Exhibit 1.1
RELIANT ENERGY TRANSITION BOND COMPANY LLC
RELIANT ENERGY, INCORPORATED
Transition Bonds, Series 2001-1
UNDERWRITING AGREEMENT
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New York, New York
October 17, 2001
To the Representatives named in
Schedule I hereto of the Underwriters
named in Schedule II hereto
Ladies and Gentlemen:
1. Introduction. Reliant Energy Transition Bond Company LLC, a direct
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wholly owned subsidiary of Reliant Energy, Incorporated, a Texas corporation
("Reliant"), and a special purpose limited liability company formed under
Delaware law (the "Issuer"), proposes to sell to the underwriters named in
Schedule II hereto (the "Underwriters"), for whom you are acting as
representatives (the "Representatives"), the principal amount of the Issuer's
Transition Bonds, Series 0000-0 (xxx "Xxxxx"), identified in Schedule I hereto.
If the firm or firms listed in Schedule II hereto include only the firm or firms
listed in Schedule I hereto, then the terms "Underwriters" and
"Representatives," as used herein, shall each be deemed to refer to such firm or
firms.
The Bonds will be issued pursuant to an Indenture, dated as of October 24,
2001, as supplemented by a First Supplemental Indenture dated as of October 24,
2001 (the "First Supplemental Indenture" and, together with the Indenture (as
amended and supplemented from time to time), the "Indenture"), by and between
the Issuer and Bankers Trust Company, as trustee (in such capacity, the
"Trustee") and as securities intermediary (in such capacity, the "Securities
Intermediary"). The Bonds will be secured primarily by the Transition Property
(as defined in the Indenture) to be purchased by the Issuer from Reliant (in
such capacity, the "Seller") pursuant to a Transition Property Sale Agreement,
dated as of October 24, 2001 (the
"Sale Agreement"), between the Seller and the Issuer. The Transition Property is
a property right created under the Texas Electric Choice Plan enacted by the
Texas Legislature in June 1999 and the financing order (the "Financing Order")
issued on May 31, 2000 by the Public Utility Commission of Texas (the "Texas
Commission"). The Transition Property will be serviced pursuant to a Transition
Property Servicing Agreement, dated as of October 24, 2001 (as amended and
supplemented from time to time, the "Servicing Agreement"), between Reliant, as
servicer (in such capacity and, together with any successor servicer, the
"Servicer"), and the Issuer. Pursuant to the Indenture, the Issuer will grant to
the Trustee, as trustee for the benefit of the holders of the Bonds (the
"Bondholders"), all of its right, title and interest in and to the Transition
Property, its rights under the Sale Agreement and the Servicing Agreement, and
certain other rights specified in the Indenture.
Capitalized terms used and not otherwise defined herein shall have the
meanings given to them in the Indenture.
2. Representations and Warranties. Each of the Issuer and Reliant, jointly
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and severally (except as to (q) below), represents and warrants to, and agrees
with, each Underwriter as set forth below in this Section 2.
(a) The Issuer and the Bonds meet the requirements for the use of Form S-3
under the Securities Act of 1933, as amended (the "Act"), and the Issuer has
filed with the Securities and Exchange Commission (the "SEC") a registration
statement (Registration No. 333-91093) on Form S-3, including a basic
prospectus, for registration under the Act of the offering and sale of the
Bonds. The Issuer has filed one or more amendments thereto, including a
Preliminary Final Prospectus (as hereinafter defined), each of which has
previously been furnished to the Representatives. Such registration statement,
as so amended, has become effective. The offering of the Bonds is a Delayed
Offering (as hereinafter defined) and, although the Basic Prospectus (as
hereinafter defined) may not include all the information with respect to the
Bonds and the offering thereof required by the Act and the rules thereunder to
be included in the Final Prospectus (as hereinafter defined), the Basic
Prospectus includes all such information required by the Act and the rules
thereunder to be included therein as of the Effective Date (as hereinafter
defined). Subsequent to the Effective Date, the Issuer filed with the SEC
pursuant to Rule 424(b)(5) a Preliminary Final Prospectus. The Issuer will next
file with the SEC 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 Bonds and the offering thereof. As filed, such final prospectus supplement
shall include all required information with respect to the Bonds and the
offering thereof and, except to the extent the Representatives shall agree in
writing to a modification, shall be in all substantive respects in the form
furnished to the Representatives prior to the Execution Time (as hereinafter
defined) 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 the Representatives, prior to the Execution Time, will be
included or made therein.
(b) On the Effective Date, the Registration Statement (as hereinafter
defined) did or will, and, when the Final Prospectus is first filed in
accordance with Rule 424(b) and on the
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Closing Date, the Final Prospectus (and any supplement thereto) will, comply in
all material respects with the applicable requirements of the Act and the Trust
Indenture Act of 1939 (the "Trust Indenture Act") and the respective rules and
regulations of the SEC 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 and regulations of the SEC thereunder; 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; and, when any Preliminary Final Prospectus
was first filed with the SEC (whether filed as part of the Registration
Statement or pursuant to Rule 424) and when any amendment thereof or supplement
thereto was first filed with the SEC, such Preliminary Final Prospectus and any
amendments thereof and supplements thereto complied in all material respects
with the applicable provisions of the Act and the rules and regulations of the
SEC thereunder, and did not contain an untrue statement of a material fact and
did not omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that neither the Issuer nor Reliant
makes any representations or warranties as to (i) that part of the Registration
Statement that shall constitute the Statement of Eligibility and Qualification
(the "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 Representatives specifically for inclusion in the
Registration Statement or the Final Prospectus (or any supplement thereto), it
being understood and agreed that the only such information is that described as
such in Section 8(b) hereof.
(c) Each document to be filed pursuant to the Securities Exchange Act of
1934 (the "Exchange Act") and incorporated by reference, or deemed to be
incorporated by reference, in the Final Prospectus (including any document to be
filed pursuant to the Exchange Act that will constitute an amendment to the
Final Prospectus), when so filed, will conform in all material respects to the
requirements of the Exchange Act and the applicable rules and regulations of the
SEC thereunder, and none of such documents, when so filed, will include any
untrue statement of a material fact or will omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) The terms that follow, when used in this Underwriting Agreement, shall
have the meanings indicated:
(i) "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.
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(ii) "Execution Time" shall mean the date and time that this
Underwriting Agreement is executed and delivered by the parties hereto.
(iii) "Basic Prospectus" shall mean the prospectus referred to in
subsection (a) above contained in the Registration Statement at the
Effective Date, including any Preliminary Final Prospectus.
(iv) "Preliminary Final Prospectus" shall mean any preliminary
prospectus supplement to the Basic Prospectus that describes the Bonds and
the offering thereof and is used prior to filing of the Final Prospectus.
(v) "Final Prospectus" shall mean the prospectus supplement
relating to the Bonds that is first filed pursuant to Rule 424(b) after the
Execution Time, together with the Basic Prospectus.
(vi) "Registration Statement" shall mean the registration statement
referred to in subsection (a) above, including all documents filed as a
part thereof or incorporated by reference therein (but excluding the Form
T-1), as amended at the Execution Time 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.
(vii) "Rule 415" and "Rule 424" refer to such rules under the Act.
(viii) "Delayed Offering" refers to an offering of securities pursuant
to Rule 415 that 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.
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 that 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.
(e) Deloitte & Touche LLP, the accountants who certified the financial
statements of the Issuer included in the Final Prospectus, are independent
public accountants with respect to the Issuer and Reliant as required by the Act
and the rules and regulations of the SEC thereunder.
(f) The financial statements included in the Final Prospectus present
fairly the financial position and results of operations of the Issuer as of the
respective dates and for the
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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 in the United States applied on a
consistent basis during the periods involved. The Issuer does not have any
material contingent obligation that is not disclosed in the Final Prospectus.
(g) The Issuer has been duly organized and is validly existing in good
standing as a limited liability company under the laws of the State of Delaware,
has the requisite power and authority to conduct its business as presently
conducted and as described in the Registration Statement and the Final
Prospectus, and is duly qualified as a foreign limited liability company to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary; and the Issuer has all requisite power and authority to purchase the
Transition Property and issue and sell the Bonds as described in the Final
Prospectus and to execute, deliver and perform its obligations under this
Underwriting Agreement, the Basic Documents to which it is a party and the
Bonds.
(h) Reliant has been duly organized and is validly existing in good
standing as a corporation under the laws of the State of Texas; and Reliant has
all requisite corporate power and authority to transfer all of its rights and
interests under the Financing Order and to enter into and perform its
obligations under this Underwriting Agreement and the Basic Documents to which
it is a party.
(i) Each of this Underwriting Agreement and each of the Basic Documents to
which the Issuer or Reliant is a party has been duly and validly authorized by
the Issuer or Reliant, as applicable, and when executed and delivered by the
Issuer or Reliant, as applicable, will constitute a valid and binding obligation
of the Issuer or Reliant, as applicable, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, receivership, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors' or
secured parties' rights generally from time to time in effect and to general
principles of equity (including concepts of materiality, reasonableness, good
faith and fair dealing), regardless of whether considered in a proceeding in
equity or at law.
(j) The issuance and sale of the Bonds in accordance with the terms of
this Underwriting Agreement have been duly and validly authorized by the Issuer;
the Bonds and the Indenture will conform to the descriptions thereof contained
in the Final Prospectus; and the Bonds, when duly executed by the Issuer,
authenticated by the Trustee and delivered to the Underwriters against payment
of the agreed consideration therefor, will be entitled to the benefits provided
by the Indenture and will constitute legal, valid and binding obligations of the
Issuer, enforceable in accordance with their terms, subject, as to enforcement,
to bankruptcy, receivership, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' or secured parties' rights generally
from time to time in effect and to general principles of equity (including
concepts of materiality, reasonableness, good faith and fair dealing),
regardless of whether considered in a proceeding in equity or at law.
(k) The Issuer is not (i) in violation of its Amended and Restated
Certificate of Formation or Amended and Restated Limited Liability Company
Agreement, (ii) in default in the
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performance or observance of any material obligation, agreement, covenant or
condition contained in any material contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or other agreement or instrument to
which the Issuer is a party or by which it may be bound, or to which any of the
assets of the Issuer is subject, or (iii) materially in violation of any law,
administrative regulation or administrative, arbitration or court order, except
in each case to such extent as may be set forth in the Final Prospectus.
(l) The issuance and sale of the Bonds by the Issuer, the purchase of the
Transition Property by the Issuer from Reliant, the execution, delivery and
performance by the Issuer of this Underwriting Agreement, the Bonds and each of
the Basic Documents to which the Issuer is a party, and the consummation of the
transactions herein and therein contemplated do not and 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 contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to which
the Issuer is a party or by which the Issuer may be bound, or to which any of
the assets of the Issuer is subject, nor will such action result in any
violation of the provisions of the Issuer's Amended and Restated Certificate of
Formation or Amended and Restated Limited Liability Company Agreement, or any
statute, order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Issuer or any of its assets.
(m) The transfer by Reliant of all of its rights and interests under the
Financing Order to the Issuer, the execution, delivery and performance by
Reliant of this Underwriting Agreement and each of the Basic Documents to which
Reliant is a party, and the consummation of the transactions herein and therein
contemplated do not and 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 contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which Reliant is a party or by
which Reliant may be bound, or to which any of the assets of Reliant is subject,
nor will such action result in any violation of the provisions of Reliant's
Restated Articles of Incorporation or Bylaws, or any statute, order, rule or
regulation of any court or governmental agency or body having jurisdiction over
Reliant or any of its assets, which conflict, breach, violation or default would
be material to the issuance and sale of the Bonds or to the other transactions
contemplated by this Underwriting Agreement and the Basic Documents, or would
have a material adverse effect on the business, properties or financial
condition of Reliant.
(n) Except for:
(i) the order of the SEC making the Registration Statement
effective,
(ii) permits and similar authorizations required under the securities
or blue sky laws of any jurisdiction, and
(iii) any necessary action of the Texas Commission or filings required
under the Financing Order,
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no consent, approval, authorization or other order of any governmental authority
is required for the execution, delivery and performance by the Issuer or Reliant
of this Underwriting Agreement and the consummation of the transactions
contemplated hereby.
(o) There is no pending or, to the knowledge of the Issuer or Reliant,
threatened suit or proceeding before any court or governmental agency, authority
or body or any arbitration involving the Issuer or Reliant or any of their
subsidiaries or affiliates required to be disclosed in the Final Prospectus that
is not adequately disclosed therein.
(p) The Indenture has been duly qualified under the Trust Indenture Act.
(q) The Issuer represents severally and not jointly with Reliant, that, as
of the Closing Date, the representations and warranties of the Issuer contained
in the Basic Documents to which the Issuer is a party will be true and correct.
Reliant represents, severally and not jointly with the Issuer, that, as of the
Closing Date, the representations and warranties of Reliant contained in the
Basic Documents to which Reliant is a party will be true and correct.
(r) Any transfer taxes related to the transfer of the Transition Property
or the issuance and sale of the Bonds to the Underwriters pursuant to this
Underwriting Agreement shall have been paid or will be paid by the Issuer or
Reliant at or prior to the Closing Date to the extent then due.
Any certificate signed by any officer of the Issuer or Reliant and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed a representation and warranty by the Issuer or Reliant, as applicable, to
each Underwriter as to the matters covered thereby.
3. Purchase and Sale. Subject to the terms and conditions and in reliance
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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 Bonds set forth opposite such
Underwriter's name in Schedule II hereto.
4. Delivery and Payment. Delivery of and payment for the Bonds shall be
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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
Representatives shall designate), which date and time may be postponed by
agreement between the Representatives and the Issuer or as provided in Section 9
hereof (such date and time of delivery and payment for the Bonds being herein
called the "Closing Date"). Delivery of the Bonds shall be made to the
Representatives for the respective accounts of the several Underwriters against
payment by the several Underwriters through the Representatives of the purchase
price thereof to the Issuer by wire transfer of immediately available funds. The
Bonds to be so delivered initially shall be represented by Bonds registered in
the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"). The
interests of beneficial owners of the Bonds will be represented by book entries
on the records of DTC and participating members thereof. Definitive Bonds will
be available only under limited circumstances.
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The Issuer agrees to have the Bonds available for inspection, checking and
packaging by the Representatives in Houston, Texas, not later than 12:00 p.m.
(Noon) Houston time on the business day prior to the Closing Date.
5. Covenants.
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(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 Bonds, the Issuer will not file any amendment to the Registration
Statement or supplement (including the Final Prospectus or any Preliminary
Final Prospectus) to the Basic Prospectus unless the Issuer has furnished
the Representatives a copy for their review prior to filing and will not
file any such proposed amendment or supplement to which the Representatives
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 SEC pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence satisfactory to
the Representatives of such timely filing. During the period from the
Execution Time until 90 days after the Closing Date and at any time when a
prospectus relating to the Bonds is required to be delivered under the Act,
the Issuer will promptly advise the Representatives (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 SEC
pursuant to Rule 424(b), (C) when any amendment to the Registration
Statement shall have been filed or become effective; provided, that, with
respect to documents filed pursuant to the Exchange Act and incorporated by
reference into the Registration Statement, such notice shall be required
during such time as the Underwriters are required, in the reasonable
opinion of Xxxxxx & Xxxxxx L.L.P. or Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, counsel for the Underwriters, to deliver a prospectus, (D) of any
request by the SEC for any amendment to the Registration Statement or
supplement to the Final Prospectus or for any additional information, (E)
of the issuance by the SEC 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
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 paragraph (ii) below. The Issuer will use its best
efforts to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement and, if issued, to obtain as
soon as possible the withdrawal thereof.
(ii) If, at any time during the period from the Execution Time until
90 days after the Closing Date and at any time when a prospectus relating
to the 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
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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, at any time during the period from the Execution Time until 90 days
after the Closing Date and at any time when a prospectus relating to the
Bonds is required to be delivered under the Act, it is necessary to amend
the Registration Statement or supplement the Final Prospectus to comply
with the Act or the rules and regulations of the SEC thereunder, the Issuer
promptly will (A) prepare and file with the SEC an amendment or supplement
that will correct such statement or omission or effect such compliance and
(B) supply any supplemented Final Prospectus to the Representatives in such
quantities as they may reasonably request.
(iii) As soon as practicable and no later than 12 months after the
Closing Date, the Issuer will make generally available to the Bondholders
and to the Representatives 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 Representatives and counsel for
the Underwriters, without charge, copies of the Registration Statement
(including exhibits thereto) and, during the period from the Execution Time
until 90 days after the Closing Date and for 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 Representatives may reasonably request. 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 Bonds for
sale under the laws of such jurisdictions as the Representatives may
designate and will maintain such qualifications in effect so long as
required for the distribution of the Bonds; 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, other than those arising out of the offering
or sale of the Bonds, in any jurisdiction where it is not now so subject.
(vi) Until the business date set forth on Schedule I hereto, the
Issuer will not, without the consent of the Representatives, 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
Bonds).
(vii) For a period from the date of this Underwriting Agreement until
the retirement of the Bonds, or until such time as the Underwriters shall
cease to maintain a secondary market in the Bonds, whichever occurs first,
the Issuer will deliver to the Representatives the annual statements of
compliance and the annual independent auditor's servicing reports furnished
to the Issuer or the Trustee pursuant to the Servicing Agreement or the
Indenture, as applicable, as soon as such statements and reports are
furnished to the Issuer or the Trustee.
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(viii) So long as any of the Bonds are outstanding or until such time
as the Underwriters shall cease to maintain a secondary market in the
Bonds, whichever occurs first, the Issuer will furnish to the
Representatives (A) as soon as available, a copy of each report of the
Issuer filed with the SEC under the Exchange Act, or mailed to Bondholders,
(B) a copy of any filings made by the Issuer or Reliant with the Texas
Commission pursuant to the Texas Electric Choice Plan and the Financing
Order, including, but not limited to, any annual or more frequent
adjustment filings, and (C) from time to time, any information concerning
the Issuer as the Representatives may reasonably request.
(ix) To the extent, if any, that any rating necessary to satisfy the
condition set forth in Section 6(k) 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 Reliant. Reliant 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) Reliant will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereto, to become effective. Reliant will use its best efforts to prevent
the issuance by the SEC of any stop order suspending the effectiveness of
the Registration Statement and, if issued, to obtain as soon as possible
the withdrawal thereof.
(ii) If, at any time during the period from the Execution Time until
90 days after the Closing Date and at any time when a prospectus relating
to the 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, at any time during the
period from the Execution Time until 90 days after the Closing Date and at
any time when a prospectus relating to the Bonds is required to be
delivered under the Act, it is necessary to amend the Registration
Statement or supplement the Final Prospectus to comply with the Act or the
rules and regulations of the SEC thereunder, Reliant promptly will, or
promptly will cause the Issuer to, (A) prepare and file with the SEC an
amendment or supplement that will correct such statement or omission or
effect such compliance and (B) supply any supplemented Final Prospectus to
the Representatives in such quantities as they may reasonably request.
(iii) Until the business date set forth on Schedule I hereto, Reliant
will not, without the consent of the Representatives, 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 Bonds
(other than the Bonds).
(iv) So long as any of the Bonds are outstanding or until such time
as the Underwriters shall cease to maintain a secondary market in the
Bonds, whichever occurs
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first, and Reliant is the Servicer, Reliant will furnish to the
Representatives (A) as soon as available, a copy of each report of the
Issuer filed with the SEC under the Exchange Act, or mailed to Bondholders,
(B) a copy of any filings with the Texas Commission pursuant to the Texas
Electric Choice Plan and the Financing Order, including, but not limited
to, any annual or more frequent adjustment filings, and (C) from time to
time, any information concerning Reliant or the Issuer as the
Representatives may reasonably request.
(v) To the extent, if any, that any rating necessary to satisfy the
condition set forth in Section 6(k) of this Underwriting Agreement is
conditioned upon the furnishing of documents or the taking of other actions
by Reliant on or after the Closing Date, Reliant shall furnish such
documents and take such other actions.
(vi) Reliant will apply the proceeds of the issuance and sale of the
Bonds for the purposes described in the Final Prospectus.
6. Conditions to the Obligations of the Underwriters. The obligations of
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the Underwriters to purchase the Bonds shall be subject to (i) the accuracy of
the representations and warranties (A) on the part of the Issuer and Reliant
contained in this Underwriting Agreement, (B) on the part of Reliant contained
in Article III of the Sale Agreement, and (C) on the part of the Servicer
contained in Section 5.01 of the Servicing Agreement, all as of the Execution
Time and the Closing Date; (ii) the accuracy of the statements of the Issuer and
Reliant made in any certificates pursuant to the provisions hereof; (iii) the
performance by the Issuer and Reliant of their obligations hereunder; and (iv)
the following additional conditions precedent:
(a) If the Registration Statement has not become effective prior to the
Execution Time, unless the Representatives agree in writing to a later time, the
Registration Statement will become effective not later than (i) 6:00 p.m. New
York City time, on the date of determination of the public offering price, if
such determination occurred at or prior to 3:00 p.m. New York City time on such
date, or (ii) 12:00 Noon New York City time on the business day following the
day on which the public offering price was determined, if such determination
occurred after 3:00 p.m. New York City time on such date; the Final Prospectus,
and any supplement thereto, 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 Representatives shall have received an opinion or opinions, dated
the Closing Date, of Xxxxx X. Xxxxx, Deputy General Counsel of Reliant,
substantially covering the opinion points listed in Exhibit A hereto.
---------
(c) The Representatives shall have received an opinion or opinions, dated
the Closing Date, of Xxxxx Xxxxx L.L.P., counsel to the Issuer and Reliant,
substantially covering the opinion points listed in Exhibit B hereto.
---------
11
(d) The Representatives shall have received an opinion or opinions, dated
the Closing Date, of Xxxxxxx, Xxxxxx and Finger, P.A., special Delaware counsel
to the Issuer, substantially covering the opinion points listed in Exhibit C
---------
hereto.
(e) The Representatives shall have received an opinion, dated the Closing
Date, of Xxxxxx & Xxxxxx LLP, special New York counsel to the Trustee and the
Securities Intermediary, in form and substance reasonably satisfactory to the
Representatives, to the effect that:
(i) Bankers Trust Company is a banking corporation validly existing
under the laws of the State of New York;
(ii) Each of the Trustee and the Securities Intermediary has full
power and authority to execute, deliver and perform its respective
obligations under the Indenture, the First Supplemental Indenture and the
Intercreditor Agreement (the "Trustee Agreements"), as the case may be, and
has taken all necessary action to authorize the execution, delivery and
performance by it of each of the Trustee Agreements to which it is a party;
(iii) each of the Trustee Agreements has been duly executed and
delivered by the Trustee or the Securities Intermediary, as the case may
be, and constitutes a legal, valid and binding obligation of the Trustee or
the Securities Intermediary, as the case may be, enforceable under New York
law against the Trustee or the Securities Intermediary, as the case may be,
in accordance with its respective terms, except that certain of such
obligations may be enforceable solely against the Trust Estate and except
that such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, liquidation or other similar laws affecting the
enforcement of creditors' rights generally, and by general principles of
equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) the Trustee has duly authenticated the Bonds issued on the
Closing Date in accordance with the terms of the Indenture and the First
Supplemental Indenture;
(v) to the best of such counsel's knowledge, no approval,
authorization or other action by or filing with any governmental authority
of the United States of America or of the State of New York having
jurisdiction over the banking or trust powers of the Trustee or the
Securities Intermediary is required in connection with the execution and
delivery by the Trustee or the Securities Intermediary of the Trustee
Agreements; and
(vi) the execution and delivery of the Trustee Agreements and the
performance by the Trustee or the Securities Intermediary, as the case may
be, of the respective terms of the Trustee Agreements do not conflict with
or result in a violation of the Articles of Incorporation or By-laws of the
Trustee or the Securities Intermediary or the applicable federal laws of
the United States of America or of the State of New York having
jurisdiction over the banking or trust powers of the Trustee or the
Securities Intermediary.
12
(f) The Representatives shall have received an opinion, dated the Closing
Date, from each of Xxxxxx & Xxxxxx L.L.P. and Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP, counsel to the Underwriters, with respect to the issuance and sale of
the Bonds, the Indenture, the Registration Statement, the Final Prospectus
(together with any supplement thereto) and other related matters as the
Representatives may reasonably require, and the Issuer and Reliant shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(g) The Representatives shall have received a certificate of the Issuer,
signed by a duly authorized manager of the Issuer, dated the Closing Date, to
the effect that the signer of such certificate has 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 made pursuant to 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 are pending or, to the Issuer's knowledge, are threatened by
the SEC, and any request on the part of the SEC for additional information
has been complied with; 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, business or properties of the Issuer, whether or not arising
from transactions contemplated by the Final Prospectus or in the ordinary
course of business, or (B) the Transition Property or any right related
thereto under the Texas Electric Choice Plan or the Financing Order, except
as set forth in the Final Prospectus (exclusive of any supplement thereto).
(h) The Representatives shall have received a certificate of Reliant,
signed by an executive officer (including, without limitation, the Treasurer) of
Reliant, dated the Closing Date, to the effect that the signer of such
certificate has 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 Reliant 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 Reliant 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;
13
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or, to Reliant's knowledge, are threatened by the
SEC, and any request on the part of the SEC for additional information has
been complied with; 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 (A) in or affecting the business, properties or
financial condition of Reliant, whether or not arising from transactions
contemplated by the Final Prospectus or in the ordinary course of business,
or (B) in the Transition Property or any right related thereto under the
Texas Electric Choice Plan or the Financing Order, except as set forth in
the Final Prospectus (exclusive of any supplement thereto).
(i) At the Closing Date, Deloitte & Touche LLP shall have furnished to the
Representatives (i) a letter or letters (which may refer to letters previously
delivered to one or more of the Representatives), dated as of the Closing Date,
in form and substance satisfactory to the Representatives, 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 Issuer and Reliant,
excluding any questions of legal interpretation, and (ii) the opinion or
certificate, dated as of the Closing Date, in form and substance satisfactory to
the Representatives, satisfying the requirements of Section 2.10(7) of the
Indenture.
References to the Final Prospectus in this paragraph (i) 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 Representatives a letter
or letters, dated as of the Execution Time, in form and substance satisfactory
to the Representatives, to the effect set forth above.
(j) Subsequent to the Execution Time, there shall not have occurred any
change, or any development involving a prospective change, in or any event
affecting either (i) the business, properties or financial condition of the
Issuer or Reliant, or (ii) the Transition Property, the Bonds, the Texas
Electric Choice Plan or the Financing Order, the effect of which is, in the case
of either (i) or (ii) above, in the judgment of the Representatives, so material
and adverse as to make it impractical or inadvisable to proceed with the
offering or delivery of the Bonds as contemplated by the Registration Statement
(exclusive of any amendment thereto relating to such change, development or
event) and the Final Prospectus (exclusive of any supplement thereto relating to
such change, development or event).
(k) The Bonds shall have been rated in the highest long-term rating
category by each Rating Agency and on or after the date hereof no such
organization shall have publicly
14
announced that it has under surveillance or review, with possible negative
implications, its rating of the Bonds.
(l) On or prior to the Closing Date, the Issuer shall have delivered to
the Representatives evidence, in form and substance reasonably satisfactory to
the Representatives, 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 Texas Electric Choice Plan and other applicable law
reflecting (1) the purchase of the Transition Property by the Issuer from the
Seller and the Issuer's first priority perfected ownership interest in the
Transition Property, including the filing of financing statements in the office
of the Secretary of State of the State of Texas pursuant to the Texas Electric
Choice Plan and the Texas Uniform Commercial Code, and (2) the grant of a
security interest by the Issuer in the Trust Estate to the Trustee, including
the filing of UCC financing statements in the office of the Secretary of State
of the State of Delaware.
(m) On or prior to the Closing Date, the Issuer shall have delivered to
the Representatives evidence, in form and substance reasonably satisfactory to
the Representatives, of compliance with Section 2.10 of the Indenture, together
with such reliance letters as the Representatives shall reasonably request.
(n) Prior to the Closing Date, the Issuer and Reliant shall have furnished
to the Representatives such further information, certificates, opinions and
documents as the Representatives may reasonably request.
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 Representatives 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 Representatives. 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 Xxxxx Xxxxx L.L.P. in the City of Houston, Texas on the
Closing Date.
7. Expenses.
--------
(a) The Issuer and Reliant will pay, or cause to be paid, all reasonable
costs and expenses incident to the performance of its obligations and those of
the Issuer under this Underwriting Agreement, including without limiting the
generality of the foregoing, (i) all costs, taxes and expenses incident to the
issuance and delivery of the Bonds to the Underwriters, (ii) all costs and
expenses incident to the word processing, printing, reproduction and
distribution of the Registration Statement as originally filed with the SEC and
each amendment thereto, Preliminary Final Prospectuses and the Final Prospectus
(including any amendments and supplements thereto), (iii) all fees,
disbursements and expenses of the Trustee, the Securities Intermediary and their
counsel, (iv) all fees, disbursements and expenses of counsel to the Issuer and
Reliant, and
15
the independent public accountants of the Issuer, (v) all fees charged by the
Rating Agencies in connection with the rating of the Bonds, (vi) all fees of DTC
in connection with the book-entry registration of the Bonds, and (vii) expenses
incurred in distributing Preliminary Final Prospectuses and the Final Prospectus
(including any amendments and supplements thereto) by the Underwriters. The
Issuer and Reliant will also pay all reasonable fees and disbursements of
Underwriters' counsel, and will reimburse the Underwriters for any reasonable
expenses incurred by the Underwriters in connection with the qualification of
the Bonds for sale pursuant to Section 5(a)(v) hereof under the laws of such
jurisdictions in the United States as the Representatives may designate, each as
set forth in Schedule I hereto.
(b) If the sale of the Bonds provided for herein is not consummated
because any condition to the obligations of the Underwriters 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 Issuer or Reliant 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 Issuer and Reliant will, jointly and severally,
reimburse the Underwriters upon demand for all reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the Bonds.
8. Indemnification and Contribution.
--------------------------------
(a) The Issuer and Reliant, jointly and severally, agree to indemnify and
hold harmless each Underwriter, and each person, if any, who controls each
Underwriter within the meaning of the Act or the Exchange Act, against any
losses, claims, damages, liabilities or expenses (including the reasonable cost
of investigating and defending against any claims therefor and counsel fees
incurred in connection therewith), joint or several, which may be based upon (i)
the complete or partial judicial invalidation of the Texas Electric Choice Plan,
or the repeal, revocation or complete or partial judicial invalidation of the
Financing Order or (ii) either the Act or the Exchange Act, or any other statute
or at common law, on the ground or alleged ground that the Registration
Statement, any Preliminary Final Prospectus, the Basic Prospectus or the Final
Prospectus (or any such document, as from time to time amended, or deemed to be
amended, supplemented or modified) includes or allegedly includes an untrue
statement of material fact or omits or allegedly omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, unless such statement or omission was made in reliance
upon, and in conformity with, written information furnished to the Issuer or
Reliant by any Underwriter through the Representatives specifically for use in
the preparation thereof, it being understood and agreed that the only such
information is that described as such in Section 8(b) hereof; provided that in
no case is the Issuer or Reliant to be liable with respect to any claims made
against any Underwriter or any such controlling person unless such Underwriter
or such controlling person shall have notified Reliant in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Underwriter or such controlling person, but failure to notify Reliant of any
such claim shall not relieve the Issuer or Reliant from any liability that
either may have to such Underwriter or such controlling person otherwise than on
account of the
16
indemnity agreement contained in this paragraph; and provided, further, that the
foregoing indemnity with respect to the Basic Prospectus or any Preliminary
Final Prospectus shall not inure to the benefit of any Underwriter if a copy of
the Final Prospectus, as amended or supplemented, had not been sent or given by
or on behalf of such Underwriter to the person asserting any such losses,
claims, damages or liabilities concurrently with or prior to delivery of the
written confirmation of the sale of Bonds to such person and the untrue
statement or omission of a material fact contained in the Basic Prospectus or
such Preliminary Final Prospectus was corrected in the Final Prospectus as
amended or supplemented.
The Issuer and Reliant will be entitled to participate at their own expense
in the defense, or, if they so elect, to assume the defense of any suit brought
to enforce any such liability, but, if the Issuer or Reliant elects to assume
the defense, such defense shall be conducted by counsel chosen by it. In the
event that the Issuer or Reliant elects to assume the defense of any such suit
and retains such counsel, the Underwriter or Underwriters or controlling person
or persons, defendant or defendants in the suit, may retain additional counsel,
but shall bear the fees and expenses of such counsel unless (i) the Issuer or
Reliant shall have specifically authorized the retaining of such counsel or (ii)
the parties to such suit include the Underwriter or Underwriters or controlling
person or persons and the Underwriter or Underwriters or controlling person or
persons have been advised by such counsel that one or more legal defenses may be
available to it or them that may not be available to the Issuer or Reliant, in
which case the Issuer or Reliant shall not be entitled to assume the defense of
such suit on behalf of such Underwriter or Underwriters or controlling person or
persons, notwithstanding their obligation to bear the reasonable fees and
expenses of such counsel, it being understood, however, that the Issuer and
Reliant shall not, in connection with any one such suit or proceeding or
separate but substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for all such Underwriters and their controlling persons,
which firm shall be designated in writing by Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated. The Issuer and Reliant shall not be liable to indemnify any
person for any settlement of any such claim effected without their consent. This
indemnity agreement will be in addition to any liability that the Issuer and
Reliant might otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify and
hold harmless the Issuer and Reliant, each of their directors or managers, each
of their officers or managers who have signed the Registration Statement, and
each person, if any, who controls the Issuer or Reliant within the meaning of
the Act or the Exchange Act, against any losses, claims, damages, liabilities or
expenses (including the reasonable cost of investigating and defending against
any claims therefor and counsel fees incurred in connection therewith), joint or
several, which may be based upon the Act, or any other statute or at common law,
on the ground or alleged ground that the Registration Statement, any Preliminary
Final Prospectus, the Basic Prospectus or the Final Prospectus (or any such
document, as from time to time amended, or deemed to be amended, supplemented or
modified) includes or allegedly includes an untrue statement of a material fact
or omits or allegedly omits to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading, but
only insofar as any such statement or omission was made in reliance upon, and in
conformity with, written information
17
furnished to the Issuer or Reliant by such Underwriter through the
Representatives specifically for inclusion therein, it being understood and
agreed that the only such information furnished by any Underwriter consists of
the following information: the first and second paragraphs (including the table)
under the caption "The Underwriters' Sales Price for the Series 2001-1
Transition Bonds" and in the first paragraph and the last sentence of the last
paragraph under the caption "Various Types of Underwriter Transactions That May
Affect the Price of the Series 2001-1 Transition Bonds" in the section entitled
"Underwriting the Series 2001-1 Transition Bonds" in the Final Prospectus;
provided that in no case is such Underwriter to be liable with respect to any
claims made against the Issuer or Reliant or any such director, manager, officer
or controlling person unless the Issuer or Reliant or any such director,
manager, officer or controlling person shall have notified such Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon the
Issuer or Reliant or any such director, manager, officer or controlling person,
but failure to notify such Underwriter of any such claim shall not relieve it
from any liability that it may have to the Issuer or Reliant or any such
director, manager, officer or controlling person otherwise than on account of
the indemnity agreement contained in this paragraph.
Such Underwriter will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but, if such Underwriter elects to assume the
defense, such defense shall be conducted by counsel chosen by it. In the event
that such Underwriter elects to assume the defense of any such suit and retain
such counsel, the Issuer or Reliant or any such director, manager, officer or
controlling person, defendant or defendants in the suit, may retain additional
counsel, but shall bear the fees and expenses of such counsel unless (i) such
Underwriter shall have specifically authorized the retaining of such counsel or
(ii) the parties to such suit include the Issuer or Reliant or any such
director, manager, officer or controlling person and such Underwriter and the
Issuer or Reliant or such director, manager, officer or controlling person have
been advised by such counsel that one or more legal defenses may be available to
it or them that may not be available to such Underwriter, in which case such
Underwriter shall not be entitled to assume the defense of such suit on behalf
of the Issuer or Reliant or such director, manager, officer or controlling
person, notwithstanding its obligation to bear the reasonable fees and expenses
of such counsel, it being understood, however, that such Underwriter shall not,
in connection with any one such suit or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys at any time for
all of the Issuer or Reliant and any such director, manager, officer or
controlling person, which firm shall be designated in writing by Reliant. Such
Underwriter shall not be liable to indemnify any person for any settlement of
any such claim effected without such Underwriter's consent. This indemnity
agreement will be in addition to any liability which such Underwriter might
otherwise have.
(c) If recovery is not available under Section 8(a) or 8(b) hereof, for
any reason other than as specified therein, the parties entitled to
indemnification by the terms thereof shall be entitled to contribution for
liabilities and expenses, except to the extent that contribution is not
18
permitted under Section 11(f) of the Act. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the relative benefits received by each party from the offering of the
Bonds (taking into account the portion of the proceeds of the offering realized
by each), the parties' relative knowledge and access to information concerning
the matter with respect to which the claim was asserted, the opportunity to
correct and prevent any statement or omission, and any other equitable
considerations appropriate under the circumstances. The Issuer and Reliant and
the Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose). No Underwriter or any
person controlling such Underwriter shall be obligated to make contribution
hereunder which in the aggregate exceeds the total public offering price of the
Bonds purchased by such Underwriter under this Underwriting Agreement, less the
aggregate amount of any damages that such Underwriter and its controlling
persons have otherwise been required to pay in respect of the same claim or any
substantially similar claim. The Underwriters' obligations to contribute are
several in proportion to their respective underwriting obligations and not
joint.
9. Default by an Underwriter. If any one or more Underwriters shall fail
-------------------------
to purchase and pay for any of the 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 that the amount
of Bonds set forth opposite their names in Schedule II hereto bears to the
aggregate amount of Bonds set forth opposite the names of all the remaining
Underwriters) the Bonds that the defaulting Underwriter or Underwriters agreed
but failed to purchase; provided, however, that in the event that the aggregate
amount of Bonds that the defaulting Underwriter or Underwriters agreed but
failed to purchase shall exceed 10% of the aggregate amount of 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
Bonds, and if such nondefaulting Underwriters do not purchase all the Bonds,
this Underwriting Agreement will terminate without liability to any
nondefaulting Underwriter, the Issuer or Reliant. In the event of a default by
any Underwriter as set forth in this Section 9, the Closing Date may be
postponed for such period, not exceeding seven days, as the Representatives, in
consultation with the Issuer and Reliant, 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 Reliant and any nondefaulting Underwriter
for damages occasioned by its default hereunder.
10. Termination. This Underwriting Agreement shall be subject to
-----------
termination by notice given to the Issuer and Reliant prior to delivery of and
payment for the Bonds on the Closing Date, if prior to such time there shall
have occurred any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange, (ii) a general
moratorium on commercial banking activities declared by federal or New York
State authorities or (iii) the outbreak or escalation of hostilities involving
the United States or the declaration by the United States of a national
emergency or war, or the occurrence of any other calamity or crisis, if the
effect of any such event specified in this Section 10 upon
19
the financial markets in the United States, in the reasonable judgment of the
Representatives, makes it impracticable to market the Bonds, to proceed with the
public offering or to deliver the Bonds being issued on the Closing Date on the
terms and in the manner contemplated in the Final Prospectus.
11. Representations and Indemnities to Survive. The respective agreements,
------------------------------------------
representations, warranties, indemnities and other statements of the Issuer or
its managers, Reliant or its officers, and the Underwriters set forth in or made
pursuant to this Underwriting Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or of
the Issuer, Reliant or any of the managers, officers, directors or controlling
persons referred to in Section 8 hereof, and will survive delivery of and
payment for the 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 provisions of the Texas Electric Choice
Plan relevant to securitization.
12. Notices. All communications hereunder will be in writing and may be
-------
given by United States mail, reputable courier service, telecopy, telefax or
facsimile (confirmed by telephone or in writing in the case of notice by
telecopy, telefax or facsimile) or any other customary means of communication,
and any such communication shall be effective when delivered or transmitted, or
if mailed, three days after deposit in the United States mail with proper
postage for ordinary mail prepaid, and if sent to the Representatives, to them
at the address specified in Schedule I hereto; and if sent to Reliant, to it at
Reliant Energy, Incorporated, 0000 Xxxxxxxxx, Xxxxxxx, Xxxxx 00000, Attention:
Treasurer; and if sent to the Issuer to it at Reliant Energy Transition Bond
Company LLC, 0000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, Attention: Xxxx
Xxxxxxxx. The parties hereto, by notice to the others, may designate additional
or different addresses for subsequent communications.
13. Successors. This Underwriting Agreement will inure to the benefit of
----------
and be binding upon the parties hereto and their respective successors and the
managers, 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.
20
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 Issuer,
Reliant and the several Underwriters.
Very truly yours,
RELIANT ENERGY TRANSITION
BOND COMPANY LLC
By: ______________________________
Name:
Title:
RELIANT ENERGY, INCORPORATED
By: ______________________________
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of the
date specified in Schedule I hereto.
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By: _______________________________
Name:
Title:
For itself and the other several
Underwriters, if any, named in Schedule II
to this Underwriting Agreement.
21
SCHEDULE I
Underwriting Agreement dated October 17, 2001
Registration Statement No. 333-91093
Representative(s):
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
000 Xxxxx Xxxxxx
World Financial Center
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Title/Description of Bonds:
Reliant Energy Transition Bond Company LLC Transition Bonds, Series 0000-0
Xxxxxxxxx Xxxxxx, 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
--------------- --------------- ----------- ------------------
Class A-1........... $115,000,000 99.99546% 0.35% 99.64546%
Class A-2........... $118,000,000 99.98652% 0.43% 99.55652%
Class A-3........... $130,000,000 99.95206% 0.49% 99.46206%
Class A-4........... $385,897,000 99.93718% 0.535% 99.40218%
------------ --------------- ------------- ---------------
TOTAL $748,897,000 $748,571,130.10 $3,611,448.95 $744,959,681.15
============ =============== ============= ===============
Plus, the Underwriters will be reimbursed by the Issuer for:
$1,760,570.00 of expenses, consisting of $0 of out-of-pocket expenses and
$1,760,570.00 for Underwriters' counsel.
Original Issue Discount (if any): $325,869.90
Redemption provisions:
As set forth in the Indenture.
Other provisions:
None.
Closing Date, Time and Location:
October 24, 2001 at 9:00 a.m.
Xxxxx Xxxxx L.L.P., 910 Louisiana, Xxx Xxxxx Xxxxx, Xxxxxxx, Xxxxx 00000
Date referred to in Section 5(a)(vi) and Section 5(b)(iii) after which the
Issuer and Reliant may offer or sell asset-backed securities without the consent
of the Representatives:
October 31, 2001
2
SCHEDULE II
Class A-1 Class A-2 Class A-3 Class A-4 Total
--------- --------- --------- --------- -----
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ...................... $ 57,500,000 $ 59,000,000 $ 65,000,000 $ 192,948,500 $ 374,448,500
Bear, Xxxxxxx & Co. Inc. ...................... $ 19,550,000 $ 20,060,000 $ 22,100,000 $ 65,602,490 $ 127,312,490
Xxxxxxx, Xxxxx & Co. .......................... $ 11,500,000 $ 11,800,000 $ 13,000,000 $ 38,589,700 $ 74,889,700
Banc One Capital Markets, Inc. ................ $ 7,475,000 $ 7,670,000 $ 8,450,000 $ 25,083,305 $ 48,678,305
Credit Suisse First Boston Corporation ........ $ 7,475,000 $ 7,670,000 $ 8,450,000 $ 25,083,305 $ 48,678,305
Xxxxxx Brothers Inc. .......................... $ 7,475,000 $ 7,670,000 $ 8,450,000 $ 25,083,305 $ 48,678,305
Loop Capital Markets, LLC ..................... $ 4,025,000 $ 4,130,000 $ 4,550,000 $ 13,506,395 $ 26,211,395
------------- ------------- ------------ ------------- -------------
Total ...................................... $ 115,000,000 $ 118,000,000 $130,000,000 $ 385,897,000 $ 748,897,000
============= ============= ============ ============= =============
EXHIBIT A
Opinion of Xxxxx X. Xxxxx, Deputy General Counsel of Reliant
------------------------------------------------------------
1. No consent, approval, authorization or other order of, or filing or
registration with, any governmental regulatory body (other than has already been
obtained or made or other than such as may be required under applicable state or
federal securities laws, as to which such counsel need not express an opinion)
is required as a condition to the validity of the Basic Documents and the
Underwriting Agreement or in connection with the execution, delivery and
performance by Reliant of the Basic Documents and the Underwriting Agreement.
2. The execution, delivery and performance by Reliant of the Basic
Documents and the Underwriting Agreement, each in accordance with its terms,
will not result in the breach or violation of, or constitute a default under,
(i) the Restated Articles of Incorporation or the Bylaws of Reliant, each as
amended to date, (ii) any indenture, mortgage, deed of trust or other agreement
or instrument for borrowed money to which Reliant is a party or by which it is
bound or to which its property is subject, (iii) to the best of such counsel's
knowledge, any other agreement or instrument to which Reliant is a party or by
which it is bound or to which its property is subject or (iv) any law, order,
rule or regulation of any court or governmental agency or body having
jurisdiction over Reliant or its property, in each case in any manner that would
have a material adverse effect on the business of Reliant or the transactions
contemplated in the Underwriting Agreement and the Basic Documents.
3. To the best of such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened to which Reliant or any of its
subsidiaries is subject, or involving or relating to the Financing Order or the
collection of the Transition Charges, of a character required to be disclosed in
the Final Prospectus that is not so disclosed.
EXHIBIT B
Opinion of Xxxxx Xxxxx L.L.P., Counsel to the Issuer and Reliant
----------------------------------------------------------------
1. The Issuer is duly qualified to do business and is in good standing
under the laws of the State of Texas.
2. The Issuer has the limited liability company power and authority to
execute, deliver and perform its obligations under each of the Basic Documents,
the Underwriting Agreement and the 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 Basic Documents, the
Underwriting Agreement and the Bonds and the consummation by the Issuer of the
transactions contemplated thereby have been duly authorized by all necessary
limited liability company action on the part of the Issuer, and each of the
Basic Documents and the Underwriting Agreement has been duly executed and
delivered by the Issuer.
4. The issue and sale of the Bonds by the Issuer, the execution and
delivery by the Issuer of each of the Basic Documents and the Underwriting
Agreement and the performance by the Issuer of its obligations under each of the
foregoing, each in accordance with its terms, will not result in the breach or
violation of, or constitute a default under, the Amended and Restated
Certificate of Formation or the Amended and Restated Limited Liability Company
Agreement of the Issuer, any indenture, or other agreement or instrument to
which the Issuer is a party or by which it is bound or to which its property is
subject, or any law, order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Issuer or its property, in any
manner that would have a material adverse effect on the business of the Issuer
or the transactions contemplated in the Underwriting Agreement and the Basic
Documents.
5. Reliant has been duly incorporated and is validly existing in good
standing under the laws of the State of Texas, and has corporate power and
authority to execute, deliver and perform its obligations under each of the
Basic Documents and the Underwriting Agreement.
6. The execution, delivery and performance by Reliant of each of the
Basic Documents and the Underwriting Agreement have been duly authorized by all
necessary corporate action on the part of Reliant, and each of the Basic
Documents and the Underwriting Agreement has been duly executed and delivered by
Reliant.
7. No consent, approval, authorization or other order of, or filing or
registration with, any governmental authority (other than (i) such as may be
required for the perfection and priority of the lien under the Indenture, (ii)
has already been obtained or made or (iii) such as may be required under
applicable state securities laws, as to which such counsel need not express an
opinion) is required as a condition to the validity of the Basic Documents, the
Underwriting Agreement and the Bonds, or in connection with the execution,
delivery and performance by the Issuer of the Basic Documents, the Underwriting
Agreement and the Bonds.
8. Each of the Basic Documents constitutes the valid and binding
obligation of the Issuer and Reliant, enforceable against the Issuer and
Reliant, as applicable, in accordance with its terms, except as such
enforceability is subject to the effect of any applicable bankruptcy,
insolvency, reorganization or other law relating to or affecting creditors'
rights generally and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
9. The 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 be entitled to the benefits of the Indenture and
will constitute the valid and binding obligations of the Issuer enforceable
against the Issuer in accordance with their terms, except as such enforceability
is subject to the effect of any applicable bankruptcy, insolvency,
reorganization or other law relating to or affecting creditors' rights generally
and to general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
10. The Indenture has been duly qualified under the Trust Indenture Act.
11. The Registration Statement has become effective under the Act, and, to
the best of such counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted and are pending or are
threatened by the SEC under the Act; the Registration Statement, as of its
effective date, and the Final Prospectus, as of its date, (except for (A) the
operating statistics and financial statements contained or incorporated by
reference therein (including the auditors' reports on the financial statements
and the notes to the financial statements), (B) the other financial and
statistical information contained or incorporated by reference therein and (C)
the exhibits thereto, as to which such counsel is not asked to comment) complied
as to form in all material respects with the requirements of Form S-3 under the
Act and the applicable rules and regulations of the SEC thereunder, and each
document incorporated by reference therein as originally filed pursuant to the
Exchange Act (except for (A) the operating statistics and financial statements
contained or incorporated by reference therein (including the auditors' reports
on the financial statements and the notes to the financial statements), (B) the
other financial and statistical information contained or incorporated by
reference therein and (C) the exhibits thereto, as to which such counsel is not
asked to comment) when so filed complied as to form in all material respects
with the Exchange Act and the applicable rules and regulations of the SEC
thereunder.
12. The Issuer is not, and after giving effect to the offering and sale of
the 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.
13. Pursuant to a Memorandum Opinion and Order Granting Exemption to
Holding Company dated July 24, 1997 issued by the SEC (Release No. 35-26744),
Reliant is exempt from regulation as a public utility holding company under
Section 3(a)(2) of the Public Utility Holding Company Act of 1935, as amended,
except the provisions of Section 9(a)(2) thereof.
2
14. Such counsel does not know of any contracts or documents of a
character required to be described in the Registration Statement or the Final
Prospectus or to be filed as exhibits to the Registration Statement that are not
so described and filed.
15. The Bonds conform, as to legal matters, in all material respects to
the descriptions thereof contained in the Final Prospectus, and the statements
set forth in the Final Prospectus under the headings "The Transition Bonds,"
"The Sale Agreement," "The Servicing Agreement" and "The Indenture" accurately
summarize in all material respects the Sale Agreement, the Servicing Agreement
and the Indenture.
16. The description of statutes and regulations set forth in the Final
Prospectus under the headings "Risk Factors," "The Texas Electric Choice Plan,"
"Reliant Energy's Financing Order," "Retail Electric Providers," "How a
Bankruptcy May Affect Your Investment" and "ERISA Considerations" fairly
describe in all material respects the portions of the statutes and regulations
addressed thereby.
17. A bankruptcy court would hold that compliance with those provisions of
the Amended and Restated Limited Liability Company Agreement of the Issuer
requiring the prior unanimous consent of the Managers to commence a Voluntary
Case (as defined in such opinion) is necessary in order to commence a Voluntary
Case.
18. A bankruptcy court (a) would hold that the bankruptcy or dissolution
of Reliant would not, by itself, cause the Issuer to be dissolved or its affairs
to be wound up, and (b) would follow applicable state law by holding that a
judgment creditor of Reliant may not satisfy its claims against Reliant by
asserting these claims directly against the assets of the Issuer and (c)(i) that
the Issuer is a separate legal entity and (ii) that the existence of the Issuer
as a separate legal entity will continue until the cancellation of its
Certificate of Formation.
19. In the event of a case under the Bankruptcy Code involving Reliant as
debtor (whether or not the Issuer is a debtor in a case under the Bankruptcy
Code at the same time), a bankruptcy court would not disregard the separate
limited liability company existence of the Issuer so as to consolidate the
Issuer's assets and liabilities with those of Reliant.
20. If Reliant were to become a debtor under the Bankruptcy Code, a court
would hold that the Transition Property (including the revenues and collections
thereon) is not property of the estate of Reliant under Section 541(a)(1) or
(a)(6) of the Bankruptcy Code and Section 362(a) of the Bankruptcy Code would
not apply to prevent Reliant in its capacity as Servicer from paying Collections
(as defined in such opinion) to the Issuer and its assigns.
21. Based on the provisions of the PURA (as defined in such opinion), the
Sale Agreement, the Xxxx of Sale and the Financing Order noted in the opinion
and under the governing law of the State of Texas, Reliant's transfer of the
Transition Property to the Issuer will, upon such transfer, be treated as a true
sale and not as a secured financing.
22. The portion of the amounts collected from retail customers by retail
electric providers that is attributable to Transition Charges billed to the
retail electric providers pursuant to Schedule TC are "transition charges"
within the meaning of the Texas Electric Choice Plan
3
and that the amounts paid by the retail electric providers to the Servicer
pursuant to Schedule TC are also "transition charges" within the meaning of the
Texas Electric Choice Plan.
23. Under the Contract Clauses of the United States Constitution and the
Texas Constitution, the State of Texas, including the State of Texas acting
through the Texas Commission, could not, consistent with the United States
Constitution or the Texas Constitution, take any action of a legislative
character, including the repeal or amendment of the Texas Electric Choice Plan,
which would substantially impair the value of the Transition Property or
substantially reduce, alter or impair the Transition Charges in a manner
violative of the Pledge (as defined in such opinion), unless such action is a
reasonable exercise of the sovereign powers of the State of Texas and of a
character reasonable and appropriate to the important public purpose justifying
such action.
24. Under existing case law the State of Texas could not repeal or amend
the Texas Electric Choice Plan, or take any other action in contravention of the
Pledge, that substantially impairs the rights of the Bondholders without paying
just compensation to the Bondholders, as determined by a court of competent
jurisdiction, if doing so (a) under the federal Takings Clause, would constitute
a permanent appropriation of a substantial property interest of the Bondholders
in the Transition Property and deprive the Bondholders of their reasonable
expectations arising from their investments in the Bonds or (b) under the Texas
Takings Clause, did not accomplish a legitimate goal (i.e., was not
substantially related to the health, safety or general welfare of the people) or
was not reasonable, as determined under a case-by-case analysis taking into
account such factors as whether the action taken would render the Bonds wholly
useless, would cause a disproportionate diminution in economic value to the
Bondholders or was for the State's own advantage.
25. Based on certain assumptions set forth therein, statements of legal
conclusion set forth under the heading "Material Federal Income Tax Consequences
for the Transition Bondholders" in the Final Prospectus reflect such counsel's
opinions on the material tax consequences of the purchase, ownership and
disposition of the Bonds based on the Internal Revenue Code of 1986, the
franchise tax statutes of the State of Texas and applicable regulations
thereunder, all as in effect on the date of such opinion, and on reported
judicial decisions and administrative rulings.
26. Pursuant to Section 39.309 of the Texas Electric Choice Plan, (a) upon
the delivery of the executed Sale Agreement and the Xxxx of Sale from Reliant to
the Issuer and the filing of the Notice of Transfer (as defined in such opinion)
with the Secretary of State of the State of Texas, the transfer of the
Transition Property (including revenues and collections of or arising from
Transition Charges) shall be perfected against Reliant, as Seller thereunder,
and against third parties, including subsequent judicial or other lien
creditors, and (b) upon the delivery of the executed Indenture from the Issuer
to the Trustee and the filing of the Notice of Security Interest (as defined in
such opinion) with the Secretary of State of the State of Texas, the security
interest in the Transition Property (including revenues and collections of or
arising from Transition Charges) granted by the Issuer to the Trustee shall be
perfected against the Issuer and against third parties, including subsequent
judicial or other lien creditors. The Notices (as defined in such opinion) are
in appropriate form and have been executed and filed in the Office of the
Secretary of State of the State of Texas.
4
27. Upon the issuance of the Bonds and the filing of the Notices with the
Secretary of State of the State of Texas, (a) the Indenture creates in favor of
the Trustee a security interest in the rights of the Issuer in the Transition
Property including collections and revenues of or arising from Transition
Charges to secure the Bonds, (b) such security interest is valid and enforceable
against the Issuer and third parties, and has attached under the Texas Electric
Choice Plan, (c) such security interest is perfected under the Texas Electric
Choice Plan, and (d) such perfected security interest is of first priority under
the Texas Electric Choice Plan.
28. Searches have been made of the transition property notices filed in
the Office of the Secretary of State of the State of Texas and based on the
Search Report (as defined in such opinion), there is not on file under the Texas
Electric Choice Plan any filing that purports to cover the Transition Property,
other than the Notices.
29. Under the laws of the State of Texas, the Indenture is effective to
create in favor of the Trustee, as trustee for the benefit of the holders of the
Bonds from time to time issued and outstanding, a valid security interest in all
of the right, title and interest of the Issuer in, to and under the Trust Estate
as collateral security under Article 9 of the Uniform Commercial Code as in
effect in the State of Texas on the date of such opinion (the "Texas UCC"),
except to the extent set forth in Section 9.109(c) and (d) of Article 9 of the
Texas UCC.
30. The provisions of Section 8.02 of the Indenture are effective to
create in favor of the Trustee, as trustee for the benefit of the holders of the
Bonds from time to time issued and outstanding, a valid security interest in all
of the right, title and interest of the Issuer in, to and under the "securities
account," as such term is defined in Section 8.02(a)(ii) of the Indenture, and
all "security entitlements," as such term is defined in Section 8-102(a)(17) of
the Texas UCC, carried therein or credited thereto from time to time. Under
Section 9.305(a)(3) of the Texas UCC, the local law of the securities
intermediary's jurisdiction as specified in Section 8.110(e) of the Texas UCC
governs perfection, the effect of perfection or nonperfection in the securities
account and security entitlements. Under Section 11.13 of the Indenture, for
purposes of Section 8.110(e), the jurisdiction of the Securities Intermediary is
the State of New York. Upon the establishment of the securities account in
accordance with the provisions of the Indenture, the security interest in all
securities entitlements are perfected by "control" within the meaning of
Sections 8-106(d) and 9-106 of the Uniform Commercial Code as in effect in the
State of New York on the date of such opinion (the "New York UCC"). Perfection
of the security interest in all securities entitlements carried in a securities
account also constitutes perfection of the security interest in such securities
account and under Section 9.328(1) of the New York UCC, such security interest
will have priority over any security interest held by a secured party perfected
by a means other than control.
31. Based solely on the legal opinion of Xxxxxxxx, Xxxxxx & Finger, P.A.
dated the same date as such opinion (the "Delaware Opinion"), concerning the
following matters under Article 9 of the Uniform Commercial Code as in effect in
the State of Delaware on the date of such opinion (the "Delaware UCC"), (a) the
Financing Statement (as defined in such opinion) is in an appropriate form for
filing in the State of Delaware under Section 9-502(a) and 9-516 of the Delaware
UCC and (b) insofar as Article 9 of the Delaware UCC is applicable (without
regard to conflict of laws principles), upon the filing of the Financing
Statement with the Secretary of State of the State of Delaware, the Trustee will
have a perfected security interest in
5
the Issuer's rights in that portion of the Trust Estate that may be perfected by
the filing of a UCC financing statement with the Secretary of State of the State
of Delaware and the proceeds thereof (as defined in Section 9-102(a)(64) of the
Delaware UCC).
32. Under the Texas UCC, and with respect to the application of Delaware
law regarding perfection and priority of the security interests described in
paragraph 31 above, based upon the Delaware Opinion, upon the filing of the
Financing Statement with the Secretary of State of the State of Delaware, the
Trustee will have a first priority security interest in the Issuer's rights in
that portion of the Trust Estate that may be perfected by the filing of a UCC
financing statement with the Secretary of State of the State of Delaware and the
proceeds thereof (as defined in Section 9-102(a)(64) of the Delaware UCC).
33. Insofar as Article 9 of the Texas UCC is applicable (without regard to
conflict of laws principles), the provisions of the Indenture are sufficient to
constitute authorization by the Issuer of the filing of the Financing Statement
for purposes of Section 9.509 of the Texas UCC.
34. Under Section 9.102(70) a "registered organization" is an organization
organized solely under the law of a single State or the United States and as to
which the State or the United States must maintain a public record showing the
organization to have been organized. Under Section 9.307(e) of the Texas UCC, a
registered organization is located in its jurisdiction of organization. The
Issuer is a limited liability company organized under the laws of the State of
Delaware and, therefore, under Section 9.307 of the Texas UCC the Issuer is a
registered organization located in the State of Delaware.
35. The rights and interests of Reliant under the Financing Order are not
subject to the lien and operation of the Mortgage (as defined in such opinion).
As a result, Reliant can sell its rights and interests under the Financing Order
to the Issuer without any limitations, restrictions or requirements imposed by
the Mortgage and the transition property will not be subject to the lien of the
Mortgage in the hands of the Issuer.
36. The Financing Order has been duly authorized and issued by the Texas
Commission in accordance with all applicable laws, rules and regulations; the
Financing Order and process by which it was issued comply with all applicable
laws, rules and regulations, including the Texas Electric Choice Plan; and, the
Financing Order, as interpreted by the Texas Commission's September 18 Order (as
defined in such opinion), is in full force and effect. The Financing Order and
the Texas Commission's actions on September 17, 2001, as reflected in the
September 18 Order, are final and nonappealable.
37. The Texas Electric Choice Plan was duly enacted by the Legislature of
the State of Texas in accordance with all applicable laws and is in full force
and effect. The validity of the Texas Electric Choice Plan (insofar as it
relates to the transactions contemplated in the Basic Documents) is not the
subject of any pending appeal or litigation. In June 2001, the Supreme Court of
Texas in Power Choice, Inc. v. Public Utility Commission of Texas, Case No.
00-0821 (reh denied) unanimously upheld the constitutionality of the provisions
of the Texas Electric Choice Plan relevant to the Transaction. Therefore, it is
our opinion that the provisions of the Texas Electric Choice Plan relevant to
the Transaction are constitutional under the Texas
6
Constitution. There has been no challenge to the constitutionality of the Texas
Electric Choice Plan under the United States Constitution.
38. The Financing Order authorizes the issuance of the Bonds, the transfer
of the Transition Property to the Issuer, the imposition of the Transition
Charges and the periodic adjustments of the Transition Charges, and the sections
of the Financing Order authorizing the foregoing are irrevocable.
39. Under the Texas Electric Choice Plan neither the State, the Texas
Commission nor any other Texas governmental entity has the authority, directly
or indirectly, legally or equitably to take or permit any action that impairs
the value of transition property, or, except for periodic adjustments required
to be made pursuant to the true-up mechanism required by Section 39.307 of the
Texas Electric Choice Plan and specified in the Financing Order, reduce, alter,
or impair the Transition Charges until the principal, interest and premium and
any other charges incurred and contracts to be performed in connection with the
Bonds have been paid and performed in full.
40. The Transition Property conveyed to the Issuer in the Sale Agreement
and the Xxxx of Sale, including the irrevocable right to impose, collect and
receive Transition Charges and the revenues and collections from the Transition
Charges, is "transition property" within the meaning of Sections 39.302(8) and
39.304 of the Texas Electric Choice Plan.
41. The Bonds are "transition bonds" within the meaning of Section
39.302(6) of the Texas Electric Choice Plan and the Bonds are entitled to the
protections provided under the Texas Electric Choice Plan.
42. There is no judicial, statutory or constitutional authority in the
State of Texas for a voter initiative or referendum for the purpose of amending
or repealing the Texas Electric Choice Plan.
43. Under the Texas Electric Choice Plan the provisions of that statute
are severable, such that if any provision of the Texas Electric Choice Plan or
its application to any person or circumstance is held invalid by any court of
competent jurisdiction, the invalidity will not affect any other provision or
the applications of the statute which can be given effect without the invalid
provision or application.
44. Upon issuance of the Bonds, the Pledge will give rise to a contractual
obligation for purposes of the Contract Clauses (as defined in such opinion).
45. Any challenge to the constitutionality of the provisions of the PURA
relevant to securitization under the United States Constitution would be
rejected.
46. The Indenture constitutes a legal, valid and binding agreement,
enforceable under Texas law against the Trustee and the Securities Intermediary
in accordance with its terms, subject to bankruptcy, receivership, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors' or
secured parties' rights generally from time to time in effect and to general
principles of equity (including concepts of materiality, reasonableness, good
faith and fair dealing), regardless of whether considered in a proceeding in
equity or at law. Certain
7
of the remedial provisions of the Indenture may not be enforceable under
applicable laws or judicial decisions, but in our opinion such laws or judicial
decisions would not substantially interfere with the practical realization of
the principal benefits expressed in the Indenture, except for the economic
consequences of any procedural delay that may result from such laws or
decisions.
In addition to the opinions listed above, such counsel shall also state the
following:
We have participated in conferences with officers and other representatives
of the Issuer and Reliant, representatives of the independent public accountants
of the Issuer and Reliant, and representatives of the Underwriters, at which
conferences the contents of the Registration Statement and the Final Prospectus
and related matters were discussed. Although we have not undertaken to determine
independently, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Final Prospectus or any of the documents incorporated by
reference in the Registration Statement and the Final Prospectus (except to the
extent set forth in paragraphs 15 and 16 above), we advise you that, on the
basis of the foregoing, no facts have come to our attention that lead us to
believe that the Registration Statement (except for (A) the operating statistics
and financial statements contained or incorporated by reference therein
(including the auditors' reports on the financial statements and the notes to
the financial statements), (B) the other financial and statistical information
contained or incorporated by reference therein, and (C) the exhibits thereto, as
to which we have not been asked to comment), as of the time such Registration
Statement 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 not misleading, or that the Final Prospectus, as
amended, supplemented or modified by the filing of a document incorporated by
reference therein if so amended, supplemented or modified (except for (A) the
operating statistics and financial statements contained or incorporated by
reference therein (including the auditors' reports on the financial statements
and the notes to the financial statements) and (B) the other financial and
statistical information contained or incorporated by reference therein), as of
the date of the Final Prospectus contained, or as of the date of such opinion
contains, any untrue statement of a material fact or omitted, or as of the date
of such opinion omits, to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
8
EXHIBIT C
Opinion of Xxxxxxx, Xxxxxx and Finger, P.A., Special Delaware Counsel to the
----------------------------------------------------------------------------
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 Amended and Restated Limited Liability Company Agreement of the
Issuer (the "Issuer LLC Agreement") constitutes a legal, valid and binding
agreement of the Member (as defined in such opinion), and is enforceable against
the Member, in accordance with its terms.
3. If properly presented to a Delaware court, a Delaware court applying
Delaware law, would conclude that (a) in order for a Person (as defined in such
opinion) to file a voluntary bankruptcy petition on behalf of the Issuer, the
prior unanimous consent of the Managers (as defined in such opinion), including
each of the Independent Managers (as defined in such opinion), as provided for
in Section 4.04(b) of the Issuer LLC Agreement, is required and (b) such
provision, contained in Section 4.04(b) of the Issuer LLC Agreement, that
requires the prior unanimous consent of the Managers, including each of the
Independent Managers, in order for a Person to file a voluntary bankruptcy
petition on behalf of the Issuer, constitutes a legal, valid and binding
agreement of the Member, and is enforceable against the Member, in accordance
with its terms.
4. Under the Delaware Limited Liability Company Act (6 Del.C. (S) 18-101,
------
et seq.) (the "LLC Act") and the Issuer LLC Agreement, the Bankruptcy (as
-- ---
defined in such opinion) or dissolution of the Member will not, by itself, cause
the Issuer to be dissolved or its affairs to be wound up.
5. While under the LLC Act, on application to a court of competent
jurisdiction, a judgment creditor of the Member may be able to charge the
Member's share of any profits and losses of the Issuer and the Member's right to
receive distributions of the Issuer's assets (the "Member's Interest"), and the
court may appoint a receiver of the share of the distributions due or to become
due to the Member in respect of the Issuer, the receiver shall have only the
rights of an assignee of the Member's Interest. Under the LLC Act, no creditor
of the Member shall have any right to obtain possession of, or otherwise
exercise legal or equitable remedies with respect to, the property of the
Issuer. Thus, under the LLC Act, a judgment creditor of the Member may not
satisfy its claims against the Member by asserting a claim against the assets of
the Issuer.
6. Under the LLC Act (a) the Issuer is a separate legal entity, and (b)
the existence of the Issuer as a separate legal entity shall continue until the
cancellation of the Issuer's Certificate of Formation.
7. The Financing Statement (as defined in such opinion) is in an
appropriate form for filing in the State of Delaware under Section 9-502(a) and
9-516 of the Delaware UCC (as hereinafter defined).
8. Insofar as Article 9 of the Uniform Commercial Code as in effect in
the State of Delaware on the date hereof (the "Delaware UCC") is applicable
(without regard to conflict of laws principles), upon the filing of the
Financing Statement with the Secretary of State of the State of Delaware, the
Trustee will have a perfected security interest in the Issuer's rights in that
portion of the Trust Estate that may be perfected by the filing of a UCC
financing statement with the Secretary of State of the State of Delaware (the
"Filing Collateral") and the proceeds thereof (as defined in Section
9-102(a)(64) of the Delaware UCC), and such security interest will be prior to
any other security interest granted by the Issuer that is perfected solely by
the filing of financing statements under the Delaware UCC. Insofar as Article 9
of the Delaware UCC is applicable (without regard to conflict of laws
principles), the Secretary of State of the State of Delaware is the appropriate
place to file a financing statement to perfect a security interest except for
as-extracted collateral or timber to be cut (as described in Section
9-501(a)(1)(A) of the Delaware UCC) or fixture filings where the collateral is
goods that are or are to become fixtures (as described in Section 9-501(a)(1)(B)
of the Delaware UCC).
9. The Search Report (as defined in such opinion) sets forth the proper
filing office and the proper debtor necessary to identify those Persons (as
defined in such opinion) who under the Delaware UCC have on file financing
statements against the Issuer covering the Filing Collateral as of the Effective
Time (as defined in such opinion). The Search Report identifies no secured party
who has filed with the Secretary of State of the State of Delaware a financing
statement naming the Issuer as debtor and describing the Filing Collateral prior
to the Effective Time.
10. Insofar as Article 9 of the Delaware UCC is applicable (without regard
to conflict of laws principles), the provisions of the Indenture are sufficient
to constitute authorization by the Issuer of the filing of the Financing
Statement for purposes of Section 9-509 of the Delaware UCC.
11. Insofar as Article 9 of the Delaware UCC is applicable (without regard
to conflict of laws principles), for purposes of the Delaware UCC, the Issuer is
a "registered organization" (as defined in Section 9-102(a)(70) of the Delaware
UCC).
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