ILLINOIS POWER SPECIAL PURPOSE TRUST
TRANSITIONAL FUNDING TRUST NOTES
ILLINOIS POWER SECURITIZATION LIMITED LIABILITY COMPANY
ILLINOIS POWER COMPANY
UNDERWRITING AGREEMENT
New York, New York
December 10, 1998
To the Representatives
named in Schedule I hereto
of the Underwriters named in
Schedule II hereto
Ladies and Gentlemen:
1. INTRODUCTION. Illinois Power Securitization Limited Liability Company,
a special purpose Delaware limited liability company (the "Grantee") proposes to
cause and be sold to the underwriters named in Schedule II hereto (the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"), the principal amount of the notes identified in Schedule I
hereto (the "Notes") to be issued. If the firm or firms listed in Schedule II
hereto include only the firm or firms listed in Schedule I hereto, then the
terms "Underwriters" and "Representatives," as used herein, shall each be deemed
to refer to such firm or firms.
Illinois Power Special Purpose Trust, a Delaware business trust (the "Note
Issuer") was formed pursuant to a declaration of trust, dated as of December 1,
1998, by First Union Trust Company, National Association, a national banking
association, as Delaware Trustee (the "Delaware Trustee"), and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇, each as a Beneficiary Trustee (the "Trust
Agreement"), and the Notes will be issued pursuant to an indenture, dated as of
December 1, 1998, as supplemented by a first supplemental indenture or Trust
Issuance Certificate (and as amended and supplemented from time to time, the
"Indenture"), by and between the Note Issuer and ▇▇▇▇▇▇ Trust and Savings Bank,
a banking corporation organized under the laws of the State of Illinois, as
Indenture Trustee (the "Indenture Trustee"). The assets of the Note Issuer will
consist primarily of the Intangible Transition Property (whether created by the
Transitional Funding Order issued by the Illinois Commerce Commission (the
"ICC") on September 10, 1998 (the "1998 Funding Order") or any Subsequent
Funding Order) transferred
to the Note Issuer pursuant to the Sale Agreement (as hereinafter defined).
Such Intangible Transition Property was, by virtue of the 1998 Funding Order,
granted to and vested in the Grantee, whose sole member is Illinois Power
Company (the "Company"). Pursuant to an agreement relating to the grant of
Intangible Transition Property, dated as of December 1, 1998 (the "Grant
Agreement"), by and between the Company and the Grantee, the Company has
confirmed the absolute nature of the ownership of the Intangible Transition
Property in the Grantee. The Intangible Transition Property will be
transferred to the Note Issuer by the Grantee pursuant to an Intangible
Transition Property sale agreement, dated as of December 1, 1998 (the "Sale
Agreement"), by and between the Grantee and the Note Issuer. Other
Intangible Transition Property may be granted to and vested in the Grantee
pursuant to Subsequent Financing Orders and confirmed by Subsequent Grant
Agreements and transferred to the Note Issuer by the Grantee pursuant to
Subsequent Sale Agreements. Pursuant to the Indenture, the Note Issuer has
granted to the Indenture Trustee, as trustee for the benefit of the holders
of the Notes, all of its right, title and interest in and to the Intangible
Transition Property as security for the Notes. The Intangible Transition
Property will be serviced pursuant to an Intangible Transition Property
servicing agreement, dated as of December 1, 1998 (as amended and
supplemented from time to time, the "Servicing Agreement"), by and between
the Company, as servicer, and the Grantee. All of the Grantee's right, title
and interest in and to the Grant Agreement, the Sale Agreement and the
Servicing Agreement, among other things, will be transferred to the Note
Issuer as Related Assets pursuant to the Sale Agreement.
Capitalized terms used and not otherwise defined herein shall have the
meanings given to them in the Indenture, including Appendix A thereto.
2. REPRESENTATIONS AND WARRANTIES. Each of the Company and the Grantee
represents and warrants to, and agrees with, each Underwriter as set forth below
in this Section 2. Certain terms used in this Section 2 are defined in
paragraph (c) hereof.
(a) If the offering of the Notes is a Delayed Offering (as
specified in Schedule I hereto), paragraph (i) below is applicable and, if
the offering of the Notes is a Non-Delayed Offering (as so specified),
paragraph (ii) below is applicable.
(i) The Grantee and the Notes meet the requirements for
the use of Form S-3 under the Securities Act of 1933 (the "Act"),
and the Grantee has filed with the Securities and Exchange
Commission (the "SEC") a registration statement (the file number of
which is set forth in Schedule I hereto) on such Form, including a
basic prospectus, for registration under the Act of the offering and
sale of the Notes. The Grantee may have filed one or more
amendments thereto, and may have used a Preliminary Final
Prospectus, each of which has previously been furnished to you.
Such registration statement, as so amended, has become effective.
The offering of the Notes is a Delayed Offering and, although the
Basic Prospectus may not include all the information with respect to
the Notes and the offering thereof required by the Act and the rules
thereunder to be included in the Final Prospectus, the Basic
Prospectus includes all such
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information required by the Act and the rules thereunder to be
included therein as of the Effective Date. The Grantee will next
file with the SEC pursuant to Rules 415 and 424(b)(2) or (5) a
final supplement to the form of prospectus included in such
registration statement relating to the Notes and the offering
thereof. As filed, such final prospectus supplement shall
include all required information with respect to the Notes and
the offering thereof and, except to the extent the
Representatives shall agree in writing to a modification, shall
be in all substantive respects in the form furnished to you prior
to the Execution Time or, to the extent not completed at the
Execution Time, shall contain only such specific additional
information and other changes (beyond that contained in the Basic
Prospectus and any Preliminary Final Prospectus) as the Grantee
has advised you, prior to the Execution Time, will be included or
made therein.
(ii) The Grantee and the Notes meet the requirements for
the use of Form S-3 under the Act and the Grantee has filed with
the SEC a registration statement (the file number of which is set
forth in Schedule I hereto) on such Form, including a basic
prospectus, for registration under the Act of the offering and
sale of the Notes. The Grantee may have filed one or more
amendments thereto, including a Preliminary Final Prospectus,
each of which has previously been furnished to you. The Note
Issuer will next file with the SEC either (x) a final prospectus
supplement relating to the Notes in accordance with Rules 430A
and 424(b)(1) or (4), or (y) prior to the effectiveness of such
registration statement, an amendment to such registration
statement, including the form of final prospectus supplement. In
the case of clause (x), the Grantee has included in such
registration statement, as amended at the Effective Date, all
information (other than Rule 430A Information) required by the
Act and the rules thereunder to be included in the Final
Prospectus with respect to the Notes and the offering thereof. As
filed, such final prospectus supplement or such amendment and
form of final prospectus supplement shall contain all Rule 430A
Information, together with all other such required information,
with respect to the Notes and the offering thereof and, except to
the extent the Representatives shall agree in writing to a
modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent
not completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond that
contained in the Basic Prospectus and any Preliminary Final
Prospectus) as the Grantee has advised you, prior to the
Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or
will, and when the Final Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date, the Final Prospectus
(and any supplement thereto) will, comply in all material respects with the
applicable requirements of the Act, the Securities Exchange Act of 1934
(the "Exchange Act") and the Trust Indenture Act of 1939 (the "Trust
Indenture Act") and the respective rules thereunder; on the Effective Date,
the
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Registration Statement did not or will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; on the Effective Date and on the Closing Date the Indenture did
or will comply in all material respects with the requirements of the Trust
Indenture Act and the rules thereunder; and, on the Effective Date, the
Final Prospectus, if not filed pursuant to Rule 424(b), did not or will
not, and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date, the Final Prospectus (together with any supplement thereto)
will not, include any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that neither the Grantee nor the Company makes any
representations or warranties as to (i) that part of the Registration
Statement which shall constitute the Statements of Eligibility and
Qualification (Forms T-1) under the Trust Indenture Act of the Indenture
Trustee or (ii) the information contained in or omitted from the
Registration Statement or the Final Prospectus (or any supplement thereto)
in reliance upon and in conformity with information furnished in writing to
the Grantee by or on behalf of any Underwriter through the Representatives
specifically for inclusion in the Registration Statement or the Final
Prospectus (or any supplement thereto).
(c) The terms which follow, when used in this Agreement, shall
have the meanings indicated. The term "the Effective Date" shall mean each
date that the Registration Statement and any post-effective amendment or
amendments thereto became or become effective and each date after the date
hereof on which a document incorporated by reference in the Registration
Statement is filed. "Execution Time" shall mean the date and time that
this Agreement is executed and delivered by the parties hereto. "Basic
Prospectus" shall mean the prospectus referred to in paragraph (a) above
contained in the Registration Statement at the Effective Date including, in
the case of a Non-Delayed Offering, any Preliminary Final Prospectus.
"Preliminary Final Prospectus" shall mean any preliminary prospectus
supplement to the Basic Prospectus which describes the Notes and the
offering thereof and is used prior to filing of the Final Prospectus.
"Final Prospectus" shall mean the prospectus supplement relating to the
Notes that is first filed pursuant to Rule 424(b) after the Execution Time,
together with the Basic Prospectus or, if, in the case of a Non-Delayed
Offering, no filing pursuant to Rule 424(b) is required, shall mean the
form of final prospectus relating to the Notes, including the Basic
Prospectus, included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statement referred to
in paragraph (a) above, including incorporated documents, exhibits and
financial statements, as amended at the Execution Time (or, if not
effective at the Execution Time, in the form in which it shall become
effective) and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Date (as hereinafter defined), shall also
mean such registration statement as so amended. Such term shall include
any Rule 430A Information deemed to be included therein at the Effective
Date as provided by Rule 430A. "Rule 415," "Rule 424," "Rule 430A" and
"Regulation S-K" refer to such rules or regulation under the Act. "Rule
430A Information" means information with respect to
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the Notes and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
Any reference herein to the Registration Statement, the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under
the Exchange Act on or before the Effective Date of the Registration
Statement or the issue date of the Basic Prospectus, any Preliminary
Final Prospectus or the Final Prospectus, as the case may be; and any
reference herein to the terms "amend," "amendment" or "supplement" with
respect to the Registration Statement, the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus shall be deemed to
refer to and include the filing of any document under the Exchange Act
after the Effective Date of the Registration Statement or the issue date
of the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, as the case may be, deemed to be incorporated therein by
reference. A "Non-Delayed Offering" shall mean an offering of
securities which is intended to commence promptly after the effective
date of a registration statement, with the result that, pursuant to
Rules 415 and 430A, all information (other than Rule 430A Information)
with respect to the securities so offered must be included in such
registration statement at the effective date thereof. A "Delayed
Offering" shall mean an offering of securities pursuant to Rule 415
which does not commence promptly after the effective date of a
registration statement, with the result that only information required
pursuant to Rule 415 need be included in such registration statement at
the effective date thereof with respect to the securities so offered.
Whether the offering of the Notes is a Non-Delayed Offering or a Delayed
Offering shall be set forth in Schedule I hereto.
(d) PricewaterhouseCoopers LLP, the accountants who certified
certain financial statements of the Grantee and the Note Issuer included in
the Prospectus, are independent public accountants as required by the Act
and the rules and regulations of the SEC thereunder.
(e) The financial statements included or incorporated by
reference in the Prospectus present fairly the financial position and
results of operations of the Grantee and the Note Issuer, respectively, as
of the respective dates and for the respective periods specified and,
except as otherwise stated in the Prospectus, such financial statements
have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis during the periods involved.
Neither the Grantee nor the Note Issuer has any material contingent
obligation which is not disclosed in the Prospectus.
(f) The Note Issuer has been duly formed and is validly existing
as a Delaware business trust and is in good standing under the laws of the
State of Delaware, with full power and authority to execute, deliver and
perform its obligations under this Agreement, the Sale Agreement, the
Indenture and the Notes.
(g) The Note Issuer is not in violation of the Trust Agreement,
or in default in the performance or observance of any material obligation,
agreement, covenant or
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condition contained in any material contract, lease, note or other
instrument to which it is a party or by which it may be bound, or
materially in violation of any law, administrative regulation or
administrative, arbitration or court order, except in each case to such
extent as may be set forth in the Prospectus; and the execution and
delivery of the Sale Agreement, and the Indenture and the Notes, the
incurrence of the obligations set forth therein and the consummation of
the transaction therein contemplated will not conflict with or
constitute a breach of, or default under, the Trust Agreement or any
mortgage, contract, lease, note or other instrument to which the Note
Issuer is a party or by which it may be bound, or any law,
administrative regulation or administrative, arbitration or court order.
(h) There is no pending or threatened suit or proceeding before
any court or governmental agency, authority or body or any arbitration
involving the Company or any of its significant subsidiaries or the Note
Issuer required to be disclosed in the Prospectus which is not adequately
disclosed in the Prospectus.
(i) The Indenture has been duly and validly authorized by the
necessary action and duly qualified under the Trust Indenture Act; and the
Indenture has been duly and validly executed and delivered and is a valid
and enforceable instrument in accordance with its terms (subject to
bankruptcy, reorganization, insolvency, moratorium or other similar laws or
equitable principles affecting the enforcement of creditors' rights from
time to time in effect).
(j) The issuance and sale of the Notes in accordance with the
terms of this Agreement have been duly and validly authorized by the
necessary action; the Notes, when duly executed, authenticated and
delivered against payment of the agreed consideration therefor, will be
valid and enforceable obligations in accordance with their terms, entitled
to the benefits provided by the Indenture, and the holders of the Notes
will be entitled to the payment of principal and interest as therein
provided; and the Notes and the Indenture conform to the descriptions
thereof contained in the Prospectus.
Any certificate signed by any officer of the Company or the Grantee and
delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company and the Grantee to each Underwriters
as to the matters covered thereby.
3. PURCHASE AND SALE. Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Grantee will cause
to be sold to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Note Issuer, at the purchase price set forth in
Schedule I hereto the principal amount of the Notes set forth opposite such
Underwriter's name in Schedule II hereto.
4. DELIVERY AND PAYMENT. Delivery of and payment for the Notes shall be
made on the date and at the time specified in Schedule I hereto (or such later
date not later than five business days after such specified date as the
Representatives shall designate), which date and time may be postponed by
agreement between the Representatives and the Grantee or as provided in
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Section 9 hereof (such date and time of delivery and payment for the Notes
being herein called the "Closing Date"). Delivery of the Notes shall be made
to the Representatives for the respective accounts of the several
Underwriters against payment by the several Underwriters through the
Representatives of the purchase price thereof to the Note Issuer by wire
transfer of immediately available funds. Delivery of the Notes shall be made
at such location as the Representatives shall reasonably designate at least
one business day in advance of the Closing Date. The Notes to be so
delivered shall be initially represented by Notes registered in the name of
Cede & Co., as nominee of The Depository Trust Company ("DTC"). The
interests of beneficial owners of the Notes will be represented by book
entries on the records of DTC and participating members thereof. Definitive
Notes will be available only under limited circumstances.
The Grantee will cause the Note Issuer to have the Notes available for
inspection, checking and packaging by the Representatives in New York, New York,
not later than 1:00 PM Eastern Standard Time on the business day prior to the
Closing Date.
5. COVENANTS.
(a) COVENANTS OF THE GRANTEE. The Grantee covenants and agrees
with the several Underwriters that:
(i) The Grantee will use commercially reasonable efforts
to cause the Registration Statement, if not effective at the
Execution Time, and any amendment thereto, to become effective.
Prior to the termination of the offering of the Notes, the Grantee
will not file any amendment of the Registration Statement or
supplement (including the Final Prospectus or any Preliminary Final
Prospectus) to the Basic Prospectus unless the Grantee has furnished
you a copy for your review prior to filing and will not file any
such proposed amendment or supplement to which you reasonably
object. Subject to the foregoing sentence, the Grantee will cause
the Final Prospectus, properly completed, and any supplement thereto
to be filed with the SEC pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide
evidence satisfactory to the Representatives of such timely filing.
The Grantee will promptly advise the Representatives (i) when the
Registration Statement, if not effective at the Execution Time, and
any amendment thereto, shall have become effective, (ii) when the
Final Prospectus, and any supplement thereto, shall have been filed
with the SEC pursuant to Rule 424(b), (iii) when, prior to
termination of the offering of the Notes, any amendment to the
Registration Statement shall have been filed or become effective,
(iv) of any request by the SEC for any amendment of the Registration
Statement or supplement to the Final Prospectus or for any
additional information, (v) of the issuance by the SEC of any stop
order suspending the effectiveness of the Registration Statement or
the institution or threatening of any proceeding for that purpose
and (vi) of the receipt by the Grantee of any notification with
respect to the suspension of the qualification of
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the Notes for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Grantee will
use commercially reasonable efforts to prevent the issuance of
any such stop order and, if issued, to obtain as soon as possible
the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the
Notes is required to be delivered under the Act, any event occurs as
a result of which the Final Prospectus as then supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light
of the circumstances under which they were made not misleading, or
if it shall be necessary to amend the Registration Statement or
supplement the Final Prospectus to comply with the Act or the
Exchange Act or the respective rules thereunder, the Grantee
promptly will (i) prepare and file with the SEC, subject to the
second sentence of paragraph (a) of this Section 5, an amendment or
supplement which will correct such statement or omission or effect
such compliance and (ii) supply any supplemented Prospectus to you
in such quantities as you may reasonably request.
(iii) As soon as practicable, the Grantee will cause Note
Issuer to make generally available to the Noteholders and to the
Representatives an earnings statement or statements of the Note
Issuer which will satisfy the provisions of Section 11(a) of the Act
and Rule 158 under the Act.
(iv) The Grantee will furnish to the Representatives and
counsel for the Underwriters, without charge, copies of the
Registration Statement (including exhibits thereto) and, so long as
delivery of a prospectus by an Underwriter or dealer may be required
by the Act, as many copies of any Preliminary Final Prospectus and
the Final Prospectus and any supplement thereto as the
Representatives may reasonably request. The Grantee shall furnish
or cause to be furnished to the Representatives copies of all
reports on Form SR required by Rule 463 under the Act. The Grantee
will pay the expenses of printing or other production of all
documents relating to the offering.
(v) The Grantee will arrange for the qualification of the
Notes for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in
effect so long as required for the distribution of the Notes and
will arrange for the determination of the legality of the Notes for
purchase by institutional investors; provided that in no event shall
the Grantee be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action
that would subject it to service of process in suits, other than
those arising out of the offering or sale of the Notes, in any
jurisdiction where it is not now so subject.
(vi) Until the business date set forth on Schedule I
hereto, the Grantee will not, without the consent of the
Representatives, offer, sell or contract to sell,
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or otherwise dispose of, directly or indirectly, or announce the
offering of, any asset-backed securities of a trust or other
special purpose vehicle (other than the Notes).
(vii) For a period from the date of this Agreement until the
retirement of the Notes, or until such time as the Underwriters
shall cease to maintain a secondary market in the Notes, whichever
occurs first, the Grantee will deliver to the Representatives the
annual statements of compliance and the annual independent auditor's
servicing reports furnished to the Grantee Trustee, the Note Issuer
or the Indenture Trustee pursuant to the Servicing Agreement or the
Indenture, as applicable, as soon as such statements and reports are
furnished to the Grantee, Note Issuer or the Indenture Trustee.
(viii) So long as any of the Notes are outstanding, the
Grantee will furnish to the Representatives, to the extent not
provided by the Company pursuant to clause (b)(iii) below, (i) as
soon as available, a copy of each report of the Grantee or the Note
Issuer filed with the SEC under the Exchange Act, or mailed to
Noteholders, (ii) a copy of any filings made by the Grantee or the
Note Issuer with the ICC pursuant to the 1998 Funding Order, and
(iii) from time to time, any information concerning the Company, the
Grantee, the Note Issuer, as the Representatives may reasonably
request.
(ix) To the extent, if any, that any rating necessary to
satisfy the condition set forth in Section 6(m) of this Agreement is
conditioned upon the furnishing of documents or the taking of other
actions by the Grantee on or after the Closing Date, the Grantee
shall furnish such documents and take such other actions.
(b) Covenants of the Company. The Company covenants and agrees
with the several Underwriters that, to the extent that the Note Issuer has
not already performed such act pursuant to Section 5(a):
(i) The Company will use commercially reasonable efforts
to cause the Registration Statement, if not effective at the
Execution Time, and any amendment thereto, to become effective. The
Company will use commercially reasonable efforts to prevent the
issuance by the SEC of any stop order suspending the effectiveness
of the Registration Statement and, if issued, to obtain as soon as
possible the withdrawal thereof.
(ii) The Company will apply the proceeds of the issuance
and sale of the Notes for the purposes described in the Prospectus.
(iii) Until the business date set forth on Schedule I
hereto, the Company will not, without the consent of the
Representatives, offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce the offering of, any
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asset-backed securities of a trust or other special purpose vehicle
(other than the Notes).
(iv) So long as any of the Notes are outstanding and the
Company is the Servicer, the Company will furnish to the
Representatives (i) as soon as available, a copy of each report of
the Company, the Grantee or the Note Issuer filed with the SEC under
the Exchange Act, or mailed to Noteholders, (ii) a copy of any
filings with the ICC by the Company, the Grantee or the Note Issuer
pursuant to the 1998 Funding Order, and (iii) from time to time, any
information concerning the Company, the Grantee or the Note Issuer,
as the Representatives may reasonably request.
(v) To the extent, if any, that any rating necessary to
satisfy the condition set forth in Section 6(m) of this Agreement is
conditioned upon the furnishing of documents or the taking of other
actions by the Company on or after the Closing Date, the Company
shall furnish such documents and take such other actions.
(vi) The Company recognizes and agrees that a substantial
impairment of the rights of Holders with respect to the collection
of IFCs and payments on the Notes, arising from a declaration of
invalidity of the Amendatory Act and/or the Funding Law or for any
other reason, occurring after the Company and its affiliates
received the proceeds of such Notes, would not be equitable. The
Company agrees to take any and all actions reasonably necessary to
preserve the rights of Holders with respect to payments on the Notes
out of the amounts represented by IFCs or their equivalent,
including, but not limited to, (i) making appropriate filings with
the State of Illinois, the ICC or other regulatory bodies to defend,
preserve and create on behalf of Holders the right to receive
payments as provided in the Notes and (ii) so long as the 1998
Funding Order remains in effect, continuing to deduct and pay over
to the Servicer for the benefit of the Note issuer all IFCs and IFC
Payments or equivalent revenues received by the Company
notwithstanding any declaration of invalidity of the Amendatory Act
and/or the Funding Law.
(vii) The Initial IFC Tariff will be calculated in
accordance with the 1998 Funding Order.
6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of
the Underwriters to purchase the Notes shall be subject to the accuracy of the
representations and warranties on the part of the Grantee and the Company
contained herein as of the Execution Time and the Closing Date, on the part of
the Grantee contained in Article III of the Sale Agreement and on the part of
the Company contained in Article III of the Grant Agreement and in Section 6.01
of the Servicing Agreement as of the Closing Date (which representations and
warranties are hereby incorporated herein as if set forth in full),to the
accuracy of the statements in the Notes pursuant to the provisions hereof, to
the performance by the Grantee, the Company
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and the Note Issuer of their obligations hereunder and to the following
additional conditions precedent:
(a) If the Registration Statement has not become effective prior
to the Execution Time, unless the Representatives agree in writing to a
later time, the Registration Statement will become effective not later than
(i) 6:00 PM Eastern Standard Time, on the date of determination of the
public offering price, if such determination occurred at or prior to 3:00
PM Eastern Standard Time on such date, or (ii) 12:00 Noon Eastern Standard
Time on the business day following the day on which the public offering
price was determined, if such determination occurred after 3:00 PM Eastern
Standard Time on such date; if filing of the Final Prospectus, or any
supplement thereto, is required pursuant to Rule 424(b), the Final
Prospectus, and any such supplement, shall have been filed in the manner
and within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or
threatened.
(b) The Representatives shall have received an opinion of ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Company, the Grantee and the Note Issuer,
dated the Closing Date, substantially in the form of Exhibit A hereto.
(c) The Representatives shall have received an opinion letter of,
or a reliance letter thereon from, ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the
Note Issuer, dated the Closing Date, in form and substance reasonably
satisfactory to the Representatives, required to be delivered by such
counsel pursuant to the requirements of clauses (3) and (8) of Section 2.10
of the Indenture.
(d) The Representatives shall have received (i) opinion letters
of, or a reliance letter or letters thereon from, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and
Finger, P.A., special Delaware counsel to the Grantee and the Note Issuer,
dated the Closing Date, in form and substance reasonably satisfactory to
the Representatives, as to matters relating to the Grantee and the Note
Issuer and the transactions contemplated hereby, respectively, and (ii) an
opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A., counsel to the Delaware
Trustee, dated the Closing Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
(i) the Delaware Trustee is validly existing as a national
banking association in good standing under the laws of the State of
Delaware and of the federal laws of the United States of America,
with full corporate trust power and authority to enter into and
perform its obligations as Delaware Trustee under the Trust
Agreement, the Sale Agreement and the Indenture; and
(ii) the Trust Agreement has been duly authorized, executed
and delivered by the Delaware Trustee and constitutes a legal, valid
and binding agreement enforceable against the Delaware Trustee in
accordance with its terms (subject, as to enforcement of remedies,
to applicable bankruptcy, reorganization,
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insolvency, moratorium or other similar laws or equitable
principles affecting creditors' rights generally from time to
time in effect).
(e) The Representatives shall have received an opinion or
opinions of counsel to the Indenture Trustee, portions of which may be
delivered by ▇▇▇▇▇▇ & ▇▇▇▇▇▇, outside counsel to the Indenture Trustee, and
portions of which may be delivered by in-house counsel for the Indenture
Trustee, dated the Closing Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
(i) the Indenture Trustee is validly existing as a banking
corporation in good standing under the laws of Illinois;
(ii) the Indenture has been duly authorized, executed and
delivered by the Indenture Trustee and constitutes the legal, valid
and binding agreement enforceable against the Indenture Trustee in
accordance with its terms (subject, as to enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws or equitable principles affecting creditors'
rights generally from time to time in effect); and
(iii) the Indenture Trustee has duly executed and
authenticated the Notes issued on the Closing Date on behalf of the
Note Issuer.
(f) The Representatives shall have received from Brown & Wood
LLP, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Notes, the
Indenture, the Registration Statement, the Final Prospectus (together with
any supplement thereto) and other related matters as the Representatives
may reasonably require, and the Company, the Grantee and the Note Issuer
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(g) The Representatives shall have received a certificate of the
Grantee, signed by the Sole Member or any Manager of the Grantee, including
the Independent Managers of the Grantee, dated the Closing Date, to the
effect that the signers of such certificate have carefully examined the
Registration Statement, the Final Prospectus, any supplement to the Final
Prospectus and this Agreement and that:
(i) the representations and warranties of the Grantee in
this Agreement and in the Sale Agreement are true and correct in all
material respects on and as of the Closing Date with the same effect
as if made on the Closing Date, and the Grantee and the Note Issuer
have complied with all the agreements and satisfied all the
conditions on each of their part to be performed or satisfied at or
prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been
12
instituted or, to the Grantee's knowledge, threatened; and
(iii) since the dates as of which information is given in
the Final Prospectus (exclusive of any supplement thereto), there
has been no material adverse change in (A) the condition (financial
or other), prospects, earnings, business or properties of the
Grantee or the Note Issuer, whether or not arising from transactions
contemplated by the Final Prospectus in the ordinary course of
business, or (B) the Intangible Transition Property or any right
related thereto under the Funding Law or the 1998 Funding Order,
except as set forth in or contemplated in the Final Prospectus
(exclusive of any supplement thereto).
(h) The Representatives shall have received a certificate of the
Company, signed by the Chief Executive Officer, the President or a
Vice-President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the Final
Prospectus, any supplement to the Final Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company in
this Agreement, the Grant Agreement, the Servicing Agreement, the
Administration Agreement and the Remediation Agreement are true and
correct in all material respects on and as of the Closing Date with
the same effect as if made on the Closing Date, and the Company has
complied in all material respects with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date; provided, however, that
the execution of each certificate by any of said individuals on
behalf of the Company shall not be deemed to be the expression of
any legal opinion or opinions by any of said individuals;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the dates as of which information is given in
the Final Prospectus (exclusive of any supplement thereto), there
has been no material adverse change in (A) the condition (financial
or other), prospects, earnings, business or properties of the
Company and its subsidiaries taken as a whole, whether or not
arising from transactions contemplated by the Final Prospectus or in
the ordinary course of business, or (B) the Intangible Transition
Property, except as set forth in or contemplated in the Final
Prospectus (exclusive of any supplement thereto).
(i) At the Closing Date, PricewaterhouseCoopers LLP shall have
furnished to the Representatives (i) a letter or letters (which may refer
to letters previously delivered to one or more of the Representatives),
dated as of the Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent
13
accountants within the meaning of the Act and the Exchange Act and the
respective applicable published rules and regulations thereunder and
stating in effect that they have performed certain specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Registration Statement and the Final Prospectus, including
information specified by the Underwriters and set forth under the
captions "Prospectus Summary," "Description of the Intangible Transition
Property," "The Servicer" and "Description of the Notes" in the Final
Prospectus, agrees with the accounting records of the Company and its
subsidiaries, excluding any questions of legal interpretation, and (ii)
the opinion or certificate, dated as of the Closing Date, in form and
substance satisfactory to the Representatives, satisfying the
requirements of Section 2.10(9) of the Indenture.
References to the Final Prospectus in this paragraph (i) include any
supplement thereto at the date of the letter.
In addition, except as provided in Schedule I hereto, at the Execution
Time, PricewaterhouseCoopers LLP shall have furnished to the Representatives a
letter or letters, dated as of the Execution Time, in form and substance
satisfactory to the Representatives, to the effect set forth above.
(j) Subsequent to the Execution Time or, if earlier, the dates as
of which information is given in the Registration Statement (exclusive of
any amendment thereof) and the Final Prospectus (exclusive of any
supplement thereto), there shall not have been any change, or any
development involving a prospective change, in or affecting either (i) the
business, properties or financial condition of the Company, the Grantee or
the Note Issuer, or (ii) the Intangible Transition Property, the Notes, the
1998 Funding Order or the Funding Law, the effect of which is, in the case
of either (i) or (ii) above, in the judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to proceed
with the offering or delivery of the Notes as contemplated by the
Registration Statement (exclusive of any amendment thereof) and the Final
Prospectus (exclusive of any supplement thereto).
(k) The Representatives shall have received on the Closing Date
an opinion letter or letters, portions of which may be delivered by ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Company, the Grantee and the Note Issuer,
and portions of which may be delivered by ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A.,
special Delaware counsel to the Grantee and the Note Issuer, dated the
Closing Date, in form and substance reasonably satisfactory to the
Representatives, but subject to the qualifications, limitations,
assumptions and analyses set forth therein (i) to the effect that a
bankruptcy court would conclude that, if the Company is deemed to have
received some interest in the Intangible Transition Property, that interest
was transferred by the Company to the Grantee as an absolute transfer (as
in a true sale), and no interest in or title to the Intangible Transition
Property shall be part of
14
the Company's estate in the event of a bankruptcy petition by or against
the Company under the Bankruptcy Code; (ii) to the effect that a court
would not order the substantive consolidation of the assets and
liabilities of the Grantee with those of the Company in the event of a
bankruptcy, reorganization or other insolvency proceeding involving the
Company; (iii) to the effect a federal bankruptcy court or another
federal court would hold that Delaware law (and not United States
federal law) governs the determination of whether a voluntary bankruptcy
petition filed on behalf of the Grantee has been duly authorized; (iv)
to the effect that if properly presented to a Delaware court, a Delaware
court applying Delaware law would conclude that (A) pursuant to Section
2.7(b) of the Operating Agreement of the Grantee, in order for a person
to initiate any Event of Bankruptcy (as defined in the Operating
Agreement) with respect to the Grantee or take any action in furtherance
of any such Event of Bankruptcy, the affirmative vote of all of the
Managers (including the Independent Managers (as defined in the
Operating Agreement)) is required, and (B) such provision, contained in
Section 2.7(b) of the Operating Agreement, that requires the affirmative
vote of all of the Managers (including the Independent Managers),
constitutes a legal, valid and binding agreement of the Sole Member and
is enforceable against the Sole Member, in accordance with its terms;
and (v) the Operating Agreement constitutes a legal, valid and binding
agreement of the Sole Member thereunder, and is enforceable against the
Sole Member in accordance with its terms.
(l) The Representatives shall have received on the Closing Date
an opinion letter or letters of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the
Company, the Grantee and the Note Issuer, dated the Closing Date, in form
and substance reasonably satisfactory to the Representatives, to the effect
that, but subject to the qualifications, limitations, assumptions and
analysis therein set forth, including the assumption that any Impairment
(as defined therein) would be substantial, a reviewing court, in a properly
prepared and presented case: (i) would conclude that, absent a
demonstration by the State of Illinois (the "State") that an Impairment is
necessary to further a significant and legitimate public purpose, the
Noteholders (or the Indenture Trustee acting on their behalf) could
challenge successfully under Article I, Section 10 of the United States
Constitution (the "Contract Clause") the constitutionality of any law
passed by the State legislature determined by such court to limit, alter,
impair or reduce the value of the Intangible Transition Property or the
Charges (as defined therein) so as to cause an Impairment prior to the time
that the Notes are fully paid and discharged; (ii) would conclude that any
attempt by citizens of the State to initiate changes to the Amendatory Act
determined by such court to limit, alter, impair or reduce the value of the
Intangible Transition Property or the Charges would be invalid; (iii) would
conclude that under the Funding Law the ICC would be prohibited from taking
any action subsequent to the 1998 Funding Order becoming final determined
by such court to reduce, postpone, impair or terminate the value of the
Intangible Transition Property or the Charges; (iv) should conclude that
permanent injunctive relief is available, pursuant to the Contract Clause,
to prevent implementation of legislation hereafter passed by the Illinois
legislature determined by such court to limit, alter, impair or reduce the
value of the Intangible Transition Property or the Charges so as
15
to cause an Impairment; and although sound and substantial arguments
support the granting of preliminary injunctive relief, the decision to
do so will be in the discretion of the court requested to take such
action, which will be exercised on the basis of the considerations
discussed in such opinion; (v) in the event that a provision of the
Amendatory Act were hereafter declared to be invalid by a court, a
reviewing court should hold that the Intangible Transition Property
would remain valid and vested in the Grantee or its assignees and the
Noteholders would continue to be secured thereby; (vi) if a reviewing
court were to determine, after such a declaration, that the Intangible
Transition Property would remain valid and so vested and that the
Noteholders would continue to be secured thereby, such court should also
determine, for the same reasons, that the substance of the State Pledge
would continue in effect for the benefit of the Noteholders; (vii) a
reviewing court which determines that the substance of the State Pledge
continues in effect for the benefit of the Noteholders should also
determine, for the same reasons, that the ICC could not take any action
determined by such court to limit, alter, impair or reduce materially
the value of the Intangible Transition Property or the Charges, except
for such actions, if any, which could be taken by the State without
violating the State Pledge; and (viii) notwithstanding a judicial
declaration of the invalidity of the Amendatory Act, the 1998 Funding
Order would remain in effect and the Intangible Transition Property
would continue to be valid and enforceable, at least against the Company
and its successors and assigns (including a trustee in bankruptcy),
unless and until the 1998 Funding Order were modified by the ICC or a
court in subsequent proceedings initiated to vacate, amend or otherwise
modify the 1998 Funding Order; however, notwithstanding such a
declaration, it would be possible to seek a stay of any decision which
vacates, amends or otherwise modifies the 1998 Funding Order in a manner
adversely affecting the payment of the Charges pending appellate review
of such decision; and while sound and substantial arguments support the
granting of such a stay, the decision to do so will be in the discretion
of the court requested to take such an action, which will be exercised
on the basis of the factors discussed in such opinion.
(m) The Notes shall have been rated in the highest long-term
rating category by each of the Rating Agencies and on or after the date
hereof (i) no downgrade shall have occurred in the rating accorded to the
debt securities of the Company by any Rating Agency, and (ii) no such
organization shall have publicly announced that it has under surveillance
or review, with possible negative implications, its rating of any of the
Company's debt securities.
(n) On or prior to the Closing Date, the Grantee shall have
delivered to the Representatives evidence, in form and substance reasonably
satisfactory to the Representatives, of compliance with Section 2.10 of the
Indenture, together with such reliance letters as the Representatives shall
request.
(o) On or prior to the Closing Date, the Grantee shall have
delivered to the Representatives evidence, in form and substance reasonably
satisfactory to the Representatives, that appropriate filings have been,
are being or will be made, as
16
applicable, pursuant to Section 3.08 of the Sale Agreement and in
accordance with the Funding Law and other applicable law reflecting the
Note Issuer's first priority perfected ownership interest in the
Intangible Transition Property.
(p) On or prior to the Closing Date, the Grantee shall have
delivered to the Representatives evidence, in form and substance reasonably
satisfactory to the Representatives, that appropriate filings have been,
are being or will be made, as applicable, pursuant to Section 18-104(h) of
the Funding Law.
(q) The Representatives shall have received an opinion, or
reliance letter thereon, from ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, tax counsel to the Note
Issuer, substantially in the form of Exhibit 8.1 to the Registration
Statement.
(r) Prior to the Closing Date, the Company, the Grantee and the
Note Issuer shall have furnished to the Representatives such further
information, certificates, opinions and documents as the Representatives
may reasonably request.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of
such cancellation shall be given to the Grantee and the Note Issuer in writing
or by telephone or telegraph confirmed in writing.
The documents required to be delivered by this Section 6 shall be delivered
at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, on
the Closing Date.
7. EXPENSES.
(a) The Company and the Grantee will pay, or cause to be paid,
all expenses incident to the performance of their respective obligations
and those of the Note Issuer under this Agreement, including without
limitation, (i) expenses incident to the word processing, printing,
reproduction and distribution of the registration statement as originally
filed with the SEC and each amendment thereto, Preliminary Final
Prospectuses and the Final Prospectus (including any amendments and
supplements thereto), (ii) the fees and disbursements of the Indenture
Trustee, the Delaware Trustee, the Beneficiary Trustees and their
respective counsel, (iii) the fees and disbursements of counsel to the
Company, the Grantee, the Note Issuer, and the independent public
accountants of the Company, the Grantee and the Note Issuer, (iv) the fees
charged by the Rating Agencies in connection with the rating of the Notes,
(v) the fees of DTC in connection with the book-entry registration of the
Notes, and (vi) expenses incurred in distributing Preliminary Final
Prospectuses and the Final Prospectus (including any amendments and
supplements thereto) by the Underwriters. The Company and the
17
Grantee will also pay all reasonable fees and disbursements of
Underwriters' counsel, and will reimburse the Underwriters for any
expenses incurred by the Underwriters pursuant to Section 5(a)(v)
hereof in connection with the qualification of the Notes for sale under
the laws of such jurisdictions in the United States as the
Representatives may designate, together with costs and expenses in
connection with any filing with the National Association of Securities
Dealers with respect with the transactions contemplated hereby.
(b) If the sale of the Notes provided for herein is not
consummated because any condition to the obligations of the Underwriters
set forth in Section 6 hereof is not satisfied, because of any termination
pursuant to Section 10 hereof or because of any refusal, inability or
failure on the part of the Company, the Grantee or the Note Issuer to
perform any agreement herein or comply with any provision hereof other than
by reason of a default (including under Section 9) by any of the
Underwriters, the Company and the Grantee will, jointly and severally,
reimburse the Underwriters upon demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have
been incurred by them in connection with the proposed purchase and sale of
the Notes.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and the Grantee will, jointly and severally,
indemnify and hold harmless each Underwriter, the directors, officers,
members, employees and agents of each Underwriter, and each person who
controls any Underwriter within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the
Funding Law, the Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out
of, directly or indirectly, (i) the complete or partial judicial
invalidation of the Amendatory Act and/or the Funding Law, or (ii) arise
out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the registration statement for the
registration of the Notes as originally filed or in any amendment thereof,
or in the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, or in any amendment thereof or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, and will reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that neither the Company nor the
Grantee will be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information
furnished to the Grantee or the Company by or on behalf of any Underwriter
through the Representatives specifically for inclusion therein;
18
provided further, that, in the case of any indemnification under clause
(ii) above, with respect to any untrue statement or omission of material
fact made in any Preliminary Final Prospectus, the indemnity agreement
contained in this Section 8(a) shall not inure to the benefit of any
Underwriter or any person controlling such Underwriter from whom the
person asserting any such loss, claim, damage or liability purchased the
Notes that are the subject thereof, to the extent that any such loss,
claim, damage or liability of such Underwriter occurs under the
circumstance where it shall have been determined by a court of competent
jurisdiction by final and nonappealable judgment that (A) the Company or
the Grantee had previously furnished copies of the Final Prospectus to
the Representatives, (B) delivery of the Final Prospectus was required
by the Act to be made to such person, (C) the untrue statement or
omission of a material fact contained in the Preliminary Final
Prospectus was corrected in the Final Prospectus and (D) there was not
sent or given to such person, at or prior to the written confirmation of
the sale of such Notes to such person, a copy of the Final Prospectus.
This indemnity agreement will be in addition to any liability which the
Company and the Grantee may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company and the Grantee, each of their directors, each of
their officers who signs the Registration Statement, and each person who
controls the Company or the Grantee within the meaning of either the Act or
the Exchange Act, to the same extent as the foregoing indemnity from the
Company and the Grantee to each Underwriter, but only with reference to
written information relating to such Underwriter furnished to the Grantee
or the Company by or on behalf of such Underwriter through the
Representatives specifically for inclusion in the documents referred to in
the foregoing indemnity. This indemnity agreement will be in addition to
any liability which any Underwriter may otherwise have. The Grantee and
the Company acknowledge that the statements set forth in the last paragraph
of the cover page, under the heading "Underwriting" or "Plan of
Distribution" in any Preliminary Final Prospectus or the Final Prospectus
constitute the only information furnished in writing by or on behalf of the
several Underwriters for inclusion in the documents referred to in the
foregoing indemnity, and you, as the Representatives, confirm that such
statements are correct.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph
(a) or (b) above unless and to the extent it did not otherwise learn of
such action and such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a)
or (b) above. The indemnifying party shall be entitled to appoint counsel
of the indemnifying party's choice at the indemnifying party's expense to
represent the indemnified party in any action for which indemnification is
sought (in which case the
19
indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or
parties except as set forth below); provided, however, that such counsel
shall be reasonably satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local
counsel), and the indemnifying party shall bear the reasonable fees,
costs and expenses of such separate counsel if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the actual
or potential defendants in, or targets of, any such action include both
the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified partes which are different from
or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action
or (iv) the indemnifying party shall authorize the indemnified party to
employ separate counsel at the expense of the indemnifying party. It is
understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees and expenses of more than one separate firm for
all such indemnified parties. An indemnifying party will not, without
the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding and (ii)
does not include a statement as to or an admission of fault, culpability
or failure to act, by or on behalf of any indemnified party. The
indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, which consent shall not
be unreasonably withheld.
(d) In the event that the indemnity provided in paragraph (a) or
(b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company, the Grantee and the
Underwriters agree to contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses") to
which the Grantee and one or more of the Underwriters may be subject in
such proportion as is appropriate to reflect the relative benefits received
by the Grantee and by the Underwriters from the offering of the Notes;
provided, however, that in no case shall any Underwriter (except as may be
provided in any agreement among underwriters relating to the offering of
the Notes) be responsible for any amount in excess of the underwriting
discount or commission applicable to the Notes purchased by such
Underwriter hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company, the Grantee
and the Underwriters shall
20
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company, the
Grantee and the Underwriters respectively in connection with the
statements or omissions which resulted in such Losses as well as any
other relevant equitable considerations. Benefits received by the
Grantee shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses) of the Notes (which shall be equal
to the net proceeds from the sale of the Notes to the Note Issuer
(before deducting expenses)), and benefits received by the Underwriters
shall be deemed to be equal to the total underwriting discounts and
commissions, in each case as set forth on the cover page of the Final
Prospectus. Relative fault shall be determined by reference to whether
any alleged untrue statement or omission relates to information provided
by the Company or the Grantee, or the Underwriters, as the case may be.
The Company, the Grantee and the Underwriters agree that it would not be
just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each
person who controls an Underwriter within the meaning of either the Act
or the Exchange Act and each director, officer, employee and agent of an
Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Grantee or the Company
within the meaning of either the Act or the Exchange Act, each officer
of the Grantee or the Company who shall have signed the Registration
Statement and each director of the Grantee or the Company shall have the
same rights to contribution as the Grantee or the Company, subject in
each case to the applicable terms and conditions of this paragraph (d).
The Underwriters' obligations in this paragraph (d) to contribute are
several in proportion to their respective underwriting obligations and
not joint.
9. DEFAULT BY AN UNDERWRITER. If any one or more Underwriters shall fail
to purchase and pay for any of the Notes agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the nondefaulting Underwriters shall be obligated severally to take
up and pay for (in the respective proportions which the amount of Notes set
forth opposite their names in Schedule II hereto bears to the aggregate amount
of Notes set forth opposite the names of all the remaining Underwriters) the
Notes which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Notes which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Notes set forth in Schedule
II hereto, the nondefaulting Underwriters shall have the right to purchase all,
but shall not be under any obligation to purchase any, of the Notes, and if such
nondefaulting Underwriters do not purchase all the Notes, this Agreement will
terminate without liability to any nondefaulting Underwriter, the Grantee or the
Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
seven days, as the Representatives shall determine in order that the required
changes in the Registration Statement
21
and the Final Prospectus or in any other documents or arrangements may be
effected. Nothing contained in this Agreement shall relieve any defaulting
Underwriter of its liability, if any, to the Grantee and the Company and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
10. TERMINATION. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company and
the Grantee prior to delivery of and payment for the Notes, if prior to such
time (i) there shall have occurred any change, or any development involving a
prospective change, in or affecting either (A) the business, properties or
financial condition of the Grantee or the Company or (B) the Intangible
Transition Property, the Notes, the 1998 Funding Order or the Funding Law, the
effect of which, in the judgment of the Representatives, materially impairs the
investment quality of the Notes or makes it impractical or inadvisable to market
the Notes, (ii) trading in the Company's Common Stock shall have been suspended
by the SEC or the New York Stock Exchange or trading in securities generally on
the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on such Exchange, (iii) a banking moratorium
shall have been declared either by federal, New York State or Illinois State
authorities or (iv) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the judgment of the Representatives, impracticable or inadvisable to
proceed with the offering or delivery of the Notes as contemplated by the Final
Prospectus (exclusive of any supplement thereto).
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers, the Grantee or its officers, the Note Issuer or its officers and
of the Underwriters set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or of the Company, the Grantee, the Note Issuer or any of the
officers, directors or controlling persons referred to in Section 8 hereof, and
will survive delivery of and payment for the Notes. The provisions of Sections
7 and 8 hereof shall survive the termination or cancellation of this Agreement
and the complete or partial judicial invalidation of the Amendatory Act and/or
the Funding Law.
12. NOTICES. All communications hereunder will be in writing and may be
given by United States mail, courier service, telegram, telex, telemessage,
telecopy, telefax, cable or facsimile (confirmed by telephone or in writing in
the case of notice by telegram, telex, telemessage, telecopy, telefax, cable or
facsimile) or any other customary means of communication, and any such
communication shall be effective when delivered, or if mailed, three days after
deposit in the United States mail with proper postage for ordinary mail prepaid,
and if sent to the Representatives, to them at the address specified in Schedule
I hereto; and if sent to the Company, to it at Illinois Power Company, the sole
member of Illinois Power Securitization Limited Liability Company, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇; and if sent to the
Grantee, to it at Illinois Power Securitization Limited Liability Company, ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇. The
22
parties hereto, by notice to the others, may designate additional or
different addresses for subsequent communications.
13. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. APPLICABLE LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
15. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be deemed an original, which taken together
shall constitute one and the same instrument.
23
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the
Company, the Grantee and the several Underwriters.
Very truly yours,
ILLINOIS POWER COMPANY,
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President-Finance
ILLINOIS POWER SECURITIZATION LIMITED
LIABILITY COMPANY,
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Manager
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date specified in Schedule I hereto.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Managing Director
For itself and the other several Underwriters, if any, named in Schedule II to
the foregoing Agreement.
SCHEDULE I
Underwriting Agreement dated December 10, 1998
Registration Statement No. 333-63537
Representative(s):
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
World Financial Center
North Tower
New York, New York 10281
Title, Purchase Price and Description of Notes:
Title: $864,000,000 Illinois Power Special Purpose Trust
Transitional Funding Trust Notes, Series 1998-1
Principal amount, Price to Public, Underwriting Discounts and Commissions and
Proceeds to Trust:
Underwriting
Total Principal Discounts and
Amount of Class Price to Public Commissions Proceeds to Trust
--------------- --------------- ----------- -----------------
Per Class A-1 Note $110,000,000 99.99903% .28% 99.71903%
Per Class A-2 Note 100,000,000 99.99636% .35% 99.64636%
Per Class A-3 Note 80,000,000 99.99912% .40% 99.59912%
Per Class A-4 Note 85,000,000 99.99460% .45% 99.54460%
Per Class A-5 Note 175,000,000 99.99166% .50% 99.49166%
Per Class A-6 Note 175,000,000 99.99465% .55% 99.44465%
Per Class A-7 Note 139,000,000 99.96472% .65% 99.31472%
----------- --------- ------ ---------
Total $864,000,000 $863,917,002 $4,101,500 $859,815,502
----------- ----------- --------- -----------
----------- ----------- --------- -----------
2
Original Issue Discount (if any): $82,997.70
Redemption provisions: Optional Redemption as set forth in Article X
of the Indenture
Other provisions:
Closing Date, Time and Location: December 22, 1998, 8:00 AM,
Central Standard Time,
Chicago, IL
Type of Offering: Delayed Offering
Date referred to in Section 5(a)(vi) and 5(b)(iii) after which the Company and
the Note Issuer may offer or sell asset-backed securities in a trust or special
purpose vehicle without the consent of the Representative(s): December 31, 1998
3
SCHEDULE II
Class A-4 Class A-4 Class A-4 Class A-4 Class A-5 Class A-6 Class A-7
Underwriters Notes Notes Notes Notes Notes Notes Notes Total
------------ ----- ----- ----- ----- ----- ----- ----- -----
▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated $60,500,000 $55,000,000 $44,000,000 $46,750,000 $96,250,000 $96,250,000 $76,450,000 $475,200,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Inc. 19,800,000 18,000,000 14,400,000 15,300,000 31,500,000 31,500,000 25,020,000 155,520,000
Chase Securities Inc. 6,600,000 6,000,000 4,800,000 5,100,000 10,500,000 10,500,000 8,340,000 51,840,000
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Securities
Corporation 6,600,000 6,000,000 4,800,000 5,100,000 10,500,000 10,500,000 8,340,000 51,840,000
First Chicago Capital
Markets, Inc. 4,400,000 4,000,000 3,200,000 3,400,000 7,000,000 7,000,000 5,560,000 34,560,000
NationsBanc
▇▇▇▇▇▇▇▇▇▇ Securities
LLC 4,400,000 4,000,000 3,200,000 3,400,000 7,000,000 7,000,000 5,560,000 34,560,000
ABN AMRO Incorporated 2,200,000 2,000,000 1,600,000 1,700,000 3,500,000 3,500,000 2,780,000 17,280,000
▇.▇. ▇▇▇▇▇▇▇ &
Sons, Inc. 2,200,000 2,000,000 1,600,000 1,700,000 3,500,000 3,500,000 2,780,000 17,280,000
▇.▇. ▇▇▇▇▇▇
Securities Inc. 2,200,000 2,000,000 1,600,000 1,700,000 3,500,000 3,500,000 2,780,000 17,280,000
Loop Capital
Markets, LLC 1,100,000 1,000,000 800,000 850,000 1,750,000 1,750,000 1,390,000 8,640,000
----------- ----------- ----------- ---------- ---------- ----------- ---------- -----------
Total $110,000,000 $100,000,000 $80,000,000 $85,000,000 $175,000,00 $175,000,000 $139,000,00 $864,000,000
----------- ----------- ----------- ---------- ---------- ----------- ---------- -----------
----------- ----------- ----------- ---------- ---------- ----------- ---------- -----------
28
EXHIBIT A
FORM OF ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ OPINION
[▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ LETTERHEAD]
December 22, 1998
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, Incorporated,
as Representative of the Underwriters
New York, New York
Ladies and Gentlemen:
We address this letter to you individually and as Representatives
of the Underwriters (the "Underwriters") named in Schedule II to the
Underwriting Agreement dated December 10, 1998 (the "Underwriting Agreement")
among you, Illinois Power Company, an Illinois corporation ("Illinois
Power"), and Illinois Power Securitization Limited Liability Company, a
Delaware limited liability company (the "Grantee"). The Underwriting
Agreement provides for the sale on the date hereof by Illinois Power Special
Purpose Trust, a Delaware business trust (the "Note Issuer"), to the
Underwriters of $864,000,000 aggregate principal amount of Illinois Power
Transitional Funding Trust Notes, Series 1998-1 (the "Notes"). This letter
is delivered pursuant to Section 6(b) of the Underwriting Agreement.
Capitalized terms not defined herein have the meanings specified in the
Underwriting Agreement.
We have acted as special counsel to Illinois Power, the Grantee and
the Note Issuer (Illinois Power, the Note Issuer and the Grantee are referred
to collectively as the "Companies") in connection with the issuance and sale
of the Notes and the following related matters: (a) the 1998 Funding Order
issued by the Illinois Commerce Commission (the "ICC") dated September 10,
1998 in Docket No. 98-0488 creating the Intangible Transition Property and
granting the same to the Grantee; (b) the Agreement Relating to Grant of
Intangible Transition Property dated as of December 1, 1998 between Illinois
Power and the Grantee (the "Grant Agreement"); (c) the Intangible Transition
Property Sale Agreement dated as of December 1, 1998 (the "Sale Agreement")
between the Note Issuer and the Grantee; (d) the Indenture dated as of
December 1, 1998 (the "Indenture") between the Note Issuer and ▇▇▇▇▇▇ Trust
and Savings Bank, a banking corporation organized under the laws of the State
of Illinois, as indenture trustee (the "Indenture Trustee"); (e) the Trust
Issuance Certificate dated as of
A-1
December 1, 1998 (the "Certificate") specifying the terms of the Notes;
(f) the Administration Agreement dated as of December 1, 1998 (the
"Administration Agreement") among Illinois Power, as Administrator and the
Grantee; (g) the Intangible Transition Property Servicing Agreement dated as
of December 1, 1998 (the "Servicing Agreement") between the Grantee and
Illinois Power, as Servicer, and (h) the Remediation Agreement dated as of
December 1, 1998, by and between Illinois Power and the Indenture Trustee
(the "Reconciliation Agreement"). The Grant Agreement, the Sale Agreement,
the Indenture, the Certificate, the Remediation Agreement, the Administration
Agreement and the Servicing Agreement are sometimes collectively referred to
herein as the "Relevant Documents."
We have also participated with officers and representatives of
Illinois Power, the Grantee and the Note Issuer, including independent public
accountants, other counsel and representatives of the Underwriters in the
preparation of the Registration Statement on Form S-3 (Registration No.
333-63537) and Amendments Nos. 1, 2 and 3 thereto, filed on October 27, 1998,
December 4, 1998 and December 9, 1998, respectively, with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), which registration statement, as so amended,
became effective on December 10, 1998. Such registration statement, as so
amended, at the time it became effective (including the documents then
incorporated by reference therein) is hereinafter referred to as the
"Registration Statement". The prospectus forming a part of the Registration
Statement (including the documents incorporated by reference therein) is
hereinafter referred to as the "Basic Prospectus". The Basic Prospectus, as the
same was supplemented to reflect the terms of the offering and sale of the Notes
by a prospectus supplement dated December 10, 1998 filed with the Commission on
December 11, 1998 pursuant to Rule 424(b) under the Securities Act (including
all documents incorporated by reference therein at the date hereof) is
hereinafter referred to as the "Final Prospectus."
For the purposes of rendering the opinions expressed below we have
relied, as to questions of fact material such opinions, upon the
representations made in the Underwriting Agreement and Relevant Documents.
In addition, we have examined and relied upon the originals, or copies
certified or otherwise identified to our satisfaction, of such instruments
and other certificates of public officials, officers and representatives of
the Companies and such other persons, and we have made such investigations of
law, as we have deemed appropriate as a basis for such opinions. In our
examination, we have assumed, without independent investigation, (i) the
genuineness of the signatures of and legal capacity of all persons signing
all such instruments and certificates, (ii) the authority of all persons
signing on behalf of the parties thereto, (iii) the due organization, valid
existence, good standing and authority of all entities signing all such
instruments and certificates (other than the Companies), (iv) the due
authorization, execution and delivery of all instruments and certificates by
all the parties thereto (other than the Companies), (v) the authenticity of
all documents submitted to us as originals, and (vi) the conformity to
original documents of all documents submitted to us as certified, conformed,
or photostatic copies.
A-2
Subject to the foregoing and to the limitations, qualifications and
assumptions hereinafter set forth below, this will advise you that, in the
opinion of the undersigned:
(a) (i) Illinois Power (A) has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Illinois; (B) has all requisite corporate power and
authority to own its properties and conduct its business as
presently conducted, as described in the prospectus, and to execute,
deliver and perform its obligations under the Underwriting
Agreement, the Grant Agreement, the Servicing Agreement, the
Remediation Agreement and the Administration Agreement; and (C) is
duly qualified to do business in all jurisdictions (and is in good
standing under the laws of all such jurisdictions) to the extent
that such qualification and good standing is or shall be necessary
to protect the validity and enforceability of the Underwriting
Agreement, the Grant Agreement, the Servicing Agreement, the
Remediation Agreement and the Administration Agreement and each
other instrument or agreement to which Illinois Power is a party
necessary or appropriate to consummate the transactions contemplated
by the Underwriting Agreement;
(ii) the Grant Agreement, the Servicing Agreement, the
Administration Agreement and the Remediation Agreement have been
duly authorized, executed and delivered by Illinois Power and
constitute legal, valid and binding instruments enforceable against
Illinois Power in accordance with their respective terms, except to
the extent enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium, fraudulent transfer and
other similar laws of general applicability relating to or affecting
the enforcement of creditors' rights and by the effect of general
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law);
(iii) to our knowledge, there is no pending or threatened
action, suit or proceeding before any court or governmental agency,
authority or body or any arbitrator involving Illinois Power or any
of its Significant Subsidiaries of a character required to be
disclosed in the Registration Statement which is not adequately
disclosed in the Final Prospectus, and there is no franchise,
contract or other document of a character required to be described
in the Registration Statement or Final Prospectus, or to be filed as
an exhibit to the Registration Statement, which is not described or
filed as required;
(iv) the Underwriting Agreement has been duly authorized,
executed and delivered by Illinois Power;
(v) no consent, approval, authorization or order of any
court or
A-3
governmental agency or body is required for the consummation of
the transactions contemplated by the Underwriting Agreement or
the Relevant Documents, except such as have been obtained under
the Securities Act, the Funding Law and the Public Utilities Act
and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of
the Notes by the Underwriters; and
(vi) neither the execution and delivery by Illinois Power of
the Underwriting Agreement, the Grant Agreement, the Servicing
Agreement, the Remediation Agreement, the Administration Agreement
nor the consummation by Illinois Power of the transactions
contemplated by the Underwriting Agreement, the Grant Agreement, the
Servicing Agreement, the Administration Agreement, and the
Remediation Agreement, nor the fulfillment by Illinois Power of the
terms of the Underwriting Agreement, the Grant Agreement, the
Servicing Agreement, the Administration Agreement or the Remediation
Agreement will: (A) contravene with, result in any breach of any of
the terms or provisions of, or constitute (with or without notice or
lapse of time) a default under the Articles of Incorporation or
Bylaws of Illinois Power, or, to our knowledge, contravene or breach
any of the terms or provisions of, or constitute (with or without
notice or lapse of time) a default under, any indenture, material
agreement or other material instrument to which Illinois Power is a
party or by which Illinois Power is bound; (B) result in the
creation or imposition of any lien upon any properties of Illinois
Power pursuant to the terms of any such indenture, agreement or
other instrument (other than as contemplated by the Relevant
Documents and Section 18-107 of the Funding Law); or (C) violate any
law or any order, rule or regulation applicable to Illinois Power of
any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction
over Illinois Power, or any of its properties.
(b) (i) the Grantee has been duly formed and is validly existing
as a single member limited liability company and is in good standing
under the laws of the State of Delaware, with full power and
authority to execute, deliver and perform its obligations under the
Grant Agreement, the Sale Agreement, the Servicing Agreement and the
Administration Agreement;
(ii) the Grant Agreement, the Sale Agreement, the Servicing
Agreement and the Administration Agreement have been duly
authorized, executed and delivered by the Grantee and constitute
legal, valid and binding instruments enforceable against the Grantee
in accordance with their respective terms, except to the extent
enforceability may be limited by bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance and other similar laws
of general applicability relating to or
A-4
affecting the enforceability of creditors' rights and by the effect
of general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law);
(iii) the Grant Agreement, the Sale Agreement, the Servicing
Agreement, the Administration Agreement, the Remediation Agreement,
the Indenture and the Notes conform in all material respects to the
descriptions thereof contained in the Final Prospectus;
(iv) neither the execution and delivery by the Grantee of
the Grant Agreement, the Sale Agreement, the Servicing Agreement,
the Underwriting Agreement or the Administration Agreement, or the
consummation by the Grantee of the transactions contemplated
thereby, nor the fulfillment of the terms thereof by the Grantee,
will (A) contravene, result in any breach of any of the terms or
provisions of, or constitute (with or without notice or lapse of
time) a default under the Certificate of Formation or the Operating
Agreement of the Grantee or contravene or breach any of the material
terms or provisions of, or constitute (with or without notice or
lapse of time) a default under, any indenture, agreement or other
instrument known to us to which the Grantee is a party or by which
the Grantee is bound; (B) result in the creation or imposition of
any lien upon any properties of the Grantee pursuant to the terms of
any such indenture, agreement or other instrument (other than as
contemplated by the Relevant Documents and Section 18-107 of the
Funding Law); or (C) violate any law or any order, rule or
regulation applicable to the Grantee of any court or of any federal
or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Grantee or
any of its properties;
(v) to our knowledge, there is no pending or threatened
action, suit or proceeding before any court or governmental agency,
authority or body or any arbitrator challenging the validity or
enforceability of the Grant Agreement, the Sale Agreement, the
Servicing Agreement or the Administration Agreement of a character
required to be disclosed in the Final Prospectus which is not
adequately disclosed in the Final Prospectus;
(vi) upon the execution and delivery of the fully executed
Sale Agreement by the Note Issuer and the Grantee and the payment of
the purchase price of the Intangible Transition Property and related
assets by the Note Issuer to the Grantee pursuant to the Sale
Agreement: (A) the transfer of the Intangible Transition Property by
the Grantee to the Note Issuer pursuant to the Sale Agreement will
convey all of the Grantee's right, title and interest in the
Intangible Transition Property to the Note Issuer and will constitute
an absolute transfer of all of the Grantee's right,
A-5
title and interest in the Intangible Transition Property, other
than for federal and state income and franchise tax purposes (and
we express no opinion as to the proper accounting treatment of such
transfer); (B) such transfer of the Intangible Transition Property
is perfected; (C) such transfer has first priority over any other
assignment of the Intangible Transition Property; and (D) the
Intangible Transition Property is free and clear of all liens
created prior to its transfer to the Note Issuer pursuant to the
Sale Agreement; and
(vii) the Grantee is not an "investment company" or under
the "control" of an "investment company" as such terms are defined
under the Investment Company Act of 1940, as amended.
(ix) the Underwriting Agreement has been duly authorized,
executed and delivered by the Grantee;
(c) (i) the Notes have been duly authorized by the Note Issuer
and, when duly executed by the Note Issuer and duly authenticated by
the Indenture Trustee in accordance with the provisions of the
Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of the Underwriting Agreement, will be
duly issued and valid and legally binding obligations enforceable in
accordance with their respective terms, except to the extent
enforceability may be limited by bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance or other similar laws
of general applicability relating to or affecting the enforceability
of creditors' rights and by the effect of general principles of
equity (regardless of whether enforceability is considered in a
proceeding in equity or at law) and entitled to the benefits of the
Indenture and the Certificate; and the Notes and the Indenture
conform in all material respects to the descriptions thereof in the
Final Prospectus;
(ii) the Indenture, the Certificate and the Sale Agreement
have each been duly authorized, executed and delivered by the Note
Issuer and constitute legal, valid and binding instruments
enforceable against the Note Issuer in accordance with their
respective terms, except to the extent enforceability may be limited
by bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance and other similar laws of general applicability relating
to or affecting the enforceability of creditors' rights and by the
effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law);
(iii) the Indenture has been duly qualified under the Trust
Indenture Act;
(iv) to our knowledge, there is no pending or threatened
action,
A-6
suit or proceeding before any court or governmental agency,
authority or body or any arbitrator challenging the validity or
enforceability of the Notes or the Indenture, or relating to the
1998 Funding Order or the collection of the IFC Charges, of a
character required to be disclosed in the Registration Statement
which is not adequately disclosed in the Final Prospectus, and there
is no franchise, contract or other document relating to the Notes or
the Indenture, or relating to the 1998 Funding Order or the
collection of the IFC Charges, of a character required to be
described in the Registration Statement or Final Prospectus, or to
be filed as an exhibit to the Registration Statement, which is not
described or filed as required; and the statements included or
incorporated by reference in the Final Prospectus under the headings
"Electric Industry Restructuring in Illinois" (to the extent the
Amendatory Act is described) "Description of the Intangible
Transition Property" "Description of the Notes," "The Trust," "The
Grantee, " "Servicing," "Security for the Notes," "Material United
States Federal Tax Consequences" and "ERISA Considerations", in each
case to the extent that such statements constitute descriptions of
Illinois, Delaware or federal law or legal conclusions with respect
thereto, provide a fair and accurate summary of such law or
conclusions;
(v) the Registration Statement has become effective under
the Act; any required filing of the Basic Prospectus, any
Preliminary Final Prospectus and the Final Prospectus, and any
supplements thereto, pursuant to Rule 424(b) under the Securities
Act has been made in the manner and within the time period required
by Rule 424(b); to our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued, and no
proceedings for that purpose have been instituted or threatened and
the Registration Statement and the Final Prospectus (other than
operating statistics, the financial statements and other financial
and statistical information contained therein and the Form T-1 as to
which we express no opinion) comply as to form in all material
respects with the applicable requirements of the Act, the Exchange
Act and the Trust Indenture Act and the respective rules thereunder;
(vi) neither the execution and delivery of the Underwriting
Agreement or the Indenture, the issue and sale of the Notes, or the
consummation of the transactions contemplated by the Underwriting
Agreement and the Indenture, nor the fulfillment by the Note Issuer
of the terms of the Underwriting Agreement and the Indenture will:
(A) contravene, result in any breach of any of the terms or
provisions of, or constitute (with or without notice or lapse of
time) a default under the Trust Agreement, or contravene or breach
any of the material terms or provisions of, or constitute (with or
without notice or lapse of time) a default under, any indenture,
agreement or other instrument known to us to which the Note Issuer
is a party or by which the Note Issuer is bound; (B)
A-7
result in the creation or imposition of any lien upon any properties
of the Note Issuer pursuant to the terms of any such indenture,
agreement or other instrument other than the lien created by the
Indenture on the Note Collateral; (C) require the consent or approval
of, the giving of notice to, the registration with, or the taking of
any other action with respect to, any court, governmental or
regulatory authority or agency, except such as have been obtained
under the Securities Act, the Funding Law and the Public Utilities
Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Notes by the Underwriters; or (D) violate any law or any order, rule
or regulation applicable to the Note Issuer of any court or of any
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Note
Issuer or any of its properties;
(vii) (A) the lien of the Indenture in favor of the Holders
of the Notes in the Intangible Transition Property attaches
automatically; (B) such lien has been perfected in accordance with
Section 18-107(c) of the Funding Law and in accordance with the 1998
Funding Order; (C) under the terms of the Funding Law, such lien is
valid and enforceable against Illinois Power, the Grantee, the Note
Issuer and all third persons, including judgment lien creditors;
(D) such lien ranks prior to any other lien which subsequently
attaches to the Intangible Transition Property; and (E) there are no
other liens on the Intangible Transition Property which have
attached prior to such lien; and
(viii) Neither Illinois Power nor the Note Issuer is an
"investment company" or under the "control" of an "investment
company" as such terms are defined under the Investment Company Act
of 1940, as amended.
In the course of the preparation of the Registration Statement and
the Final Prospectus we have considered the information set forth therein in the
light of the matters required to be set forth therein, and, as noted above, we
have participated in discussions with your representatives and officers and
representatives of the Companies, including independent public accountants and
other counsel, during the course of which the contents of the Registration
Statement, the Final Prospectus, the documents incorporated by reference in the
Final Prospectus and related matters were discussed. We have not independently
checked the accuracy or completeness of, or otherwise verified, and accordingly
are not passing upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Final Prospectus (except to the extent stated in paragraphs
(b)(iii) and the last clause of (c)(i) and (c)(iv) above); and we have relied as
to materially (with respect to non-legal matters), to a large extent, upon the
judgement of officers and representatives of the Companies. However, as a
result of such consideration and participation, nothing has
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come to our attention that causes us to believe that the Registration
Statement (except for the financial statements and other financial or
statistical data included or incorporated by reference therein and the Form
T-1, as to which we have not been asked to comment), at the effective date
thereof, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Final Prospectus (except for
the operating statistics, financial statements and other financial or
statistical data contained or incorporated by reference therein and the Form
T-1, as to which we have not been asked to comment) as of its date contained,
or as of the date hereof contains, any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
The foregoing opinions are limited to the laws of Illinois and New
York, the Delaware Limited Liability Company Act and, to the extent specifically
referred to herein, the federal laws of the United States of America. We have,
with your consent, assumed the validity and continued effectiveness of the
Amendatory Act (including, without limitation, the Funding Law and the 1998
Funding Order); provided, however, that our opinion with respect to the
enforceability of the Remediation Agreement against Illinois Power is not so
qualified. In that regard we refer you to our opinion of even date herewith
delivered pursuant to Section 6(l) of the Underwriting Agreement. Further, we
have relied, with your consent, on the opinion dated today of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
Finger delivered pursuant to Section 6(d) of the Underwriting Agreement and on
the opinion of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇ delivered in the form of Exhibit 8.1 to the
Registration Statement. We express no opinion as to the enforceability of any
provisions of the Grant Agreement or the Servicing Agreement pursuant to which
Illinois Power, the Grantee or the Servicer covenant to continue to deduct and
collect amounts equal to the IFC Charges and equivalent amounts, and to remit
those amounts to the Servicer or the Note Issuer, as the case may be, if the
Funding Order were no longer in effect. The opinion expressed in this letter
with respect to the enforceability of indemnification provisions are limited by
principles of public policy limiting their enforceability. Such principles as
applied by a court might include a requirement that a creditor act reasonably
and in good faith. In addition, certain remedial provisions of the Relevant
Documents may be unenforceable in whole or in part under the laws of the State
of Illinois, but the inclusion of such provisions does not affect the validity
of any Relevant Document taken as a whole, and the Relevant Documents, taken as
a whole, contain adequate provisions for the practical realization of the rights
and benefits intended to be afforded thereby.
Any opinion or statement herein which is expressed to be "to our
knowledge" or is otherwise qualified by words of like import means that the
lawyers currently practicing law with this Firm who have had an active
involvement in advising Illinois Power, the Grantee or the Note Issuer with
regard to the authorization issuance and sale of the Notes have no current
conscious awareness of any facts or information contrary to such opinion or
statement; and, except as described above, we have undertaken no independent
investigation with respect to such facts or information.
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We consent to the reliance on the opinions expressed herein by the
Rating Agencies, the Delaware Trustee and Note Issuer and, with respect to the
opinions set forth in (c) above, by Illinois Power, the Grantee and the
Indenture Trustee. Except as set forth in the preceding sentence, this letter
is being delivered solely to you for your benefit in connection with the closing
under the Underwriting Agreement and may not be delivered to, or relied upon by,
or otherwise circulated to or utilized by, any other party or for any other
purpose without our prior written consent.
The opinions and statements expressed in this letter speak as of
today, and we assume no obligation to supplement such opinions or statements if
any applicable laws change after the date hereof or if we become aware of any
facts which might change such opinions or statements after today.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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