Exhibit 1.1
RELIANT ENERGY, INC.
$750,000,000
6.75% SENIOR SECURED NOTES DUE 2014
UNDERWRITING AGREEMENT
December 14, 2004
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.,
As representatives (the "Representatives") of the several Underwriters
named in Schedule I hereto,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇ & Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reliant Energy, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
$750,000,000 principal amount of its 6.75% Senior Secured Notes due 2014 (the
"Securities"). The Securities will be unconditionally guaranteed as to the
payment of principal, premium and interest (including special interest), if any
(the "Guarantees"), by the entities listed on Schedule II hereto (collectively,
the "Guarantors"). The Securities will be issued under a base indenture to be
dated as of December 22, 2004 (the "Base Indenture") among the Company, the
Guarantors and Wilmington Trust Company, as Trustee (the "Trustee"), as
supplemented by a first supplemental indenture. The Base Indenture, as
supplemented by the first supplemental indenture, is referred to herein as the
"Indentures."
The Company, the Guarantors and the Underwriters, in accordance with the
requirements of Rule 2720 ("Rule 2720") of the National Association of
Securities Dealers, Inc. (the "NASD") and subject to the terms and conditions
stated herein, also hereby confirm the engagement of the services of ▇.▇. ▇▇▇▇ &
Company (the "Independent Underwriter") as a "qualified independent underwriter"
within the meaning of Section (b)(15) of Rule 2720 in connection with the
offering and sale of the Securities.
Capitalized terms used but not defined herein shall have the meanings
assigned to them in the "Description of Notes" section of the Final Prospectus
(as defined below).
The Company and the Guarantors have agreed to secure the Securities and
the Guarantees "equally and ratably" (as defined in the "Description of Notes"
section of the Final Prospectus) with the Credit Agreement Debt, the Existing
Notes, the ▇▇▇▇▇▇ Note Parent Guarantees, all future Parity Secured Debt and
guarantees thereof and all other Parity Secured Obligations by security
interests
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(subject to Permitted Prior Liens) granted to the Collateral Trustee
for the benefit of the holders of the Secured Obligations, in all of the Shared
Collateral.
1. The Company, with respect to itself and the Guarantors, and each of
the Guarantors, solely with respect to itself, represent and warrant to, and
agree with, each of the Underwriters and the Independent Underwriter that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File
No. 333-107296) under the Securities Act of 1933, as amended (the "Act"),
which has become effective, for the registration under the Act of the
Securities. The Company meets the requirements for use of Form S-3 under
the Act. No stop order suspending the effectiveness of the registration
statement has been issued under the Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part
of the Commission for additional information has been complied with. The
Company proposes to file with the Commission pursuant to Rule 424 under
the Act a supplement or supplements to the form of prospectus included in
such registration statement relating to the Securities and the plan of
distribution thereof. Such registration statement, including the exhibits
thereto, as amended at the date of this Agreement, is hereinafter called
the "Registration Statement"; such prospectus in the form in which it
appears in the Registration Statement is hereinafter called the "Base
Prospectus"; and such supplemented form of prospectus, in the form in
which it shall first be filed with the Commission pursuant to Rule 424
(including the Base Prospectus as so supplemented), is hereinafter called
the "Final Prospectus." Any preliminary form of the Final Prospectus,
which has heretofore been filed pursuant to Rule 424, is hereinafter
called the "Preliminary Prospectus." Any reference herein to the
Registration Statement, the Base Prospectus, any Preliminary Prospectus or
the Final Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which
were filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the date of this Agreement, or the issue
date of the Base Prospectus, any Preliminary 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 Base Prospectus, any Preliminary Prospectus or the Final
Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the date of this Agreement, or the
issue date of the Base Prospectus, any Preliminary Prospectus or the Final
Prospectus, as the case may be, deemed to be incorporated therein by
reference; each Preliminary Prospectus and the prospectuses filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the Act, complied
when so filed in all material respects with the Act and the rules
thereunder;
(b) As of the date hereof, when the Final Prospectus is first filed
or transmitted for filing pursuant to Rule 424 under the Act, when, prior
to the Time of Delivery (as hereinafter defined), any amendment to the
Registration Statement becomes effective (including the filing of any
document incorporated by reference in the Registration Statement), when
any supplement to the Final Prospectus is filed with the Commission and at
the Time of Delivery, (i) the Registration Statement, as amended as of any
such time, and, in the case of Securities issued pursuant to Indentures,
such Indentures, will comply in all material respects with the applicable
requirements of the Act and the Exchange Act and the respective rules
thereunder and (ii) neither the Registration Statement, as amended as of
any such time, nor the Final
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Prospectus, as amended or supplemented as of any such time, will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; provided, however, that the Company makes no
representations and warranties as to (i) that part of the Registration
Statement that constitutes the trustee's Statement of Eligibility and
Qualification (the "Form T-1s") under the Trust Indenture Act, as amended
(the "Trust Indenture Act"), or (ii) the information contained in or
omitted from the Registration Statement, the Final Prospectus or any
amendment thereof or supplement thereto in reliance upon and in conformity
with information furnished in writing to the Company by an Underwriter
through the Representatives or by the Independent Underwriter expressly
for use in the Registration Statement or the Final Prospectus;
(c) Each document incorporated or deemed to be incorporated by
reference in the Registration Statement and the Final Prospectus, when
they became effective or at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with the
Act or the Exchange Act, as applicable, and, when read together with the
other information in the Final Prospectus, at the time the Registration
Statement became effective, at the time the Final Prospectus was issued
and at the Time of Delivery did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply
to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by an Underwriter
through the Representatives or by the Independent Underwriter expressly
for use therein;
(d) Neither the Company nor any of its subsidiaries, taken as a
whole, has sustained since the date of the latest audited financial
statements included or incorporated by reference in the Final Prospectus
any material loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Final Prospectus; and, since the
respective dates as of which information is given in the Registration
Statement and the Preliminary Prospectus, otherwise than as described or
contemplated in the Final Prospectus, there has not been any change in the
capital stock or long-term debt of the Company or any of its subsidiaries
or any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries, taken as a whole;
(e) The Company and its subsidiaries have good and indefeasible
title in fee simple to all real property and good and indefeasible title
to all personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described in the Final
Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made of such property by the Company and
its subsidiaries; and any real property and buildings held under lease by
the Company and its subsidiaries are held by them under enforceable leases
with such exceptions as are not material and do not interfere with the use
made of such property and buildings by the Company and its subsidiaries;
(f) Each of the Company and the Guarantors has been duly
incorporated or formed, as the case may be, and is validly existing as a
corporation, limited liability company or limited partnership, as the case
may be, in good standing (or equivalent thereof) under the laws of its
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state of incorporation or formation, as the case may be, with power and
authority (corporate or other) to own its properties and conduct its
business as described in the Final Prospectus, and has been duly qualified
as a foreign corporation, limited liability company or limited
partnership, as the case may be, for the transaction of business and is in
good standing (or equivalent thereof) under the laws of each other
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, or is subject to no material
liability or disability by reason of the failure to be so qualified in any
such jurisdiction; and each subsidiary of the Company that is not a
Guarantor has been duly incorporated or formed, as the case may be, and is
validly existing as a corporation or other entity, as the case may be, in
good standing (or equivalent thereof) under the laws of its jurisdiction
of incorporation or formation, as the case may be;
(g) The Company has an authorized capitalization as set forth in the
Final Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully
paid and non-assessable; and all of the issued shares of capital stock of
each subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and (except (i) as otherwise set
forth in the Final Prospectus and (ii) as pledged to secure indebtedness
of the Company and/or its subsidiaries pursuant to credit facilities,
indentures and other instruments evidencing indebtedness existing on the
date hereof) are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims;
(h) This Agreement has been duly authorized, executed and delivered
by the Company;
(i) (i) The Securities have been duly authorized by the Company and,
when issued and delivered pursuant to the Indentures, will have been duly
executed, issued and delivered and, when duly authenticated by the Trustee
and assuming payment therefor by the Underwriters in accordance with this
Agreement, will constitute valid and legally binding obligations of the
Company entitled to the benefits provided by the Indentures under which
they are to be issued, and enforceable in accordance with their terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors'
rights and to general equity principles;
(j) The Indentures have been duly authorized and, when executed and
delivered by the Company, the Guarantors and the Trustee, will constitute
valid and legally binding instruments, enforceable in accordance with
their terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Securities and the Indentures will conform in all material respects to the
descriptions thereof in the Final Prospectus and will be in substantially
the form previously delivered to you;
(k) The Guarantees have been duly authorized by the Guarantors and,
when issued and delivered pursuant to this Agreement and the Indentures,
will have been duly executed, issued and delivered and will constitute the
valid and legally binding obligations of the Guarantors entitled to the
benefits provided by the Indentures under which they are to be issued, and
enforceable in accordance with their terms, subject, as to enforcement, to
bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Guarantees will conform in all material respects to the descriptions
thereof in the Final Prospectus and will be in substantially the form
previously delivered to you;
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(l) The Security Documents (as defined in the Credit Agreement) have
each been duly authorized by each of the Company and the Guarantors and
constitute valid and legally binding obligations of the Company and such
Guarantors, respectively, enforceable against the Company and the
Guarantors in accordance with their respective terms, subject, as to
enforcement and the Liens created thereby, to bankruptcy, insolvency,
fraudulent transfer, fraudulent conveyance, reorganization and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles; and the Security Documents will conform in all
material respects to the descriptions thereof in the Final Prospectus and
will be in substantially the form previously delivered to you;
(m) The mortgages or deeds of trust as listed on Schedule III
attached hereto (the "Mortgages") have each been duly authorized by the
Guarantors party thereto and such Mortgages constitute valid and legally
binding obligations of such Guarantors, respectively, enforceable against
such Guarantors in accordance with their respective terms, subject, as to
enforcement and the Liens created thereby, to bankruptcy, insolvency,
fraudulent transfer, fraudulent conveyance, reorganization and other laws
of general applicability relating to or affecting creditors' rights or
providing for the relief of debtors and to general equity principles;
(n) The Credit Agreement has been duly authorized by the Company and
its subsidiaries party thereto and, when the Credit Agreement is executed
and delivered by the Company and such subsidiaries, the Credit Agreement
will constitute valid and legally binding obligations of the Company and
such subsidiaries, respectively, enforceable against the Company and such
subsidiaries in accordance with their respective terms, subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer, fraudulent
conveyance, reorganization, and other laws of general applicability
relating to or affecting creditors' rights or providing for the relief of
debtors and to general equity principals; and the Credit Agreement will
conform in all material respects to the description thereof in the Final
Prospectus and will be in substantially in the form previously delivered
to you;
(o) The issue and sale of the Securities and the Guarantees and the
compliance by the Company and the Guarantors with all of the provisions of
the Securities, the Guarantees, the Indentures, the Security Documents,
the Credit Agreement and this Agreement and the consummation of the
transactions herein and therein contemplated will not (i) conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject; (ii) result in any
violation of the provisions of the Certificate of Incorporation,
Certificate of Formation, Certificate of Limited Partnership, Limited
Liability Company Agreement, Partnership Agreement, By-laws or other
organizational documents, as applicable, of the Company or any of its
subsidiaries; (iii) result in any violation of any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties; or (iv) result in the imposition of a Lien, other than a
Permitted Lien, on any assets of the Company or any of its subsidiaries or
result in the acceleration of any indebtedness of the Company or any of
its subsidiaries; except with respect to clause (i) and clause (iii) of
this paragraph, for such conflicts, breaches, defaults or violations as
would not materially impair the ability of the Company or the Guarantors
to perform their respective obligations hereunder or have any adverse
effect upon the consummation of the transactions contemplated hereby;
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(p) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Securities and the Guarantees, the
grant, perfection or enforcement of security interests in the Collateral
pursuant to the provisions of the Security Documents or the performance by
the Company and the Guarantors of their obligations pursuant to this
Agreement, the Indentures, the Credit Agreement or the Security Documents,
except for (i) the registration under the Act of the Securities, (ii) such
as have been obtained under the Trust Indenture Act, (iii) the filings
required to perfect the Collateral Trustee's security interests granted
pursuant to the Security Documents and (iv) such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Securities and the Guarantees by the Underwriters;
(q) (i) Neither the Company nor any of its material subsidiaries is
in violation of its Certificate of Incorporation, Certificate of
Formation, Certificate of Limited Partnership, Limited Liability Company
Agreement, Partnership Agreement, By-laws or other organizational
documents and (ii) neither the Company nor any of its subsidiaries is in
default in the performance or observance of any material obligation,
covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound, except with
respect to clause (ii) of this paragraph, as disclosed in the Final
Prospectus;
(r) The statements set forth in the Final Prospectus under the
caption "Description of Notes," insofar as they purport to constitute a
summary of the terms of the Securities and the Guarantees and the Security
Documents, under the caption "United States Federal Income Tax
Considerations for Non-U.S. Holders," insofar as they address the federal
income tax consequences to non-U.S. holders, under the captions
"Description of Certain Other Financial Obligations" and "Underwriting"
(other than statements or omissions made in reliance upon and in
conformity with the information furnished in writing to the Company by an
Underwriter through the Representatives expressly for use in the
"Underwriting" section only), insofar as they purport to describe the
documents and provisions of law referred to therein, in each case, are
accurate and complete in all material respects;
(s) Other than as set forth in the Final Prospectus, there are no
legal or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property of the Company or any
of its subsidiaries is the subject which could reasonably be expected,
individually or in the aggregate, to have a material adverse effect on the
current or future financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole; and, to
the best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or overtly threatened by others;
(t) Neither the Company, nor any of its subsidiaries, is, or, after
giving effect to the offering and sale of the Securities and the
application of the proceeds therefrom as described under "Use of Proceeds"
in the Final Prospectus, will be required to register as an "investment
company," as such term is defined in the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder (the "Investment
Company Act");
(u) The Company and the Guarantors (i) make and keep accurate books
and records and (ii) maintain internal accounting controls which provide
reasonable assurance that (A) transactions are executed in accordance with
management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain
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accountability for its assets, (C) access to its assets is permitted only
in accordance with management's authorization and (D) the reported
accountability for its assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
difference;
(v) Neither the Company nor any of its subsidiaries is, or after
giving effect to the offering and sale of the Securities, will be, subject
to regulation under the Public Utility Holding Company Act of 1935, as
amended ("PUHCA") and the rules and regulations thereunder;
(w) Except as disclosed in the Final Prospectus, the Company and its
subsidiaires are in compliance with all applicable federal, state and
local laws and regulations relating to provision of electricity and energy
services to retail and wholesale customers in the United States ("Energy
Laws") and have received, and are in compliance with, all permits,
licenses or other approvals required under applicable Energy Laws to
conduct their business, except where such non-compliance could not
reasonably be expected to have a material adverse effect on the current or
future financial position, stockholders' equity or results of operations
of the Company and its subsidiaries, taken as a whole; and except as
disclosed in the Final Prospectus, such permits, licenses or other
approvals are not subject to any challenge, investigation or proceeding;
(x) As of the Time of Delivery, the Company and the Guarantors will
own the Collateral free and clear of all Liens (other than Permitted
Liens), and no Financing Statements (as defined below) in respect of
Collateral of the Company or any Guarantor will be on file in favor of any
person other than those in respect of Permitted Liens;
(y) The Collateral Trust Agreement, dated July 1, 2003, grants and
creates a collateral trust (the "Collateral Trust") for the benefit of the
holders of the Securities and the other present and future holders of
Secured Obligations. The Amended and Restated Security Agreement, dated
July 1, 2003, among the Collateral Trustee and the grantors parties
thereto, as amended as of December 22, 2004 (the "Security Agreement") is
effective to grant and create, (i) in favor of the Collateral Trustee, for
the benefit of each present and future holder of Obligations under the
Credit Agreement, a valid and enforceable security interest in the
Separate Collateral described therein and proceeds and products thereof;
and such security interests are perfected security interests (subject to
Permitted Prior Liens), and (ii) in favor of the Collateral Trustee, for
the benefit of the holders of the Securities and each other present and
future holder of Secured Obligations (collectively, the "Secured
Parties"), a valid and enforceable security interest in the Shared
Collateral described therein and proceeds and products thereof; and such
security interests are perfected security interests (subject to Permitted
Prior Liens). Upon delivery of the Notice of Additional Secured Debt
referred to in Section 8(k)(i), the Securities will constitute Secured
Obligations under the Collateral Trust Agreement and the Security
Agreement. When delivered at the Time of Delivery, a supplement to each
Mortgage (other than the Mortgages filed in Florida) will be delivered,
duly acknowledged and, if required for recordation, attested and otherwise
will be in recordable form, and when such supplement is filed for record
and recorded in the filing office identified therein, the security
interest of the Collateral Trustee in the real property and fixtures
described in the Mortgage subject to such supplement will be duly
perfected. Each of the Company and Guarantors is a "registered
organization" (as defined in Article 9 of the Uniform Commercial Code as
in effect in the state of New York and the states in which the Company and
each of the Guarantors is organized) under the law of the state in which
it is identified in the Indentures, as being organized, and at the Time of
Delivery all security interests granted
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under the Security Documents in Collateral consisting of personal property
or fixtures have been duly perfected to the extent such security interests
may be perfected by filing pursuant to the filing of the financing
statement and assignments previously filed in connection with the
execution of the Collateral Trust Agreement. At the Time of Delivery, (i)
all certificated securities, promissory notes and other instruments then
evidencing or representing any Separate Collateral have been delivered to
the Collateral Trustee in pledge for the benefit of the holders of
Obligations under the Credit Facilities as security, duly endorsed by an
effective endorsement and (ii) all certificated securities, promissory
notes and other instruments then evidencing or representing any Shared
Collateral will have been delivered to the Collateral Trustee in pledge
for the benefit of the holders of Secured Debt as security for all of the
Secured Obligations, duly endorsed by an effective endorsement unless, in
each case, the same are not required to be delivered pursuant to Section 7
of the Security Agreement;
(z) As of the Time of Delivery, the representations and warranties
contained in the Security Documents will be true and correct in all
material respects as if made on and as of the Time of Delivery, except for
representations and warranties expressly stated to relate to a specific
earlier date, in which case such representations and warranties shall have
been true and correct in all material respects as of such earlier date;
(aa) Except as disclosed in the Final Prospectus, all existing
intercompany Indebtedness of the Company or any Guarantor that is the
obligor on such Indebtedness has been subordinated to the Securities, in
the case of the Company, or the guarantee, in the case of a Guarantor, in
the manner set forth in the Credit Agreement; and
(bb) Deloitte & Touche LLP, who has certified certain financial
statements of the Company and its subsidiaries, are an independent public
registered accounting firm as required by the Act and the rules and
regulations of the Commission thereunder.
2. Subject to the terms and conditions herein set forth, the Company and
the Guarantors agree to issue and sell to each of the Underwriters, and each of
the Underwriters agrees, severally and not jointly, to purchase from the Company
and the Guarantors, at a purchase price of 97.75% of the principal amount of
Securities, plus accrued interest, if any, from December 22, 2004 to the Time of
Delivery hereunder, the principal amount of Securities (and the Guarantees
thereof) set forth opposite the name of such Underwriter in Schedule I hereto.
3. Upon the authorization by the Representatives of the release of the
Securities and the Guarantees, the several Underwriters propose to offer the
Securities and the Guarantees for sale upon the terms and conditions set forth
in this Agreement and the Final Prospectus as amended or supplemented.
4. (a) The Company hereby confirms its engagement of the services of the
Independent Underwriter as, and the Independent Underwriter hereby confirms its
agreement with the Company to render services as, a "qualified independent
underwriter" within the meaning of Section (b)(15) of Rule 2720 with respect to
the offering and sale of the Securities.
(b) The Independent Underwriter hereby represents and warrants to,
and agrees with, the Company, the Guarantors and the Underwriters that
with respect to the offering and sale of the Securities as described in
the Final Prospectus:
(i) The Independent Underwriter constitutes a "qualified
independent underwriter" within the meaning of Section (b)(15) of
Rule 2720;
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(ii) The Independent Underwriter has participated in the
preparation of the Final Prospectus and has exercised the usual
standards of "due diligence" in respect thereto;
(iii) The Independent Underwriter has undertaken the legal
responsibilities and liabilities of an underwriter under the Act
specifically including those inherent in Section 11 thereof;
(iv) Based upon (A) a review of the Company, including an
examination of the Registration Statement and the Final Prospectus,
information regarding the earnings, assets, capital structure and
growth rate of the Company and other pertinent financial and
statistical data, (B) inquiries of and conferences with the
management of the Company and its counsel and independent public
accountants regarding the business and operations of the Company,
(C) consideration of the prospects for the industry in which the
Company competes, estimates of the business potential of the
Company, assessments of its management, the general condition of the
securities markets, market prices of the capital stock and debt
securities of, and financial and operating data concerning,
companies believed by the Independent Underwriter to be comparable
to the Company with debt securities of maturity and seniority
similar to the Securities and the demand for securities of
comparable companies similar to the Securities, and (D) such other
studies, analyses and investigations as the Independent Underwriter
has deemed appropriate, and assuming that the offering and sale of
the Securities is made as contemplated herein and in the Preliminary
Prospectus and the Final Prospectus, the Independent Underwriter
recommends, as of the date of the execution and delivery of this
Agreement, that the yield on the Securities be not less than 6.75%
(corresponding to an initial public offering price of 100.0% of the
Securities), which minimum yield should in no way be considered or
relied upon as an indication of the value of the Securities; and
(v) Subject to the provisions of Section 8 hereof, the
Independent Underwriter will furnish to the Underwriters at the Time
of Delivery a letter, dated the Time of Delivery, in form and
substance satisfactory to the Underwriters, to the effect of clauses
(i) through (iv) above.
(c) The Independent Underwriter hereby agrees with the Company, the
Guarantors and the Underwriters that, as part of its services hereunder,
in the event of any amendment or supplement to the Final Prospectus, the
Independent Underwriter will render services as a "qualified independent
underwriter" within the meaning of Section (b)(15) of Rule 2720 with
respect to the offering and sale of the Securities as described in the
Final Prospectus as so amended or supplemented that are substantially the
same as those services being rendered with respect to the offering and
sale of the Securities as described in the Final Prospectus (including
those described in subsection (b) above).
(d) The Company, the Guarantors the Underwriters and the Independent
Underwriter agree to comply in all material respects with all of the
requirements of Rule 2720 applicable to them in connection with the
offering and sale of the Securities. The Company and the Guarantors agree
to cooperate with the Underwriters and the Independent Underwriter to
enable the Underwriters to comply with Rule 2720 and the Independent
Underwriter to perform the services contemplated by this Agreement.
(e) As compensation for the services of the Independent Underwriter
hereunder, the Company agrees to pay the Independent Underwriter $22,500
at the Time of Delivery. In addition, the Company agrees promptly to
reimburse the Independent Underwriter for all
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out-of-pocket expenses, including fees and disbursements of counsel,
reasonably incurred in connection with this Agreement and the services to
be rendered hereunder.
5. (a) The Securities and the Guarantees to be purchased by each
Underwriter hereunder, in definitive form, to the extent practicable, and in
such authorized denominations and registered in such names as the
Representatives may request upon at least forty-eight hours' prior notice to the
Company, shall be delivered by or on behalf of the Company to the
Representatives, through the facilities of The Depository Trust Company ("DTC"),
for the account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified by the Company to the Representatives
at least forty-eight hours in advance. The Company will cause the certificates
representing the Securities to be made available for checking prior to the Time
of Delivery (as defined below). The time and date of such delivery and payment
shall be 9:30 a.m., New York City time, on December 22, 2004 or such other time
and date as the Representatives and the Company may agree upon in writing. Such
time and date are herein called the "Time of Delivery."
(b) The documents to be delivered at the Time of Delivery by or on
behalf of the parties hereto pursuant to Section 8 hereof, including the
cross-receipt for the Securities, the Guarantees and any additional
documents requested by the Underwriters or the Independent Underwriter, as
the case may be, pursuant to Section 8(m) hereof, will be delivered at
such time and date at the offices of Mayer, Brown, ▇▇▇▇ & Maw LLP, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Closing Location"), and the
Securities and the Guarantees will be delivered at the office of DTC or
its designated custodian, all at the Time of Delivery. A meeting will be
held at the Closing Location at 5:00 p.m., New York City time, on the New
York Business Day next preceding the Time of Delivery, at which meeting
the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For
the purposes of this Section 5, "New York Business Day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
6. Each of the Company and the Guarantors agrees with each of the
Underwriters and with the Independent Underwriter:
(a) To prepare the Final Prospectus as amended or supplemented in
relation to the applicable Securities in a form approved by the
Representatives and to file the Final Prospectus pursuant to Rule 424(b)
under the Act not later than the Commission's close of business on the
second business day following the execution and delivery of this
Agreement; to make no further amendment or any supplement to the
Registration Statement or the Final Prospectus as amended or supplemented
after the date of this Agreement and prior to the Time of Delivery which
shall be disapproved by the Representatives promptly after reasonable
notice thereof, or, in the case of documents to be filed under the
Exchange Act, to furnish the Representatives with copies of any such
filing in a reasonable amount of time prior to such proposed filing, and
will use its reasonable best efforts to reflect in such document such
comments as the Representatives or its counsel may reasonably propose; to
advise the Representatives and the Independent Underwriter promptly after
it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Final Prospectus or any amended Final Prospectus has
been filed and to furnish the Representatives and the Independent
Underwriter with copies thereof; to advise the Representatives and the
Independent Underwriter, promptly after it
10
receives notice thereof, of (i) the issuance by the Commission of any stop
order or of any order preventing or suspending the use of the Final
Prospectus, (ii) the suspension of the qualification of the Securities and
the Guarantees for offering or sale in any jurisdiction, of the initiation
or threatening of any proceeding for any such purpose or (iii) any request
by the Commission for the amending or supplementing of the Registration
Statement or the Final Prospectus or for additional information; and, in
the event of the issuance of any stop order or of any order preventing or
suspending the use of the Final Prospectus or suspending any such
qualification, to promptly use its best efforts to obtain the withdrawal
of such order;
(b) Promptly to take such action as the Representatives may
reasonably request to qualify the Securities and the Guarantees for
offering and sale under the securities laws of such jurisdictions as the
Representatives may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as
long as may be necessary to complete the distribution of the Securities
and the Guarantees, provided that in connection therewith neither the
Company nor any of the Guarantors shall be required to qualify as a
foreign corporation or to file a general consent to service of process or
subject itself to taxation in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time to
time, to furnish the Underwriters and the Independent Underwriter with
written and electronic copies of the Final Prospectus as amended or
supplemented in New York City in such quantities as the Representatives
and the Independent Underwriter may reasonably request, and, if the
delivery of a prospectus is required at any time prior to the expiration
of nine months after the time of issue of the Final Prospectus in
connection with the offering or sale of the Securities and the Guarantees
and if at such time any event shall have occurred as a result of which the
Final Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were made when such Final Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary during such
same period to amend or supplement the Final Prospectus in order to comply
with the Act or the Exchange Act, to notify the Representatives and the
Independent Underwriter and upon the request of the Representatives and
the Independent Underwriter to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many written and electronic
copies as the Representatives may from time to time reasonably request of
an amended Final Prospectus or a supplement to the Final Prospectus which
will correct such statement or omission or effect such compliance; and in
case any Underwriter is required to deliver a prospectus in connection
with sales of any of the Securities and the Guarantees at any time nine
months or more after the time of issue of the Final Prospectus, upon
request of the Representatives but at the expense of such Underwriter, to
prepare and deliver to such Underwriter as many written and electronic
copies as the Representatives may request of an amended or supplemented
Final Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and
the rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158);
11
(e) During the period beginning from the date hereof and continuing
to and including the later of the Time of Delivery and such earlier time
as the Representatives may notify the Company, not to offer, sell,
contract to sell or otherwise dispose of, except as provided hereunder any
securities of the Company that are substantially similar to the Securities
and the Guarantees;
(f) If not otherwise available on the Commission's Electronic Data
Gathering, Analysis and Retrieval system ("▇▇▇▇▇"), to furnish to the
holders of the Securities, as and to the extent required under the
Indentures, as soon as practicable after the end of each fiscal year an
annual report (including a balance sheet and statements of income,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the date of
the Final Prospectus), to make available to its stockholders consolidated
summary financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(g) If not otherwise available on ▇▇▇▇▇, during a period of five
years from the date of the Final Prospectus, to furnish to the
Representatives copies of all reports or other communications (financial
or other) furnished to stockholders of the Company or any of the
Guarantors, and to deliver to the Representatives (i) as soon as
practicable after they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any securities
exchange on which the Securities, the Guarantees or any class of
securities of the Company or any of the Guarantors is listed; and (ii)
such additional information concerning the business and financial
condition of the Company and the Guarantors as the Representatives may
from time to time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its stockholders
generally or to the Commission); and
(h) To use the net proceeds received by it from the sale of the
Securities pursuant to this Agreement in the manner specified in the Final
Prospectus under the caption "Use of Proceeds."
7. Each of the Company and the Guarantors, jointly and severally,
covenants and agrees with the several Underwriters and the Independent
Underwriter that the Company and the Guarantors will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Securities and the
Guarantees under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, the Base
Prospectus, any Preliminary Prospectus and the Final Prospectus as amended or
supplemented and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters, the Independent Underwriter
and dealers; (ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, the Indentures, the Security Documents, the Blue
Sky Memoranda, closing documents (including any compilations thereof) and any
other documents in connection with the offering, purchase, sale and delivery of
the Securities and the Guarantees; (iii) all expenses in connection with the
qualification of the Securities and the Guarantees for offering and sale under
state securities laws as provided in Section 6(b) hereof, including the
reasonable fees and disbursements of counsel for the Underwriters in connection
with such qualification and in connection with the Blue Sky survey; (iv) all
expenses associated with the assignment, creation and the perfection of security
interests and associated documents, including, without limitation, the Security
Documents and all Financing Statements (as
12
defined below), including filing fees and the reasonable fees and disbursements
of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP incurred in connection therewith; (v) any fees charged
by securities rating services for rating the Securities; (vi) the cost of
preparing the Securities and the Guarantees; (vii) the fees and expenses of the
Trustee and any agent of the Trustee and the reasonable fees and disbursements
of counsel for the Trustee in connection with the Indentures and the Securities;
(viii) the fees and expenses of the Collateral Trustee and any agent of the
Collateral Trustee in connection with the Security Documents, the Financing
Statements and the Collateral; (ix) the fees and expenses of the Collateral
Trustee and the holders of Credit Agreement Obligations in connection with the
Security Documents, the Financing Statements and the Collateral; and (x) all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this Section. It
is understood, however, that, except as provided in this Section, and Sections
10 and 13 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, transfer taxes on resale of any of the
Securities by them, and any advertising expenses connected with any offers they
may make.
8. The respective obligations of the Underwriters and the Independent
Underwriter hereunder shall be subject, in the sole discretion of the
Representatives or the Independent Underwriter, as the case may be, to the
condition that all representations and warranties and other statements of the
Company and the Guarantors herein are, at and as of the Time of Delivery, true
and correct, the condition that the Company and the Guarantors shall have
performed all of their respective obligations hereunder theretofore to be
performed, the condition (in the case of the Underwriters that the Independent
Underwriter shall have furnished to the Underwriters the letter referred to in
clause (v) of Section 4(b) hereof and the following additional conditions:
(a) The Final Prospectus as amended or supplemented shall have been
filed with the Commission pursuant to Rule 424(b) within the applicable
time period prescribed for such filing by the rules and regulations under
the Act and in accordance with Section 6(a) hereof; no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been
complied with to the reasonable satisfaction of the Representatives or the
Independent Underwriter, as the case may be;
(b) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, shall have
furnished to the Representatives or the Independent Underwriter, as the
case may be, such opinion or opinions, dated the Time of Delivery, with
respect to certain matters as the Representatives or the Independent
Underwriter, as the case may be, may reasonably request, and such counsel
shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(c) Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the
Company and the Guarantors ("Skadden"), shall have furnished to the
Representatives or the Independent Underwriter, as the case may be, their
written opinion, dated the Time of Delivery, in form and substance
satisfactory to the Representatives or the Independent Underwriter, as the
case may be, substantially as set forth on Exhibit I hereto;
(d) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, general counsel for the Company, shall have
furnished to the Representatives or the Independent Underwriter, as the
case may be, his written opinion, dated the Time of Delivery, in form and
substance satisfactory to the Representatives or the Independent
Underwriter, as the case may be, substantially as set forth on Exhibit II
attached hereto;
13
(e) ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, L.L.P., special counsel for the Company
and its subsidiaries ("▇▇▇▇▇▇▇▇▇"), shall have furnished to the
Representatives or the Independent Underwriter, as the case may be, their
written opinion, dated the Time of Delivery, in form and substance
satisfactory to the Representatives or the Independent Underwriter, as the
case may be, substantially as set forth on Exhibit III attached hereto;
(f) On the date of the Final Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at the
Time of Delivery, Deloitte & Touche LLP shall have furnished to the
Representatives or the Independent Underwriter, as the case may be, a
letter or letters, dated the respective dates of delivery thereof, in form
and substance satisfactory to the Representatives or the Independent
Underwriter, as the case may be, to the effect set forth in Annex I
hereto;
(g) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Final Prospectus as amended
or supplemented any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Final
Prospectus as amended or supplemented, and (ii) since the respective dates
as of which information is given in the Final Prospectus as amended or
supplemented there shall not have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any change, or
any development involving a prospective change, in or affecting the
general affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, taken as a
whole, otherwise than as set forth or contemplated in the Final Prospectus
as amended or supplemented, the effect of which, in any such case
described in clause (i) or (ii), is in the judgment of the Representatives
so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Securities on the
terms and in the manner contemplated in the Final Prospectus as amended or
supplemented;
(h) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization," as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act,
and (ii) no such organization shall have publicly announced that it has
under surveillance or review, with possible negative implications, its
rating of any of the Company's debt securities;
(i) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange ("NYSE"); (ii) a
suspension or material limitation in trading in the Company's securities
on the NYSE; (iii) a general moratorium on commercial banking activities
declared by either Federal or New York State authorities or a material
disruption in commercial banking or securities settlement or clearance
services in the United States; (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the United
States of a national emergency or war or (v) the occurrence of any other
calamity or crisis or any change in financial, political or economic
conditions in the United States or elsewhere, if the effect of any such
event specified in clause (iv) or (v) in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Securities
14
on the terms and in the manner contemplated in the Final Prospectus as
amended or supplemented;
(j) The Company shall have complied with any request by the
Representatives or the Independent Underwriter, as the case may be, with
respect to the furnishing of the Final Prospectus in compliance with the
provisions of Section 6(c);
(k) The Collateral Trustee shall have received (with a copy for the
Underwriters and the Independent Underwriter) at the Time of Delivery:
(i) a Notice of Additional Secured Debt pursuant to the
Collateral Trust Agreement designating the Securities as Parity
Secured Obligations under the Collateral Trust Agreement, duly
executed by the Company;
(ii) appropriately completed copies, which have been duly
authorized for filing by the appropriate Person, of Uniform
Commercial Code Form UCC-3 amendments necessary to (a) reflect any
name changes or merger of the Company or any Guarantor and/or (b)
reflect the Collateral subject to the Collateral Trust Agreement, or
other similar instruments or documents to be filed under the UCC of
all jurisdictions as may be necessary or, in the reasonable opinion
of the Collateral Trustee and its counsel, desirable to perfect the
security interests of the Collateral Trustee pursuant to the
Security Documents;
(iii) appropriately completed copies, which have been duly
authorized for filing by the appropriate Person, of Uniform
Commercial Code Form UCC-3 termination statements, if any, necessary
to release all Liens (other than Permitted Liens) of any Person in
any Collateral described in the Security Documents previously
granted by any Person, except financing statements filed to perfect
security interests securing Secured Obligations or assigned to the
Collateral Trustee or filed to perfect security interests securing
Credit Agreement Debt and obligations in respect thereof;
(iv) copies of all lien searches provided to Bank of America,
N.A. as administrative agent in connection with the closing of the
Credit Agreement, together with copies of all Financing Statements
identified by such searches which name the Company or any Guarantor
(under its present name and any relevant previous names) as the
debtor (none of which shall cover any Collateral described in the
Security Documents, other than such Financing Statements that
evidence Permitted Liens);
(v) such releases, reconveyances, satisfactions or other
instruments as it may request to confirm the release, satisfaction
and discharge in full of all mortgages and deeds of trust at any
time delivered by the Company or any Guarantor, except those
assigned to the Collateral Trustee and those evidencing the Credit
Agreement Debt and obligations in respect thereof, duly executed,
delivered and acknowledged in recordable form by the grantee named
therein or its of record successors or assigns;
(vi) confirmation reasonably satisfactory to the Underwriters
that the issuers of the existing title insurance policies have
accepted the supplements to the Mortgages for recording and will
cause the supplements to the Mortgages to be duly filed and recorded
within ten days following the Time of Delivery and have agreed to
issue to the Collateral Trustee for the benefit of the Secured
Parties, an endorsement to the existing policies of title insurance
in form and substance reasonably satisfactory to the Underwriters,
insuring each Mortgage to be a valid, enforceable and perfected Lien
securing Secured
15
Obligations upon all real property described therein, free from all
prior Liens except Permitted Prior Liens, for the full amount stated
in the existing title insurance policies;
(vii) a certificate of insurance reasonably satisfactory to
the Underwriters confirming that all insurance requirements of the
Indentures are satisfied; and
(viii) such other approvals, opinions, or documents as the
Underwriters, the Trustee or the Collateral Trustee may reasonably
request in form and substance reasonably satisfactory to each of
them.
(l) An arrangement satisfactory to the Representatives shall have
been made for the filing of all Uniform Commercial Code Form UCC-3
amendments or other similar Financing Statements and Uniform Commercial
Code Form UCC-3 termination statements required pursuant to clause (k)(ii)
and (iii) above (collectively, the "Financing Statements");
(m) Each of the Company and the Guarantors shall have furnished or
caused to be furnished to the Representatives and the Independent
Underwriter at the Time of Delivery certificates of officers of the
Company and the Guarantors satisfactory to the Representatives and the
Independent Underwriter as to the accuracy of the representations and
warranties of the Company and the Guarantors herein at and as of such Time
of Delivery, as to the performance by the Company and the Guarantors of
all of their obligations hereunder to be performed at or prior to such
Time of Delivery, as to the matters set forth in subsections (g) and (h)
of this Section and as to such other matters as the Representatives or the
Independent Underwriter, as the case may be, may reasonably request;
(n) The Company and each of the Guarantors shall have delivered
executed copies of the Securities, the Guarantees, the Indentures and the
Security Documents (with all Mortgages and any related assignments duly
acknowledged in recordable form) to the Underwriters, in each case in form
and substance reasonably satisfactory to the Company and the Underwriters;
and
(o) The Company and the Guarantors shall have consummated the Credit
Agreement prior to, or simultaneously with, the Time of Delivery on
substantially the same terms described in the Final Prospectus and the
Underwriters shall have received executed counterparts of the Credit
Agreement and such other documentation as they deem necessary to evidence
the consummation thereof.
9. The Independent Underwriter hereby consents to the references to it as
set forth under the caption "Underwriting" in the Final Prospectus and in any
amendment or supplement thereto made in accordance with Section 6(a) hereof.
10. (a) Each of the Company and the Guarantors will, jointly and
severally, indemnify and hold harmless each Underwriter and the Independent
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or the Independent Underwriter, as the case
may be, may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in (i) the Registration Statement or any amendment or supplement
(when considered together with the document to which such amendment or
supplement relates) thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein not misleading or (ii) the
Base Prospectus, Preliminary Prospectus, the Final Prospectus or any other
prospectus relating to the Securities, or any amendment or supplement
16
(when considered together with the document to which such amendment or
supplement relates) thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein not misleading, and will
reimburse each Underwriter or the Independent Underwriter, as the case may be,
for any legal or other expenses reasonably incurred by such Underwriter or the
Independent Underwriter, as the case may be, in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that neither the Company nor any Guarantor shall be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Final Prospectus as amended or supplemented or any such amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by any Underwriter through the Representatives or the Independent
Underwriter expressly for use therein or constitutes a reference to the
Independent Underwriter consented to by it pursuant to Section 9 hereof.
(b) Each Underwriter will indemnify and hold harmless the Company
and the Guarantors and the Independent Underwriter, as the case may be,
against any losses, claims, damages or liabilities to which the Company,
any Guarantor or the Independent Underwriter, as the case may be, may
become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Final Prospectus as amended or supplemented, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration
Statement or the Final Prospectus as amended or supplemented or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives expressly for use therein; and will reimburse the Company
and the Guarantors or the Independent Underwriter, as the case may be, for
any legal or other expenses reasonably incurred by the Company and the
Guarantors or the Independent Underwriter, as the case may be, in
connection with investigating or defending any such action or claim as
such expenses are incurred.
(c) The Independent Underwriter will indemnify and hold harmless the
Company and the Guarantors and each Underwriter against any losses,
claims, damages or liabilities to which the Company, any Guarantor or such
Underwriter, as the case may be, may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Final Prospectus
as amended or supplemented, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Final Prospectus
as amended or supplemented or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the Company
by the Independent Underwriter expressly
17
for use therein or constitutes a reference to the Independent Underwriter
consented to by it pursuant to Section 9 hereof; and will reimburse the
Company and the Guarantors or each Underwriter, as the case may be, for
any legal or other expenses reasonably incurred by the Company and the
Guarantors or each Underwriter, as the case may be, in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under
such subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with a single counsel (in addition to local counsel) satisfactory
to such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any
legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to
such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act,
by or on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 10 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by each party to
this Agreement from the offering of the Securities. If, however, the
allocation provided by the immediately preceding sentence is not permitted
by applicable law or if the indemnified party failed to give the notice
required under subsection (d) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the each party to this Agreement
in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by the Company, the Guarantors, the Underwriters and the
Independent Underwriter shall be deemed to be in the same proportion as
the total net proceeds from the sale of the Securities (before deducting
expenses) received by the Company and the Guarantors in the offering, the
total underwriting discounts and commissions payable to the Underwriters
as set forth in the table on the cover
18
of the Final Prospectus as amended or supplemented and the fee payable to
the Independent Underwriter pursuant to the first sentence of Section 4(e)
hereof, respectively, bear to the sum of the total proceeds from the sale
of the Securities (before deducting expenses) in the offering and the fee
payable to the Independent Underwriter pursuant to the first sentence of
Section 4(e) hereof. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of
a material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company on the one hand or
either the Underwriters or the Independent Underwriter on the other and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company,
the Guarantors, the Underwriters and the Independent Underwriter agree
that it would not be just and equitable if contribution pursuant to this
subsection (e) were determined by pro rata allocation (even if the
Underwriters and the Independent Underwriter were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this
subsection (e). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (e) shall be deemed
to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (e), no
Underwriter nor the Independent Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Securities underwritten by it and distributed to the public were
offered to the public, and the Independent Underwriter shall not be
required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by the Underwriters and
distributed to the public were offered to the public, exceeds the amount
of any damages which such Underwriter or the Independent Underwriter, as
the case may be, has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (e) to contribute are several
in proportion to their respective underwriting obligations and not joint.
(f) The obligations of the Company and the Guarantors under this
Section 10 shall be in addition to any liability which the Company and the
Guarantors may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter or the
Independent Underwriter within the meaning of the Act; and the obligations
of the Underwriters under this Section 10 shall be in addition to any
liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director
of the Company or the Guarantors and to each person, if any, who controls
the Company, the Guarantors or the Independent Underwriter within the
meaning of the Act; and the obligations of the Independent Underwriter
under this Section 10 shall be in addition to any liability which the
Independent Underwriter may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company or the
Guarantors and to each person, if any, who controls the Company, the
Guarantors or any of the Underwriters within the meaning of the Act.
11. (a) If any Underwriter shall default in its obligation to purchase the
Securities that it has agreed to purchase hereunder, the Representatives may in
their discretion arrange for the Representatives or another party or other
parties to purchase such Securities on the terms contained
19
herein. If within 36 hours after such default by any Underwriter the
Representatives do not arrange for the purchase of such Securities, then the
Company shall be entitled to a further period of 36 hours within which to
procure another party or other parties reasonably satisfactory to the
Representatives to purchase such Securities on such terms. In the event that,
within the respective prescribed periods, the Representatives notify the Company
that they have so arranged for the purchase of such Securities, or the Company
notifies the Representatives that it has so arranged for the purchase of such
Securities, the Representatives or the Company shall have the right to postpone
the Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Final Prospectus, or in any other documents or arrangements,
and the Company agrees to file promptly any amendments to the Registration
Statement or the Final Prospectus which in the opinion of the Representatives
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Securities.
(b) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of such Securities which remains unpurchased
does not exceed one-eleventh of the aggregate principal amount of all the
Securities, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the principal amount of Securities
which such Underwriter agreed to purchase hereunder and, in addition, to
require each non-defaulting Underwriter to purchase its pro rata share
(based on the principal amount of Securities which such Underwriter agreed
to purchase hereunder) of the Securities of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing
herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of Securities which remains unpurchased exceeds
one-eleventh of the aggregate principal amount of all the Securities, or
if the Company shall not exercise the right described in subsection (b)
above to require non-defaulting Underwriters to purchase Securities of a
defaulting Underwriter or Underwriters, then this Agreement shall
thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company, except for the expenses to be borne by the
Company and the Underwriters as provided in the second sentence of Section
4(e) hereof and Section 7 hereof and the indemnity and contribution
agreements in Section 10 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
12. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Guarantors, the several Underwriters
and the Independent Underwriter, as set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of any Underwriter or on behalf of the
Independent Underwriter or any controlling person of any Underwriter, the
Independent Underwriter or the Company, the Guarantors or any officer or
director or controlling person of the Company or a Guarantor, and shall survive
delivery of and payment for the Securities.
13. If this Agreement shall be terminated pursuant to Section 11 hereof,
the Company shall not then be under any liability to any Underwriter or the
Independent Underwriter except as provided
20
in the second sentence of Section 4(e) hereof and Sections 7 and 9 hereof; but,
if for any other reason, the Securities and the Guarantees are not delivered by
or on behalf of the Company and the Guarantors as provided herein, the Company
will reimburse the Underwriters through the Representatives for all
out-of-pocket expenses approved in writing by the Representatives, including
reasonable fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Securities and the Guarantees but the Company shall then be under no further
liability to any Underwriter or the Independent Underwriter except as provided
in Sections 7 and 9 hereof.
14. In all dealings hereunder, the Representatives shall act on behalf of
each of the Underwriters, and the parties hereto shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by the Representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the Representatives at ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Registration Department; if to the
Independent Underwriter shall be delivered or sent by mail, letter or facsimile
transmission to ▇.▇. ▇▇▇▇ & Company, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇;
and if to the Company or any Guarantor shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: General Counsel. Any such statements,
requests, notices or agreements shall take effect upon receipt thereof.
15. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Independent Underwriter, the Company, the Guarantors
and, to the extent provided in Sections 10 and 12 hereof, the officers and
directors of the Company and the Guarantors and each person who controls the
Company, any Guarantor, any Underwriter or the Independent Underwriter, and
their respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Securities from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
16. Time shall be of the essence of this Agreement.
17. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
18. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
19. The Company is authorized, subject to applicable law, to disclose any
and all aspects of this potential transaction that are necessary to support any
U.S. federal income tax benefits expected to be claimed with respect to such
transaction, and all materials of any kind (including tax opinions and other tax
analyses) related to those benefits, without the Underwriters imposing any
limitation of any kind.
21
If the foregoing is in accordance with your understanding, please sign and
return to us seven counterparts hereof, and upon the acceptance hereof by the
Representatives on behalf of each of the Underwriters and the Independent
Underwriter, this letter and such acceptance hereof shall constitute a binding
agreement among each of the Underwriters, the Independent Underwriter, the
Company and the Guarantors. It is understood that the Representatives'
acceptance of this letter on behalf of each of the Underwriters is pursuant to
the authority set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Company for examination, upon request, but
without warranty on the part of the Representatives as to the authority of the
signers thereof.
Very truly yours,
Reliant Energy, Inc.
By:________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President and Chief
Financial Officer
(Executive Vice President)
Reliant Energy Asset Management, LLC
Reliant Energy Aurora Development, LLC
Reliant Energy Aurora Holding, LLC
Reliant Energy Aurora I, LP
Reliant Energy ▇▇▇▇▇▇ ▇▇, LP
Reliant Energy Aurora, LP
Reliant Energy Broadband, Inc.
Reliant Energy California Holdings, LLC
Reliant Energy Capital (Europe), Inc.
Reliant Energy CapTrades Holding Corp.*
Reliant Energy Communications, Inc.
Reliant Energy Coolwater, Inc.
Reliant Energy Corporate Services, LLC
Reliant Energy Deer Park, Inc.
Reliant Energy Electric Solutions, LLC
Reliant Energy Ellwood, Inc.
Reliant Energy Etiwanda, Inc.
Reliant Energy Europe, Inc.
Reliant Energy Florida, LLC
Reliant Energy Florida Holdings, LLC
Reliant Energy Key/Con Fuels, LLC
Reliant Energy Mandalay, Inc.
Reliant Energy Net Ventures, Inc.
Reliant Energy Northeast Generation, Inc.
Reliant Energy Northeast Holdings, Inc.
Reliant Energy Ormond Beach, Inc.
Underwriting Agreement
Reliant Energy Power Generation, Inc.
Reliant Energy Power Operations I, Inc.
Reliant Energy Power Operations II, Inc.
Reliant Energy Renewables Holdings II, LLC*
Reliant Energy Renewables, Inc.
Reliant Energy Retail Holdings, LLC
Reliant Energy Retail Services, LLC
Reliant Energy Sabine (Delaware), Inc.*
Reliant Energy Sabine (Texas), Inc.
Reliant Energy Services Desert Basin, LLC
Reliant Energy Services International, Inc.
Reliant Energy Services Mid-Stream, LLC
Reliant Energy Services, Inc.
Reliant Energy ▇▇▇▇▇▇, LLC
Reliant Energy Shelby County II, LP
Reliant Energy Shelby County, LP
Reliant Energy Shelby Development Corp.
Reliant Energy Shelby Holding Corp.
Reliant Energy Shelby I, LP
Reliant Energy ▇▇▇▇▇▇ ▇▇, LP
Reliant Energy Solutions, LLC*
Reliant Energy Solutions East, LLC*
Reliant Energy Solutions Holdings, LLC
Reliant Energy Texas Renewables GP, LLC
Reliant Energy Texas Renewables, LP
Reliant Energy Trading Exchange, Inc.
Reliant Energy Ventures, Inc.
Reliant Energy Wholesale Generation, LLC
Reliant Energy Wholesale Service Company
Reliant Resources International Services, Inc.
StarEn Power, LLC
Texas Star Energy Company
By:________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Assistant Treasurer of the corporations,
limited liability companies and general
partners of the limited partnerships
*As to these entities, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ is
signing pursuant to a Power of Attorney
Underwriting Agreement
Accepted as of the date hereof:
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
_____________________________________
(▇▇▇▇▇▇▇, Sachs & Co.)
On behalf of each of the Underwriters
▇.▇. ▇▇▇▇ & Company
By:________________________________
Name:
Title:
Underwriting Agreement
SCHEDULE I
PRINCIPAL
AMOUNT OF
SECURITIES
TO BE
UNDERWRITER PURCHASED
----------- ---------
▇▇▇▇▇▇▇, Sachs & Co............................................................ $105,000,000
Banc of America Securities LLC................................................. 105,000,000
Barclays Capital Inc........................................................... 105,000,000
Deutsche Bank Securities Inc................................................... 105,000,000
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated................................................ 105,000,000
ABN AMRO Incorporated.......................................................... 78,750,000
Scotia Capital (USA) Inc....................................................... 78,750,000
▇.▇. ▇▇▇▇▇▇ Securities Inc..................................................... 33,750,000
UBS Securities LLC............................................................. 33,750,000
Total.............................................................. $750,000,000
Schedule I-1
SCHEDULE II
Guarantors
Reliant Energy Asset Management, LLC Reliant Energy Renewables Holdings II, LLC
Reliant Energy Aurora Development, LLC Reliant Energy Renewables, Inc.
Reliant Energy Aurora Holding, LLC Reliant Energy Retail Holdings, LLC
Reliant Energy Aurora I, LP Reliant Energy Retail Services, LLC
Reliant Energy ▇▇▇▇▇▇ ▇▇, LP Reliant Energy Sabine (Delaware), Inc.
Reliant Energy Aurora, LP Reliant Energy Sabine (Texas), Inc.
Reliant Energy Broadband, Inc. Reliant Energy Services Desert Basin, LLC
Reliant Energy California Holdings, LLC Reliant Energy Services International, Inc.
Reliant Energy Capital (Europe), Inc. Reliant Energy Services Mid-Stream, LLC
Reliant Energy CapTrades Holding Corp. Reliant Energy Services, Inc.
Reliant Energy Communications, Inc. Reliant Energy ▇▇▇▇▇▇, LLC
Reliant Energy Coolwater, Inc. Reliant Energy Shelby County II, LP
Reliant Energy Corporate Services, LLC Reliant Energy Shelby County, LP
Reliant Energy Deer Park, Inc. Reliant Energy Shelby Development Corp.
Reliant Energy Electric Solutions, LLC Reliant Energy Shelby Holding Corp.
Reliant Energy Ellwood, Inc. Reliant Energy Shelby I, LP
Reliant Energy Etiwanda, Inc. Reliant Energy ▇▇▇▇▇▇ ▇▇, LP
Reliant Energy Europe, Inc. Reliant Energy Solutions, LLC
Reliant Energy Florida, LLC Reliant Energy Solutions East, LLC
Reliant Energy Florida Holdings, LLC Reliant Energy Solutions Holdings, LLC
Reliant Energy Key/Con Fuels, LLC Reliant Energy Texas Renewables GP, LLC
Reliant Energy Mandalay, Inc. Reliant Energy Texas Renewables, LP
Reliant Energy Net Ventures, Inc. Reliant Energy Trading Exchange, Inc.
Reliant Energy Northeast Generation, Inc. Reliant Energy Ventures, Inc.
Reliant Energy Northeast Holdings, Inc. Reliant Energy Wholesale Generation, LLC
Reliant Energy Ormond Beach, Inc. Reliant Energy Wholesale Service Company
Reliant Energy Power Generation, Inc. Reliant Resources International Services, Inc.
Reliant Energy Power Operations I, Inc. StarEn Power, LLC
Reliant Energy Power Operations II, Inc. Texas Star Energy Company
Schedule II-1
SCHEDULE III
Mortgages
With respect to the property of Reliant Energy Shelby County, LP
located in Cumberland County and Shelby County, Illinois:
1. Amended and Restated Second Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Filing by Reliant Energy Shelby County,
LP, as mortgagor, in favor of Wachovia Bank, National Association, as Collateral
Trustee, as mortgagee, dated as of even date with the Collateral Trust
Agreement.
With respect to the property of Reliant Energy Aurora, LP located in
DuPage County, Illinois:
2. Amended and Restated Second Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Filing by Reliant Energy Aurora, LP, as
mortgagor, in favor of Wachovia Bank, National Association, as Collateral
Trustee, as mortgagee, dated as of even date with the Collateral Trust
Agreement.
With respect to the property of Reliant Energy Osceola, LLC located
in Osceola County, Florida:
3. Amended and Restated Second Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Filing by Reliant Energy Osceola, LLC, as
mortgagor, in favor of Wachovia Bank, National Association, as Collateral
Trustee, as mortgagee, dated as of even date with the Collateral Trust
Agreement.
With respect to the property of Reliant Energy Indian River, LLC
located in Brevard County, Florida:
4. Amended and Restated Second Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Filing by Reliant Energy Indian River,
LLC, as mortgagor, in favor of Wachovia Bank, National Association, as
Collateral Trustee, as mortgagee, dated and submitted for recording
simultaneously herewith.
With respect to the property of Reliant Energy Bighorn, LLC located
in ▇▇▇▇▇ County, Nevada:
5. Amended and Restated Second Leasehold Deed of Trust, Assignment
of Leases and Rents, Security Agreement and Fixture Filing among Reliant Energy
Bighorn, LLC, as trustor, in favor of Fidelity National Title Insurance Company,
as trustee, for the benefit of Wachovia Bank, National Association, as
Collateral Trustee, as beneficiary, dated as of even date with the Collateral
Trust Agreement.
With respect to the property of Reliant Energy Coolwater, Inc.
located in San Bernardino County, California:
6. Amended and Restated Second Deed of Trust, Assignment of Leases
and Rents, Security Agreement and Fixture Filing among Reliant Energy Coolwater,
Inc., as trustor, in favor of Fidelity National Title Insurance Company, as
trustee, for the benefit of Wachovia Bank, National Association, as Collateral
Trustee, as beneficiary, dated as of even date with the Collateral Trust
Agreement.
Schedule III-1
With respect to the property of Reliant Energy Ellwood, Inc. located
in Santa ▇▇▇▇▇▇▇ County, California:
7. Amended and Restated Second Deed of Trust, Assignment of Leases
and Rents, Security Agreement and Fixture Filing among Reliant Energy Ellwood,
Inc., as trustor, in favor of Fidelity National Title Insurance Company, as
trustee, for the benefit of Wachovia Bank, National Association, as Collateral
Trustee, as beneficiary, dated as of even date with the Collateral Trust
Agreement.
With respect to the property of Reliant Energy Etiwanda, Inc.
located in Riverside County and San Bernardino County, California:
8. Amended and Restated Second Deed of Trust, Assignment of Leases
and Rents, Security Agreement and Fixture Filing among Reliant Energy Etiwanda,
Inc., as trustor, in favor of Fidelity National Title Insurance Company, as
trustee, for the benefit of Wachovia Bank, National Association, as Collateral
Trustee, as beneficiary, dated as of even date with the Collateral Trust
Agreement.
With respect to the property of Reliant Energy Mandalay, Inc.
located in Ventura County, California:
9. Amended and Restated Second Fee and Leasehold Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing among
Reliant Energy Mandalay, Inc., as trustor, in favor of Fidelity National Title
Insurance Company, as trustee, for the benefit of Wachovia Bank, National
Association, as Collateral Trustee, as beneficiary, dated as of even date with
the Collateral Trust Agreement.
With respect to the property of Reliant Energy Ormond Beach, Inc.
located in Ventura County, California:
10. Amended and Restated Second Deed of Trust, Assignment of Leases
and Rents, Security Agreement and Fixture Filing among Reliant Energy Ormond
Beach, Inc., as trustor, in favor of Fidelity National Title Insurance Company,
as trustee, for the benefit of Wachovia Bank, National Association, as
Collateral Trustee, as beneficiary, dated as of even date with the Collateral
Trust Agreement.
With respect to the property of ▇▇▇▇▇▇ Trust and Reliant Energy
▇▇▇▇▇▇, LLC located in Indiana County, Pennsylvania:
11. Amended and Restated Second Fee and Leasehold Mortgage,
Assignment of Leases and Rents, Security Agreement and Fixture Filing by Reliant
Energy ▇▇▇▇▇▇, LLC, as mortgagor, in favor of Wachovia Bank, National
Association, as Collateral Trustee, as mortgagee, dated as of even date with the
Collateral Trust Agreement.
With respect to the property of Hunterstown Trust and Reliant Energy
Hunterstown, LLC located in ▇▇▇▇▇ County, Pennsylvania:
12. Amended and Restated Second Fee and Leasehold Mortgage,
Assignment of Leases and Rents, Security Agreement and Fixture Filing by Reliant
Energy Hunterstown, LLC, as mortgagor, in favor of Wachovia Bank, National
Association, as Collateral Trustee, as mortgagee, dated as of even date with the
Collateral Trust Agreement.
With respect to the property of Choctaw County Trust and Reliant
Energy Choctaw County, LLC located in Choctaw County, Mississippi:
Schedule III-2
13. Amended and Restated Second Fee and Leasehold Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing among
Reliant Energy Choctaw County, LLC, as trustor, in favor of W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇., as trustee, for the benefit of Wachovia Bank, National Association, as
Collateral Trustee, as beneficiary, dated as of even date with the Collateral
Trust Agreement.
Schedule III-3
EXHIBIT I
OPINION OF SKADDEN, ARPS, SLATE, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, COUNSEL FOR THE COMPANY
1. The Company has been duly incorporated and is validly existing in
good standing as a corporation under the laws of the State of Delaware.
2. The Underwriting Agreement has been duly executed and delivered
by the Company and each of the Subsidiary Guarantors.
3. Each Indenture has been duly executed and delivered by the
Company and each of the Subsidiary Guarantors and the Indentures are valid and
binding agreements of the Company and each of the Subsidiary Guarantors,
enforceable against the Company and each of the Subsidiary Guarantors in
accordance with its terms.
4. The execution and delivery by the Company and each of the
Subsidiary Guarantors of each of the Transaction Documents and the consummation
by the Company of the transactions contemplated thereby, including the issuance
and sale of the Securities and the Guarantees, will not (i) constitute a
violation of, or a breach or default under, the terms of any Applicable Contract
or (ii) violate or conflict with, or result in any contravention of, any
Applicable Law or any Applicable Order. We do not express any opinion, however,
as to whether the execution, delivery or performance by the Company or any of
the Subsidiary Guarantors of each of the Transaction Documents will constitute a
violation of, or a default under, any covenant, restriction or provision with
respect to financial ratios or tests or any aspect of the financial condition or
results of operations of the Company or any of its subsidiaries.
5. No Governmental Approval, which has not been obtained or taken
and is not in full force and effect, is required to authorize, or is required in
connection with, the issuance and sale of the Securities and the Guarantees or
the consummation by the Company and the Subsidiary Guarantors of the
transactions contemplated by the Transaction Documents.
6. The Securities have been duly executed by the Company, and when
issued and delivered by the Company against payment therefor in accordance with
the terms of the Underwriting Agreement, the Securities will constitute valid
and binding obligations of the Company entitled to the benefits of the
Indentures and enforceable against the Company in accordance with their terms.
7. When the Securities are issued and delivered by the Company
against payment therefor in accordance with the terms of the Underwriting
Agreement, each Guarantee will constitute the valid and binding obligation of
each Subsidiary Guarantor, enforceable against such Subsidiary Guarantor in
accordance with its terms.
8. The statements in the Prospectus Supplement under the captions
(i) "Description of Notes," in so far as such statements purport to summarize
certain provisions of the Indentures and the Securities, (ii) "Underwriting" in
so far as such statements purport to summarize certain provisions of the
Underwriting Agreement and (iii) "United States Federal Tax Considerations for
Non-U.S. Holders," in so far as such statements purport to address the federal
income tax consequences to non-U.S. holders, in each case, fairly summarize such
provisions or consequences, as applicable, in all material respects.
9. The Company is not and, solely after giving effect to the
offering and sale of the Securities and the application of the proceeds as
described in the Final Prospectus, will not be, an "investment company," as such
term is defined in the Investment Company Act of 1940, as amended.
Exhibit I-1
10. Pursuant to Section 309 of the Trust Indenture Act, the
Indentures have been qualified under the Trust Indenture Act.(i)
On the basis of the foregoing, (i) the Registration Statement, as of
the date of the filing of the Company's 2003 Annual Report on Form 10-K and as
of December 14, 2004 and the Base Prospectus, as supplemented by the Prospectus
Supplement, as of the date of the Prospectus Supplement, appeared on their face
to be appropriately responsive in all material respects to the requirements of
the Securities Act and the Rules and Regulations (except that in each case we do
not express any view as to the financial statements, schedules and other
financial information, included or incorporated by reference therein or excluded
therefrom or the exhibits to the Registration Statement, including the Statement
of Eligibility on Form T-1 (the "Form T-1")), (ii) the Incorporated Documents,
as of their respective filing dates, appeared on their face to be appropriately
responsive in all material respects to the requirements of the Exchange Act and
the Rules and Regulations promulgated thereunder (except that in each case we do
not express any view as to the financial statements, schedules and other
financial information, included or incorporated by reference therein or excluded
therefrom or the exhibits to any of the Incorporated Documents) and (iii) no
facts have come to our attention that have caused us to believe that the
Registration Statement, as of the date of the filing of such Form 10-K and as of
December 14, 2004, contained an untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Base Prospectus, as
supplemented by the Prospectus Supplement, as of the date of the Prospectus
Supplement and as of the date hereof, contained or contains an untrue statement
of a material fact or omitted or 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 (except that in each case we do not express any
view as to the financial statements, schedules and other financial information,
included or incorporated by reference therein or excluded therefrom or the
exhibits to the Registration Statement, including the Form T-1).
---------------------------------
(i)This option will be in Skadden's 10b-5 letter.
Exhibit I-2
EXHIBIT II
OPINION OF ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, GENERAL COUNSEL FOR THE COMPANY
1. Each Reliant Party is a corporation, partnership or limited
liability company (as applicable) duly organized or formed, validly existing and
in good standing under the laws of the State of Delaware. The name of each
Reliant Party as shown on its organizational/charter document, as amended,
pursuant to which it was organized or formed, is correctly set forth on Exhibit
A to this opinion.
2. Each Reliant Party that conducts business in the State of Texas,
as indicated with an asterisk on Exhibit A to this opinion, is duly qualified to
conduct business as a foreign corporation, limited partnership or limited
liability company, as the case may be, in the State of Texas. Each Reliant Party
is duly qualified to conduct business as a foreign corporation, limited
partnership or limited liability company, as the case may be, in each
jurisdiction identified on Exhibit B to this opinion.
3. Each Reliant Party has all requisite power and authority to (a)
conduct its business as presently conducted, and (b) execute and deliver, and to
perform its obligations under, the Transaction Documents to which it is a party.
The execution, delivery and performance of each of the Transaction Documents
executed and delivered on the date hereof have been duly authorized by all
necessary action on the part of each Reliant Party which is a party thereto, and
the Transaction Documents have been duly executed and delivered by or on behalf
of each such Reliant Party. In particular, the Secured Notes have been duly
authorized, executed, authenticated, issued and delivered by REI and the
Guarantees have been duly authorized, executed and delivered by each of the
Secured Note Guarantors.
4. The execution and delivery by each Reliant Party of each
Transaction Document to which it is a party, including the issuance and sale of
the Secured Notes and the Guarantees, and the performance by such Reliant Party
of its obligations thereunder, (i) do not violate its charter or by-laws, its
partnership agreement or limited liability company agreement, as the case may
be, or any other organizational document of such Reliant Party, or (ii) to the
best of my knowledge, violate any order, decree or judgment of any Delaware,
Texas, New York, or United States federal court or other agency of government
having jurisdiction over any of the Reliant Parties.
5. Except as disclosed in the Final Prospectus (including the
documents incorporated by reference therein), to the best of my knowledge, (i)
there is no action, suit or proceeding pending or overtly threatened, at law or
in equity to which the Company or any of its subsidiaries is a party or of which
any property of the Company or any of its subsidiaries is the subject, which if
determined adversely to the Company or any of its subsidiaries would,
individually or in the aggregate, have a material adverse effect on the
businesses, assets, operations or financial condition of the Company and its
subsidiaries, taken as a whole, and (ii) there is no action, suit or proceeding
pending or, to the best of my knowledge, overtly threatened, at law or in
equity, before or by any state or federal court or any state or federal
governmental agency, body or official relating specifically to the transactions
under the Opinion Documents.
Exhibit II-1
6. The execution, delivery and performance by each Reliant Party of
each Security Document to which it is a party has been duly authorized, and the
Security Documents have been duly executed and delivered by the Reliant Parties.
7. All of the issued shares of capital stock of each of the Reliant
Parties (other than REI) have been duly and validly authorized and issued, are
fully paid and non-assessable, and (except for the directors' qualifying shares,
the liens securing the Credit Agreement Debt and the Parity Secured Debt and as
otherwise set forth in the Final Prospectus) are owned directly or indirectly by
REI, free and clear of all liens, encumbrances, equities or claims.
In the course of acting as General Counsel to the Company in
connection with its preparation of the Final Prospectus, I or attorneys under my
supervision participated in conferences and telephone conversations with
representatives of REI, representatives of REI's counsel, representatives of the
independent public accountants of REI, representatives of the Underwriters and
representatives of the Underwriters' counsel, during which conferences and
conversations the contents of the Final Prospectus and related matters were
discussed, and I or attorneys under my supervision reviewed certain corporate
records and documents. Based on this participation in such conferences and
conversations and review of such records and documents, I advise you that no
information has come to my attention that causes me to believe that the Final
Prospectus (except the financial statements and other financial and statistical
data included therein and the statements set forth under the headings
Underwriting, Legal Matters and Independent Auditors as to which I express no
view), as of its date and the date hereof, contained or contains an untrue
statement of a material fact or omitted or omits 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.
Exhibit II-2
EXHIBIT III
OPINION OF ▇▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇▇, L.L.P., SPECIAL COUNSEL FOR THE COMPANY
1. Enforceable Obligations. Each New York Document (other than the Collateral
Trust Agreement) to which a Reliant Party is a party constitutes the legal,
valid and binding obligation of such Reliant Party, enforceable against such
Reliant Party in accordance with its respective terms under the laws of the
State of New York. Each Texas Blocked Account Agreement constitutes the legal,
valid and binding obligation of each Reliant Party which is a party thereto,
enforceable against such Reliant Party in accordance with its terms under the
laws of the State of Texas. To the extent that provisions in or matters relating
to the Collateral Trust Agreement are governed by the laws of the State of New
York, the Collateral Trust Agreement constitutes the legal, valid and binding
obligations of each of the Reliant Parties that are party thereto, enforceable
against such Reliant Party in accordance with its terms and the Collateral
Trustee under the laws of the State of New York. To the extent that provisions
in or matters relating to the Collateral Trust Agreement are governed by the
laws of the State of Texas, the Collateral Trust Agreement constitutes the
legal, valid and binding obligations of each of the Reliant Parties that are
party thereto, enforceable against such Reliant Party in accordance with its
terms and the Collateral Trustee under the laws of the State of Texas.
2. No Conflict. The execution and delivery by each Reliant Party of the Opinion
Documents (other than the 2010 Indenture and the ▇▇▇▇ ▇▇▇▇▇▇▇▇▇) to which it is
a party, and the performance by such Reliant Party of its obligations thereunder
will not conflict with, constitute a default under, or violate any provision of
Applicable Law. The execution and delivery by each Reliant Party of the Opinion
Documents to which it is a party, and the performance by such Reliant Party of
its obligations thereunder, will not conflict with, constitute a default under,
or violate any provision of any other Opinion Document or any of the agreements
identified in the Exhibit list to REI's 2003 10-K and first, second and third
quarter 2004 10-Qs as filed with the Securities and Exchange Commission (other
than those relating to employee benefits and executive employment).
3. Forms of Financing Statements. Each Existing Delaware Financing Statement was
in appropriate form for filing and was duly filed in the Office of the Delaware
Secretary of State pursuant to the Delaware UCC. Each New Delaware UCC-3
Financing Statement is in appropriate form for filing in the Office of the
Delaware Secretary of State pursuant to the Delaware UCC.
4. Creation of Security Interests. The Security Agreement creates valid security
interests in favor of the Collateral Trustee, for the benefit of the Secured
Parties as security for the Secured Notes, the PEDFA Guarantees and the other
Secured Obligations (as defined in the Security Agreement) specified therein in
each Reliant Party's right, title, and interest in and to the Collateral (as
defined in the Security Agreement) and the proceeds thereof to the extent a
security interest may be created in such Collateral and such proceeds pursuant
to the New York UCC (such property hereinafter called the "UCC Collateral"). The
Additional Security Agreement creates a valid security interest in favor of the
Collateral Agent for the benefit for the Credit Agreement Secured Parties as
security for the Credit Agreement Obligations (as defined in the Additional
Security Agreement) in each Reliant Party's right, title, and interest in and to
the Collateral (as defined in the Additional Security Agreement) and the
proceeds thereof to the extent a security interest may be created in such
Collateral and such proceeds pursuant to the New York UCC (such property
hereinafter called the "Additional UCC Collateral").
Exhibit III-1
5. Perfection of Certain Collateral by Filing. (a) The acceptance for filing of
the New Delaware UCC-3 Financing Statements in the Office of the Secretary of
State of Delaware is effective to perfect or continue the perfection of the
security interests described in paragraph 4 above in the UCC Collateral and the
Additional UCC Collateral described in the Existing Delaware Financing
Statements previously filed in the Office of the Secretary of State of Delaware
to the extent such security interests may be perfected, and such perfection may
be continued, by filing a financing statement in the State of Delaware pursuant
to the Delaware UCC.
(b) Pursuant to Section 9-301 and Section 9-307 of the New York UCC,
the law of the State of Delaware is the law governing the perfection of security
interests in the UCC Collateral and the Additional UCC Collateral for each
Reliant Party which is a registered organization (within the meaning of Section
9-102(70) of the New York UCC) under the laws of the State of Delaware, except
with respect to UCC Collateral for which the provisions of Section 9-303 through
9-306 of the New York UCC expressly provide otherwise.
6. Perfection of Securities Accounts. The provisions of the Security Agreement
and the Securities Account Control Agreements described on Exhibit B to which
any Reliant Party is a party are effective to perfect the security interests of
the Collateral Trustee for the benefit of the Secured Parties, in such Reliant
Party's right, title and interest in the Securities Accounts described in such
Securities Account Control Agreements and the Securities Entitlements related
thereto. For purposes of this opinion letter, the following terms have the
meanings set forth below:
"Federal Book-Entry Regulations" means the United States Department of the
Treasury's regulations governing the transfer and pledge of marketable
securities issued by the U.S. Treasury and maintained in the form of entries in
the TRADES book-entry system in the records of the federal reserve banks and set
forth in 61 Fed. Reg. 43626 (1996) (codified at 31 C.F.R. Part 357) and the
United States Department of Housing and Urban Development's regulations
governing the transfer and pledge of securities issued by the Federal National
Mortgage Association ("FNMA") or the Federal Home Loan Mortgage Corporation
("FHLMC") in each case maintained in the form of entries in the records of
federal reserve banks and set forth in 62 Fed. Reg. 28975 (1997) (codified at 24
C.F.R. Part 81).
"Federal Book-Entry Securities" means securities issued in book-entry form by
the United States Treasury, FNMA or FHLMC which are subject to the Federal
Book-Entry Regulations.
"Securities Account" means each "Account" described in any Securities Account
Control Agreement listed on Exhibit B.
"Securities Entitlements" means "security entitlements" (as defined in Section
8-102(a)(17) of the New York UCC) with respect to "financial assets" (as defined
in Section 8-102(a)(9) of the New York UCC) now or hereafter credited to any of
the Securities Accounts and, with respect to Federal Book-Entry Securities,
"security entitlements" within the meaning of the Federal Book-Entry Regulations
with respect to Federal Book-Entry Securities now or hereafter credited to any
of the Securities Accounts.
"Securities Intermediary" means financial institution described in a Securities
Account Control Agreement listed on Exhibit B as a securities intermediary with
respect to the Securities Accounts covered thereby, acting solely in its
capacity as a "securities intermediary" as defined in the New York UCC and the
Federal Book-Entry Regulations.
7. Perfection of Texas Deposit Accounts. The provisions of the Security
Agreement and the Texas Blocked Account Agreements are sufficient to perfect the
security interests described in paragraph 4 above in favor of the Collateral
Trustee for the benefit of the Secured Parties as security
Exhibit III-2
for the Secured Obligations (as defined in the Security Agreement) specified
therein, in the "Accounts" identified in the Texas Blocked Account Agreements
(the "Texas Deposit Accounts") to the extent each such Texas Deposit Account is
a "deposit account" as defined in the New York UCC and the Texas UCC.
8. Perfection of Trademark Collateral. The Trademark Security Agreement
Supplement dated as of March 28, 2003 among REI, Orion Power Holdings, Inc. and
Reliant Energy Retail Services, LLC was in proper form for filing and has been
duly filed with the U.S. Patent and Trademark Office (the "PTO"). The filing of
the Amended and Restated Trademark Supplement with the PTO and the filing of
each of the Delaware UCC-1 Financing Statements naming REI and Reliant Energy
Resources Services, Inc., respectively, as debtor (each, a "▇▇ ▇▇▇▇▇▇") in the
Office of the Delaware Secretary of State, was sufficient to perfect the
security interests created by the Security Agreement in favor of the Collateral
Trustee, for the ratable benefit of the Secured Parties, in all of such ▇▇
▇▇▇▇▇▇'▇ right, title, and interest in the Trademarks described in the Amended
and Restated Trademark Supplement Trustee for the benefit of the Secured Parties
as security for the Secured Obligations (as defined in the Security Agreement)
specified therein.
9. Perfection of Certificated Securities and Instruments. When each Reliant
Party that has granted to the Collateral Trustee for the benefit of the Secured
Parties a security interest in certificated securities and instruments (as
defined in the New York UCC) pursuant to the Security Agreement delivers to the
Collateral Trustee in the State of New York (i) each of the certificates
representing such certificated securities, together with instruments of transfer
or assignment related thereto duly indorsed in blank by an authorized officer of
such Reliant Party, and (ii) each of such instruments, together with instruments
of transfer or assignment related thereto duly executed in blank by an
authorized officer of such Reliant Party, the Collateral Trustee for the benefit
of the Secured Parties, will have perfected security interests in such
certificated securities and such instruments under the New York UCC, and no
other security interest of any other creditor of such Reliant Party in such
certificated securities and such instruments will be equal or prior to such
security interests of the Collateral Trustee assuming neither the Collateral
Trustee nor the Secured Parties have agreed otherwise.
10. Choice of New York Law. If the issue is properly presented before such
court, a Texas or federal court applying Texas choice of law rules should hold
that the provisions contained in the New York Documents (other than such
provisions in any Mortgage) relating to the choice of New York law to govern
such Opinion Documents are valid under the laws of the State of Texas. We call
your attention to the fact that Section 8.110 and Sections 9.301 through 9.306
of the Texas UCC specify the law (including the conflict of law rules)
applicable to the perfection and priority of security interests and effect of
perfection or nonperfection of security interests in multiple state
transactions.
11. Texas Jurisdictional Issues. Except as may be otherwise required due to
other activities performed by any Creditor Party in the State of Texas unrelated
to those activities contemplated by the Opinion Documents, and provided the
performance by such Creditor Party of the transactions contemplated under the
Opinion Documents, including the soliciting of loans, gathering of financial
data, making of credit checks, or performing other financial activities through
employees, independent contractors, or agents (regardless of whether they reside
in the State of Texas), do not take place in the State of Texas, then none of
the Creditor Parties is required to qualify to do business in the State of Texas
or to comply with any foreign lender or similar statute, nor will any Creditor
Party be subject to taxation in the State of Texas, in each case solely as a
result of its execution and delivery of the Opinion Documents or by reason of
its participation in the transactions contemplated under the Opinion Documents.
No opinion is given, however, as to the need for any Creditor Party to qualify
to
Exhibit III-3
do business in the State of Texas should its activities in the State of Texas in
connection with its exercise of any rights or remedies under the Opinion
Documents constitute transacting business in the State of Texas.
12. PUHCA. To our knowledge after due inquiry, neither REI nor any of its
subsidiaries is, or after giving effect to the offering and sale of the Secured
Notes and the PEDFA Guarantees, will be, subject to regulation as a "holding
company", a "public-utility company", an "electric utility company", a "gas
utility company", or a "subsidiary" or "affiliate" of a "holding company" under,
and as each term is defined in, the Public Utility Holding Company Act of 1935
and the rules and regulations thereunder.
13. Prospectus. The statements set forth in the Prospectus Supplement dated
December 14, 2004 under the caption "Description of Notes," insofar as they
purport to constitute a summary of the terms of the Security Documents, and
under the caption "Description of Certain Other Financial Obligations", insofar
as they purport to constitute summaries of the documents and instruments
referred to therein, are accurate summaries of the Security Documents and such
other documents and instruments in all material respects.
14. Governmental Approvals. No notices to, or consent, approval, authorization,
order, registration or qualification of or with any court or governmental agency
or body or REI shareholder is required under Applicable Law for (i) the grant
and perfection of security interests in the Collateral pursuant to the
provisions of the Opinion Documents or (ii) the execution, delivery or
performance by the Company and the Guarantors of their obligations pursuant to
the Opinion Documents (other than the Secured Note Documents), except for such
filings as are (w) required to perfect the Collateral Trustee's security
interests granted pursuant to the Security Documents, (x) required to perfect
the Collateral Agent's security interests granted pursuant to the Security
Documents, (y) required to release existing Liens previously granted by any
Person, or (z) made pursuant to the Opinion Documents.
Exhibit III-4
ANNEX I
Pursuant to Section 8(f) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters or the Independent Underwriter, as the
case may be, to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included or incorporated by reference in the Registration
Statement or the Final Prospectus as amended or supplemented comply as to
form in all material respects with the applicable accounting requirements
of the Act and the related published rules and regulations thereunder;
and, if applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the consolidated interim financial statements, selected financial data,
pro forma financial information, financial forecasts and/or condensed
financial statements derived from audited financial statements of the
Company for the periods specified in such letter, as indicated in their
reports thereon, copies of which have been furnished to the
representatives of the Underwriters (the "Representatives") or the
Independent Underwriter, as the case may be;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Final Prospectus and/or included in the Company's quarterly report on Form
10-Q incorporated by reference into the Final Prospectus as amended or
supplemented as indicated in their reports thereon copies of which have
been separately furnished to the Representatives; and on the basis of
specified procedures including inquiries of officials of the Company who
have responsibility for financial and accounting matters regarding whether
the unaudited condensed consolidated financial statements referred to in
paragraph (v)(A)(i) below comply as to form in the related in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations, nothing came to their attention
that caused them to believe that the unaudited condensed consolidated
financial statements do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the related
published rules and regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the Final
Prospectus and included or incorporated by reference in Item 6 of the
Company's Annual Report on Form 10-K for the most recent fiscal year
agrees with the corresponding amounts (after restatements where
applicable) in the audited consolidated financial statements for such five
fiscal years which were included or incorporated by reference in the
Company's Annual Reports on Form 10-K for such fiscal years;
(v) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of
the minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included
or incorporated by reference in the Final Prospectus as amended or
supplemented, inquiries of officials of the Company and its subsidiaries
responsible for financial and accounting matters and such other inquiries
and procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included or incorporated by reference in the Company's
Quarterly Reports on Form 10-Q incorporated by reference in the
Final Prospectus as amended or supplemented do not comply as to form
in all material respects with the applicable accounting requirements
of the Exchange Act as it applies to Form 10-Q and the related
published rules and regulations, or (ii) any material modifications
should be made to the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included or incorporated by reference in the Company's
Quarterly Reports on Form 10-Q incorporated by reference in the
Final Prospectus as amended or supplemented, for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Final Prospectus as amended or
supplemented do not agree with the corresponding items in the
unaudited consolidated financial statements from which such data and
items were derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis for
the corresponding amounts in the audited consolidated financial
statements included or incorporated by reference in the Company's
Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included
in the Final Prospectus as amended or supplemented but from which
were derived the unaudited condensed financial statements referred
to in clause (A) and any unaudited income statement data and balance
sheet items included in the Final Prospectus as amended or
supplemented and referred to in clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal
year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Final
Prospectus as amended or supplemented do not comply as to form in
all material respects with the applicable accounting requirements of
the Act and the published rules and regulations thereunder or the
pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of convertible
securities, in each case which were outstanding on the date of the
latest balance sheet included or incorporated by reference in the
Final Prospectus as amended or supplemented) or any increase in the
consolidated long-term debt of the Company and its subsidiaries, or
any decreases in consolidated net current assets or stockholders'
equity or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each
case as compared with amounts shown in the latest balance sheet
included or incorporated by reference in the Final Prospectus as
amended or supplemented, except
in each case for changes, increases or decreases which the Final
Prospectus as amended or supplemented discloses have occurred or may
occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Final
Prospectus as amended or supplemented to the specified date referred
to in clause (E) there were any decreases in consolidated net
revenues or operating profit or the total or per share amounts of
consolidated net income or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Representatives, except in each case for
increases or decreases which the Final Prospectus as amended or
supplemented discloses have occurred or may occur or which are
described in such letter; and
(vi) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Final Prospectus as amended
or supplemented and the limited procedures, inspection of minute books,
inquiries and other procedures referred to in paragraphs (iii) and (v)
above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Final Prospectus (excluding documents incorporated by
reference) or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives or in documents
incorporated by reference in the Final Prospectus as amended or
supplemented specified by the Representatives, and have compared certain
of such amounts, percentages and financial information with the accounting
records of the Company and its subsidiaries and have found them to be in
agreement.