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Exhibit 1.1
CENTERPOINT ENERGY TRANSITION BOND COMPANY II, LLC
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC
$1,851,000,000 SENIOR SECURED TRANSITION BONDS, SERIES A
UNDERWRITING AGREEMENT
December 9, 2005
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 II, LLC, a
Delaware limited liability company (the
"Issuer"), proposes to issue and sell
$1,851,000,000 aggregate principal amount
of its Senior Secured Transition
Bonds, Series A (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 December 16,
2005, as supplemented by the First
Supplemental Indenture thereto, to be dated
as of December 16 (as so
supplemented and as it may be further
supplemented from time to time, the
"Indenture"), between the Issuer and
Wilmington Trust Company, 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, "Series A Transition Property"),
to be sold to the Issuer by the
Company pursuant to the Transition Property
Sale Agreement, to be dated on or
about December 16, 2005, between the
Company and the Issuer (the "Sale
Agreement"). The Series A Transition
Property securing the
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Bonds will be
serviced pursuant to the Series A Transition Property
Servicing
Agreement, to be dated on or about December 16, 2005, between
the
Company, as
servicer, and the Issuer, as owner of the Series A 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 has filed with the Securities and Exchange
Commission
(the
"Commission") a registration statement on Form S-3 on December
21,
2004
(Registration No. 333-121505), as amended by Amendment No. 1
thereto,
including a
prospectus and form of prospectus supplement, for the
registration
under the Securities Act of 1933, as amended (the "Securities
Act"), of up to
$1,857,000,000 aggregate principal amount of its transition
bonds. Such
registration statement, as amended ("Registration Statement No.
333-121505"),
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 Statement No. 333-121505 have been previously
issued.
References herein to the term "Registration Statement" shall be
deemed to refer
to Registration Statement No. 333-121505, including all
documents
incorporated by reference therein pursuant to Item 12 of Form
S-3
("Incorporated
Documents") at the time it became effective, in the form in
which it was
declared effective by the Commission, and including any
required information
deemed to be a part thereof at the time of
effectiveness
pursuant to Rule 430B under the Securities Act. 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.
(c) At any date as of which any part of the Registration
Statement
relating to the
Bonds became effective in accordance with the rules and
regulations
under the Securities Act (each such date, an "Effective Date")
the Registration
Statement fully complied, and the Final Prospectus, both
at the date and
time it is filed with the Commission pursuant to Rule 424
(such date and
time, the "424 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
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Registration
Statement, at each 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 on the 424 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 information furnished in writing to the Issuer or the
Company by, or
on behalf of, any Underwriter through the Representatives
expressly for
use in connection with the preparation of the Registration
Statement or the
Final Prospectus 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 or to any statements or omissions made
in the
Registration Statement or the Final Prospectus relating to The
Depository Trust
Company ("DTC") Book-Entry System that are based solely on
information
contained in published reports of the DTC.
(d) As of the Applicable Time (as defined below), the Pricing
Prospectus and
each Issuer Free Writing Prospectus (as defined 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 preceding
sentence does not apply to statements in or omissions from
the Pricing
Prospectus and each Issuer Free Writing Prospectus in reliance
upon and in
conformity with written information furnished to the Issuer or
the Company by
any Underwriter through the Representatives specifically for
use therein, it
being understood and agreed that the only such information
furnished by any
Underwriter consists of the information described as such
in Section 11(b)
hereof. "Issuer Free Writing Prospectus" means any "issuer
free writing
prospectus," as defined in Rule 433, relating to the Bonds and
issued prior to
the Applicable Time that is listed on Schedule IV hereto
(and only to the
extent listed on such Schedule), 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 4:00 PM, central time, on the date
hereof.
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(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 written information furnished to the
Issuer or the
Company by any Underwriter through the Representatives
specifically for
use therein, it being understood and agreed that the only
such information
furnished by any Underwriter consists of the information
described as
such 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 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 Series A
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
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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, and constitutes a valid and 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 or contribution by federal or
state securities
laws or regulations or by public policy.
(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.
(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
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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 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) The financial statements, together with the related notes,
included in the
Pricing Prospectus present fairly in all material respects
the financial
position, and member's equity of the Issuer as of the
respective dates
and for the respective periods specified and, except as
otherwise stated
in the Pricing Prospectus, such financial statements have
been prepared in
conformity with generally accepted accounting principles
in the United
States applied on a consistent basis during the periods
involved.
(p) Deloitte & Touche LLP, who have certified certain
financial
statements of
the Issuer, are independent public accountants as required by
the Securities
Act and the rules and regulations of the Commission
thereunder.
(q) Each of the Sale Agreement and Servicing Agreement has been
duly
authorized by
the Issuer, and when executed and delivered by the Issuer and
the other
parties thereto, will constitute a valid and legally binding
obligation of
the Issuer,
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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.
Each of 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 other 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 Issuer has filed with the Commission Registration
Statement
No. 333-121505
for the registration under the Securities Act of up to
$1,857,000,000
aggregate principal amount of its transition bonds.
Registration
Statement No. 333-121505 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) The Registration Statement at each Effective Date fully
complied,
and the Final
Prospectus, both on the 424 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 each 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 on the 424 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 information furnished in writing to the Issuer
or the Company
by, or on behalf of, any Underwriter through the
Representatives
expressly for use in connection with the preparation of the
Registration
Statement or the Final Prospectus, 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
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Documents or to
any statements or omissions made in the Registration
Statement or
Final Prospectus relating to the DTC Book-Entry-Only System
that are based
solely on information contained in published reports of DTC.
(c) As of the Applicable Time, the Pricing Prospectus and each
Issuer
Free Writing
Prospectus, 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 preceding sentence does not apply to
statements in or
omissions from the Pricing Prospectus and each Issuer Free
Writing
Prospectus in reliance upon and in conformity with written
information
furnished to the Issuer or Company by any Underwriter through
the
Representatives specifically for use therein, it being understood
and
agreed that the
only such information furnished by any Underwriter consists
of the
information described as such in Section 11(b) hereof.
(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 written information furnished to the
Issuer or the
Company by any Underwriter through the Representatives
specifically for
use therein, it being understood and agreed that the only
such information
furnished by any Underwriter consists of the information
described as
such 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
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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 material adverse effect on the business, property
or financial condition of
the Company and its subsidiaries considered as a
whole. 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, and constitutes a valid and 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 or contribution by federal or
state securities
laws or regulations or by public policy.
(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
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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 Company
and its subsidiaries taken as a whole.
(k) 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 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 and Servicing 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. Each of the
Administration
Agreement and Intercreditor Agreement has been duly
authorized by
the Company, and when executed and delivered by the Company
and 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
Series A
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.
5.
Representations and Warranties of the Underwriters. Each
Underwriter
represents and warrants to the Company and
the Issuer that:
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(a) If and to the extent it has provided any prospective
investors
with any
Computational Materials or ABS Term Sheets (as such terms are
hereinafter
defined) prior to the date hereof in connection with the
offering of the
Bonds, all of the conditions set forth in Section 8A hereof
have been
satisfied with respect thereto.
(b) [Reserved]
6. Purchase and
Sale. On the basis of the representations and warranties
herein contained, and subject to the terms
and conditions herein set forth, the
Issuer shall sell to each of the
Underwriters, and each Underwriter shall
purchase from the Issuer, at the time and
place herein specified, severally and
not jointly, at the purchase price set
forth in Schedule I hereto, the principal
amount of the Bonds set forth opposite such
Underwriter's name in Schedule II
hereto. The Underwriters agree to make a
public offering of the Bonds. The
Issuer shall pay (in the form of a discount
to the principal amount of the
offered Bonds) to the Underwriters a
commission equal to $7,022,925.
7. Time and
Place of Closing. Delivery of the Bonds against payment of the
aggregate purchase price therefor by wire
transfer in federal funds shall be
made at the place, on the date and at the
time specified in Schedule I hereto,
or at such other place, time and date as
shall be agreed upon in writing by the
Issuer and the Representatives. The hour
and date of such delivery and payment
are herein called the "Closing Date". The
Bonds shall be delivered to DTC or to
Wilmington Trust Company, as custodian for
DTC, in fully registered global form
registered in the name of Cede & Co.,
for the respective accounts specified by
the Representatives not later than the
close of business on the business day
preceding the Closing Date or such other
time as may be agreed upon by the
Representatives. The Issuer agrees to make
the Bonds available to the
Representatives for checking purposes not
later than 1:00 P.M. New York Time on
the last business day preceding the Closing
Date at the place specified for
delivery of the Bonds in Schedule I hereto,
or at such other place as the Issuer
may specify.
If any
Underwriter shall fail or refuse to purchase and pay for the
aggregate principal amount of Bonds that
such Underwriter has agreed to purchase
and pay for hereunder, the Issuer shall
immediately give notice to the other
Underwriters of the default of such
Underwriter, and the other Underwriters
shall have the right within 24 hours after
the receipt of such notice to
determine to purchase, or to procure one or
more others, who are members of the
National Association of Securities Dealers,
Inc. ("NASD") (or, if not members of
the NASD, who are not eligible for
membership in the NASD and who agree (i) to
make no sales within the United States, its
territories or its possessions or to
persons who are citizens thereof or
residents therein and (ii) in making sales
to comply with the NASD's Conduct Rules)
and satisfactory to the Issuer, to
purchase, upon the terms herein set forth,
the aggregate principal amount of
Bonds that the defaulting Underwriter had
agreed to purchase. If any
non-defaulting Underwriter or Underwriters
shall determine to exercise such
right, such Underwriter or Underwriters
shall give written notice to the Issuer
of the determination in that regard within
24 hours after receipt of notice of
any such default, and thereupon the Closing
Date shall be postponed for such
period, not exceeding three business days,
as the Issuer shall determine.
If in the event of such a default no
non-defaulting Underwriter shall give
such notice, then this Underwriting
Agreement may be terminated by the Issuer,
upon like notice given to the
non-defaulting Underwriters, within a
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further period
of 24 hours. If in such case the Issuer shall not elect to
terminate this
Underwriting Agreement it shall have the right, irrespective
of such
default:
(a) to require each non-defaulting Underwriter to purchase and pay
for
the respective
aggregate principal amount of Bonds that it had agreed to
purchase
hereunder as hereinabove provided and, in addition, the
aggregate
principal amount
of Bonds that the defaulting Underwriter shall have so
failed to
purchase up to aggregate principal amount of Bonds equal to
one-ninth (1/9)
of the aggregate principal amount of Bonds that such
non-defaulting
Underwriter has otherwise agreed to purchase hereunder,
and/or
(b) to procure one or more persons, reasonably acceptable to
the
Representatives,
who are members of the NASD (or, if not members of the
NASD, who are
not eligible for membership in the NASD and who agree (i) to
make no sales
within the United States, its territories or its possessions
or to persons
who are citizens thereof or residents therein and (ii) in
making sales to
comply with the NASD's Conduct Rules), to purchase, upon
the terms herein
set forth, either all or a part of the aggregate principal
amount of Bonds
that such defaulting Underwriter had agreed to purchase or
that portion
thereof that the remaining Underwriters shall not be obligated
to purchase
pursuant to the foregoing clause (a).
In the event the
Issuer shall exercise its rights under (a) and/or (b)
above, the Issuer shall give written notice
thereof to the non-defaulting
Underwriters within such further period of
24 hours, and thereupon the Closing
Date shall be postponed for such period,
not exceeding three business days, as
the Issuer shall determine.
In the
computation of any period of 24 hours referred to in this Section
7,
there shall be excluded a period of 24
hours in respect of each Saturday, Sunday
or legal holiday that would otherwise be
included in such period of time.
Any action taken
by the Issuer or the Company under this Section 7 shall
not relieve any defaulting Underwriter from
liability in respect of any default
of such Underwriter under this Underwriting
Agreement. Termination by the Issuer
under this Section 7 shall be without any
liability on the part of the Issuer,
the Company or any non-defaulting
Underwriter, except as otherwise provided in
Sections 8(a)(vii) and 11 hereof.
8.
Covenants.
(a) Covenants of
the Issuer. The Issuer covenants and agrees with the
several Underwriters that:
(i) The Issuer will upon request promptly deliver to the
Representatives
and Counsel to the Underwriters a signed copy of the
Registration
Statement as originally filed or, to the extent a signed copy
is not
available, a conformed copy, certified by an officer of the
Issuer
to be in the
form as originally filed, including all Incorporated Documents
and exhibits and
all amendments thereto.
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<PAGE>
(ii) The Issuer will deliver to the Underwriters, as soon as
practicable
after the date hereof, as many copies of the Final Prospectus
as they may
reasonably request.
(iii) The Issuer will cause the Final Prospectus to be filed with
the
Commission
pursuant to Rule 424 as soon as practicable and advise the
Underwriters of
any stop order suspending the effectiveness of the
Registration
Statement or the institution of any proceeding therefor of
which Issu
