the Pricing Disclosure
Material available to the Agents. The Purchasing Agent’s
agreement to purchase Bonds pursuant to any Terms Agreement shall
be deemed to have been made on the
12
basis of the
representations, warranties, and agreements of the Company herein
contained and shall be subject to the terms and conditions herein
set forth. Except pursuant to a Terms Agreement, under no
circumstances shall the Purchasing Agent be obligated to purchase
any Bonds for its own account. Each Terms Agreement, whether oral
(and confirmed in writing which may be by facsimile transmission)
or in writing, shall describe the Bonds to be purchased pursuant
thereto by the Purchasing Agent, and may specify, among other
things, the principal amount of Bonds to be purchased, the interest
rate or formula and maturity date or dates of such Bonds, the
interest payment dates, if any, the price to be paid to the Company
for such Bonds, the initial public offering price at which the
Bonds are proposed to be reoffered, and the time and place of
delivery of and payment for such Bonds (the “Settlement
Date”), whether the Bonds provide for a survivor’s
option or for optional redemption by the Company and on what terms
and conditions, and any other relevant terms.
In connection with
the resale of the Bonds purchased by the Purchasing Agent on behalf
of the Agents, without the consent of the Company, you are not
authorized to appoint subagents or to engage the service of any
other broker or dealer; provided, however, the Purchasing Agent may
engage the service of any other broker or dealer without the
consent of the Company. The Purchasing Agent will, however, on a
periodic basis, provide the Company with a listing of those brokers
or dealers so engaged. Unless authorized by the Purchasing Agent in
each instance, each Agent agrees not to purchase and sell Bonds
during the initial public offering for which an order from a client
has not been received.
The Company agrees
to pay the Purchasing Agent, as consideration for soliciting offers
to purchase Bonds, a concession in the form of a discount equal to
the percentages of initial offering price of each Bond sold as set
forth in Exhibit A hereto or such other discount agreed to by
the Company and the Purchasing Agent (the
“Concession”). The Purchasing Agent and the other
Agents will share the Concession in such proportions as they may
agree.
(c)
Public Offering Price . Unless otherwise authorized by the
Company, all Bonds shall be sold to the public at a purchase price
not to exceed 100 percent of the principal amount thereof,
plus accrued interest, if any, with the exception of Bonds that
bear a zero interest rate and are issued at a substantial discount
from the principal amount payable at the Maturity Date (a
“Zero-Coupon Bond”). Zero-Coupon Bonds shall be sold to
the public at a purchase price no greater than an amount, expressed
as a percentage of the principal face amount of such Bonds, equal
to (i) the net proceeds to the Company on the sale of such Bonds,
plus (ii) the Concession, plus (iii) accrued interest, if any.
Such purchase price shall be set forth in the confirmation
statement of the Selling Group (as defined in Exhibit B)
member responsible for such sale, and delivered to the purchaser
along with a copy of the Offering Circular (if not previously
delivered).
(d)
Procedures . Procedural details relating to the issue and
delivery of, and the solicitation of offers to purchase and
purchase of and payment for, the Bonds, pursuant to Section IV(a)
and IV(b) of this Agreement, are set forth in the Administrative
Procedures attached hereto as Exhibit B, as amended from time
to time (the “Procedures”). The provisions of the
Procedures shall apply to all transactions contemplated hereunder.
You and the Company each agree to perform the respective duties and
obligations specifically provided to be performed
13
in the
Procedures. The Procedures may only be amended by written agreement
of the Company and the Purchasing Agent, and a copy of any such
amendment shall be provided promptly to JPMorgan Chase Bank, N.A.,
or any successor paying agent.
(e)
Offering Circular Delivery . You shall furnish to each
person to whom you sell or deliver Bonds a copy of the Offering
Circular and the Pricing Disclosure Material. You are not
authorized to give any information or to make any representation
not contained in the Offering Circular, the Pricing Disclosure
Material, or the documents incorporated by reference or
specifically referred to in either thereof in connection with the
offer and sale of the Bonds. You will not use any additional
marketing materials in connection with any offer or sale of the
Bonds other than the brochure prepared by the Company and
previously furnished to the Purchasing Agent.
(f)
Compliance With Laws . The Agents are aware that no action
has been or will be taken by the Company that would permit a public
offering of the Bonds or possession or distribution of the Offering
Circular, the Pricing Disclosure Material or any other material
relating to the Bonds in any country or jurisdiction where action
for that purpose is required (other than states of the United
States in connection with securities or Blue Sky laws of such
states). Accordingly, the Agents agree that they will observe all
applicable laws and regulations in each jurisdiction in or from
which it may directly or indirectly acquire, offer, sell, or
deliver Bonds or have in their possession or distribute the
Offering Circular, the Pricing Disclosure Material or any other
offering material relating to the Bonds, and the Agents will obtain
any consent, approval or permission required for the purchase,
offer, or sale by them of Bonds under the laws and regulations in
force in any such jurisdiction to which they are subject or in
which they make such purchase, offer, or sale; provided, however,
that the obligations of the Agents pursuant to this
Section IV(f) does not apply to any website of the Company
with respect to the Bonds.
V.
Representations and Warranties of the Company
The Company
represents and warrants to and agrees with the Agents that as of
the date hereof, as of each date on which the Company accepts an
offer to purchase Bonds pursuant to a Terms Agreement, as of each
Settlement Date, and as of each date the Offering Circular is
amended or supplemented:
(a) The
Offering Circular does not and the Pricing Disclosure Material will
not include any untrue statement of a material fact, and the
Offering Circular does not and the Pricing Disclosure Material will
not omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading. The preceding sentence does not apply to
statements in the Offering Circular or the Pricing Disclosure
Material based upon written information furnished to the Company by
the Purchasing Agent or by any Agent through the Purchasing Agent
specifically for use therein.
(b) The Board
has duly adopted the Resolutions, copies of which have been or will
be provided to the Agents, providing for the issuance and sale of
the Bonds thereunder.
14
(c) The
Secretary of the Treasury has approved the time of issuance of and
the maximum rate of interest to be borne by the Bonds, in
compliance with Section 15d of the TVA Act, the rate of
interest on the Bonds will not exceed the maximum rate of interest
approved by the Secretary of the Treasury, and no other approval,
authorization, consent, or order of or filing with any public board
or body (other than in connection with qualifying the Bonds for
offering and sale under the securities or Blue Sky laws of any
jurisdiction) is required for or in connection with the issuance
and sale of the Bonds as contemplated hereby.
(d) The Bonds
have been duly authorized and, when issued and delivered pursuant
to the Resolutions and this Agreement, will be duly issued and
delivered and will constitute valid and legally binding obligations
of the Company enforceable in accordance with their terms, subject,
as to enforcement, to fraudulent transfer, moratorium, and other
laws of general applicability relating to or affecting
creditors’ rights and to general equity principles, payable,
however, solely from the Net Power Proceeds of the Company, as
defined and set forth in the Basic Resolution.
(e) When
issued and delivered pursuant to the Resolutions and this
Agreement, the Bonds will conform, in all material respects, to the
descriptions thereof contained in the Offering Circular and the
Pricing Disclosure Material.
(f) The
Company is not, in any material respect, in violation of the TVA
Act or in default in the performance or observance of any
obligation, agreement, covenant, or condition contained in any
material contract or lease to which the Company is a party or by
which it is bound, and the execution and delivery of this Agreement
and the issuance and delivery of the Bonds, the incurrence of the
obligations herein set forth and the consummation of the
transactions herein contemplated will not conflict with, or
constitute a breach of or default under, the TVA Act and the
regulations of the Company thereunder, any material contract or
lease to which the Company is a party or by which it is bound, or
any law, administrative regulation, or court decree to which it is
subject.
(g) Except as
may be described in the Offering Circular or the Pricing Disclosure
Material, since November 18, 2005, there has not been any
material adverse change in the financial condition or the results
of operations of the Company or in its business
prospects.
(h) Except as
disclosed in the Offering Circular or the Pricing Disclosure
Material, there are no actions, suits, or proceedings pending or,
to the knowledge of the Company, threatened against the Company or
any of its property, at law or in equity or before or by any
Federal or state commission, regulatory body, or administrative
agency or other governmental body, in which a decision might have a
material adverse effect on the business or property of the Company
or which would in any way interfere with the issuance and delivery
of the Bonds or the performance by the Company of its obligations
thereunder or under the Resolutions.
(i) This
Agreement has been duly authorized, executed, and delivered by the
Company.
(j) The
program under which the electronotes ® are issued as well as the Bonds are rated
“Aaa” by Moody’s Investor Services, Inc. and
“AAA” by Standard & Poor’s Rating Services or
such other rating as to which the Company shall have most recently
notified the Agents pursuant to Section III(h)
hereof.
15
(k) The
Company has not distributed and will not distribute any offering
material in connection with the offering and sale of the Bonds
other than the Offering Circular, the Pricing Disclosure Material,
if any, the Pricing Supplement, if any, the Permitted Free Writing,
if any, and any amendment or supplement to any thereof.
VI.
Indemnification and Contribution
(a) The
Company will indemnify and hold harmless each Agent against any
losses, claims, damages, or liabilities, joint or several, to which
the Agent may become subject, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof)
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Offering Circular, the Pricing Disclosure Material, the Pricing
Supplement, the Permitted Free Writing or any amendment or
supplement to any thereof or (ii) arise out of or are based
upon the omission or alleged omission to state therein a material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and will
reimburse the Agent for any legal or other expenses reasonably
incurred by the Agent in connection with investigating or defending
any such loss, claim, damage, liability, or action as such expenses
are incurred; provided, however, that the foregoing indemnity
agreement with respect to the Offering Circular, the Pricing
Disclosure Material, the Pricing Supplement, the Permitted Free
Writing and any amendment or supplement to any thereof shall not
inure to the benefit of any Agent from whom the person asserting
any such losses, claims, damages, or liabilities purchased Bonds,
or any person controlling such Agent, if (i) TVA or another
entity acting on TVA’s behalf furnished a copy of the
Offering Circular, the Pricing Disclosure Material, the Pricing
Supplement, or the Permitted Free Writing (each as then amended and
supplemented) to such Agent prior to the mailing or delivery by
such Agent of written confirmation of the sale of the Bonds,
(ii) a copy of such Offering Circular, Pricing Disclosure
Material, Pricing Supplement, or Permitted Free Writing was not
sent or given by or on behalf of such Agent to such person at or
prior to delivery of the written confirmation of the sale of the
Bonds to such person, and (iii) the Offering Circular, the
Pricing Disclosure Material, the Pricing Supplement, or the
Permitted Free Writing would have cured the defect giving rise to
such losses, claims, damages, or liabilities; and provided,
further, that the Company will not be liable in any such case to
the extent that any such loss, claim, damage, or liability arises
out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from the Offering
Circular, the Pricing Disclosure Material, the Pricing Supplement,
or the Permitted Free Writing (or any amendment or supplements to
any thereof) included or omitted in reliance upon and in conformity
with written information furnished to the Company by any Agent
relating to such Agent specifically for use therein and will
reimburse any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such
loss, claim, damage, liability, or action as such expenses are
incurred.
(b) Each
Agent will indemnify and hold harmless the Company against any
losses, claims, damages, or liabilities to which the Company may
become subject, 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 any
material fact contained in the Offering Circular, the Pricing
Disclosure Material, the Pricing Supplement or the Permitted Free
Writing or any amendment or supplement to any thereof or the
omission or the alleged omission to state
16
therein a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company by the Agent relating to such
Agent specifically for use therein.
(c) Promptly
after receipt by an indemnified party under this Section VI 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 Section VI(a) or Section VI(b)
above, notify the indemnifying party of the commencement thereof.
Failure of an indemnified party to provide such notice within a
reasonable time shall not relieve the indemnifying party from any
liability under Section VI(a) or Section VI(b) above to
the extent it is not materially prejudiced as a result thereof, and
in any event, the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any
indemnified party otherwise than under Section VI(a) or
Section VI(b) above. In case any proceeding (including any
governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to
Section VI(a) or Section VI(b) above and such person timely
notifies the indemnifying party of the institution thereof, the
indemnifying party shall be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying
party notified, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party and shall pay the
fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right
to retain or provide its own counsel, but the fees and expenses of
such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party
shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the indemnifying
party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local
counsel) for all such indemnified parties, including all
indemnified Agents, and that all such fees and expenses shall be
reimbursed as they are incurred.
(d) If the
indemnification provided for in this Section VI is unavailable
in whole or in part (other than for failure to provide timely
notice) to hold harmless an indemnified party under
Section VI(a) or Section VI(b) above, then each
indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of the losses, claims,
damages, or liabilities referred to in Section VI(a) or
Section VI(b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by the
Company on the one hand and the Agent on the other from the
particular installment or installments of Bonds associated with
such indemnification or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Agent on the other in
connection with the statements or omissions which resulted in such
losses, claims, damages, or liabilities as well as any other
relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Agent on the other shall be
deemed to be in the same proportion as the total net proceeds from
the particular installment or installments
17
of Bonds
associated with such indemnification (before deducting expenses)
received by the Company bear to the total commissions or discounts
received by the Agent in respect thereof. The relative fault shall
be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company or the Agent and the
parti
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