EXHIBIT 1.1
UNDERWRITING AGREEMENT
PSE&G TRANSITION FUNDING LLC
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
UNDERWRITING AGREEMENT
New York, New York
January 25, 2001
To Xxxxxx Brothers Inc. as representative of the
Underwriters named in Schedule II hereto
Ladies and Gentlemen:
1. Introduction. PSE&G Transition Funding 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 (the "Underwriters"), for whom
Xxxxxx Brothers Inc. is acting as representative (the "Representative"),
the principal amount of the PSE&G Transition Funding LLC Transition Bonds,
Series 2001-1 (the "Transition Bonds"), identified in Schedule I hereto.
The issuance of the Transition Bonds is authorized by the Final
Decision and Order, Docket Nos. E097070461, E097070462 and E097070463 (the
"Restructuring Order"), issued by the State of New Jersey Board of Public
Utilities (the "BPU") on August 24, 1999, and by the Bondable Stranded
Costs Rate Order, Docket No. EF99060390 (the "Financing Order"), issued by
the BPU on September 17, 1999. The Transition Bonds will be issued pursuant
to an indenture dated on or about January 31, 2001, as supplemented by the
2001-1 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 January 31, 2001, between the Company and the Issuer (the
"Sale Agreement") and a related Xxxx of Sale dated on or about January 31,
2001 (the "Xxxx of Sale"). The Transferred Bondable Transition Property
will be serviced pursuant to a Servicing Agreement dated on or about
January 31, 2001, 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. Each of the Company and the
Issuer represents and warrants to, and agrees with, each Underwriter as set
forth below in this Section 2. Certain terms used in this Section 2 are
defined in paragraph (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 "Act"), and the Issuer has filed with the
Securities and Exchange Commission (the "Commission") a
registration statement on such Form (Registration No.
333-83635), including a basic prospectus, for registration
under the Act of the offering and sale of the Transition Bonds.
The Issuer may have filed one or more amendments thereto, and
may have used a Preliminary Final Prospectus, each of which has
previously been furnished to you. Such registration statement,
as so amended, has become effective. The offering of the
Transition Bonds is a Delayed Offering and, although the Basic
Prospectus may not include all the information with respect to
the Transition Bonds and the offering thereof required by the
Act and the rules thereunder to be included in the Final
Prospectus, the Basic Prospectus includes all such information
required by the Act and the rules thereunder to be included
therein as of the Effective Date. The Issuer will next file
with the 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 Act and the
Issuer has filed with the Commission a registration statement
on such Form (Registration No. 333-83635), including a basic
prospectus, for registration under the Act of the offering and
sale of the Transition Bonds. The Issuer may have filed one or
more amendments thereto, including a Preliminary Final
Prospectus, each of which has previously been furnished to you.
The Issuer will next file with the 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 Act and the rules thereunder to be
included in the Final Prospectus with respect to the Transition
Bonds and the offering thereof. As filed, such final prospectus
supplement or such amendment and form of final prospectus
supplement shall contain all Rule 430A Information, together
with all other such required information, with respect to the
Transition Bonds and the offering thereof and, except to the
extent the Representative shall agree in writing to a
modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent
not completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond that
contained in the Basic Prospectus and any Preliminary Final
Prospectus) as the Issuer has advised you, prior to the
Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or
will, and when the Final Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date, the Final
Prospectus (and any supplement thereto) will, comply in all material
respects with the applicable requirements of the Act, the Securities
Exchange Act of 1934 (the "Exchange Act") and the Trust Indenture Act
of 1939 (the "Trust Indenture Act") and the respective rules
thereunder; on the Effective Date, the Registration Statement did not
or will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; on the Effective
Date and on the Closing Date the Indenture did or will comply with the
requirements of the Trust Indenture Act and the rules thereunder; and,
on the Effective Date, the Final Prospectus, if not filed pursuant to
Rule 424(b), did not or will not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date, the Final Prospectus
(together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that neither the Issuer nor the Company makes any
representations or warranties as to (i) that part of the Registration
Statement which shall constitute the 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).
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 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 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 light of the
circumstances under which they were made, not misleading;
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 to the Basic Prospectus which
describes the Transition Bonds and the offering thereof and is used
prior to filing of the Final Prospectus. "Final Prospectus" shall mean
the prospectus supplement relating to the Transition Bonds that is
first filed pursuant to Rule 424(b) after the Execution Time, together
with the Basic Prospectus or, if, in the case of a Non-Delayed
Offering, no filing pursuant to Rule 424(b) is required, shall mean
the form of final prospectus relating to the Transition Bonds,
including the Basic Prospectus, included in the Registration Statement
at the Effective Date. "Registration Statement" shall mean the
registration statement referred to in paragraph (a) above, including
incorporated documents, exhibits and financial statements, as amended
at the Execution Time (or, if not effective at the Execution Time, in
the form in which it shall become effective) and, in the event any
post-effective amendment thereto becomes effective prior to the
Closing Date (as hereinafter defined), shall also mean such
registration statement as so amended. Such term shall include any Rule
430A Information deemed to be included therein at the Effective Date
as provided by Rule 430A. "Rule 415," "Rule 424," "Rule 430A" and
"Regulation S-K" refer to such rules or regulation under the Act.
"Rule 430A Information" means information with respect to the
Transition Bonds and the offering thereof permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule
430A. Any reference herein to the Registration Statement, the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed
under the Exchange Act on or before the Effective Date of the
Registration Statement or the issue date of the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, as the case may
be; and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement, the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus
shall be deemed to refer to and include the filing of any document
under the Exchange Act after the Effective Date of the Registration
Statement or the issue date of the Basic Prospectus, any Preliminary
Final Prospectus or the Final Prospectus, as the case may be, deemed
to be incorporated therein by reference. A "Non-Delayed Offering"
shall mean an offering of securities which is intended to commence
promptly after the effective date of a registration statement, with
the result that, pursuant to Rules 415 and 430A, all information
(other than Rule 430A Information) with respect to the securities so
offered must be included in such registration statement at the
effective date thereof. A "Delayed Offering" shall mean an offering of
securities pursuant to Rule 415 which does not commence promptly after
the effective date of a registration statement, with the result that
only information required pursuant to Rule 415 need be included in
such registration statement at the effective date thereof with respect
to the securities so offered. Whether the offering of the Transition
Bonds is a Non-Delayed Offering or a Delayed Offering shall be set
forth in Schedule I hereto.
(c) Deloitte & Touche LLP are independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder.
(d) 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.
(e) 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 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 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.
(f) 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.
(g) 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).
(h) 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 or equitable principles affecting creditors' rights
generally from time to time in effect);
(i) 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.
(j) Except for:
(i) the order of the Commission making the Registration
Statement effective,
(ii) permits and similar authorizations required under the
securities or blue sky laws of any jurisdiction,
(iii) the Restructuring Order, and
(iv) the Financing Order and all filings required
thereunder,
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.
(k) 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 or equitable principles affecting creditors'
rights generally from time to time in effect and subject to the
possible unenforceability of the indemnity provisions contained
herein).
(l) 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.
(m) The Indenture has been duly and validly authorized by all
necessary action by the Issuer and duly qualified under the Trust
Indenture Act; and the Indenture has been duly and validly executed
and delivered by the Issuer and is 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 or equitable principles affecting creditors'
rights generally from time to time in effect).
(n) 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 the Transition
Bonds set forth opposite such Underwriter's name in Schedule II hereto.
4. Delivery and Payment. Delivery of and payment for the
Transition Bonds shall be made on the date and at the time specified in
Schedule I hereto (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. 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.
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 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 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 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 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 Act, any
event occurs as a result of which the Final Prospectus as then
supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be
necessary to amend the Registration Statement or supplement the
Final Prospectus to comply with the Act or the Exchange Act or
the respective rules thereunder, the Issuer promptly will (i)
prepare and file with the Commission an amendment or supplement
which will correct such statement or omission or effect such
compliance and (ii) supply any supplemented Final Prospectus to
you in such quantities as you may reasonably request.
(iii) As soon as practicable but no later than 12 months
after the Closing Date, the Issuer will make generally
available to the Transition Bondholders and to the
Representative an earnings statement or statements of the
Issuer that will satisfy the provisions of Section 11(a) of the
Act and Rule 158 under the Act.
(iv) The Issuer will furnish to the Representative and
counsel for the Underwriters, without charge, copies of the
Registration Statement (including exhibits thereto) and, so
long as delivery of a prospectus by an Underwriter or dealer
may be required by the Act, as many copies of any Preliminary
Final Prospectus and the Final Prospectus and any supplement
thereto as the Representative may reasonably request. The
Issuer shall furnish or cause to be furnished to the
Representative copies of all reports required by Rule 463 under
the Act. The Issuer will pay the expenses of printing 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 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 in
any jurisdiction where it is not now so subject.
(vi) Until the business date set forth on Schedule I
hereto, the Issuer will not, without the consent of the
Representative, offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce the offering
of, any asset-backed securities (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, 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 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(m) 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.
(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 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.
(ii) Until the business date set forth on Schedule I
hereto, the Company will not, without the consent of the
Representative, offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce the offering
of, any asset-backed securities similar to the Transition Bonds
(other than the Transition Bonds).
(iii) So long as any of the Transition Bonds are
outstanding and the Company is the Servicer, the Company will
furnish to the Representative (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.
(iv) 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 such
documents and take such other actions.
(v) The initial Transition Bond Charge will be calculated
in accordance with the Financing Order.
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 Time, on the date of
determination of the public offering price, if such determination
occurred at or prior to 3:00 PM Eastern Time on such date, or (ii)
12:00 Noon Eastern 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 Time on such date; if filing of the
Final Prospectus, or any supplement thereto, is required pursuant to
Rule 424(b), the Final Prospectus, and any such supplement, shall have
been filed in the manner and within the time period required by Rule
424(b); and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or threatened.
(b) The Representative shall have received opinions, each dated
as of the Closing Date, from Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP,
outside 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 X, X, X, X, X, X, X, X, X, X, and M hereto.
(c) 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, subject to customary
qualifications, exceptions and limitations, in form and substance
satisfactory to the Representative, to the effect set forth in Exhibit
F hereto.
(d) 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 Exhibit E hereto
(e) The Representative shall have received (i) an opinion
letter of, or a reliance letter thereon from, Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, counsel to the Issuer, dated the Closing Date, in
form and substance reasonably satisfactory to the Representative,
required to be delivered by such counsel pursuant to Section 2.10 of
the Indenture and (ii) the opinion of in-house counsel to the Company
delivered to the Mortgage Trustee relating to the release of the
Bondable Transition Property under the Company's mortgage indenture,
together with a reliance letter addressed to the Representative.
(f) The Representative shall have received an opinion or
opinions of counsel to the Trustee, portions of which may be delivered
by Stradley, Ronon, Xxxxxxx & Young, LLP, counsel to the Trustee, and
portions of which may be delivered by Xxxxx, Xxxxxx & Xxxxxx LLP,
special New York counsel for 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 been duly authenticated and
delivered by the Trustee.
(g) The Representative shall have received from Xxxxx & Wood
LLP, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Transition
Bonds, the Indenture, the Registration Statement, the Final Prospectus
(together with any supplement thereto) and other related matters as
the Representative may reasonably require, and the Company and the
Issuer shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(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 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, Deloitte & Touche LLP 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 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.
In addition, except as provided in Schedule I hereto, at the
Execution Time, Deloitte & Touche LLP 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 Skadden, Arps, Slate, Xxxxxxx & 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.
(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, including such certificates, opinions and
documents as the Representative may reasonably request to evidence the
enforceability of any interest rate swap agreement entered into in
connection with any class of floating rate bonds and the qualification
or listing of any floating rate bonds 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 Skadden, Arps, Slate, Xxxxxxx & 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 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 with the transactions
contemplated hereby, and (G) and all costs and expenses of printing
and distributing all of the documents in connection 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.
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 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 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 in the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, 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 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 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 2001-1 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.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof; but the
failure so to notify the indemnifying party (i) will not relieve it
from liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other
than the indemnification obligation provided 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 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 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 which 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 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of an
Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Issuer or the Company
within the meaning of either the Act or the Exchange Act, each officer
of the Issuer or the Company who shall have signed the Registration
Statement and each director of the Issuer or the Company shall have
the same rights to contribution as the Issuer or the Company, subject
in each case to the applicable terms and conditions of this paragraph
(d). 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.
9. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Transition Bonds agreed to be
purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Underwriting Agreement, the nondefaulting
Underwriters shall be obligated severally to take up and pay for (in the
respective proportions which the amount of Transition Bonds set forth
opposite their names in Schedule II hereto bears to the aggregate amount of
Transition Bonds set forth opposite the names of all the remaining
Underwriters) the Transition Bonds which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the
event that the aggregate amount of Transition Bonds which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10%
of the aggregate amount of Transition Bonds set forth in Schedule II
hereto, the nondefaulting Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the
Transition Bonds, and if such nondefaulting Underwriters do not purchase
all the Transition Bonds, this Underwriting Agreement will terminate
without liability to any nondefaulting Underwriter, the Issuer or the
Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not
exceeding 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. 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 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).
11. 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.
12. 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 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.
13. 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.
14. Applicable Law. This Underwriting Agreement will be governed
by and construed in accordance with the laws of the State of New York.
15. 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.
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: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
and Chief Financial Officer
PSE&G TRANSITION FUNDING LLC,
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Manager, President, Chief
Financial Officer and
Principal Accounting
Officer
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
specified in Schedule I hereto.
XXXXXX BROTHERS INC.
By: /s/ Xxxxx Xxxxx
-------------------------------
Name: Xxxxx Xxxxx
Title: Managing Director
For itself and the other several
Underwriters, if any, named in
Schedule II to the foregoing
Underwriting Agreement.
SCHEDULE I
Underwriting Agreement dated January 25, 2001
Registration Statement No. 333-83635
Representative:
Xxxxxx Brothers Inc.
3 World Financial Center
Xxx Xxxx, Xxx Xxxx 00000
Title, Purchase Price and Description of Transition Bonds:
Title: PSE&G Transition Funding LLC
Transition Bonds, Series 2001-1
Principal Amount, Price to Public,
Underwriting Discounts and
Commissions and Proceeds to
Issuer:
Underwriting
Total Principal Discounts and
Amount of Class Price to Public Commissions Proceeds to Issuer
-------------------------------------------------------------------------
Per Class A-1
Transition Bond $105,249,914 99.99992% 0.35000% $104,881,454
Per Class A-2
Transition Bond $368,980,380 99.98922% 0.40000% $367,464,694
Per Class A-3
Transition Bond $182,621,909 99.97071% 0.45000% $181,746,628
Per Class A-4
Transition Bond $496,606,425 100.00000% 0.50000% $494,123,393
Per Class A-5
Transition Bond $328,032,965 99.97372% 0.50000% $326,306,606
Per Class A-6
Transition Bond $453,559,632 99.97903% 0.55000% $450,969,960
Per Class A-7
Transition Bond $219,688,870 99.93132% 0.60000% $218,219,850
Per Class A-8
Transition Bond $370,259,905 99.96735% 0.65000% $367,732,325
------------ -----------
Total $2,525,000,000 $2,511,444,909
=============
Original Issue Discount (if any): $546,399
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 and provided
there is no interest rate swap
agreement in effect with
respect to any class of the
Transition Bonds, as set forth
in Section 10.01 of the
Indenture.
Floating Rate Class: Class A-4
Other provisions:
Closing Date, Time and Location: January 31, 2001, 10:00 AM;
offices of Skadden, Arps, Slate,
Xxxxxxx & 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 asset-backed securities without the
consent of the Representative: April 25, 2001
SCHEDULE II
Class A-1 Class A-2 Class A-3 Class A-4
Transition Transition Transition Transition
Underwriters Bonds Bonds Bonds Bonds
Xxxxxx Brothers Inc. .......... $ 62,623,699 $219,543,326 $108,660,036 $295,480,823
Xxxxxxx Xxxxx Xxxxxx Inc. ...... $ 14,208,738 $ 49,812,351 $ 24,653,958 $ 67,041,867
Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated $ 13,682,489 $ 47,967,449 $ 23,740,848 $ 64,558,835
Banc One Capital Markets, Inc. . $ 2,631,248 $ 9,224,510 $ 4,565,548 $ 12,415,161
The Xxxxxxxx Capital Group, L.P. $ 2,631,248 $ 9,224,510 $ 4,565,548 $ 12,415,161
Banc of America Securities LLC $ 2,104,998 $ 7,379,608 $ 3,652,438 $ 9,932,129
Chase Securities Inc. ......... $ 2,104,998 $ 7,379,608 $ 3,652,438 $ 9,932,129
First Union Securities, Inc. .. $ 2,104,998 $ 7,379,608 $ 3,652,438 $ 9,932,129
Commerce Capital Markets, Inc. $ 1,578,749 $ 5,534,706 $ 2,739,329 $ 7,449,096
Scotia Capital (USA) Inc. ..... $ 1,578,749 $ 5,534,706 $ 2,739,329 $ 7,449,096
Total........................ $105,249,914 $368,980,380 $182,621,909 $496,606,425
========================================================================================
Class A-5 Class A-6 Class A-7 Class A-8
Transition Transition Transition Transition
Underwriters Bonds Bonds Bonds Bonds
Xxxxxx Brothers Inc. .......... $195,179,614 $269,867,981 $130,714,878 $220,304,643
Xxxxxxx Xxxxx Barney Inc. ...... $ 44,284,450 $ 61,230,550 $ 29,657,997 $ 49,985,087
Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated $ 42,644,285 $ 58,962,752 $ 28,559,553 $ 48,133,788
Banc One Capital Markets, Inc. $ 8,200,824 $ 11,338,991 $ 5,492,222 $ 9,256,498
The Xxxxxxxx Capital Group, L.P. $ 8,200,824 $ 11,338,991 $ 5,492,222 $ 9,256,498
Banc of America Securities LLC $ 6,560,659 $ 9,071,193 $ 4,393,777 $ 7,405,198
Chase Securities Inc. ......... $ 6,560,659 $ 9,071,193 $ 4,393,777 $ 7,405,198
First Union Securities, Inc. .. $ 6,560,659 $ 9,071,193 $ 4,393,777 $ 7,405,198
Commerce Capital Markets, Inc. $ 4,920,494 $ 6,803,394 $ 3,295,333 $ 5,553,899
Scotia Capital (USA) Inc. ..... $ 4,920,494 $ 6,803,394 $ 3,295,333 $ 5,553,899
Total........................ $328,032,965 $453,559,632 $219,688,870 $370,259,905
=========================================================================================
EXHIBIT A
[Opinion Regarding Security Interest Granted by Issuer to Trustee Under 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 Bondable Transition Property described in the
Xxxx of Sale (the "Transferred Bondable Transition Property"), which
security interest if characterized as a transfer for security will secure
the amount paid by the Issuer for such Transferred 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 the proper characterization of the transfer of the Transferred
Bondable Transition Property by the Seller to the Issuer.
2. The security interest in favor of the Issuer in the
Transferred Bondable Transition Property has been 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
Transferred Bondable Transition Property.
4. The provisions of the Indenture are effective to create,
in favor of the Trustee for the benefit of the Transition Bondholders to
secure the obligations of the Issuer under the Indenture to the Transition
Bondholders, a valid security interest in the Issuer's rights in the
Transferred Bondable Transition Property and that portion of the Collateral
(as defined in the Indenture) consisting of "accounts" (other than the
Bondable Transition Property) or "general intangibles," each as defined in
Article 9 of the UCC (the "Intangible Collateral").
5. The security interest in favor of the Trustee for the
benefit of the Transition Bondholders in the Transferred Bondable
Transition Property and in that portion of the Intangible Collateral which
is described in the Issuer Financing Statement has been 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 Transition Bondholders in the Transferred Bondable
Transition Property and in that portion of the Intangible Collateral
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
Transition Bondholders to secure the obligations of the Issuer under the
Indenture to the Transition Bondholders in the Issuer's rights in all
Security Entitlements. The provisions of the Control Agreement are
effective to perfect the security interest of the Trustee for the benefit
of the Transition Bondholders in the Security Entitlements. 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 Transition
Bondholders in the Security Entitlements.
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 BTP, and not a borrowing secured by the
BTP, other than for federal, state and local tax purposes and financial
accounting purposes; and (ii) such transfer of the BTP 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 Department of Treasury Financing Statement and the due
presentation of the Seller Secretary of State Financing Statement together
with the tender of the required filing fee.
EXHIBIT C
[Opinion Regarding Security Enforceability of Delaware LLC
Provisions Under Federal Bankruptcy Law]
1. The bankruptcy or dissolution of PSE&G would not, by itself, cause the
Issuer to be dissolved or its affairs to be wound up,
2. A judgment creditor of PSE&G may not satisfy its claims against PSE&G
by asserting these claims directly against the assets of the Issuer,
and
3. (A) The Issuer is a separate legal entity, and
(B) The existence of the Issuer as a separate legal entity will continue
until the cancellation of its Issuer Certificate of Formation.
4. A bankruptcy court would hold that compliance with those provisions of
the Issuer LLC Agreement requiring the prior unanimous written consent
of the Issuer's Managers to commence a Voluntary Case is necessary in
order to commence a Voluntary Case.
EXHIBIT D
[Corporate Opinion Regarding PSE&G]
1. Each of the Transaction Documents (other than the Underwriting
Agreement) constitutes the valid and binding obligation of PSE&G,
enforceable against PSE&G in accordance with its terms under the laws of
the State of New Jersey.
2. The Underwriting Agreement constitutes the valid and binding
obligation of PSE&G, enforceable against PSE&G in accordance with its terms
under the laws of the State of New York.
EXHIBIT E
[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 Transaction Documents. PSE&G has the power and
authority to execute, deliver and perform its obligations under the
Transaction 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
Transaction 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 Transaction 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 Transaction
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 Transaction
Documents or in connection with the execution, delivery and performance by
PSE&G of the Transaction Documents have been obtained or made.
4. The execution, delivery and performance by PSE&G of the
Transaction 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 BTP 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.
EXHIBIT F
[Regulatory Opinion]
1. The Restructuring Order and the Financing Order have been duly
authorized and issued by the BPU in accordance with all applicable laws,
rules and regulations, including the Competition Act; the Restructuring
Order and the Financing Order and process by which they were issued comply
with all applicable laws, rules and regulations, including the Competition
Act; the Restructuring Order (insofar as it relates to the transaction
contemplated in the Transaction Documents) and the Financing Order are in
full force and effect and are final and nonappealable, subject only to any
rights that the appellants in the proceedings before the New Jersey Supreme
Court referred to above may have to seek an enlargement of the time within
which they may apply for reconsideration of the New Jersey Supreme Court's
order and/or to file a petition for a writ of certiorari from the United
States Supreme Court. The time period within which the appellants may apply
for reconsideration of the New Jersey Supreme Court's order has lapsed, and
that period may be enlarged only by court order.
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 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 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 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.
EXHIBIT G
[Constitutional Opinion Regarding New Jersey and U.S. Contract
Clause and Takings Clause]
1. Based on interpretation of existing case law, in our opinion,
under the Contract Clauses of the United States Constitution and 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 Bondable
Transition Property or other rights vested in the Transition Bondholders
pursuant to the Financing Order, or substantially limit, alter, impair or
reduce the value or amount of the 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 Clauses of the United States and New Jersey
Constitutions, 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 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 Transition Bondholders in the Bondable Transition Property
and deprive the Transition Bondholders of their reasonable expectations
arising from their investments in the Transition Bonds.
EXHIBIT H
[Opinion Regarding Mortgage Indenture]
1. The Bondable Transition Property is not subject to any lien
thereon created by the Mortgage Indenture.
EXHIBIT I
[Corporate Opinion Regarding Issuer]
1. The Issuer has been duly formed and is validly existing and in
good standing as a limited liability company under the laws of the State of
Delaware, and is duly qualified to do business and is in good standing
under the laws of the State of New Jersey.
2. The Issuer has the limited liability company power and
authority to execute, deliver and perform its obligations under the
Transaction Documents and the Transition Bonds and to own its properties
and conduct its business as described in the Registration Statement and the
Final Prospectus.
3. The execution and delivery of each of the Transaction Documents
and the Transition Bonds and the consummation by the Issuer of the
transactions contemplated thereby have been duly authorized by all
requisite limited liability company action on the part of the Issuer and
each of the Transaction Documents and the Transition Bonds has been duly
executed and delivered by the Issuer.
4. The issue and sale of the Transition Bonds by the Issuer, the
execution and delivery by the Issuer of each of 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,
result in any breach of any of the terms or provisions of, or constitute
(with or without notice or lapse of time) a default under the Issuer
Certificate of Formation or the Issuer LLC Agreement, (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 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"), (c) 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), (d) 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 (e) violate any
Applicable Law applicable to the Issuer.
5. 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.
6. 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.
7. The Underwriting Agreement constitutes the valid and binding
obligation of the Issuer, enforceable against the Issuer in accordance with
its terms under the laws of the State of New York.
8. The Transition Bonds have been duly authorized and executed,
and, when authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Underwriters in accordance with the
terms of the Underwriting Agreement, 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.
9. Neither the execution, delivery or performance by the Issuer of
the Transaction Documents or the Transition Bonds nor the compliance by the
Issuer with the terms and provisions thereof nor the issuance and sale by
the Issuer of the Transition Bonds, will contravene any provisions of any
Applicable Law of the State of New Jersey, the State of Delaware or the
United States of America.
10. 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.
11. 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.
12. 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.
EXHIBIT J
[10b-5/Fair Summary Letter]
1. The statements set forth in the final prospectus dated January
__, 2001 relating to the Transition Bonds (together with the Prospectus
Supplement relating to the Transition Bonds dated January __, 2001, the
"Final Prospectus") (a) under the headings "PSE&G Transition Funding 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,
the Interest Rate Swap Agreements 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 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.
4. 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 K
[Opinion Regarding True Sale of Bondable Transition
Property from PSE&G to Issuer Under Federal Bankruptcy Law]
1. In a properly presented and argued case, as a legal matter, and
based upon existing case law, in the event of the bankruptcy of PSE&G, the
transfer of the right, title and interest of PSE&G in, to and under the BTP
would be treated as a true sale to the Issuer, such that (i) section 362(a)
of the Bankruptcy Code would not apply to prevent PSE&G in its capacity as
Servicer from paying collections of TBC to the Issuer and its assigns as
provided in the Servicing Agreement, and (ii) the BTP or collections of the
TBC imposed on account of BTP transferred by PSE&G to the Issuer in the
Transaction would not become property of PSE&G's bankruptcy estate under
section 541(a)(1) or 541(a)(6) of the Bankruptcy Code.
EXHIBIT L
[Opinion Regarding Non-Consolidation of PSE&G and
Issuer Under Federal Bankruptcy Law]
1. If PSE&G becomes a debtor in a case under the Bankruptcy Code,
for the reasons, among others, set forth below, it is our opinion that
regardless of which of the approaches or standards a court follows, a
creditor or trustee of PSE&G (or PSE&G as debtor in possession) would not
have valid grounds to have a court disregard the limited liability company
form of the Issuer so as to cause a substantive consolidation of the assets
and liabilities of the Issuer with the assets and liabilities of PSE&G in a
manner prejudicial to the holders of Transition Bonds.
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. 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.
3. 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 each of the Independent
Managers, 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 each of the Independent Managers, 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.
4. Under the Delaware Limited Liability Company Act, 6 Del.
C.ss.18-101, et seq. (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.
5. 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.
6. 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.
