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Exhibit 1.1
Execution
Copy
CENTERPOINT ENERGY TRANSITION
BOND COMPANY III, LLC
CENTERPOINT ENERGY HOUSTON
ELECTRIC, LLC
$488,472,000 2008 SENIOR
SECURED TRANSITION BONDS
UNDERWRITING
AGREEMENT
January 29, 2008
To the Representatives named in Schedule
I hereto of the Underwriters named in Schedule II hereto
Ladies and Gentlemen:
1. Introduction .
CenterPoint Energy Transition Bond Company III, LLC, a Delaware
limited liability company (the “Issuer”), proposes to
issue and sell $488,472,000 aggregate principal amount of its 2008
Senior Secured Transition Bonds (the “Bonds”),
identified in Schedule I hereto. The Issuer and CenterPoint Energy
Houston Electric, LLC, a Texas limited liability company and the
Issuer’s direct parent (the “Company”), hereby
confirm their agreement with the several Underwriters (as defined
below) as set forth herein.
The term
“Underwriters” as used herein shall be deemed to mean
the entity or several entities named in Schedule II hereto and any
underwriter substituted as provided in Section 7 hereof and
the term “Underwriter” shall be deemed to mean any one
of such Underwriters. If the entity or entities listed in Schedule
I hereto (the “Representatives”) are the same as the
entity or entities listed in Schedule II hereto, then the terms
“Underwriters” and “Representatives”, as
used herein, shall each be deemed to refer to such entity or
entities. All obligations of the Underwriters hereunder are several
and not joint. If more than one entity is named in Schedule I
hereto, any action under or in respect of this underwriting
agreement (“Underwriting Agreement”) may be taken by
such entities jointly as the Representatives or by one of the
entities acting on behalf of the Representatives and such action
will be binding upon all the Underwriters.
Capitalized terms used and
not otherwise defined in this Underwriting Agreement shall have the
meanings given to them in the Indenture (as defined
below).
2. Description of the
Bonds . The Bonds will be issued pursuant to an indenture to be
dated as of February 12, 2008, as supplemented by the First
Supplemental Indenture thereto, to be dated as of February 12,
2008 (as so supplemented and as it may be further supplemented from
time to time, the “Indenture”), between the Issuer and
Deutsche Bank Trust Company Americas, as indenture trustee (the
“Indenture Trustee”). The Bonds will be secured
primarily by transition property (as more fully described in the
Financing Order relating to the Bonds, the “Transition
Property”), to be sold to the Issuer by the Company pursuant
to the Transition Property Sale Agreement, to be dated on or about
February 12, 2008, between the Company and the Issuer (the
“Sale Agreement”). The Transition Property securing the
Bonds
will be serviced pursuant to the
Transition Property Servicing Agreement, to be dated on or about
February 12, 2008, between the Company, as servicer, and the
Issuer, as owner of the Transition Property sold to it pursuant to
the Sale Agreement (the “Servicing
Agreement”).
3. Representations and
Warranties of the Issuer . The Issuer represents and warrants
to the several Underwriters that:
(a) The Issuer and the Bonds
meet the requirements for the use of Form S-3 under the Securities
Act of 1933, as amended (the “Securities Act”), and the
Issuer, in its capacity as co-registrant and issuing entity with
respect to the Bonds, and the Company, in its capacity as
co-registrant and sponsor for the Issuer, has filed with the
Securities and Exchange Commission (the “Commission”) a
registration statement on such form on November 2, 2007
(Registration Nos. 333-147114 and 333-147114-01), as amended by
Amendment No. 1 thereto dated December 20, 2007, as
amended by Amendment No. 2 thereto dated January 23,
2008, and as amended by Amendment No. 3 thereto dated
January 25, 2008 including a prospectus and a form of
prospectus supplement, for the registration under the Securities
Act of up to $488,700,000 aggregate principal amount of the Bonds.
Such registration statement, as amended (“Registration Nos.
333-147114 and 333-147114-01”), has been declared effective
by the Commission and no stop order suspending such effectiveness
has been issued under the Securities Act and no proceedings for
that purpose have been instituted or are pending or, to the
knowledge of the Issuer, threatened by the Commission. No
transition bonds registered with the Commission under the
Securities Act pursuant to Registration Nos. 333-147114 and
333-147114-01 have been previously issued. References herein to the
term “Registration Statement” shall be deemed to refer
to Registration Nos. 333-147114 and 333-147114-01, including all
documents incorporated by reference therein pursuant to
Item 12 of Form S-3 (“Incorporated Documents”) and
any information in a prospectus or a prospectus supplement deemed
or retroactively deemed to be a part thereof pursuant to Rule 430B
(“Rule 430B”) under the Securities Act that has not
been superseded or modified. “Registration Statement”
without reference to a time means the Registration Statement as of
the Applicable Time (as defined below), which the parties agree is
the time of the first “contract of sale” (as used in
Rule 159) for the Bonds, and shall be considered the
“Effective Date” of the Registration Statement relating
to the Bonds. For the purpose of this definition, information
contained in a form prospectus or prospectus supplement that is
deemed retroactively to be a part of the Registration Statement
pursuant to Rule 430B shall be considered to be included in the
Registration Statement as of the time specified in Rule 430B. The
final prospectus and the final prospectus supplement relating to
the Bonds, as filed with the Commission pursuant to Rule 424(b)
under the Securities Act, are referred to herein as the
“Final Prospectus;” and the most recent preliminary
prospectus and prospectus supplement that omitted information to be
included upon pricing in a form of prospectus filed with the
Commission pursuant to Rule 424(b) under the Securities Act and
that was used after the initial effectiveness of the Registration
Statement and prior to the Applicable Time (as defined below) is
referred to herein as the “Pricing
Prospectus.”
(b) (i) At the earliest time
after the filing of the Registration Statement that the Issuer or
another offering participant made a bona fide offer (within
the meaning of Rule 164(h)(2)) of the Bonds and (ii) at the
date hereof, the Issuer was not and is not an “ineligible
issuer,” as defined in Rule 405 under the Securities
Act.
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(c) At the time the
Registration Statement initially became effective, at the time of
each amendment (whether by post-effective amendment, incorporated
report or form of prospectus) and on the Effective Date relating to
the Bonds, the Registration Statement fully complied, and the Final
Prospectus, both as of its date and at the Closing Date, and the
Indenture, at the Closing Date, will fully comply, in all material
respects with the applicable provisions of the Securities Act and
the Trust Indenture Act of 1939, as amended (“Trust Indenture
Act”), respectively, and, in each case, the applicable
instructions, rules and regulations of the Commission thereunder;
the Registration Statement, at the date it initially became
effective and at the Effective Date, did not contain and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading; the Final Prospectus, both
as of its date and at the Closing Date, will not contain an 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; and
on said dates the Incorporated Documents, taken together as a
whole, fully complied or will fully comply in all material respects
with the applicable provisions of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and the
applicable rules and regulations of the Commission thereunder;
provided that the foregoing representations and warranties in this
paragraph (c) shall not apply to statements or omissions made
in reliance upon and in conformity with any Underwriter Information
as defined in Section 11(b) below, or to any statements in or
omissions from any Statements of Eligibility on Form T-1 (or
amendments thereto) of the Indenture Trustee under the Indenture
filed as exhibits to the Registration Statement or Incorporated
Documents.
(d) As of its date, the
Applicable Time (as defined below), on the date of its filing if
applicable, and on the Closing Date, the Pricing Prospectus and
each Issuer Free Writing Prospectus (as defined below) (other than
the Pricing Term Sheet, as defined in Section 5(b) below),
considered together, did not include any untrue statement of a
material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading (except that the
principal amount of the Bonds, the tranches, the initial principal
balances, the scheduled final payment dates, the final maturity
dates, the expected average lives, the Expected Amortization
Schedule and the Expected Sinking Fund Schedule described in the
Pricing Prospectus were subject to change based on market
conditions, and the interest rate, price to the public and
underwriting discounts and commissions for each tranche was not
included in the Pricing Prospectus). The Pricing Term Sheet, as of
its issue date and at all subsequent times through the completion
of the public offer and the sale of the Bonds, considered together
with the Pricing Prospectus and each other Issuer Free Writing
Prospectus, did not include any untrue statement of material fact
or omit to state any material fact necessary in order to the make
the statements therein, in the light of the circumstance in which
they are made, not misleading. The two preceding sentences do not
apply to statements in or omissions from the Pricing Prospectus,
the Pricing Term Sheet or any other Issuer Free Writing Prospectus
in reliance upon and in
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conformity with Underwriter
Information as defined in Section 11(b) hereof. “Issuer
Free Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433(h) of the Securities Act,
relating to the Bonds in the form filed or required to be filed
with the Commission or, if not required to be filed, in the form
retained in the Issuer’s records pursuant to Rule 433(g).
References to the term “Free Writing Prospectus” shall
mean a free writing prospectus, as defined in Rule 405 under the
Securities Act. References to the term “Applicable
Time” means 3:00 PM, central time, on the date hereof. The
Issuer represents, warrants and agrees that it has treated and
agrees that it will treat each of the free writing prospectuses
listed on Schedule III hereto as an Issuer Free Writing Prospectus,
and that each such Issuer Free Writing Prospectus has fully
complied and will fully comply with the applicable requirements of
Rules 164 and 433, including timely Commission filing where
required, legending and record keeping.
(e) Each Issuer Free Writing
Prospectus, as of its issue date and at all subsequent times
through the completion of the public offer and sale of the Bonds or
until any earlier date that the Issuer notified or notifies the
Representatives as described in the next sentence, did not, does
not and will not include any information that conflicted, conflicts
or will conflict with the information then contained in the
Registration Statement. If at any time following issuance of an
Issuer Free Writing Prospectus there occurred or occurs an event or
development as a result of which such Issuer Free Writing
Prospectus conflicted or would conflict with the information then
contained in the Registration Statement or included or would
include an untrue statement of a material fact or omitted or would
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances prevailing at
that subsequent time, not misleading, (i) the Company or the
Issuer has promptly notified or will promptly notify the
Representatives and (ii) the Company or the Issuer has
promptly amended or will promptly amend or supplement such Issuer
Free Writing Prospectus to eliminate or correct such conflict,
untrue statement or omission. The foregoing two sentences do not
apply to statements in or omissions from any Issuer Free Writing
Prospectus in reliance upon and in conformity with Underwriter
Information as defined in Section 11(b) hereof.
(f) The Issuer has been duly
formed and is validly existing as a limited liability company in
good standing under the Limited Liability Company Act of the State
of Delaware, as amended, with full limited liability company power
and authority to execute, deliver and perform its obligations under
this Underwriting Agreement, the Bonds, the Sale Agreement, the
Servicing Agreement, the Indenture, the Issuer LLC Agreement, the
Intercreditor Agreement, the Administration Agreement and the other
agreements and instruments contemplated by the Pricing Prospectus
(collectively, the “Issuer Documents”) and to own its
properties and conduct its business as described in the Pricing
Prospectus; the Issuer has been duly qualified as a foreign limited
liability company for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such
qualification, except where failure to so qualify or to be in good
standing would not have a material adverse effect on the business,
properties or financial condition of the Issuer; the Issuer has
conducted and will conduct no business in the future that would be
inconsistent with the description of the Issuer’s business
set forth in the Pricing Prospectus; the Issuer is not a party to
or bound by any agreement or instrument other
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than the Issuer Documents and
other agreements or instruments incidental to its formation; the
Issuer has no material liabilities or obligations other than those
arising out of the transactions contemplated by the Issuer
Documents and as described in the Pricing Prospectus; the Company
is the beneficial owner of all of the limited liability company
interests of the Issuer; and based on current law, the Issuer is
not classified as an association taxable as a corporation for
United States federal income tax purposes.
(g) The issuance and sale of
the Bonds by the Issuer, the purchase of the Transition Property by
the Issuer from the Company and the consummation of the
transactions herein contemplated by the Issuer, and the fulfillment
of the terms hereof on the part of the Issuer to be fulfilled, will
not result in a breach of any of the terms or provisions of, or
constitute a default under the Issuer’s certificate of
formation or limited liability company agreement (collectively, the
“Issuer Charter Documents”), or any indenture,
mortgage, deed of trust or other agreement or instrument to which
the Issuer is now a party.
(h) This Underwriting
Agreement has been duly authorized, executed and delivered by the
Issuer, which has the necessary limited liability company power and
authority to execute, deliver and perform its obligations under
this Underwriting Agreement.
(i) The Issuer (i) is
not in violation of the Issuer Charter Documents, (ii) is not
in default and no event has occurred which, with notice or lapse of
time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust or other
agreement or instrument to which it is a party or by which it is
bound or to which any of its properties is subject, except for any
such defaults that would not, individually or in the aggregate,
have a material adverse effect on its business, property or
financial condition, and (iii) is not in violation of any law,
ordinance, governmental rule, regulation or court decree to which
it or its property may be subject, except for any such violations
that would not, individually or in the aggregate, have a material
adverse effect on its business, property or financial
condition.
(j) The Indenture has been
duly authorized by the Issuer, and, on the Closing Date, will have
been duly executed and delivered by the Issuer and will be a valid
and binding instrument, enforceable against the Issuer in
accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, receivership,
moratorium or other similar laws relating to or affecting
creditors’ or secured parties’ rights generally and by
general principles of equity (including concepts of materiality,
reasonableness, good faith and fair dealing), regardless of whether
considered in a proceeding in equity or at law; and limitations on
enforceability of rights to indemnification by federal or state
securities laws or regulations or by public policy. On the Closing
Date, the Indenture will (i) comply as to form in all material
respects with the requirements of the Trust Indenture Act and
(ii) conform in all material respects to the description
thereof in the Pricing Prospectus and Final Prospectus.
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(k) The Bonds have been duly
authorized by the Issuer for issuance and sale to the Underwriters
pursuant to this Underwriting Agreement and, when executed by the
Issuer and authenticated by the Indenture Trustee in accordance
with the Indenture and delivered to the Underwriters against
payment therefor in accordance with the terms of this Underwriting
Agreement, will constitute valid and binding obligations of the
Issuer entitled to the benefits of the Indenture and enforceable
against the Issuer in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws
relating to or affecting creditors’ or secured parties’
rights generally and by general principles of equity (including
concepts of materiality, reasonableness, good faith and fair
dealing), regardless of whether considered in a proceeding in
equity or at law; and limitations on enforceability of rights to
indemnification by federal or state securities laws or regulations
or by public policy, and the Bonds conform in all material respects
to the description thereof in the Pricing Prospectus and Final
Prospectus. The Issuer has all requisite limited liability company
power and authority to issue, sell and deliver the Bonds in
accordance with and upon the terms and conditions set forth in this
Underwriting Agreement and in the Pricing Prospectus and Final
Prospectus.
(l) Other than as set forth
or contemplated in the Pricing Prospectus, there is no litigation
or governmental proceeding to which the Issuer is a party or to
which any property of the Issuer is subject or which is pending or,
to the knowledge of the Issuer, threatened against the Issuer that
could reasonably be expected to, individually or in the aggregate,
result in a material adverse effect on the Issuer’s business
property or financial condition.
(m) Other than any necessary
action of the PUCT, any filings required under the Restructuring
Act (as such term is defined in the Pricing Prospectus) or
Financing Order or as otherwise set forth or contemplated in the
Pricing Prospectus, no approval, authorization, consent or order of
any public board or body (except such as have been already obtained
and other than in connection or in compliance with the provisions
of applicable blue-sky laws or securities laws of any state, as to
which the Issuer makes no representations or warranties), is
legally required for the issuance and sale by the Issuer of the
Bonds.
(n) The Issuer is not, and
after giving effect to the sale and issuance of the Bonds, will not
be an “investment company” within the meaning of the
Investment Company Act of 1940, as amended (the “1940
Act”).
(o) Deloitte &
Touche LLP, who have performed certain agreed upon procedures with
respect to certain statistical and structural information contained
in the Pricing Prospectus and the Final Prospectus, are independent
public accountants as required by the Securities Act and the rules
and regulations of the Commission thereunder.
(p) Each of the Sale
Agreement, the Servicing Agreement, the Intercreditor Agreement,
the Administration Agreement and Issuer LLC Agreement has been duly
authorized by the Issuer, and when executed and delivered by the
Issuer and the other
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parties thereto, will
constitute a valid and legally binding obligation of the Issuer,
enforceable against the Issuer in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or other
similar laws relating to or affecting creditors’ or secured
parties’ rights generally and by general principles of equity
(including concepts of materiality, reasonableness, good faith and
fair dealing), regardless of whether considered in a proceeding in
equity or at law, and limitations on enforceability of rights to
indemnification by federal or state securities laws or regulations
or by public policy.
4. Representations and
Warranties of the Company . The Company represents and warrants
to the several Underwriters that:
(a) The Company, in its
capacity as co-registrant and sponsor with respect to the Bonds,
and jointly with the Issuer, has filed with the Commission
Registration Nos. 333-147114 and 333-147114-01 for the registration
under the Securities Act of up to $ 488,700,000 aggregate principal
amount of the Bonds. Registration Nos. 333-147114 and 333-147114-01
has been declared effective by the Commission and no stop order
suspending such effectiveness has been issued under the Securities
Act and no proceedings for that purpose have been instituted or are
pending or, to the knowledge of the Company, threatened by the
Commission.
(b) At the time the
Registration Statement initially became effective, at the time of
each amendment (whether by post-effective amendment, incorporated
report or form of prospectus) and on the Effective Date relating to
the Bonds, the Registration Statement fully complied, and the Final
Prospectus, both as of its date and at the Closing Date, and the
Indenture, at the Closing Date, will fully comply, in all material
respects with the applicable provisions of the Securities Act and
the Trust Indenture Act, respectively, and, in each case, the
applicable instructions, rules and regulations of the Commission
thereunder; the Registration Statement, at the date it initially
became effective and at the Effective Date, did not contain an
untrue statement of a material fact, or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading; the Final Prospectus, both as of
its date and at the Closing Date, will not include an 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, that the foregoing representations and warranties in this
paragraph (b) shall not apply to statements or omissions made
in reliance upon and in conformity with Underwriter Information as
defined in Section 11(b) hereof, or to any statements in or
omissions from any Statement of Eligibility on Form T-1, or
amendments thereto, of the Indenture Trustee under the Indenture
filed as exhibits to the Registration Statement or Incorporated
Documents.
(c) As of its date, the
Applicable Time, on the date of its filing, if applicable, and on
the Closing Date, the Pricing Prospectus and each Issuer Free
Writing Prospectus (as defined below) (other than the Pricing Term
Sheet, as defined in Section 5(b) below), considered together,
did not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading (except that the principal
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amount of the Bonds, the
tranches, the initial principal balances, the scheduled final
payment dates, the final maturity dates, the expected average
lives, the Expected Amortization Schedule and the Expected Sinking
Fund Schedule described in the Pricing Prospectus were subject to
change based on market conditions, and the interest rate, price to
the public and underwriting discounts and commissions for each
tranche was not included in the Pricing Prospectus). The Pricing
Term Sheet, as of its issue date and at all subsequent times
through the completion of the public offer and the sale of the
Bonds, considered together with the Pricing Prospectus and each
other Issuer Free Writing Prospectus, did not include any untrue
statement of material fact or omit to state any material fact
necessary in order to the make the statements therein, in the light
of the circumstance in which they are made, not misleading. The two
preceding sentences do not apply to statements in or omissions from
the Pricing Prospectus, the Pricing Term Sheet or any other Issuer
Free Writing Prospectus in reliance upon and in conformity with
Underwriter Information as defined in Section 11(b) hereof.
The Company represents, warrants and agrees that it has treated and
agrees that it will treat each of the free writing prospectuses
listed on Schedule III hereto as an Issuer Free Writing Prospectus,
and that each such Issuer Free Writing Prospectus has fully
complied and will fully comply with the applicable requirements of
Rules 164 and 433, including timely Commission filing where
required, legending and record keeping.
(d) Each Issuer Free Writing
Prospectus, as of its issue date and at all subsequent times
through the completion of the public offer and sale of the Bonds or
until any earlier date that the Issuer or the Company notified or
notifies the Representatives as described in the next sentence, did
not, does not and will not include any information that conflicted,
conflicts or will conflict with the information then contained in
the Registration Statement. If at any time following issuance of an
Issuer Free Writing Prospectus there occurred or occurs an event or
development as a result of which such Issuer Free Writing
Prospectus conflicted or would conflict with the information then
contained in the Registration Statement or included or would
include an untrue statement of a material fact or omitted or would
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances prevailing at
that subsequent time, not misleading, (i) the Company or the
Issuer has promptly notified or will promptly notify the
Representatives and (ii) the Company or the Issuer has
promptly amended or will promptly amend or supplement such Issuer
Free Writing Prospectus to eliminate or correct such conflict,
untrue statement or omission. The foregoing two sentences do not
apply to statements in or omissions from any Issuer Free Writing
Prospectus in reliance upon and in conformity with Underwriter
Information as defined in Section 11(b) hereof.
(e) The Company has been duly
formed and is validly existing as a limited liability company in
good standing under the laws of the jurisdiction of its formation,
has the limited liability company power and authority to own, lease
and operate its properties and to conduct its business as presently
conducted and as set forth in or contemplated by the Pricing
Prospectus, and is qualified as a foreign limited liability company
to transact business and is in good standing in each jurisdiction
in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure to so qualify or be in good standing would not
have a
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material adverse effect on
the business, property or financial condition of the Company and
its subsidiaries considered as a whole, and has all requisite power
and authority to sell the Transition Property as described in the
Pricing Prospectus and to otherwise perform its obligations under
any Issuer Document to which it is a party. The Company is the
beneficial owner of all of the limited liability company interests
of the Issuer.
(f) The Company has no
significant subsidiaries within the meaning of Rule 1-02(w) of
Regulation S-X.
(g) The transfer by the
Company of all of its rights and interests under the Financing
Order relating to the Bonds to the Issuer and the consummation of
the transactions herein contemplated by the Company, and the
fulfillment of the terms hereof on the part of the Company to be
fulfilled, will not result in a breach of any of the terms or
provisions of, or constitute a default under, the Company’s
Articles of Formation or limited liability company agreement
(collectively, the “Company Charter”), or in a material
breach of any of the terms of, or constitute a material default
under, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company is now a party.
(h) This Underwriting
Agreement has been duly authorized, executed and delivered by the
Company, which has the necessary limited liability company power
and authority to execute, deliver and perform its obligations under
this Underwriting Agreement.
(i) The Company (i) is
not in violation of the Company Charter, (ii) is not in
default and no event has occurred which, with notice or lapse of
time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust or other
agreement or instrument to which it is a party or by which it is
bound or to which any of its properties is subject, except for any
such defaults that would not, individually or in the aggregate,
have a material adverse effect on the business, property or
financial condition of the Company and its subsidiaries considered
as a whole, or (iii) is not in violation of any law,
ordinance, governmental rule, regulation or court decree to which
it or its property may be subject, except for any such violations
that would not, individually or in the aggregate, have a material
adverse effect on the business, property or financial condition of
the Company and its subsidiaries considered as a whole.
(j) Except as set forth or
contemplated in the Pricing Prospectus, there is no litigation or
governmental proceeding to which the Company or any of its
subsidiaries is a party or to which any property of the Company or
any of its subsidiaries is subject or which is pending or, to the
knowledge of the Company, threatened against the Company or any of
its subsidiaries that could reasonably be expected to, individually
or in the aggregate, result in a material adverse effect on the
business, property or financial condition of the Company and its
subsidiaries considered as a whole.
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(k) Other than any necessary
action of the PUCT, any filings required under the Restructuring
Act or Financing Order or as otherwise set forth or contemplated in
the Pricing Prospectus, no approval, authorization, consent or
order of any public board or body (except such as have been already
obtained and other than in connection or in compliance with the
provisions of applicable blue-sky laws or securities laws of any
state, as to which the Company makes no representations or
warranties), is legally required for the issuance and sale by the
Issuer of the Bonds.
(l) The Company is not, and
after giving effect to the sale and issuance of the Bonds, will not
be an “investment company” within the meaning of the
1940 Act.
(m) Each of the Sale
Agreement, the Servicing Agreement, the Intercreditor Agreement and
the Administration Agreement has been duly and validly authorized
by the Company, and when executed and delivered by the Company and
the other parties thereto will constitute a valid and legally
binding obligation of the Company, enforceable against the Company
in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating to or
affecting creditors’ or secured parties’ rights
generally and by general principles of equity (including concepts
of materiality, reasonableness, good faith and fair dealing),
regardless of whether considered in a proceeding in equity or at
law, and limitations on enforceability of rights to indemnification
by federal or state securities laws or regulations or by public
policy.
(n) There are no Texas
transfer taxes related to the transfer of the Transition Property
or the issuance and sale of the Bonds to the Underwriters pursuant
to this Underwriting Agreement required to be paid at or prior to
the Closing Date by the Company or the Issuer.
(o) Deloitte &
Touche LLP are independent public accountants with respect to the
Company as required by the Securities Act and the rules and
regulations of the Commission thereunder.
5. Investor
Communications .
(a) The Issuer and the
Company represent and agree that, unless they obtain the prior
consent of the Representatives, and each Underwriter represents and
agrees that, unless it obtains the prior consent of the Issuer and
the Company and the Representatives, it has not made and will not
make any offer relating to the Bonds that would constitute an
Issuer Free Writing Prospectus, or that would otherwise constitute
a “free writing prospectus,” required to be filed by
the Issuer or the Company, as applicable, with the Commission or
retained by the Issuer or the Company, as applicable, under Rule
433 under the Securities Act; provided that the prior written
consent of the parties hereto shall be deemed to have been given in
respect of the term sheets and each other Free Writing Prospectus
identified in Schedule III hereto.
(b) The Company and the
Issuer (or the Representatives at the direction of the Issuer) will
prepare a final pricing term sheet relating to the Bonds (the
“Pricing Term Sheet”), containing only information that
describes the final pricing terms of the Bonds and otherwise in a
form consented to by the Representatives, and will file such
final
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pricing term sheet within the
period required by Rule 433(d)(5)(ii) under the Securities Act
following the date such final pricing terms have been established
for all classes of the offering of the Bonds. The Pricing Term
Sheet is an Issuer Free Writing Prospectus for purposes of this
Underwriting Agreement.
(c) Each Underwriter may
provide to investors one or more of the Free Writing Prospectuses,
including the Term Sheets, subject to the following
conditions:
(i) Unless preceded or
accompanied by a prospectus satisfying the requirements
Section 10(a) of the Securities Act, an Underwriter shall not
convey or deliver any Written Communication (as defined herein) to
any person in connection with the initial offering of the Bonds,
unless such Written Communication (i) is made in reliance on
Rule 134 under the Securities Act, (ii) constitutes a
prospectus satisfying the requirements of Rule 430B under the
Securities Act, (iii) constitutes “ABS informational and
computational information” as defined in Item 1101 of
Regulation AB, (iv) is an Issuer Free Writing Prospectus
listed on Schedule IV hereto or (v) is an Underwriter Free
Writing Prospectus (as defined below). “Written
Communication” has the same meaning as that term is defined
in Rule 405 under the Securities Act.
An “Underwriter Free
Writing Prospectus” means any free writing prospectus that
contains only preliminary or final terms of the Bonds and is not
required to be filed by the Company or the Issuer pursuant to Rule
433 and that contains information substantially the same as the
information contained in the Pricing Prospectus or Pricing Term
Sheet (including, without limitation, (i) the class, size,
rating, price, CUSIPs, coupon, yield, spread, benchmark, status
and/or legal maturity date of the Bonds, the weighted average life,
expected first and final payment dates, trade date, settlement
date, transaction parties, credit enhancement, logistical details
related to the location and timing of and access to the roadshow,
ERISA eligibility, legal investment status and payment window of
one or more classes of Bonds and (ii) a column or other entry
showing the syndicate structure or the status of the subscriptions
for the Bonds, both for the Bonds as a whole and for each
Underwriter’s retention, and/or expected pricing parameters
of the Bonds).
(ii) Each Underwriter shall
comply with all applicable laws and regulations in connection with
the use of Free Writing Prospectuses and Term Sheets, including but
not limited to Rules 164 and 433 under the Securities
Act.
(iii) All Free Writing
Prospectuses provided to investors, whether or not filed with the
Commission, shall bear a legend including substantially the
following statement:
The Issuer has filed a
registration statement (including a prospectus) with the SEC for
the offering to which this communication relates. Before you
invest, you should read the prospectus in that registration
statement and other documents the Issuer has filed with the SEC for
more complete information about the Issuer and
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the offering. You may get
these documents for free by visiting EDGAR on the SEC web site at
www.sec.gov. Alternatively, the Issuer, any underwriter or any
dealer participating in the offering will arrange to send you the
base prospectus if you request it by calling Citigroup Global
Markets Inc. toll free at 1-877-858-5407 or Credit Suisse
Securities (USA) LLC toll free at 1-800-221-1037.
The Issuer and the
Representatives shall have the right to require additional specific
legends or notations to appear on any Free Writing Prospectus, the
right to require changes regarding the use of terminology and the
right to determine the types of information appearing therein with
the approval of, in the case of the Issuer, the Representatives
and, in the case of the Representatives, the Issuer (which in
either case shall not be unreasonably withheld).
(iv) Each Underwriter
covenants with the Issuer and the Company that after the Final
Prospectus is available such Underwriter shall not distribute any
written information concerning the Bonds to an investor unless such
information is preceded or accompanied by the
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