Exhibit 1.1
PSE&G TRANSITION FUNDING II LLC
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
UNDERWRITING AGREEMENT
New York, New York
[ ], 2005
To Credit Suisse First Boston LLC as
representative of the
Underwriters named in
Schedule II hereto
Ladies and Gentlemen:
1. Introduction. PSE&G Transition Funding II LLC, a Delaware limited
liability company (the "Issuer"), and Public Service Electric and Gas Company,
an operating electric and gas public utility incorporated under the laws of
the State of New Jersey (the "Company"), as sole member and owner of the
entire equity interest in the Issuer, propose, subject to the terms and
conditions stated herein, that the Issuer issue and sell to the underwriters
named in Schedule II hereto (collectively, the "Underwriters"), for whom
Credit Suisse First Boston LLC is acting as representative (the
"Representative"), the principal amount of the PSE&G Transition Funding II LLC
Transition Bonds, Series 2005-1 (the "Transition Bonds"), identified in
Schedule I hereto.
The issuance of the Transition Bonds is authorized by the Bondable
Stranded Costs Rate Order, Docket No. EF03070532 (the "Financing Order"),
issued by the BPU on July 12, 2005. The Transition Bonds will be issued
pursuant to an indenture dated on or about the Closing Date (as defined
herein), as supplemented by the 2005-1 Series Supplement thereto, between the
Issuer and The Bank of New York, as trustee (the "Trustee") (and as amended
and supplemented from time to time, the "Indenture"). The Transition Bonds
will be secured primarily by Bondable Transition Property created by the
Financing Order, which Bondable Transition Property will be sold to the Issuer
by the Company (such sold Bondable Transition Property referred to herein as
"Transferred Bondable Transition Property"). The Company's sale of Transferred
Bondable Transition Property to the Issuer will occur pursuant to a Sale
Agreement dated on or about the Closing Date, between the Company and the
Issuer (the "Sale Agreement") and a related Xxxx of Sale dated on or about the
Closing Date (the "Xxxx of Sale"). The Transferred Bondable Transition
Property will be serviced pursuant to a Servicing Agreement dated on or about
the Closing Date, between the Company, as servicer, and the Issuer, as owner
of the Transferred Bondable Transition Property (as amended and supplemented
from time to time, the "Servicing Agreement"). Pursuant to the Indenture, the
Issuer has granted to the
Trustee, as trustee for the benefit of the Transition Bondholders, all of its
right, title and interest in and to the Transferred Bondable Transition
Property as security for the Transition Bonds.
Capitalized terms used and not otherwise defined herein shall have the
meanings given to them in the Indenture, including Appendix A thereto.
2. Representations and Warranties. The Company and the Issuer jointly and
severally represent and warrant to, and agree with, each Underwriter as
follows (it being understood that certain terms used in this Section 2 are
defined in paragraph (d) hereof):
(a) If the offering of the Transition Bonds is a Delayed Offering
(as specified in Schedule I hereto), paragraph (i) below is applicable
and, if the offering of the Transition Bonds is a Non-Delayed Offering
(as so specified), paragraph (ii) below is applicable.
(i) The Issuer and the Transition Bonds meet the requirements
for the use of Form S-3 under the Securities Act of 1933 (the
"Securities Act"), and the Issuer has filed with the Securities and
Exchange Commission (the "Commission") a registration statement on
such Form (Registration No. [o]), including a basic prospectus, for
registration under the Securities Act of the offering and sale of
the Transition Bonds. The Issuer may have filed one or more
amendments thereto, and may have used a Preliminary Final
Prospectus, each of which has previously been furnished to you. Such
registration statement, as so amended, has become effective. The
offering of the Transition Bonds is a Delayed Offering and, although
the Basic Prospectus (as herein defined) may not include all the
information with respect to the Transition Bonds and the offering
thereof required by the Securities Act and the rules thereunder to
be included in the Final Prospectus, the Basic Prospectus includes
all such information required by the Securities Act and the rules
thereunder to be included therein as of the Effective Date. The
Issuer will next file with the Commission pursuant to Rules 415 and
424(b)(2) or (5) a final supplement to the form of prospectus
included in such registration statement relating to the Transition
Bonds and the offering thereof. As filed, such final prospectus
supplement shall include all required information with respect to
the Transition Bonds and the offering thereof and, except to the
extent the Representative shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you
prior to the Execution Time or, to the extent not completed at the
Execution Time, shall contain only such specific additional
information and other changes (beyond that contained in the Basic
Prospectus and any Preliminary Final Prospectus) as the Issuer has
advised you, prior to the Execution Time, will be included or made
therein.
(ii) The Issuer and the Transition Bonds meet the requirements
for the use of Form S-3 under the Securities Act and the Issuer has
filed with the Commission a registration statement on such Form
(Registration No. [o]), including a basic prospectus, for
registration under the Securities Act of the offering and sale of
the Transition Bonds. The Issuer may have filed one or more
2
amendments thereto, including a Preliminary Final Prospectus, each
of which has previously been furnished to you. The Issuer will next
file with the Commission either (x) a final prospectus supplement
relating to the Transition Bonds in accordance with Rules 430A and
424(b)(1) or (4), or (y) prior to the effectiveness of such
registration statement, an amendment to such registration statement,
including the form of final prospectus supplement. In the case of
clause (x), the Issuer has included in such registration statement,
as amended at the Effective Date, all information (other than Rule
430A Information) required by the Securities Act and the rules
thereunder to be included in the Final Prospectus with respect to
the Transition Bonds and the offering thereof. As filed, such final
prospectus supplement or such amendment and form of final prospectus
supplement shall contain all Rule 430A Information, together with
all other such required information, with respect to the Transition
Bonds and the offering thereof and, except to the extent the
Representative shall agree in writing to a modification, shall be in
all substantive respects in the form furnished to you prior to the
Execution Time or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and
other changes (beyond that contained in the Basic Prospectus and any
Preliminary Final Prospectus) as the Issuer has advised you, prior
to the Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or will,
and when the Final Prospectus is first filed (if required) in accordance
with Rule 424(b) and on the Closing Date, the Final Prospectus (and any
amendment or supplement thereto) will, comply in all material respects
with the applicable requirements of the Securities Act, the Securities
Exchange Act of 1934 (the "Exchange Act") and the Trust Indenture Act of
1939 (the "Trust Indenture Act") and the respective rules thereunder; on
the Effective Date, the Registration Statement did not or will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which
they were made not misleading; on the Effective Date and on the Closing
Date the Indenture did or will comply with the requirements of the Trust
Indenture Act and the rules thereunder; and, on the Effective Date, the
Final Prospectus, if not filed pursuant to Rule 424(b), did not or will
not, and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date, the Final Prospectus (together with any amendment or
supplement thereto) will not, include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that neither the Issuer nor
the Company makes any representations or warranties as to (i) that part
of the Registration Statement which shall constitute the Statement of
Eligibility and Qualification (Form T-1) of the Trustee under the Trust
Indenture Act or (ii) the information contained in or omitted from the
Registration Statement or the Final Prospectus (or any supplement
thereto) in reliance upon and in conformity with information furnished in
writing to the Issuer by or on behalf of any Underwriter through the
Representative specifically for inclusion in the Registration Statement
or the Final Prospectus (or any supplement thereto). No stop order
suspending the effectiveness of
3
the Registration Statement has been issued and no proceedings for that
purpose have been instituted.
(c) The documents incorporated by reference in the Registration
Statement and the Final Prospectus, when they became effective or were
filed (or, if an amendment with respect to any such document was filed or
became effective, when such amendment was filed or became effective) with
the Commission, as the case may be, conformed in all material respects to
the requirements of the Securities Act, the Exchange Act, the Trust
Indenture Act and the rules and regulations thereunder, and any further
documents so filed and incorporated by reference will, when they become
effective or are filed with the Commission, as the case may be, conform
in all material respects to the requirements of the Securities Act, the
Exchange Act, the Trust Indenture Act and the rules and regulations
thereunder; none of such documents, when it became effective or was filed
(or, if an amendment with respect to any such documents was filed or
became effective, when such amendment was filed or became effective)
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(d) The terms which follow, when used in this Underwriting
Agreement, shall have the meanings indicated. The term "Effective Date"
shall mean each date that the Registration Statement and any
post-effective amendment or amendments thereto became or become effective
and each date after the date hereof on which a document incorporated by
reference in the Registration Statement is filed. "Execution Time" shall
mean the date and time that this Underwriting Agreement is executed and
delivered by the parties hereto. "Basic Prospectus" shall mean the
prospectus referred to in paragraph (a) above contained in the
Registration Statement at the Effective Date including, in the case of a
Non-Delayed Offering, any Preliminary Final Prospectus. "Preliminary
Final Prospectus" shall mean any preliminary prospectus supplement, and
any amendment or supplement thereto, to the Basic Prospectus which
describes the Transition Bonds and the offering thereof and is used prior
to filing of the Final Prospectus. "Final Prospectus" shall mean the
prospectus supplement, and any amendment or supplement thereto, relating
to the Transition Bonds that is first filed pursuant to Rule 424(b) after
the Execution Time, together with the Basic Prospectus or, if, in the
case of a Non-Delayed Offering, no filing pursuant to Rule 424(b) is
required, shall mean the form of final prospectus relating to the
Transition Bonds, including the Basic Prospectus, included in the
Registration Statement at the Effective Date. "Registration Statement"
shall mean the registration statement referred to in paragraph (a) above,
including incorporated documents, exhibits and financial statements, as
amended at the Execution Time (or, if not effective at the Execution
Time, in the form in which it shall become effective) and, in the event
any post-effective amendment thereto becomes effective prior to the
Closing Date (as hereinafter defined), shall also mean such registration
statement as so amended. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as
provided by Rule 430A. "Rule 415," "Rule 424," "Rule 430A" and
"Regulation S-K" refer to such rules or regulation under the Securities
Act. "Rule 430A Information" means information with respect to the
Transition Bonds and the offering thereof permitted to be omitted from
the Registration Statement when it becomes
4
effective pursuant to Rule 430A. Any reference herein to the Registration
Statement, the Basic Prospectus, any Preliminary Final Prospectus or the
Final Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which
were filed under the Exchange Act on or before the Effective Date of the
Registration Statement or the issue date of the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, as the case may be;
and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement, the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus
shall be deemed to refer to and include the filing of any document under
the Exchange Act after the Effective Date of the Registration Statement
or the issue date of the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus, as the case may be, deemed to be
incorporated therein by reference. A "Non-Delayed Offering" shall mean an
offering of securities which is intended to commence promptly after the
effective date of a registration statement, with the result that,
pursuant to Rules 415 and 430A, all information (other than Rule 430A
Information) with respect to the securities so offered must be included
in such registration statement at the effective date thereof. A "Delayed
Offering" shall mean an offering of securities pursuant to Rule 415 which
does not commence promptly after the effective date of a registration
statement, with the result that only information required pursuant to
Rule 415 need be included in such registration statement at the effective
date thereof with respect to the securities so offered. Whether the
offering of the Transition Bonds is a Non-Delayed Offering or a Delayed
Offering shall be set forth in Schedule I hereto.
(e) [o] are independent public accountants as required by the
Securities Act and the rules and regulations of the Commission
thereunder.
(f) The financial statements included or incorporated by reference
in the Final Prospectus present fairly the financial position and results
of operations of the Company and the Issuer, respectively, as of the
respective dates and for the respective periods specified and, except as
otherwise stated in the Final Prospectus, such financial statements have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis during the periods involved. Neither the
Company nor the Issuer has any material contingent obligation which is
not disclosed in the Final Prospectus.
(g) The Issuer has been duly organized and is validly existing in
good standing as a limited liability company under the laws of the State
of Delaware, has the power and authority to conduct its business as
presently conducted and as described in the Final Prospectus and is duly
qualified as a foreign limited liability company to do business and in
good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary and
in which the failure to so qualify would have a materially adverse effect
on the Issuer; and the Issuer has all requisite power and authority to
issue the Transition Bonds and purchase the Transferred Bondable
Transition Property as described in the Final Prospectus and to otherwise
perform its obligations under the Basic Documents.
5
(h) The Company is a validly existing corporation under the laws of
the State of New Jersey; each of the Company's subsidiaries is a validly
existing corporation under the laws of its jurisdiction of incorporation;
the Company has all requisite power and authority to own and occupy its
properties and carry on its business as presently conducted and as
described in the Final Prospectus and is duly qualified as a foreign
corporation to do business and in good standing in every jurisdiction in
which the nature of the business conducted or property owned by it makes
such qualification necessary and in which the failure to so qualify would
have a materially adverse effect on the Company.
(i) Each of the Basic Documents to which the Company or the Issuer
is a party has been duly authorized by the Company or the Issuer, as
applicable, and when executed and delivered by the Issuer or the Company,
as applicable, will constitute a valid and binding obligation of the
Company or the Issuer, as applicable, enforceable in accordance with its
terms (subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws or equitable
principles affecting creditors' rights generally from time to time in
effect).
(j) The Transition Bonds have been duly authorized by the Issuer and
will conform to the description thereof in the Final Prospectus; and when
the Transition Bonds are executed by the Issuer, authenticated by the
Trustee and delivered to the Underwriters and are paid for by the
Underwriters in accordance with the terms of this Underwriting Agreement,
the Transition Bonds will constitute the legal, valid and binding
obligations of the Issuer, enforceable in accordance with their terms
(subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors'
rights generally from time to time in effect and to general principals of
equity, whether considered in a proceeding at law or in equity).
(k) The issue and sale of the Transition Bonds by the Issuer, the
sale of the Transferred Bondable Transition Property by the Company to
the Issuer, the execution, delivery and compliance by the Company and the
Issuer with all of the provisions of this Underwriting Agreement and each
of the other Basic Documents to which the Company or the Issuer, as
applicable, is a party, and the consummation of the transactions herein
and therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any trust agreement, indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Issuer or the
Company is a party or by which the Issuer or the Company is bound or to
which any of the property or assets of the Issuer or the Company is
subject, which conflict, breach, violation or default would be material
to the issue and sale of the Transition Bonds or would have a material
adverse effect on the general affairs, management, prospects, financial
position or results of operations of the Issuer or the Company or on the
stockholders' equity of the Company, nor will such action result in any
violation of the provisions of the Articles of Incorporation or Bylaws of
the Company or the Issuer Certificate of Formation or Issuer LLC
Agreement or any statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Issuer or the
Company or any of their respective properties.
6
(l) Except for permits and similar authorizations required under the
securities, blue sky laws of any jurisdiction, no consent, approval,
authorization or other order of any governmental authority is legally
required for the execution, delivery and performance of this Underwriting
Agreement by the Issuer and the Company and the consummation of the
transactions contemplated hereby.
(m) This Underwriting Agreement has been duly authorized, executed
and delivered by the Issuer and the Company and constitutes a valid and
binding obligation of the Company and the Issuer, enforceable in
accordance with its terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium or other
laws affecting creditors' rights generally from time to time in effect
and to general principles of equity, whether considered in a proceeding
at law or in equity and subject to the possible unenforceability of the
indemnity provisions contained herein).
(n) There is no pending or threatened suit or proceeding before any
court or governmental agency, authority or body or any arbitration
involving the Company or any of its subsidiaries or the Issuer required
to be disclosed in the Final Prospectus which is not adequately disclosed
in the Final Prospectus.
(o) The Indenture has been duly and validly authorized by all
necessary action by the Issuer and duly qualified under the Trust
Indenture Act; and, as of the Closing Date, the Indenture will have been
duly and validly executed and delivered by the Issuer and will be a valid
and enforceable instrument of the Issuer in accordance with its terms
(subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity, whether considered in a proceeding at law or in equity).
(p) The Transition Bonds, when duly executed, authenticated and
delivered against payment of the agreed consideration therefor, will be
entitled to the benefits provided by the Indenture, and the holders of
the Transition Bonds will be entitled to the payment of principal and
interest as therein provided; the Transition Bonds and the Indenture
conform to the descriptions thereof contained in the Final Prospectus.
Any certificate signed by any officer of the Company or the Issuer and
delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company and the Issuer, as the case may be,
to each Underwriters as to the matters covered thereby.
3. Purchase and Sale. Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Issuer agrees to
sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Issuer, at the purchase price set forth in
Schedule I hereto the principal amount of each class of Transition Bonds set
forth opposite the name of such Underwriter on Schedule II hereto.
7
4. Delivery and Payment. Delivery of and payment for the Transition Bonds
shall be made on the date and at the time specified in Schedule I hereto (or
such later date not later than five business days after such specified date as
the Representative shall designate), which date and time may be postponed by
agreement between the Representative and the Issuer or as provided in Section
9 hereof (such date and time of delivery and payment for the Transition Bonds
being herein called the "Closing Date"). Delivery of the Transition Bonds
shall be made to the Representative for the respective accounts of the several
Underwriters against payment by the several Underwriters through the
Representative of the purchase price thereof to the Issuer by wire transfer of
immediately available funds in U.S. dollars. The Transition Bonds to be so
delivered shall be initially represented by Transition Bonds registered in the
name of Cede & Co., as nominee of The Depository Trust Company ("DTC"). The
interests of beneficial owners of the Transition Bonds will be represented by
book entries on the records of DTC and participating members thereof.
Definitive Transition Bonds will be available only under limited circumstances
described in the Indenture.
The Issuer shall have the Transition Bonds available for inspection,
checking and packaging by the Representative in New York, New York, not later
than 1:00 PM Eastern Time on the business day prior to the Closing Date.
5. Covenants.
(a) Covenants of the Issuer. The Issuer covenants and agrees with
the several Underwriters that:
(i) The Issuer will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and
any amendment thereto, to become effective. Prior to the termination
of the offering of the Transition Bonds, the Issuer will not file
any amendment of the Registration Statement or supplement (including
the Final Prospectus or any Preliminary Final Prospectus) to the
Basic Prospectus unless the Issuer has furnished you a copy for your
review prior to filing and will not file any such proposed amendment
or supplement to which you reasonably object. Subject to the
foregoing sentence, the Issuer will cause the Final Prospectus,
properly completed, and any amendment or supplement thereto to be
filed with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide
evidence satisfactory to the Representative of such timely filing.
The Issuer will promptly advise the Representative (A) when the
Registration Statement, if not effective at the Execution Time, and
any amendment thereto, shall have become effective, (B) when the
Final Prospectus, and any amendment or supplement thereto, shall
have been filed with the Commission pursuant to Rule 424(b), (C)
when, prior to termination of the offering of the Transition Bonds,
any amendment to the Registration Statement shall have been filed or
become effective, (D) of any request by the Commission for any
amendment of the Registration Statement or amendment or supplement
to the Final Prospectus or for any additional information, (E) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose, (F) of the receipt
by the Issuer
8
of any notification with respect to the suspension of the
qualification of the Transition Bonds for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose,
and (G) of the happening of any event during the period mentioned in
subparagraph (ii) below. The Issuer will use its best efforts to
prevent the issuance of any such stop order and, if issued, to
obtain as soon as possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the
Transition Bonds is required to be delivered under the Securities
Act, any event occurs as a result of which the Final Prospectus as
then amended or supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make
the statements therein in the light of the circumstances under which
they were made not misleading, or if it shall be necessary to amend
the Registration Statement or supplement the Final Prospectus to
comply with the Securities Act or the Exchange Act or the respective
rules thereunder, the Issuer promptly will (x) promptly notify the
Representative of such event, (y) prepare and file with the
Commission an amendment or supplement which will correct such
statement or omission or effect such compliance, provided that prior
to filing any amendment or supplement the Issuer will provide the
Representative with a copy for its review and will not file any such
proposed amendment or supplement to which the Representative
reasonably objects, and (z) supply any supplemented Final Prospectus
to the Underwriters in such quantities as they may reasonably
request.
(iii) The Issuer will file or to cause to be filed with the SEC
a current report on Form 8-K setting forth all Computational
Materials, ABS Term Sheets and Collateral Term Sheets (collectively,
"Investor Materials") provided to the Issuer by any Underwriter
within the applicable time periods allotted for such filing pursuant
to the No-Action Letter of May 20, 1994, issued by the SEC to
Xxxxxx, Xxxxxxx Acceptance Corporation I, Xxxxxx, Peabody & Co.
Incorporated and Xxxxxx Structured Asset Corporation, as made
applicable to other issuers and underwriters by the SEC in response
to the request of the Public Securities Association dated May 24,
1994 (collectively, the "Xxxxxx/PSA Letter"), and the requirements
of the No-Action Letter of February 17, 1995, issued by the SEC to
the Public Securities Association (the "PSA Letter" and, together
with the Xxxxxx/PSA Letter, the "No-Action Letters"). For purposes
hereof, "Computational Materials" shall have the meaning given such
term in the No-Action Letters, but shall include only those
Computational Materials that have been prepared or delivered to
prospective investors by any Underwriter. For purposes hereof, "ABS
Term Sheets" and "Collateral Term Sheets" shall have the meanings
given such terms in the PSA Letter but shall include only those ABS
Term Sheets or Collateral Term Sheets that have been prepared or
delivered to prospective investors by any Underwriter.
(iv) The Issuer will furnish to the Representative and counsel
for the Underwriters, without charge, copies of the Registration
Statement (including exhibits thereto) and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the
Securities Act, as many copies of any Preliminary
9
Final Prospectus and the Final Prospectus and any amendment or
supplement thereto as the Representative may reasonably request. The
Issuer shall furnish or cause to be furnished to the Representative
copies of all reports required by Rule 463 under the Securities Act.
The Issuer will pay the expenses of printing, distribution or other
production of all documents relating to the offering.
(v) The Issuer will arrange for the qualification of the
Transition Bonds for sale under the laws of such jurisdictions as
the Representative may designate, will maintain such qualifications
in effect so long as required for the distribution of the Transition
Bonds and will arrange for the determination of the legality of the
Transition Bonds for purchase by institutional investors; provided,
however, that in no event shall the Issuer be obligated to qualify
to do business in any jurisdiction where it is not now so qualified
or to take any action that would subject it to service of process in
suits, other than those arising out of the offering or sale of the
Transition Bonds, in any jurisdiction where it is not now so
subject.
(vi) Until the business date set forth on Schedule I hereto,
the Issuer will not, without the written consent of the
Representative, offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce the offering of, any
securities (other than the Transition Bonds).
(vii) For a period from the date of this Underwriting Agreement
until the retirement of the Transition Bonds, or until such time as
the Underwriters shall cease to maintain a secondary market in the
Transition Bonds, whichever occurs first, the Issuer will deliver to
the Representative the annual statements of compliance and the
annual independent auditor's servicing reports furnished to the
Issuer or the Trustee pursuant to the Servicing Agreement or the
Indenture, as applicable, as soon as such statements and reports are
furnished to the Issuer or the Trustee.
(viii) So long as any of the Transition Bonds are outstanding,
the Issuer will furnish to the Representative, (A) as soon as
available, a copy of each report of the Issuer filed with the
Commission under the Exchange Act, or mailed to Transition
Bondholders, (B) a copy of any filings with the BPU pursuant to the
Competition Act and the Financing Order including, but not limited
to, any annual or more frequent Transition Bond Charge Adjustment
filings, and (C) from time to time, any information concerning the
Company or Issuer as the Representative may reasonably request.
(ix) To the extent, if any, that any rating necessary to
satisfy the condition set forth in Section 6(n) of this Underwriting
Agreement is conditioned upon the furnishing of documents or the
taking of other actions by the Issuer on or after the Closing Date,
the Issuer shall furnish such documents and take such other actions.
10
(b) Covenants of the Company. The Company covenants and agrees with
the several Underwriters that, to the extent that the Issuer has not
already performed such act pursuant to Section 5(a):
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and
any amendment thereto, to become effective. The Company will use its
best efforts to prevent the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement and, if
issued, to obtain as soon as possible the withdrawal thereof.
(ii) The Company will apply the proceeds of the sale of the
Bondable Transition Property to the Issuer for the purposes
described in the Final Prospectus and in compliance with the
Restructuring Order and the Financing Order.
(iii) Until the business date set forth on Schedule I hereto,
the Company will not, without the written consent of the
Representative, offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce the offering of, any
securities (other than the Transition Bonds).
(iv) So long as any of the Transition Bonds are outstanding and
the Company is the Servicer, the Company will furnish to the
Representative (A) as soon as available, a copy of each report of
the Company or the Issuer filed with the Commission under the
Exchange Act, or mailed to Transition Bondholders, (B) a copy of any
filings with the BPU pursuant to the Competition Act and the
Financing Order including, but not limited to, any annual or more
frequent Transition Bond Charge Adjustment filings, and (C) from
time to time, any information concerning the Company as the
Representative may reasonably request.
(v) To the extent, if any, that any rating necessary to satisfy
the condition set forth in Section 6(m) of this Underwriting
Agreement is conditioned upon the furnishing of documents or the
taking of other actions by the Company on or after the Closing Date,
the Company shall furnish or cause to be furnished such documents
and take such other actions.
(vi) The initial Transition Bond Charge will be calculated in
accordance with the Financing Order.
(vii) If, at any time when a prospectus relating to the
Transition Bonds is required to be delivered under the Securities
Act, any event occurs as a result of which the Final Prospectus as
then supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which
they were made not misleading, or if it shall be necessary to amend
the Registration Statement or supplement the Final Prospectus to
comply with the Securities Act or the Exchange Act or the respective
rules thereunder, such Company at the
11
Issuer's expense promptly will (i) prepare and file with the SEC an
amendment or supplement which will correct such statement or
omission or effect such compliance and (ii) supply any supplemented
Prospectus to you in such quantities as you may reasonably request.
6. Conditions to the Obligations of the Underwriters. The obligations of
the Underwriters to purchase the Transition Bonds shall be subject to the
accuracy of the representations and warranties on the part of the Issuer and
the Company contained herein as of the Execution Time and the Closing Date, on
the part of the Company contained in Article III of the Sale Agreement and in
Section 5.01 of the Servicing Agreement as of the Closing Date, to the
accuracy of the statements in the Transition Bonds pursuant to the provisions
hereof, to the performance by the Issuer and the Company of their obligations
hereunder, and to the following additional conditions precedent:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Representative agrees in writing to a
later time, the Registration Statement will become effective not later
than (i) 6:00 PM Eastern Standard Time, on the date of determination of
the public offering price, if such determination occurred at or prior to
3:00 PM Eastern Standard Time on such date, or (ii) 12:00 Noon Eastern
Standard Time on the business day following the day on which the public
offering price was determined, if such determination occurred after 3:00
PM Eastern Standard Time on such date; if filing of the Final Prospectus,
or any supplement thereto, is required pursuant to Rule 424(b), the Final
Prospectus, and any such supplement, shall have been filed in the manner
and within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Representative shall have received an opinion, dated as of
the Closing Date, from Xxxxxxx Xxxxxxx & Xxxxxxx, P.C., special
regulatory counsel to the Company, each subject to customary
qualifications, exceptions and limitations, in form and substance
satisfactory to the Representative, to the effect set forth in Exhibits
A, B, C, D, E and F hereto.
(c) The Representative shall have received an opinion, dated as of
the Closing Date, from in-house counsel to the Company, subject to
customary qualifications, exceptions and limitations, in form and
substance satisfactory to the Representative, to the effect set forth in
Exhibits G and H hereto.
(d) The Representative shall have received opinions, each dated as
of the Closing Date, from Sidley Xxxxxx Xxxxx and Xxxx LLP, special
counsel to the Issuer and the Company, each subject to customary
qualifications, exceptions and limitations, in form and substance
satisfactory to the Representative, to the effect set forth in Exhibits
I, J, and K hereto.
(e) The Representative shall have received from Sidley Xxxxxx Xxxxx
& Wood llp, counsel to the Underwriters, an opinion of counsel, dated as
of the Closing Date, in form satisfactory to the Underwriters, and the
Company and the Issuer shall have
12
furnished to such counsel with such documents as they reasonably request
for the purpose of enabling them to pass upon such matters.
(f) The Representative shall have received an opinion or opinions of
counsel to the Trustee, dated the Closing Date, in form and substance
reasonably satisfactory to the Representative, to the effect that:
(i) the Trustee is validly existing as a banking corporation in
good standing under the laws of New York;
(ii) the Indenture has been duly authorized, executed and
delivered by the Trustee and constitutes the legal, valid and
binding agreement enforceable against the Trustee in accordance with
its terms (subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws or
equitable principles affecting creditors' rights generally from time
to time in effect); and
(iii) the Transition Bonds have duly authenticated and
delivered by the Trustee.
(g) The Representative shall have received opinions, each dated as
of the Closing Date, from Xxxxxxxx, Xxxxxx & Finger, P.A., Delaware
counsel to the Issuer, each subject to customary qualifications,
exceptions and limitations, in form and substance satisfactory to the
Representative, to the effect set forth in Exhibits L and M hereto.
(h) The Representative shall have received a certificate of the
Issuer, signed by a duly authorized manager of the Issuer, to the effect
that the signers of such certificate have carefully examined the
Registration Statement, the Final Prospectus, any supplement to the Final
Prospectus and this Underwriting Agreement and that:
(i) the representations and warranties of the Issuer in this
Underwriting Agreement and in the Sale Agreement and the Indenture
are true and correct in all material respects on and as of the
Closing Date with the same effect as if made on the Closing Date,
and the Issuer has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or
prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or threatened; and
(iii) since the dates as of which information is given in the
Final Prospectus (exclusive of any supplement thereto), there has
been no material adverse change in (A) the condition (financial or
other), prospects, earnings, business or properties of the Issuer,
whether or not arising from transactions contemplated by the Final
Prospectus in the ordinary course of business, or (B) the
Transferred Bondable Transition Property or any right related
thereto under
13
the Competition Act, the Restructuring Order or the Financing Order,
except as set forth in or contemplated in the Final Prospectus
(exclusive of any supplement thereto).
(i) The Representative shall have received a certificate of the
Company, signed by the Chief Executive Officer, the President or a
Vice-President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the Final
Prospectus, any supplement to the Final Prospectus and this Underwriting
Agreement and that:
(i) the representations and warranties of the Company in this
Underwriting Agreement, the Sale Agreement, the Servicing Agreement
and the Administration Agreement are true and correct in all
material respects on and as of the Closing Date with the same effect
as if made on the Closing Date, and the Company has complied with
all the agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the dates as of which information is given in the
Final Prospectus (exclusive of any supplement thereto), there has
been no material adverse change in (A) the condition (financial or
other), prospects, earnings, business or properties of the Company
and its subsidiaries taken as a whole, whether or not arising from
transactions contemplated by the Final Prospectus or in the ordinary
course of business, or (B) the Transferred Bondable Transition
Property.
(j) At the Closing Date, [o] shall have furnished to the
Representative (A) a letter or letters (which may refer to letters
previously delivered to the Representative), dated as of the Closing
Date, in form and substance satisfactory to the Representative,
confirming that they are independent accountants within the meaning of
the Securities Act and the Exchange Act and the respective applicable
published rules and regulations thereunder and stating in effect that
they have performed certain specified procedures as a result of which
they determined that certain information of an accounting, financial or
statistical nature set forth in the Registration Statement and the Final
Prospectus, agrees with the accounting records of the Company and its
subsidiaries, excluding any questions of legal interpretation, and (B)
the opinion or certificate, dated as of the Closing Date, in form and
substance satisfactory to the Representative, satisfying the requirements
of Section 2.10(6) of the Indenture.
References to the Final Prospectus in this paragraph (j) include any
supplement thereto at the date of the letter.
14
In addition, except as provided in Schedule I hereto, at the
Execution Time, [o] shall have furnished to the Representative a letter
or letters, dated as of the Execution Time, in form and substance
satisfactory to the Representative, to the effect set forth above.
(k) There shall not have occurred any change, or any development
involving a prospective change, in or any event subsequent to the
Execution Time or, if earlier, the dates as of which information is given
in the Registration Statement and the Final Prospectus (exclusive of any
supplement thereto relating to such change, development or event)
affecting either (i) the business, prospects, properties or financial
condition of the Company or the Issuer, or (ii) the Transferred Bondable
Transition Property, the Transition Bonds, the Restructuring Order, the
Financing Order or the Competition Act, the effect of which is, in the
case of either (i) or (ii) above, in the judgment of the Representative,
so material and adverse as to make it impractical or inadvisable to
proceed with the offering or delivery of the Transition Bonds as
contemplated by the Registration Statement (exclusive of any amendment
thereof relating to such change, development or event) and the Final
Prospectus (exclusive of any supplement thereto relating to such change,
development or event).
(l) On or prior to the Closing Date, the Issuer shall have delivered
to the Representative evidence, in form and substance reasonably
satisfactory to the Representative, of compliance with Section 2.10 of
the Indenture, together with such reliance letters as the Representative
shall request.
(m) The Transition Bonds shall have been rated in the highest
long-term rating category by each of the Rating Agencies, and on or after
the date hereof (i) no downgrade shall have occurred in the rating
accorded to the debt securities of the Company by any Rating Agency, and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating
of any of the Company's debt securities.
(n) On or prior to the Closing Date, the Issuer shall have delivered
to the Representative evidence, in form and substance reasonably
satisfactory to the Representative, that appropriate filings have been,
are being or will be made, as applicable, pursuant to Section 3.08 of the
Sale Agreement and in accordance with the Competition Act and other
applicable law reflecting the Issuer's first priority perfected ownership
interest in the Transferred Bondable Transition Property.
(o) The Representative shall have received an opinion, or reliance
letter thereon, from Sidley Xxxxxx Xxxxx & Xxxx LLP, special federal
income tax counsel to the Issuer, substantially in the form of Exhibit
8.1 to the Registration Statement.
(p) The Representative shall have received an opinion, or reliance
letter thereon, from Xxxxxxx Xxxxxxx & Xxxxxxx, P.C., special New Jersey
tax counsel to Company and the Issuer, substantially in the form of
Exhibit 8.2 to the Registration Statement.
15
(q) Prior to the Closing Date, the Company and the Issuer shall have
furnished to the Representative such further information, certificates,
opinions and documents as the Representative may reasonably request, as
contemplated by the Final Prospectus.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Underwriting
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Underwriting Agreement shall not be in all material respects
reasonably satisfactory in form and substance to the Representative and
counsel for the Underwriters, this Underwriting Agreement and all obligations
of the Underwriters hereunder may be canceled at, or at any time prior to, the
Closing Date by the Representative. Notice of such cancellation shall be given
to the Issuer in writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the offices of Sidley Xxxxxx Xxxxx & Xxxx llp in the City of New
York on the Closing Date.
7. Expenses.
(a) Upon the Sale of the Transition Bonds, the Company and the
Issuer will pay, or cause to be paid, all reasonable costs and expenses
incident to the performance of the obligations of the Company, the
Issuer, the Trustee and the Underwriters hereunder, including, without
limiting the generality of the foregoing, (A) all costs, taxes and
expenses incident to the issue and delivery of the Transition Bonds to
the Underwriters, (B) all costs and expenses incident to the preparation,
printing, reproduction, filing and distribution of the Registration
Statement as originally filed with the Commission and each amendment
thereto, any Preliminary Final Prospectus, the Basic Prospectus and the
Final Prospectus (including any amendments and supplements thereto), (C)
all fees, disbursements and expenses of the Company's, the Issuer's, the
Trustee's and the Underwriters' counsel and the Company's and the
Issuer's accountants, (D) all fees charged by the Rating Agencies in
connection with the rating of the Transition Bonds, (E) all fees of DTC
in connection with the book-entry registration of the Transition Bonds,
(F) all costs and expenses incurred in connection with the qualification
of the Transition Bonds for sale under the laws of such jurisdictions in
the United States as the Representative may designate, together with
costs and expenses in connection with any filing with the National
Association of Securities Dealers with respect to the transactions
contemplated hereby, and (G) and all costs and expenses of printing and
distributing all of the documents in connection with the Transition
Bonds.
(b) If the sale of the Transition Bonds provided for herein is not
consummated because any condition set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof or
because of any refusal, inability or failure on the part of the Company
or the Issuer to perform any agreement herein or comply with any
provision hereof other than by reason of a default (including under
Section 9) by any of the Underwriters, the Company and the Issuer,
jointly and severally, will reimburse the Underwriters upon demand for
all reasonable out-of-pocket expenses (including fees and disbursements
of counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Transition Bonds.
16
8. Indemnification and Contribution.
(a) The Company and the Issuer, jointly and severally, will
indemnify and hold harmless each Underwriter, the directors, officers,
members, employees and agents of each Underwriter, and each person who
controls any Underwriter within the meaning of either the Securities Act
or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Competition Act, the Securities Act, the Exchange Act
or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of, directly or indirectly, or are
based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement as originally filed or in
any amendment thereof, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, any untrue statement or
alleged untrue statement of material fact contained in the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, or
any Investor Materials, or in any amendment thereof or supplement
thereto, or arise out of, directly or indirectly, or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
and will reimburse each such indemnified party, as incurred, for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action. This indemnity agreement will be in addition to any liability
which the Company and the Issuer may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company and the Issuer, each of their directors, each of their
officers who signs the Registration Statement, and each person who
controls the Company or the Issuer within the meaning of either the
Securities Act or the Exchange Act, to the same extent as the foregoing
indemnity from the Company and the Issuer to each Underwriter, but only
with reference to written information relating to such Underwriter
furnished to the Issuer or the Company by or on behalf of such
Underwriter through the Representative specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity
agreement will be in addition to any liability which any Underwriter may
otherwise have. The Issuer and the Company acknowledge that the
statements set forth under the heading "Underwriting the Series 2005-1
Transition Bonds" or "Plan of Distribution for the Transition Bonds" in
any Preliminary Final Prospectus or the Final Prospectus constitute the
only information furnished in writing by or on behalf of the several
Underwriters for inclusion in the documents referred to in the foregoing
indemnity, and you, as the Representative, confirm that such statements
are correct in all material respects.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph
(a) or (b) above unless and to the extent it did not otherwise learn of
such action and such
17
failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve
the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraph (a) or
(b) above. The indemnifying party shall be entitled to appoint counsel of
the indemnifying party's choice at the indemnifying party's expense to
represent the indemnified party in any action for which indemnification
is sought (in which case the indemnifying party shall not thereafter be
responsible for the fees and expenses of any separate counsel retained by
the indemnified party or parties except as set forth below); provided,
however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of interest,
(ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and
the indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying
party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the
institution of such action, or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. 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 reasonable fees and expenses of
more than one separate firm (in addition to local counsel) for all such
indemnified parties. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not
the indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding and (ii) does not
include a statement as to or an admission of fault, culpability or
failure to act, by or on behalf of any indemnified party. The
indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, which consent shall not
be unreasonably withheld.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company, the Issuer and the
Underwriters agree to contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses")
to which the Issuer and one or more of the Underwriters may be subject in
such proportion as is appropriate to reflect the relative benefits
received by the Issuer and by the Underwriters from the offering of the
Transition Bonds; provided, however, that in no case shall any
Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Transition Bonds) be
responsible for any
18
amount in excess of the underwriting discount or commission applicable to
the Transition Bonds purchased by such Underwriter hereunder. If the
allocation provided by the immediately preceding sentence is unavailable
for any reason, the Company, the Issuer and the Underwriters shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company, the Issuer
and the Underwriters respectively in connection with the statements or
omissions that resulted in such Losses as well as any other relevant
equitable considerations. Relative fault shall be determined by reference
to whether any alleged untrue statement or omission relates to
information provided by the Company, the Issuer or the Underwriters, as
the case may be. The Company, the Issuer and the Underwriters agree that
it would not be just and equitable if contribution were determined by pro
rata allocation or any other method of allocation that does not take
account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this
Section 8, each person who controls an Underwriter within the meaning of
either the Securities Act or the Exchange Act and each director, officer,
employee and agent of an Underwriter shall have the same rights to
contribution as such Underwriter, and each person who controls the Issuer
or the Company within the meaning of either the Securities Act or the
Exchange Act, each officer of the Issuer or the Company who shall have
signed the Registration Statement and each director of the Issuer or the
Company shall have the same rights to contribution as the Issuer or the
Company, subject in each case to the applicable terms and conditions of
this paragraph (d). The Underwriters' obligations in this Section 8 to
contribute are several in proportion to the respective principal amounts
of Transition Bonds set forth opposite their names in Schedule II hereto
and not joint. In no case shall any Underwriter (except as may be
provided in any agreement among underwriters relating to the offering of
the Transition Bonds) be responsible for any amount in excess of the
underwriting discount or commission applicable to the Transition Bonds
purchased by such Underwriter hereunder.
9. Default by an Underwriter. If any one or more Underwriters shall fail
to purchase and pay for any of the Transition Bonds agreed to be purchased by
such Underwriter or Underwriters, the Representative may in its discretion
arrange for the Underwriters or another party or other parties to purchase
such Transition Bonds on the terms contained herein. If within 36 hours after
such default by any Underwriter, the Representative did not arrange for the
purchase of such Transition Bonds, the nondefaulting Underwriters shall be
obligated severally to take up and pay for (in the respective proportions
which the amount of Transition Bonds set forth opposite their names in
Schedule II hereto bears to the aggregate amount of Transition Bonds set forth
opposite the names of all the remaining Underwriters) the Transition Bonds
which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Transition Bonds which the defaulting Underwriter or Underwriters agreed but
failed to purchase shall exceed 10% of the aggregate amount of Transition
Bonds set forth in Schedule II hereto, the nondefaulting Underwriters shall
have the right to purchase all, but shall not be under any obligation to
purchase any, of the Transition Bonds, and if such nondefaulting Underwriters
do not purchase all the Transition Bonds, this Underwriting Agreement will
terminate without liability to any nondefaulting
19
Underwriter, the Issuer or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be
postponed for such period, not exceeding seven days, as the Representative
shall determine in order that the required changes in the Registration
Statement and the Final Prospectus or in any other documents or arrangements
may be effected. Nothing contained in this Underwriting Agreement shall
relieve any defaulting Underwriter of its liability, if any, to the Issuer and
the Company and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
10. Absence of Fiduciary Relationship. The Company acknowledges and
agrees that:
(a) The Representative has been retains solely to act as underwriter
in connection with the sale of the Transition Bonds and that no
fiduciary, advisory or agency relationship between the Company has been
created in respect of any of the transactions contemplated by this
Underwriting Agreement, irrespective of whether the Representative has
advised or is advising the Company on other matters;
(b) the price of the Transition Bonds was established by the Company
following discussions and arms-length negotiations with the
Representative and the Company is capable of evaluating and understanding
and understands and accepts the terms, risks and conditions of the
transaction contemplated by this Underwriting Agreement;
(c) has been advised that the Representative and its affiliates are
engaged in a broad range of transactions which may involve interests that
differ from those of the Company and that the Representative has no
obligation to disclose such interests and transactions to the Company by
virtue of any fiduciary, advisory or agency relationship; and
(d) it waives, to the fullest extent permitted by law, any claims it
may have against the Representative for breach of fiduciary duty or
alleged breach of fiduciary duty and agrees that the Representative shall
have no liability (whether direct or indirect) to the Company in respect
of such fiduciary duty claim or to any person asserting a fiduciary duty
claim on behalf of or in right of the Company including stockholders,
employees or creditors of the Company.
11. Termination. This Underwriting Agreement shall be subject to
termination in the absolute discretion of the Representative, by notice given
to the Company and the Issuer prior to delivery of and payment for the
Transition Bonds, if prior to such time (i) there shall have occurred any
change, or any development involving a prospective change, in or affecting
either (A) the business, prospects, properties or financial condition of the
Issuer or the Company or (B) the Transferred Bondable Transition Property, the
Transition Bonds, the Restructuring Order, the Financing Order or the
Competition Act, the effect of which, in the judgment of the Representative,
materially impairs the investment quality of the Transition Bonds or makes it
impractical or inadvisable to market the Transition Bonds, (ii) trading in the
Company's Common Stock shall have been suspended by the Commission or the New
York Stock Exchange or trading in securities generally on the New York Stock
Exchange shall have been suspended or limited or minimum prices shall have
been established on such Exchange, (iii) a banking
20
moratorium shall have been declared either by federal, State of New York or
State of New Jersey authorities or (iv) there shall have occurred any outbreak
or escalation of hostilities, declaration by the United States of a national
emergency or war or other calamity or crisis the effect of which on financial
markets is such as to make it, in the judgment of the Representative,
impracticable or inadvisable to proceed with the offering or delivery of the
Transition Bonds as contemplated by the Final Prospectus (exclusive of any
supplement thereto).
12. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
the Company or its officers, the Issuer or its officers and of the
Underwriters set forth in or made pursuant to this Underwriting Agreement
shall remain in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or of the Company, the Issuer or any of the
officers, directors or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Transition Bonds. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Underwriting Agreement and the complete or partial
judicial invalidation of the Competition Act.
13. Notices. Unless otherwise specifically provided herein, all notices,
directions, consents and waivers required under the terms and provisions of
this Underwriting Agreement shall be in English and in writing, and any such
notice, direction, consent or waiver may be given by United States first class
mail, reputable overnight courier service, facsimile transmission or
electronic mail (confirmed by telephone, United States first class mail or
reputable overnight courier service in the case of notice by facsimile
transmission or electronic mail) or any other customary means of
communication, and any such notice, direction, consent or waiver shall be
effective when delivered or transmitted, or if mailed, three days after
deposit in the United States mail with proper first class postage prepaid: (a)
in the case of the Representative, to it at the address specified in Schedule
I hereto, (b) in the case of the Company, to it at Public Service Electric and
Gas Company, 00 Xxxx Xxxxx, Xxxxxx, Xxx Xxxxxx 00000, Attention: General
Corporate Counsel, and (b) in the case of the Issuer, to it at PSE&G
Transition Funding II LLC, 00 Xxxx Xxxxx, X-0X, Xxxxxx, Xxx Xxxxxx 00000,
Attention: Managers; or, as to each of the foregoing, at such other address as
shall be designated by written notice to the other parties.
14. Successors. This Underwriting Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8
hereof, and no other person will have any right or obligation hereunder.
15. Applicable Law. This Underwriting Agreement will be governed by and
construed in accordance with the laws of the State of New York.
16. Counterparts. This Underwriting Agreement may be signed in any number
of counterparts, each of which shall be deemed an original, which taken
together shall constitute one and the same instrument.
21
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company, the Issuer and the several Underwriters.
Very truly yours,
PUBLIC SERVICE ELECTRIC AND GAS COMPANY,
By:_________________________________________________
Name:
Title:
PSE&G TRANSITION FUNDING II LLC,
By:_________________________________________________
Name:
Title:
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
specified in Schedule I hereto.
CREDIT SUISSE FIRST BOSTON LLC
By:____________________________________
Name:
Title:
For itself and the other several
Underwriters, if any, named in
Schedule II to the foregoing
Underwriting Agreement.
SCHEDULE I
Underwriting Agreement dated [ ], 2005
Registration Statement No. [o]
Representative:
Credit Suisse First Boston LLC
00 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Title, Purchase Price and Description of Transition Bonds:
Title: PSE&G Transition Funding II LLC
Transition Bonds, Series 0000-0
Xxxxxxxxx Xxxxxx, Price to Public,
Underwriting Discounts and
Commissions and Proceeds to Issuer:
Total Principal Underwriting Discounts
Amount of Class Price to Public and Commissions Proceeds to Issuer
-------------------- --------------------- ------------------------ --------------------
Per Class A-1
Transition Bond
Per Class A-2
Transition Bond
Per Class A-3
Transition Bond
Total $ % % $
==================== ===================== ======================== ====================
Original Issue Discount (if any): $
Redemption provisions: At the Issuer's option when the
outstanding principal balance of
the Transition Bonds has been
reduced to less than 5% of the
original principal balance, as
set forth in Section 10.01 of
the Indenture.
Other provisions:
Closing Date, Time and Location: [ ], 2005, 10:00 AM; offices of
Sidley Xxxxxx Xxxxx & Xxxx LLP,
New York, New York
Type of Offering: Delayed Offering
Date referred to in Section 5(a)(vi) and 5(b)(iii) after which the Company and
the Issuer may offer or sell securities without the consent of the
Representative: [ ], 2005
SCHEDULE II
Class A-1 Class A-2 Class A-3
Transition Transition Transition
Underwriters Bonds Bonds Bonds
---------------------------- ------------ ------------ --------------
Credit Suisse First Boston
Barclays Capital Inc.
X.X. Xxxx & Company
------------ ------------ --------------
Total...................
============ ============ ==============
EXHIBIT A
[Corporate Opinion Regarding Issuer Under New Jersey Law]
1. The Issuer is duly qualified to do business and is in good standing
under the laws of the State of New Jersey.
2. Each of the Transaction Documents and the Transition Bonds has been duly
executed and delivered by the Issuer.
3. The issue and sale of the Transition Bonds by the Issuer, the execution
and delivery by the Issuer of the Sale Agreement, the Xxxx of Sale, the
Servicing Agreement, the Administration Agreement, the Indenture and the
Underwriting Agreement (collectively the "Transaction Documents") and the
performance by the Issuer of its obligations under each of the foregoing, each
in accordance with its terms, do not (a) conflict with or breach any of the
material terms or provisions of, or constitute (with or without notice or
lapse of time) a default under any indenture, material agreement or instrument
to which the Issuer is a party or by which the Issuer is bound and which has
been identified to us in the Issuer's Certificate (defined in the Issuer's
Certificate as the "Issuer Applicable Contracts"), (b) result in the creation
or imposition of any security interest or lien on any properties of the Issuer
pursuant to the terms of any of the Issuer Applicable Contracts (other than as
contemplated by the Transaction Documents), (c) violate any consent, order or
decree of any court or federal or state regulatory body, administrative agency
or other governmental authority having jurisdiction over the Issuer or any of
its properties and identified in the Issuer's Certificate, or (d) violate any
Applicable Law applicable to the Issuer.
4. Except for the filing of applicable UCC financing statements, no
consent, approval, license, authorization or validation of, giving of notice
to, or filing, recording or registration with, any governmental authority
pursuant to Applicable Law which has not been obtained or taken and is not in
full force and effect, is required under Applicable Law to authorize, or is
required under Applicable Law in connection with, the execution, delivery or
performance by the Issuer of any of the Transaction Documents or the
Transition Bonds, or the performance by the Issuer of the transactions
contemplated by the Transaction Documents and the Transition Bonds.
5. Each of the Transaction Documents (other than the Underwriting
Agreement) constitutes the valid and binding obligation of the Issuer,
enforceable against the Issuer in accordance with its terms.
6. When the Transition Bonds have been duly authorized and executed, and
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Underwriters in accordance with the terms of the
Underwriting Agreement, the Transition Bonds will constitute the valid and
binding obligations of the Issuer enforceable against the Issuer in accordance
with their respective terms and will be entitled to the benefits of the
Indenture.
A-1
EXHIBIT B
[Opinion Regarding True Sale Under Competition Act]
A court properly applying the Competition Act and the New Jersey UCC to
the transactions contemplated by the Sale Agreement would conclude that, under
the Competition Act and the New Jersey UCC, (i) the provisions of the Sale
Agreement and the Xxxx of Sale are effective to constitute a sale or other
absolute transfer to the Issuer of all of PSE&G's right, title and interest in
and to the Initial Transferred Bondable Transition Property, and not a
borrowing secured by the Initial Transferred Bondable Transition Property,
other than for federal, state and local tax purposes and financial accounting
purposes; and (ii) such transfer of the Initial Transferred Bondable
Transition Property has been perfected as against third persons by the
issuance of the Financing Order, the execution and delivery of the Sale
Agreement by the parties thereto, the filing of the Seller Financing Statement
together with the tender of the required filing fee.
B-1
EXHIBIT C
[Corporate Opinion Regarding PSE&G Under New Jersey Law]
1. The Sale Agreement, the Xxxx of Sale, the Servicing Agreement, and the
Administration Agreement constitute the valid and binding obligations of
PSE&G, enforceable against PSE&G in accordance with its terms under the laws
of the State of New Jersey.
C-1
EXHIBIT D
[Regulatory Opinion]
1. The Financing Order has been duly authorized and issued by the BPU in
accordance with all applicable laws, rules and regulations, including the
Competition Act; the Financing Order and process by which it was issued
complies with all applicable laws, rules and regulations, including the
Competition Act; the Financing Order is in full force and effect and is final
and nonappealable.
2. The Competition Act has been duly enacted by the Legislature of the
State of New Jersey in accordance with all applicable laws, is in full force
and effect and (insofar as it relates to the transaction contemplated in the
Sale Agreement, the Xxxx of Sale, the Servicing Agreement, the Administration
Agreement, the Indenture, and the Underwriting Agreement (collectively, the
"Transaction Documents")) is not the subject of any pending appeal or
litigation. The provisions of the Competition Act relating to the Transition
Bonds are constitutional under the Constitutions of the United States and the
State of New Jersey.
3. Neither the BPU nor any other governmental entity has the authority,
directly or indirectly, legally or equitably to (A) rescind, alter, repeal,
modify or amend the Financing Order, (B) revalue, re-evaluate or revise the
amount of the Bondable Stranded Costs, (C) determine that the BGS Transition
Bond Charges or the revenues required to recover Bondable Stranded Costs are
unjust or unreasonable, or (D) in any way reduce or impair the value of the
BGS Bondable Transition Property.
4. The Transition Bonds are "transition bonds" within the meaning of
Section 3 of the Competition Act and the Transition Bonds are entitled to the
protections provided thereunder.
5. The Issuer is a "financing entity" within the meaning of Section 3 of
the Competition Act.
6. There presently is no judicial, statutory or constitutional authority
in the State of New Jersey for a voter initiative or referendum for the
purpose of amending or repealing the Competition Act.
7. Under the Competition Act, the provisions of that Act are severable,
such that if any provision of the Competition Act or its application to any
person or circumstance is held invalid by any court of competent jurisdiction,
the invalidity shall not affect any other provision or the applications of the
Act which can be given effect without the invalid provision or application.
D-1
EXHIBIT E
[Constitutional Opinion Regarding New Jersey Contract Clause and
Takings Clause]
1. Based on interpretation of existing case law, in our opinion, under
the Contract Clause of the New Jersey Constitution, the State of New Jersey,
including the New Jersey Board of Public Utilities, could not constitutionally
take any action of a legislative character, including the repeal or amendment
of the Competition Act, which would substantially limit, alter or impair the
BGS Bondable Transition Property or other rights vested in the BGS Transition
Bondholders pursuant to the Financing Order, or substantially limit, alter,
impair or reduce the value or amount of the BGS Bondable Transition Property,
unless such action is a reasonable exercise of the State of New Jersey's
sovereign powers and of a character reasonable and appropriate to the public
purpose justifying such action.
2. Under the Takings Clause of the New Jersey Constitution, the State of
New Jersey could not repeal or amend the Competition Act or take any other
action in contravention of its pledge and agreement quoted above without
paying just compensation to the BGS Transition Bondholders, as determined by a
court of competent jurisdiction, if doing so would constitute a permanent
appropriation of a substantial property interest of the BGS Transition
Bondholders in the BGS Bondable Transition Property and deprive the BGS
Transition Bondholders of their reasonable expectations arising from their
investments in the BGS Transition Bonds. There is no assurance, however, that,
even if a court were to award just compensation, it would be sufficient to pay
the full amount of principal of and interest on the BGS Transition Bonds.
E-1
EXHIBIT F
[Opinion Regarding Security Interest Granted by
Issuer to Trustee Under New Jersey UCC]
1. The provisions of the Sale Agreement together with the Xxxx of Sale
are effective to create, in favor of the Issuer, a valid security interest (as
such term is defined in Section 1-201 of the UCC) in the Seller's rights in
the Initial Transferred BGS Bondable Transition Property described in the Xxxx
of Sale (the "Initial Transferred BGS Bondable Transition Property"), which
security interest if characterized as a transfer for security will secure the
amount paid by the Issuer for such Initial Transferred BGS Bondable Transition
Property. We note that the term "security interest" includes both a sale and a
transfer for security of an account and we express no opinion herein as to
whether the transfer of the Initial Transferred BGS Bondable Transition
Property by the Seller to the Issuer constitutes a sale or transfer for
security.
2. Upon filing the Seller Financing Statement in the Filing Office, the
security interest in favor of the Issuer in the Initial Transferred BGS
Bondable Transition Property will be perfected.
3. No other security interest of any other creditor of the Seller is
equal or prior to the security interest of the Issuer in the Initial
Transferred BGS Bondable Transition Property.
4. The provisions of the Indenture are effective to create, in favor of
the Trustee for the benefit of the BGS Transition Bondholders to secure the
payment of the BGS Transition Bonds, a valid security interest in the Issuer's
rights in the Initial Transferred BGS Bondable Transition Property and that
portion of the Collateral (as defined in the Indenture) consisting of
"accounts" or "general intangibles," each as defined in Article 9 of the UCC
(the "Intangible Collateral").
5. Upon the filing of the Issuer Financing Statement in the Filing
Office, the security interest in favor of the Trustee for the benefit of the
BGS Transition Bondholders in the Initial Transferred BGS Bondable Transition
Property and in that portion of the Intangible Collateral (to the extent such
constitutes Initial Transferred BGS Bondable Property) which is described in
the Issuer Financing Statement will be perfected.
6. No other security interest of any other creditor of the Issuer is
equal or prior to the security interest of the Trustee for the benefit of the
BGS Transition Bondholders in the Initial Transferred BGS Bondable Transition
Property and in that portion of the Intangible Collateral (to the extent such
constitutes Initial Transferred BGS Bondable Property) described in the Issuer
Financing Statement.
7. The provisions of the Indenture are effective to create a valid
security interest in favor of the Trustee for the benefit of the BGS
Transition Bondholders to secure the obligations of the Issuer under the
Indenture to the BGS Transition Bondholders in the Issuer's rights in the
Security Entitlements maintained within the Collection Account or subaccount
thereof established under the Indenture. The provisions of the Control
Agreement are effective to perfect the security interest of the Trustee for
the benefit of the BGS Transition Bondholders in said Security Entitlements.
No other security interest of any other creditor of the Issuer is equal
F-1
or prior to the security interest of the Trustee for the benefit of the BGS
Transition Bondholders in said Security Entitlements.
EXHIBIT G
[Company Corporate General Counsel Opinion]
1. PSE&G has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of New Jersey, and is
duly qualified to do business in each jurisdiction where the nature of PSE&G's
business requires such qualification to the extent such qualification and good
standing is necessary to protect the validity and enforceability of the Basic
Documents. PSE&G has the power and authority to execute, deliver and perform
its obligations under the Basic Documents and to own its properties and
conduct its business as described in the Registration Statement and the Final
Prospectus.
2. The execution, delivery and performance by PSE&G of the Basic
Documents and the consummation by PSE&G of the transactions contemplated
thereby have been duly authorized by all requisite corporate action on the
part of PSE&G and each of the Basic Documents has been duly executed and
delivered by PSE&G.
3. PSE&G holds all franchises, certificates of public convenience,
licenses and permits necessary to carry on the utility business in which it is
engaged, the absence of which would have a material adverse effect on the
financial condition of PSE&G or on the validity of the Basic Documents. All
consents, approvals, authorizations of, or filings or registrations with, any
governmental body, authority or agency applicable to PSE&G and required as a
condition to the validity of the Basic Documents or in connection with the
execution, delivery and performance by PSE&G of the Basic Documents have been
obtained or made.
4. The execution, delivery and performance by PSE&G of the Basic
Documents, each in accordance with its terms, do not (a) conflict with the
Articles of Incorporation or By-laws of PSE&G, (b) conflict with or breach any
of the material terms or provisions of, or constitute (with or without notice
or lapse of time) a default under any indenture, material agreement or
instrument to which PSE&G is a party or by which PSE&G or any of its property
is bound, (c) result in the creation or imposition of any security interest or
lien on any properties of PSE&G pursuant to the terms of any such agreement or
instrument, except as provided in the Sale Agreement, (d) violate any law or
any consent, order, rule, regulation or decree of any court or federal or
state regulatory body, administrative agency or other governmental authority
having jurisdiction over PSE&G or any of its properties, or (e) violate any
law, rule or regulation applicable to PSE&G.
5. There is no pending and, to the best of my knowledge, no threatened
action, suit or proceeding before any court or governmental agency, authority
or body or any arbitrator involving PSE&G or any of its subsidiaries, or
involving or relating to the Financing Order or the Restructuring Order or the
collection of the Transition Bond Charge or the use and enjoyment of the
Bondable Transition Property under the Competition Act, of a character
required to be disclosed in the Registration Statement or the Final Prospectus
that is not adequately disclosed in the Final Prospectus, and there is no
franchise, contract or document of a character required to be described in the
Registration Statement or the Final Prospectus or be filed as an exhibit to
the Registration Statement that is not described or filed as required.
G-1
6. The statements included in the Final Prospectus under the headings
"The Competition Act", "PSE&G's Restructuring" and "The BPU Financing Order
and the Transition Bond Charge", to the extent they purport to summarize
provisions of the Competition Act, the Restructuring Order and the Financing
Order, fairly summarize such provisions.
7. No facts have come to our attention that have led us to believe that
the Registration Statement at the effective date thereof contained an untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
or that the Final Prospectus contained as of its date or contains as of the
Closing Date an untrue statement of a material fact or omitted or omits, as
the case may be, to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that we express no opinion or belief with respect to (i)
the numerical, statistical and financial information included therein or
excluded therefrom, (ii) the Trustee's Statement of Eligibility and
Qualification under the Trust Indenture Act of 1939, as amended, on Form T-1
or (iii) the statements under the subheading "The Transition Bonds-Transition
Bonds Will Be Issued in Book-Entry Form".
EXHIBIT H
[Opinion Regarding Mortgage Indenture]
1. The Bondable Transition Property is not subject to any lien thereon
created by the Mortgage Indenture.
H-1
EXHIBIT I
[Constitutional Opinion Regarding U.S. Contract Clause and
Takings Clause]
1. Based on our analysis of relevant judicial authority, it is our
opinion, subject to all of the qualifications, limitations and assumptions
(including the assumption that any impairment would be "substantial") set
forth in this letter, that, absent a demonstration by the State of New Jersey
that limits, alters, impairs or reduces the value of the Bondable Transition
Property is necessary to further a significant and legitimate public purpose,
a reviewing court would conclude that the State Pledge provides a basis upon
which the Bondholders (or the Trustee acting on their behalf) could challenge
successfully, under the Federal Contract Clause, the constitutionality of any
law subsequently passed by the New Jersey legislature determined by such court
to reduce, alter, or impair the value of the Bondable Transition Property so
as to cause an impairment prior to the time that the Transition Bonds are
fully paid and discharged.
2. Based on our analysis of relevant judicial authority, as set forth
above, it is our opinion, subject to all of the qualifications, limitations
and assumptions set forth in this letter, that, under the Federal Takings
Clause, a reviewing court would hold that the State of New Jersey would be
required to pay just compensation to Bondholders if the State's repeal or
amendment of the Competition Act or taking of any other action in
contravention of the state pledge in Section 17.a of the Competition Act
constituted a permanent appropriation of a substantial property interest of
the Bondholders in the Bondable Transition Property and deprived the
Bondholders of their reasonable expectations arising from their investments in
the Transition Bonds. There can be no assurance, however, that any such award
of just compensation would be sufficient to pay the full amount of principal
of and interest on the Transition Bonds.
I-1
EXHIBIT J
[Opinion Regarding the Securities Act of 1933, Trust Indenture Act of 1939 and
Investment Company Act of 1940]
1. The statements set forth in the final prospectus dated [ ], 2005
relating to the Transition Bonds (together with the Prospectus Supplement
relating to the Transition Bonds dated [ ], 2005, the "Final Prospectus") (a)
under the headings "PSE&G Transition Funding II LLC, The Issuer", "The
Transition Bonds" (other than the statements under the subheading "Transition
Bonds Will Be Issued in Book-Entry Form"), "The Sale Agreement", "The
Servicing Agreement" and "The Indenture", insofar as they purport to summarize
certain provisions of the Issuer LLC Agreement, the Transition Bonds, the Sale
Agreement, the Servicing Agreement and the Indenture, respectively, constitute
fair summaries of such provisions, (b) under the heading "ERISA
Considerations", fairly summarize the matters described therein, and (c) under
the heading "How a Bankruptcy of the Seller or Servicer May Affect Your
Investment", fairly summarize the matters described therein.
2. The Transition Bonds, the Indenture, the Servicing Agreement and the
Sale Agreement (including the Xxxx of Sale) conform in all material respects
to the descriptions thereof (other than, with respect to the Transition Bonds,
the statements under the subheading "The Transition Bonds-Transition Bonds
Will Be Issued in Book-Entry Form") contained in the Final Prospectus.
3. The Indenture has been duly qualified under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and neither the Sale Agreement
nor the Servicing Agreement is required to be registered under the Trust
Indenture Act.
4. The Registration Statement has become effective under the Securities
Act; any required filing of the Final Prospectus, and any supplements thereto,
pursuant to Rule 424(b) under the Securities Act has been made in the manner
and within the time period required by Rule 424(b); to the best of our
knowledge after due inquiry with the Commission, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or threatened; and the Registration
Statement and the Final Prospectus (other than the financial statements and
other financial and statistical information contained therein, as to which we
express no opinion) comply as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act and the Trust
Indenture Act and the respective rules thereunder.
5. The Issuer is not, and after giving effect to the offering and sale of
the Transition Bonds and the application of the proceeds thereof as described
in the Final Prospectus, will not be required to be registered as an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended.
J-1
EXHIBIT K
[Opinion Regarding True Sale of Bondable Transition Property from PSE&G to
Issuer Under Federal Bankruptcy Law and Non-Consolidation of
PSE&G and Issuer Under Federal Bankruptcy Law]
1. Based on the foregoing facts, and subject to the assumptions,
qualifications and discussions contained herein and the reasoned analysis of
analogous case law (although there is no precedent directly on point), it is
our opinion that if PSE&G were to become a debtor (regardless of whether the
Issuer is also a debtor) a court would not disregard the separate limited
liability company existence of the Issuer so as to consolidate the Issuer's
assets and liabilities with those of PSE&G.
2. Based on the foregoing facts, and subject to the qualifications and
discussion contained herein and the reasoned analysis of analogous case law
(although there is no precedent directly on point), it is our opinion that, if
PSE&G were to become a debtor (regardless of whether the Issuer is also a
debtor) a court would hold that the Bondable Transition Property (including
the revenues and collections thereon) is not property of the estate of PSE&G
under Section 541(a)(1) or 541(a)(6) of the Bankruptcy Code and that Section
362(a) of the Bankruptcy Code would not apply to prevent PSE&G in its capacity
as servicer from paying collections on the Transition Bond Charges to the
Issuer and its assigns.
K-1
EXHIBIT L
[Opinion Regarding Security Interest Granted by Issuer to
Trustee Under Delaware UCC]
1. The Financing Statement is in an appropriate form for filing with the
Secretary of State.
2. Insofar as Article 9 of the Uniform Commercial Code as in effect in
the State of Delaware on the date hereof (the "Delaware UCC") is applicable
(without regard to conflict of laws principles), upon the filing of the
Financing Statement with the Secretary of State, the Trustee will have a
perfected security interest in the Issuer's rights in that portion of the
Bondable Transition Property described in the Financing Statement in which a
security interest may be perfected by the filing of a UCC Financing Statement
with the Secretary of State (the "Filing Collateral") and the proceeds (as
defined in Section 9-102(a)(64) of the Delaware UCC) thereof.
3. The search report sets for the proper filing office and the proper
debtor necessary to identify those Persons who under the Delaware UCC have on
file Financing Statements against the Issuer covering the Filing Collateral as
of the effective time. The search report identifies no secured party who has
on file with the Secretary of State a currently effective Financing Statement
naming the Issuer as debtor and describing the Filing Collateral prior to the
effective time.
L-1
EXHIBIT M
[Delaware Law Opinion Regarding Issuer]
1. The Issuer has been duly formed and is validly existing in good
standing as a limited liability company under the laws of the State of
Delaware.
2. Under the Delaware Limited Liability Company Act, 6 Del. C. ss.
18-101, et seq. (the "LLC Act"), and the Issuer LLC Agreement, the Issuer has
all necessary limited liability company power and authority to execute and
deliver the Basic Documents and issue the Transition Bonds, and to perform its
obligations thereunder.
3. Under the LLC Act and the Issuer LLC Agreement, the Issuer has all the
necessary limited liability company power and authority to own its property
and conduct its business, all as described in the Issuer LLC Agreement.
4. Under the LLC Act and the Issuer LLC Agreement, the execution and
delivery by the Issuer of the Basic Documents and Transition Bonds, and the
performance by the Issuer of its obligations thereunder, have been duly
authorized by all necessary limited liability company action on the part of
the Issuer.
5. The Issuer LLC Agreement constitutes a valid and binding agreement of
PSE&G, as the sole member of the Issuer, and is enforceable against PSE&G in
accordance with its terms.
6. If properly presented to a Delaware court, a Delaware court applying
Delaware law would conclude that (i) compliance with Section 3.04(b)(iv) of
the Issuer LLC Agreement requiring a prior unanimous written consent of the
Issuer's Managers, including the Independent Manager, to commence a voluntary
case under Title 11 of the United States Code (a "Voluntary Case") for the
Issuer, is necessary in order to commence a Voluntary Case, and (ii) Section
3.04(b)(iv) of the Issuer LLC Agreement requiring a prior written unanimous
consent of the Issuer's Managers, including the Independent Manager, to
commence a Voluntary Case for the Issuer, constitutes a legal, valid and
binding agreement of PSE&G, and is enforceable against PSE&G, as the sole
member of the Issuer, in accordance with its terms.
7. Under the LLC Act, and the Issuer LLC Agreement, the bankruptcy or
dissolution of PSE&G would not, by itself, cause the Issuer to be dissolved or
its affairs to be wound up.
8. Although under the LLC Act, on application to a court of competent
jurisdiction, a judgment creditor of PSE&G may be able to charge PSE&G's share
of any profits and losses of the Issuer and PSE&G's right to receive
distributions of assets of the Issuer (the "PSE&G Member's Interest") with
payment of the unsatisfied amount of the judgment, with interest, to the
extent so charged, the judgment creditor of PSE&G has only the rights of an
assignee of the PSE&G Member's Interest. Thus, under the LLC Act, a judgment
creditor of PSE&G may not attach specific assets of the Issuer directly and
may not satisfy its claims against PSE&G by asserting a claim directly against
the assets of the Issuer.
N-1
9. Under the LLC Act (i) the Issuer is a separate legal entity, and (ii)
the existence of the Issuer as a separate legal entity will continue until the
cancellation of the Issuer Certificate of Formation.
10. No authorization, consent, approval or order of any Delaware court or
any Delaware governmental or administrative body is required solely in
connection with the execution and delivery by the Issuer of the Basic
Documents, or the performance by the Issuer of its obligations thereunder
(except for filings that may be required under the Uniform Commercial Code as
in effect in the State of Delaware).
11. The execution and delivery by the Issuer of the Basic Documents, and
the performance by the Issuer of its obligations thereunder, do not violate
(i) any Delaware law, rule or regulation, or (ii) the Issuer Certificate of
Formation or the Issuer LLC Agreement.
J-2
