EXECUTION VERSION
PP&L TRANSITION BOND COMPANY LLC TRANSITION BONDS, SERIES 1999-1
PP&L TRANSITION BOND COMPANY LLC
UNDERWRITING AGREEMENT
New York, New York
July 29, 1999
To the Representative
named in Schedule I hereto
of the Underwriters named in
Schedule II hereto
Ladies and Gentlemen:
1. Introduction. PP&L Transition Bond Company LLC (the
"ISSUER") proposes to sell to the underwriters named in Schedule II hereto
(the "UNDERWRITERS"), for whom you (the "REPRESENTATIVE") are acting as
representative, the principal amount of the PP&L Transition Bond Company
LLC Transition Bonds, Series ▇▇▇▇-▇ (▇▇▇ "▇▇▇▇▇"), identified in Schedule I
hereto. If the firm or firms listed in Schedule II hereto include only the
firm or firms listed in Schedule I hereto, then the terms "Underwriters"
and "Representative", as used herein, shall each be deemed to refer to such
firm or firms.
The Bonds will be issued pursuant to a base indenture dated
on or about August 10, 1999, as supplemented by the Series 1999-1
Supplemental Indenture thereto (as so supplemented, the "INDENTURE"),
between the Issuer and The Bank of New York, as bond trustee (the
"TRUSTEE"). The Bonds will be secured primarily by Transferred Intangible
Transition Property sold to the Issuer by CEP Securities Co. LLC, a
Delaware limited liability company (the "SELLER"). The sole member and
owner of the entire equity interest in the Seller is CEP Reserves, Inc., a
Delaware corporation ("RESERVES"). All the issued and outstanding capital
stock of Reserves is owned by CEP Group, Inc., a Pennsylvania corporation
("GROUP"). All the issued and outstanding capital stock of Group is owned
by PP&L, Inc., an operating electric utility incorporated under the laws of
the Commonwealth of Pennsylvania (the "COMPANY"). The Seller acquired the
Intangible Transition Property pursuant to an Intangible Transition
Property Contribution Agreement among the Company, Group, Reserves and the
Seller dated May 13, 1999 (as amended and supplemented from time to time,
the "CONTRIBUTION AGREEMENT"). The Seller's sale of Transferred Intangible
Transition Property to the Issuer will occur pursuant to a Sale Agreement
between the Seller and the Issuer, dated on or about August 10, 1999 (the
"SALE AGREEMENT"). The Transferred Intangible Transition Property will be
serviced pursuant to a Servicing Agreement, dated on or about August 10,
1999, between the Company, as servicer, and the Issuer, as owner of the
Transferred Intangible Transition Property (as amended and supplemented
from time to time, the "SERVICING AGREEMENT").
Capitalized terms used and not otherwise defined in this
Underwriting Agreement shall have the meanings given to them in the
Indenture.
2. Representations and Warranties. I. Each of the Company
and the Issuer represents and warrants to, and agrees with, each
Underwriter as set forth below in this Section 2.I. Certain terms used in
this Underwriting Agreement are defined in Section 2.I(c) below.
(a) If the offering of the Bonds is a Delayed Offering (as
specified in Schedule I hereto), paragraph (i) below is applicable
and, if the offering of the Bonds is a Non-Delayed Offering (as so
specified), paragraph (ii) below is applicable.
(i) The Issuer and the Bonds meet the requirements
for the use of Form S-3 under the Securities Act of 1933
(the "ACT"), and the Issuer has filed with the Securities
and Exchange Commission (the "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 Bonds. The
Issuer may have filed one or more amendments thereto, and
may have used a Preliminary Final Prospectus, each of which
has previously been furnished to you. Such registration
statement, as so amended, has become effective. The offering
of the Bonds is a Delayed Offering and, although the Basic
Prospectus may not include all the information with respect
to the Bonds and the offering thereof required by the Act
and the rules thereunder to be included in the Final
Prospectus, the Basic Prospectus includes all such
information required by the Act and the rules thereunder to
be included therein as of the Effective Date. The Issuer
will next file with the SEC pursuant to Rules 415 and
424(b)(2) or (5) a final supplement to the form of
prospectus included in such registration statement relating
to the Bonds and the offering thereof. As filed, such final
prospectus supplement shall include all required information
with respect to the Bonds and the offering thereof and,
except to the extent the Representative shall agree in
writing to a modification, shall be in all substantive
respects in the form furnished to you prior to the Execution
Time or, to the extent not completed at the Execution Time,
shall contain only such specific additional information and
other changes (beyond that contained in the Basic Prospectus
and any Preliminary Final Prospectus) as the Issuer has
advised you, prior to the Execution Time, will be included
or made therein.
(ii) The Issuer and the Bonds meet the requirements
for the use of Form S-3 under the Act and the Issuer 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 Bonds. The Issuer may have
filed one or more amendments thereto, including a
Preliminary Final Prospectus, each of which has previously
been furnished to you. The Issuer will next file with the
SEC either (x) a final prospectus supplement relating to the
Bonds in accordance with Rules 430A and 424(b)(1) or (4), or
(y) prior to the effectiveness of such registration
statement, an amendment to such registration statement,
including the form of final prospectus supplement. In the
case of clause (x), the Issuer has included in such
registration statement, as amended at the Effective Date,
all information (other than Rule 430A Information) required
by the Act and the rules thereunder to be included in the
Final Prospectus with respect to the Bonds and the offering
thereof. As filed, such final prospectus supplement or such
amendment and form of final prospectus supplement shall
contain all Rule 430A Information, together with all other
such required information, with respect to the Bonds and the
offering thereof and, except to the extent the
Representative shall agree in writing to a modification,
shall be in all substantive respects in the form furnished
to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond
that contained in the Basic Prospectus and any Preliminary
Final Prospectus) as the Issuer has advised you, prior to
the Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or
will, and when the Final Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date, the Final
Prospectus (and any supplement thereto) will, comply in all
material respects with the applicable requirements of the Act, the
Securities Exchange Act of 1934 (the "EXCHANGE ACT") and the Trust
Indenture Act of 1939 (the "TRUST INDENTURE ACT") and the
respective rules thereunder; on the Effective Date, the
Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; on the Effective Date and on the
Closing Date the Indenture did or will comply 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 Issuer,
the Seller nor the Company makes any representations or warranties
as to (i) that part of the Registration Statement that shall
constitute the Statement of Eligibility and Qualification (Forms
T-1) under the Trust Indenture Act of the 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
Issuer by or on behalf of any Underwriter through the
Representative specifically for inclusion in the Registration
Statement or the Final Prospectus (or any supplement thereto).
(c) The terms that follow, when used in this Underwriting
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 Underwriting Agreement is executed and delivered by the
parties hereto. "BASIC PROSPECTUS" shall mean the prospectus
referred to in paragraph (a) above contained in the Registration
Statement at the Effective Date including, in the case of a
Non-Delayed Offering, any Preliminary Final Prospectus.
"PRELIMINARY FINAL PROSPECTUS" shall mean any preliminary
prospectus supplement to the Basic Prospectus that describes the
Bonds and the offering thereof and is used prior to filing of the
Final Prospectus. "FINAL PROSPECTUS" shall mean the prospectus
supplement relating to the Bonds that is first filed pursuant to
Rule 424(b) after the Execution Time, together with the Basic
Prospectus or, if, in the case of a Non-Delayed Offering, no filing
pursuant to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Bonds, including the Basic Prospectus,
included in the Registration Statement at the Effective Date.
"REGISTRATION STATEMENT" shall mean the registration statement
referred to in paragraph (a) above, including incorporated
documents, exhibits and financial statements, as amended at the
Execution Time (or, if not effective at the Execution Time, in the
form in which it shall become effective) and, in the event any
post-effective amendment thereto becomes effective prior to the
Closing Date (as hereinafter defined), shall also mean such
registration statement as so amended. Such term shall include any
Rule 430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A. "Rule 415", "Rule 424",
"Rule 430A" and "Regulation S-K" refer to such rules or regulation
under the Act. "Rule 430A Information" means information with
respect to the Bonds and the offering thereof permitted to be
omitted from the Registration Statement when it becomes effective
pursuant to Rule 430A. Any reference herein to the Registration
Statement, the Basic Prospectus, any Preliminary Final Prospectus
or the Final Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of
Form S-3 that were filed under the Exchange Act on or before the
Effective Date of the Registration Statement or the issue date of
the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, as the case may be; and any reference herein to the
terms "amend", "amendment" or "supplement" with respect to the
Registration Statement, the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the
Effective Date of the Registration Statement or the issue date of
the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, as the case may be, deemed to be incorporated therein
by reference. 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 that does not commence promptly after the
effective date of a registration statement, with the result that
only information required pursuant to Rule 415 need be included in
such registration statement at the effective date thereof with
respect to the securities so offered. Whether the offering of the
Bonds is a Non-Delayed Offering or a Delayed Offering shall be set
forth in Schedule I hereto.
(d) PricewaterhouseCoopers LLP are independent certified
public accountants with respect to the Company, the Issuer and the
Seller as required by the Act and the rules
and regulations of the Commission thereunder.
(e) The Issuer has been duly organized and is validly
existing in good standing as a limited liability company under the
laws of the State of Delaware, has the power and authority to
conduct its business as presently conducted and as described in the
Final Prospectus and is duly qualified as a foreign corporation to
do business and in good standing in every jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary and in which the failure to so qualify
would have a materially adverse effect on the Issuer; and the
Issuer has all requisite power and authority to issue the Bonds and
purchase the Transferred Intangible Transition Property as
described in the Final Prospectus.
(f) The Company is a validly existing and subsisting
corporation under the laws of the Commonwealth of Pennsylvania;
each of the Company's subsidiaries is a validly existing
corporation under the laws of its jurisdiction of incorporation;
the Company has all requisite power and authority to own and occupy
its properties and carry on its business as presently conducted and
as described in the Final Prospectus and is duly qualified as a
foreign corporation to do business and in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary and in
which the failure to so qualify would have a materially adverse
effect on the Company.
(g) Each of the Basic Documents to which the Company or the
Issuer is a party has been duly authorized by the Company or the
Issuer, as applicable, and when executed and delivered by the
Issuer or the Company, as applicable, will constitute a valid and
binding obligation of the Company or the Issuer, as applicable,
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditor's rights and to
general equity principles.
(h) The Bonds have been duly authorized and executed by the
Issuer and will conform to the description thereof in the
Prospectus; and when the Bonds are authenticated by the Trustee and
delivered to the Underwriters and are paid for by the Underwriters
in accordance with the terms of this Underwriting Agreement, the
Bonds will constitute the legal, valid and binding obligations of
the Issuer, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditor's rights
and to general principles of equity;
(i) The issue and sale of the Bonds by the Issuer, the
execution, delivery and compliance by the Issuer with all of the
provisions of each of this Underwriting Agreement and the Basic
Documents to which the Issuer is a party, and the consummation of
the transactions herein and therein contemplated will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any trust agreement,
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Issuer is a party or by which
the Issuer is bound or to which any of the property or assets of
the Issuer is subject, which conflict, breach, violation or default
would be material to the issue of the Bonds or would have a
material adverse effect on the Issuer, nor will such action result
in any violation of the Issuer's Certificate of Formation or
Limited Liability Company Agreement or any statute, order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Issuer or its properties.
(j) The assignment of the Transferred Intangible Transition
Property by the Company to the Seller, the execution, delivery and
compliance by the Company with all of the provisions of each of
this Underwriting Agreement and the Basic Documents to which the
Company is a party, and the consummation of the transactions herein
and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any trust agreement, indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company is a party or by which the Company
is bound or to which any of the property or assets of the Company
is subject, which conflict, breach, violation or default would be
material to the issue and sale of the Bonds or would have a
material adverse effect on the financial position or results of
operations of the Company, nor will such action result in any
violation of the provisions of the Articles of Incorporation or
Bylaws of the Company or any statute, order, rule or regulation of
any court or governmental agency or body having jurisdiction over
the Company or any of its properties.
(k) Except for:
(i) the order of the SEC making the Registration
Statement effective,
(ii) permits and similar authorizations required
under the securities or blue sky laws of any jurisdiction,
and
(iii) the qualified rate order of the Pennsylvania
Public Utilities Commission dated August 27, 1998, as
supplemented by an order dated May 21, 1999 (collectively,
the "QRO"),
no consent, approval, authorization or other order of any governmental
authority is legally required for the execution, delivery and performance
of this Underwriting Agreement by the Issuer and the Company and the
consummation of the transactions contemplated hereby.
(l) This Underwriting Agreement has been duly authorized,
executed and delivered by the Issuer and the Company and
constitutes a valid and binding obligation of the Company and the
Issuer, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditor's rights
and to general equity principles.
II. The Seller represents and warrants to each Underwriter
as set forth below in this Section 2.II.
(a) The Seller is a limited liability company duly organized
and in good standing under the laws of the State of Delaware, with
power and authority to own its properties and conduct its business
as currently owned or conducted, and is duly qualified as a foreign
corporation to do business and in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary and in
which the failure to so qualify would have a materially adverse
effect on the Seller. The Seller had at all relevant times, and
has, the requisite power, authority and legal right to own the
Intangible Transition Property and to sell the Transferred
Intangible Transition Property to the Issuer as described in the
Final Prospectus.
(b) This Underwriting Agreement has been duly authorized,
executed and delivered by the Seller and constitutes a valid and
binding obligation of the Seller enforceable in accordance with its
terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditor's rights and to general equity principles.
(c) Each of the Basic Documents to which the Seller is a
party has been duly authorized by the Seller and when executed and
delivered by the Seller will constitute a valid and binding
obligation of the Seller enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditor's rights and to general equity principles.
(d) The sale of the Transferred Intangible Transition
Property by the Seller to the Issuer, the execution, delivery and
compliance by the Seller with this Underwriting Agreement and the
Basic Documents to which the Seller is a party, and the
consummation of the transactions herein and therein contemplated
will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
trust agreement, indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Seller is a party or
by which the Seller is bound or to which any of the property or
assets of the Seller is subject, which conflict, breach, violation
or default would be material to the issue and sale of the Bonds,
nor will such action result in any violation of the provisions of
the Seller's Certificate of Formation or Limited Liability Company
Agreement or any statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Seller or
any of its properties.
(e) No consent, approval, authorization or other order of
any governmental authority is legally required for the execution
and delivery of this Underwriting Agreement by the Seller.
III. The Company represents and warrants to each Underwriter
as set forth below in this Section 2.III.
(a) Group has been duly organized and is validly existing in
good standing as a corporation under the laws of the Commonwealth
of Pennsylvania, has the power and authority to conduct its
business as presently conducted and is duly qualified as a foreign
corporation to do business and in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary and in
which the failure to so qualify would have a materially adverse
effect on Group; and Group has all requisite power and authority to
enter into the Contribution Agreement.
(b) The Contribution Agreement has been duly authorized,
executed and delivered by Group and constitutes a valid and binding
obligation of Group enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditor's rights and to general equity principles.
(c) The execution and delivery by Group of the Contribution
Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, any trust agreement, indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which
Group is a party or by which Group is bound or to which any of the
property or assets of Group is subject, which conflict, breach,
violation or default would be material to the issue and sale of the
Bonds, nor will such action result in any violation of the
provisions of the Articles of Incorporation or Bylaws of Group or
any statute, order, rule or regulation of any court or governmental
agency or body having jurisdiction over Group or any of its
properties.
(d) No consent, approval, authorization or other order of
any governmental authority is legally required for the execution
and delivery of the Contribution Agreement by Group.
IV. The Company represents and warrants to each Underwriter
as set forth below in this Section 2.IV.
(a) Reserves has been duly organized and is validly existing
in good standing as a corporation under the laws of the State of
Delaware, has the power and authority to conduct its business as
presently conducted and is duly qualified as a foreign corporation
to do business and in good standing in every jurisdiction in which
the nature of the business conducted or property owned by it makes
such qualification necessary and in which the failure to so qualify
would have a materially adverse effect on Reserves; and Reserves
has all requisite power and authority to enter into the
Contribution Agreement.
(b) The Contribution Agreement has been duly authorized,
executed and delivered by Reserves and constitutes a valid and
binding obligation of Reserves enforceable in accordance with its
terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditor's rights and to general equity principles.
(c) The execution and delivery by Reserves of the
Contribution Agreement, and the consummation of the transactions
herein and therein contemplated will not conflict with or result in
a breach or violation of any of the terms or provisions of, or
constitute a default under, any trust agreement, indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which Reserves is a party or by which Reserves is
bound or to which any of the property or assets of Reserves is
subject, which conflict, breach, violation or default would be
material to the issue and sale of the Bonds, nor will such action
result in any violation of the provisions of the Articles of
Incorporation or Bylaws of Reserves or any statute, order, rule or
regulation of any court or governmental agency or body having
jurisdiction over Reserves or any of its properties.
(d) No consent, approval, authorization or other order of
any governmental authority is legally required for the execution
and delivery of the Contribution Agreement by Reserves.
V. Each of the several Underwriters represents and warrants
to, and agrees with, the Issuer, its directors and such of its
officers as shall have signed the Registration Statement, and to
each other Underwriter, that the information furnished in writing
to the Issuer by, or through the Representative on behalf of, such
Underwriter expressly for use in the Registration Statement or the
Prospectus does not contain an untrue statement of a material fact
and does not omit to state a material fact in connection with such
information required to be stated therein or necessary to make such
information not misleading.
3. Purchase and Sale. Subject to the terms and conditions
and in reliance upon the representations and warranties herein set forth,
the Issuer agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Issuer, at the purchase
price set forth in Schedule I hereto, the principal amount of the Bonds set
forth opposite such Underwriter's name in Schedule II hereto.
4. Delivery and Payment. Delivery of and payment for the
Bonds shall be made on the date and at the time specified in Schedule I
hereto (or such later date not later than five business days after such
specified date as the Representative shall designate), which date and time
may be postponed by agreement between the Representative and the Issuer or
as provided in Section 10 hereof (such date and time of delivery and
payment for the Bonds being herein called the "CLOSING DATE"). Delivery of
the Bonds shall be made to the Representative for the respective accounts
of the several Underwriters against payment by the several Underwriters
through the Representative of the purchase price thereof to the Issuer by
wire transfer of immediately available funds. Delivery of the Bonds shall
be made at such location as the Representative shall reasonably designate
at least one business day in advance of the Closing Date. The Bonds to be
so delivered initially shall be represented by Bonds registered in the name
of Cede & Co., as nominee of The Depository Trust Company ("DTC"). The
interests of beneficial owners of the Bonds will be represented by book
entries on the records of DTC and participating members thereof. Definitive
Bonds will be available only under limited circumstances.
The Issuer agrees to have the Bonds available for
inspection, checking and packaging by the Representative in New York, New
York, not later than 1:00 PM on the business day prior to the Closing Date.
5. Covenants.
(a) Covenants of the Issuer. The Issuer covenants and agrees
with the several Underwriters that:
(i) The Issuer will use its best efforts to cause the
Registration Statement, if not effective at the Execution
Time, and any amendment thereto, to become effective. Prior
to the termination of the offering of the Bonds, the Issuer
will not file any amendment of the Registration Statement or
supplement (including the Final Prospectus or any
Preliminary Final Prospectus) to the Basic Prospectus unless
the Issuer has furnished you a copy for your review prior to
filing and will not file any such proposed amendment or
supplement to which you reasonably object. Subject to the
foregoing sentence, the Issuer will cause the Final
Prospectus, properly completed, and any supplement thereto
to be filed with the SEC pursuant to the applicable
paragraph of Rule 424(b) within the time period prescribed
and will provide evidence satisfactory to the Representative
of such timely filing. The Issuer will promptly advise the
Representative (A) when the Registration Statement, if not
effective at the Execution Time, and any amendment thereto,
shall have become effective, (B) when the Final Prospectus,
and any supplement thereto, shall have been filed with the
SEC pursuant to Rule 424(b), (C) when any amendment to the
Registration Statement shall have been filed or become
effective, (D) of any request by the SEC for any amendment
of the Registration Statement or supplement to the Final
Prospectus or for any additional information, (E) of the
issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that
purpose, (F) of the receipt by the Issuer of any
notification with respect to the suspension of the
qualification of the Bonds for sale in any jurisdiction or
the initiation or threatening of any proceeding for such
purpose and (G) of the happening of any event during the
period mentioned in subparagraph (ii) below. The Issuer will
use its best efforts to prevent the issuance of any such
stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(ii) If at any time when a prospectus relating to the
Bonds is required to be delivered under the Act in
connection with sales by an Underwriter or dealer, any event
occurs as a result of which the Final Prospectus as then
amended or supplemented would include an untrue statement of
a material fact, or omit to state any material fact
necessary to make the statements therein, in the light of
the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the
Registration Statement or supplement the Final Prospectus to
comply with the Act in connection with sales by an
Underwriter or dealer, the Issuer agrees to advise you of
such event or necessity, as the case may be, and, promptly
upon request made by you, to prepare and file with the
Commission an amendment or supplement which will correct
such statement or omission or an amendment which will effect
such compliance, provided that the expense of preparing and
filing any such amendment or supplement (A) which is
necessary in connection with such a delivery of a prospectus
more than nine months after the date of this Underwriting
Agreement or (B) which relates solely to the activities of
any Underwriter shall be borne by the Underwriter or
Underwriters or the dealer or dealers requiring the same;
and provided further that you shall, upon inquiry by the
Company, advise the Company whether or not any Underwriter
or dealer which shall have been selected by you retains any
unsold Bonds and, for the purposes of this subsection (ii),
the Company shall be entitled to assume that the
distribution of the Bonds has been completed when it is
advised by you that no Underwriter or such dealer retains
any Bonds.
(iii) As soon as practicable and no later than 12
months after the Closing Date, the Issuer will make
generally available to the Bondholders and to the
Representative an earnings statement or statements of the
Issuer which will satisfy the provisions of Section 11(a) of
the Act and Rule 158 under the Act.
(iv) The Issuer will furnish to the Representative
and counsel for the Underwriters, without charge, copies of
the Registration Statement (including exhibits thereto) and,
so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of any
Preliminary Final Prospectus and the Final Prospectus and
any supplement thereto as the Representative may reasonably
request. The Issuer will pay the expenses of printing or
other production of all documents relating to the offering.
(v) The Issuer will arrange for the qualification of
the Bonds for sale under the laws of such jurisdictions as
the Representative may designate, will maintain such
qualifications in effect so long as required for the
distribution of the Bonds and will arrange for the
determination of the legality of the Bonds for purchase by
institutional investors; provided that in no event shall the
Issuer be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any
action that would subject it to service of process in suits,
other than those arising out of the offering or sale of the
Bonds, in any jurisdiction where it is not now so subject or
meet any other requirement in connection with this clause
(v) deemed by the Issuer to be unduly burdensome.
(vi) Until the business date set forth on Schedule I
hereto, the Issuer will not, without the consent of the
Representative, offer, sell or contract to sell, or
otherwise dispose of, directly or indirectly, or announce
the offering of, any asset-backed securities (other than the
Bonds).
(vii) For a period from the date of this Underwriting
Agreement until the retirement of the Bonds, or until such
time as the Underwriters shall cease to maintain a secondary
market in the Bonds, whichever occurs first, the Issuer will
deliver to the Representative the annual statements of
compliance and the annual independent auditor's servicing
reports furnished to the Issuer or the Trustee pursuant to
the Servicing Agreement or the Indenture, as applicable, as
soon as such statements and reports are furnished to the
Issuer or the Trustee.
(viii) So long as any of the Bonds are outstanding,
the Issuer will furnish to the Representative (A) as soon as
available, a copy of each report of the Issuer filed with
the SEC under the Exchange Act, or mailed to Bondholders,
(B) a copy of any filings with the Pennsylvania Public
Utility Commission pursuant to the QRO including, but not
limited to, any annual or more frequent adjustment filings,
and (C) from time to time, any information concerning the
Company or the Issuer as the Representative may reasonably
request.
(ix) To the extent, if any, that any rating necessary
to satisfy the condition set forth in Section 7(l) of this
Underwriting Agreement is conditioned upon the furnishing of
documents or the taking of other actions by the Issuer on or
after the Closing Date, the Issuer shall furnish such
documents and take such other actions.
(x) The Issuer will file with the Commission a report
on Form 8-K setting forth all Computational Materials and
ABS Term Sheets (as such terms are defined in Section 6)
provided to the Issuer by any Underwriter and identified by
it as such within the time period allotted for such filing
pursuant to the No-Action Letters (as defined in Section 6);
provided, however, that prior to any filing of the
Computational Materials and ABS Term Sheets by the Issuer,
such Underwriter must comply with its obligations pursuant
to Section 6 and the Issuer must receive a letter from
PricewaterhouseCoopers LLP, certified public accountants,
satisfactory in form and substance to the Issuer and such
Underwriter, to the effect that such accountants have
performed specified procedures, all of which have been
agreed to by the Issuer and such Underwriter, as a result of
which they have determined that the information included in
the Computational Materials and ABS Term Sheets (if any),
provided by such Underwriter to the Issuer for filing on
Form 8-K pursuant to Section 6 and this subsection (x), and
which the accountants have examined in accordance with such
agreed upon procedures, is accurate except as to such
matters that are not deemed by the Issuer and such
Underwriter to be material. The Issuer shall file any
corrected Computational Materials or ABS Terms Sheets
described in Section 6(a)(iv) as soon as practicable
following receipt thereof.
(b) Covenants of the Seller. The Seller covenants and agrees
with the several Underwriters that, to the extent that the Issuer
has not already performed such act pursuant to Section 5(a), to the
extent, if any, that any rating necessary to satisfy the condition
set forth in Section 7(l) of this Underwriting Agreement is
conditioned upon the furnishing of documents or the taking of other
actions by the Seller on or after the Closing Date, the Seller
shall furnish such documents and take such other actions.
(c) Covenants of the Company. The Company covenants and
agrees with the several Underwriters that, to the extent that the
Issuer or the Seller has not already performed such act pursuant to
Section 5(a) or Section 5(b):
(i) the Company will use its best efforts to cause
the Registration Statement, if not effective at the
Execution Time, and any amendment thereto, to become
effective. The Company will use its best efforts to prevent
the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement and, if issued,
to obtain as soon as possible the withdrawal thereof. If, at
any time when a prospectus relating to the Bonds is required
to be delivered under the Act, any event occurs as a result
of which the Final Prospectus as then supplemented would
include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements
therein in the light of the circumstances under which they
were made not misleading, or if 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 Company will, or will cause
the Issuer to (A) 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 (B) supply any
supplemented Prospectus to you in such quantities as you may
reasonably request.
(ii) until the business date set forth on Schedule I
hereto, the Company will not, without the consent of the
Representative, offer, sell or contract to sell, or
otherwise dispose of, directly or indirectly, or announce
the offering of, any asset-backed securities (other than the
Bonds).
(iii) so long as any of the Bonds are outstanding and
the Company is the Servicer, the Company will furnish to the
Representative (A) as soon as available, a copy of each
report of the Issuer filed with the SEC under the Exchange
Act, or mailed to Bondholders, (B) a copy of any filings
with the Pennsylvania Public Utility Commission pursuant to
the QRO, including, but not limited to, any annual or more
frequent adjustment filings, and (C) from time to time, any
information concerning the Company, the Seller, and the
Issuer as the Representative may reasonably request.
(iv) to the extent, if any, that any rating necessary
to satisfy the condition set forth in Section 7(l) of this
Underwriting Agreement is conditioned upon the furnishing of
documents or the taking of other actions by the Company on
or after the Closing Date, the Company shall furnish such
documents and take such other actions.
6. Offering by Underwriters.
(a) In connection with the offering of the Bonds, each
Underwriter may prepare and provide to prospective investors (i)
items similar to computational materials ("COMPUTATIONAL
MATERIALS") as defined in the no-action letter of May 20, 1994
issued by the Commission to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Acceptance Corporation
I, ▇▇▇▇▇▇, Peabody & Co. Incorporated and ▇▇▇▇▇▇ Structured Asset
Corporation, as made applicable to other issuers and underwriters
by the Commission in response to the request of the Public
Securities Association dated May 24, 1994, as well as the PSA
Letter referred to below (collectively, the "NO-ACTION LETTERS")
and (ii) items similar to ABS term sheets ("ABS TERM SHEETS") as
defined in the no-action letter of February 17, 1995 issued by the
Commission to the Public Securities Association, subject to the
following conditions:
(i) All Computational Materials and ABS Term Sheets
provided to prospective investors that are required to be
filed pursuant to the No-Action Letters shall bear a legend
substantially in the form attached hereto as Exhibit A. The
Issuer shall have the right to require additional specific
legends or notations to appear on any Computational
Materials or ABS Term Sheets, the right to require changes
regarding the use of terminology and the right to determine
the types of information appearing therein. Notwithstanding
the foregoing, this subsection (i) will be satisfied if all
Computational Materials and ABS Term Sheets referred to
herein bear a legend in a form previously approved in
writing by the Issuer.
(ii) Such Underwriter shall provide to the Issuer,
for approval by the Issuer, representative forms of all
Computational Materials and ABS Term Sheets prior to their
first use, to the extent such forms have not previously been
approved by the Issuer for use by such Underwriter. Such
Underwriter shall provide to the Issuer, for filing on Form
8-K as provided in Section 5(a)(x), copies (in such format
as required by the Issuer) of all Computational Materials
and ABS Term Sheets that are required to be filed with the
Commission pursuant to the No-Action Letters. The
Underwriter may provide copies of the foregoing in a
consolidated or aggregated form including all information
required to be filed if filing in such format is permitted
by the No-Action Letters. All Computational Materials and
ABS Term Sheets described in this subsection (ii) must be
provided to the Issuer not later than 10:00 a.m. New York
City time one business day before filing thereof is required
pursuant to the terms of this Underwriting Agreement. Such
Underwriter shall not provide to any investor or prospective
investor in the Bonds any Computational Materials or ABS
Term Sheets on or after the day on which Computational
Materials or ABS Term Sheets are required to be provided to
the Issuer pursuant to this paragraph (ii) (other than
copies of Computational Materials or ABS Term Sheets
previously submitted to the Issuer in accordance with this
paragraph (ii) for filing pursuant to Section 5(a)(x)),
unless such Computational Materials or ABS Term Sheets are
preceded or accompanied by the delivery of a Final
Prospectus to such investor or prospective investor.
(iii) All information included in the Computational
Materials and ABS Term Sheets shall be generated based on
substantially the same methodology and assumptions that are
used to generate the information in the Registration
Statement as set forth therein. However, the Computational
Materials and ABS Term Sheets may include information based
on alternative methodologies or assumptions if specified
therein. If any Computational Materials or ABS Term Sheets
are based on assumptions with respect to the Transferred
Intangible Transition Property that differ from the final
Transferred Intangible Transition Property Information (as
defined in Section 8(a)) in any material respect or on Bond
structuring terms that were revised in any material respect
prior to the printing of the Final Prospectus, the
Underwriters shall prepare revised Computational Materials
or ABS Term Sheets, as the case may be, based on the final
Transferred Intangible Transition Property Information and
structuring assumptions, deliver with the Final Prospectus
such revised Computational Materials and ABS Term Sheets to
each recipient of the preliminary versions thereof that
indicated orally to any Underwriter that such recipient
would purchase all or any portion of the Bonds, and include
such revised Computational Materials and ABS Term Sheets
(marked, "AS REVISED") in the materials delivered to the
Issuer pursuant to paragraph (ii) above. The expenses of
each Underwriter relating to the preparation and
transmission of its Computational Materials and ABS Term
Sheets, including without limitation fees and expenses of
accountants, shall be the responsibility of the Issuer.
(iv) The Issuer shall not be obligated to file any
Computational Materials or ABS Term Sheets that have been
determined to contain any material error or omission,
provided that, at the request of any Underwriter, the Issuer
will file Computational Materials or ABS Term Sheets that
contain a material error or omission if clearly marked
"SUPERSEDED BY MATERIALS DATED _____" and accompanied by
corrected Computational Materials or ABS Term Sheets that
are marked, "MATERIAL PREVIOUSLY DATED, _____ AS CORRECTED."
If, within the period during which a prospectus relating to
the Bonds is required to be delivered under the Act, any
Computational Materials or ABS Term Sheets are determined,
in the reasonable judgment of the Issuer or such
Underwriter, to contain a material error or omission, such
Underwriter shall prepare a corrected version of such
Computational Materials or ABS Term Sheets, shall circulate
such corrected Computational Materials or ABS Term Sheets to
all recipients of the prior versions thereof that either
indicated orally to such Underwriter they would purchase all
or any portion of the Bonds, or actually purchased all or
any portion thereof, and shall deliver copies of such
corrected Computational Materials or ABS Term Sheets
(marked, "AS CORRECTED") to the Issuer for filing with the
Commission in a subsequent Form 8-K submission (subject to
the Issuer's obtaining an accountant's comfort letter in
respect of such corrected Computational Materials and ABS
Term Sheets, which the parties acknowledge shall be at the
expense of the Issuer).
(v) Each Underwriter shall be deemed to have
represented, as of the Closing Date, that, except for
Computational Materials and ABS Term Sheets provided to the
Issuer pursuant to subsection (ii) above, such Underwriter
did not provide any prospective investors with any
information in written or electronic form in connection with
the offering of the Bonds that is required to be filed with
the Commission in accordance with the No-Action Letters.
(vi) In the event any delay in the delivery by any
Underwriter to the Issuer of all Computational Materials and
ABS Term Sheets required to be delivered in accordance with
subsection (ii) above, or in the delivery of the
accountant's comfort letter in respect thereof pursuant to
Section 5(a)(x), the Issuer shall have the right to delay
the release of the Final Prospectus to investors or to any
Underwriter, to delay the Closing Date and to take other
appropriate actions in each case set forth in Section
5(a)(x) to file the Computational Materials and ABS Term
Sheets by the time specified therein.
(vii) Each Underwriter represents that it has in
place, and covenants that it shall maintain, internal
controls and procedures that it reasonably believes to be
sufficient to ensure full compliance with all applicable
legal requirements of the No-Action Letters with respect to
the generation and use of Computational Materials and ABS
Term Sheets in connection with the offering of the Bonds.
(b) Each Underwriter further represents and warrants that,
if and to the extent it has provided any prospective investors with
any Computational Materials or ABS Term Sheets prior to the date
hereof in connection with the offering of the Bonds, all of the
conditions set forth in clause (a) above have been satisfied with
respect thereto.
7. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Bonds shall be subject to
the accuracy of the representations and warranties on the part of the
Issuer, the Seller, Group, Reserves and the Company contained in this
Underwriting Agreement, on the part of the Seller contained in Article III
of the Sale Agreement, and on the part of the Company contained in Section
5.01 of the Servicing Agreement and in Article III of the Contribution
Agreement as of the Execution Time and the Closing Date; to the accuracy of
the statements of the Issuer, the Seller, Group, Reserves and the Company
made in any certificates pursuant to the provisions hereof, to the
performance by the Issuer, the Seller, Group, Reserves and the Company of
their obligations hereunder, and to the following additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representative agrees in
writing to a later time, the Registration Statement will become
effective not later than (i) 6:00 PM New York City time, on the
date of determination of the public offering price, if such
determination occurred at or prior to 3:00 PM New York City time on
such date, or (ii) 12:00 Noon on the business day following the day
on which the public offering price was determined, if such
determination occurred after 3:00 PM New York City time on such
date; if filing of the Final Prospectus, or any supplement thereto,
is required pursuant to Rule 424(b), the Final Prospectus, and any
such supplement, shall have been filed in the manner and within the
time period required by Rule 424(b); and no stop order suspending
the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Representative shall have received from ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq., Senior Counsel, or such other counsel for the
Company as may be acceptable to the Representative, an opinion,
dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under
laws of the Commonwealth of Pennsylvania, with power and
authority (corporate and others) to own its properties and
conduct its businesses as described in the Registration
Statement and the Final Prospectus, and 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 this
Underwriting Agreement, the Contribution Agreement, the
Servicing Agreement, the Administration Agreement and each
other instrument or agreement necessary or appropriate to
the proper administration of this Underwriting Agreement and
the transactions contemplated hereby;
(ii) this Underwriting Agreement, the Contribution
Agreement, the Servicing Agreement, the Administration
Agreement and each of the other Basic Documents to which the
Company is a party, has been duly authorized, executed and
delivered, and constitutes a valid and legally binding
obligation of the Company enforceable according to its terms
(except to the extent limited by bankruptcy, insolvency, or
reorganization laws or laws relating to or affecting the
enforcement of creditors' rights and by general equity
principles); and no authorization, notice, consent or action
by the holders of any of the outstanding shares of capital
stock of the Company is necessary with respect thereto;
(iii) such counsel does not know of any legal or
governmental proceedings required to be described in the
Registration Statement or Final Prospectus which are not
described, or of any franchises, contracts or documents of a
character required to be described in the Registration
Statement or the Final Prospectus or to be filed as exhibits
to the Registration Statement which are not described and
filed as required; it being understood that such counsel
need express no opinion as to the financial statements and
other financial data contained in the Registration Statement
or the Final Prospectus;
(iv) except as described in the Registration
Statement and the Final Prospectus, the Company holds all
franchises, certificates of public convenience, licenses and
permits necessary to carry on the utility business in which
it is engaged; and
(v) neither the execution and delivery of this
Underwriting Agreement, the Servicing Agreement, the
Administration Agreement nor the consummation of the
transactions contemplated by this Underwriting Agreement,
the Contribution Agreement or the Servicing Agreement, the
Administration Agreement nor the fulfillment of the terms of
this Underwriting Agreement, the Sale Agreement, the
Contribution Agreement, the Administration Agreement or the
Servicing Agreement by the Company, will (A) conflict with,
result in any breach of any of the terms or provisions of,
or constitute (with or without notice or lapse of time) a
default under the articles of incorporation, bylaws or other
organizational documents of the Company, or conflict with or
breach any of the material terms or provisions of, or
constitute (with or without notice or lapse of time) a
default under, any indenture, agreement or other instrument
to which the Company is a party or by which the Company is
bound, (B) result in the creation or imposition of any lien
upon any properties of the Company pursuant to the terms of
any such indenture, agreement or other instrument (other
than as contemplated by the Indenture), or (C) violate any
law or any order, rule or regulation promulgated by the
United States or the Commonwealth of Pennsylvania applicable
to the Company of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Company, or any
of its properties.
(c) The Representative shall have received an opinion,
portions of which shall be rendered by ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP,
counsel for the Company, the Seller, Group, Reserves and the
Issuer, portions of which may be rendered by Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special counsel for the Issuer, portions of
which may be rendered by ▇▇▇▇▇▇, ▇▇▇▇ & Priest LLP, special counsel
for the Company, and portions of which may be rendered by ▇▇▇▇▇▇▇ &
Associates, special counsel for Reserves and the Seller, each such
opinion dated the Closing Date, in form and substance reasonably
satisfactory to the Representative, to the effect that:
(i) Each of the Issuer, the Seller, Group and
Reserves has been duly incorporated or organized and is
validly existing as a limited liability company or
corporation under the laws of the State of Delaware or the
Commonwealth of Pennsylvania, as applicable, with power and
authority to own its properties and conduct its businesses
as described in the Registration Statement and the Final
Prospectus and contemplated by the Contribution Agreement,
and is duly qualified to do business in all jurisdictions
(and is in good standing under the laws of all
jurisdictions) to the extent that such qualification and
good standing is or shall be necessary to protect the
validity and enforceability of this Underwriting Agreement,
the Contribution Agreement, the Sale Agreement, and each
other instrument or agreement necessary or appropriate to
the proper administration of this Underwriting Agreement and
the transactions contemplated herein.
(ii) The Sale Agreement and the Contribution
Agreement have been duly authorized, executed and delivered
by, and constitute valid and legally binding obligations of,
the Seller, Group and/or Reserves, as applicable,
enforceable according to their terms (except to the extent
limited by bankruptcy, insolvency, or reorganization laws or
laws relating to or affecting the enforcement of creditors'
rights and by general equity principles); and no
authorization, notice, consent or action by the holders of
any outstanding equity interest in the Seller, Group or
Reserves, as applicable, is necessary with respect thereto.
(iii) This Underwriting Agreement, the Contribution
Agreement, the Servicing Agreement and all other Basic
Documents to which the Company is a party, have been duly
authorized, executed and delivered by the Company, and
constitute valid and legally binding obligations of the
Company, enforceable according to their terms (except to the
extent limited by bankruptcy, insolvency or reorganization
laws or by laws relating to or affecting the enforcement of
creditors' rights and by general equity principles) and no
authorization, notice, consent or actions by the holders of
any outstanding capital stock of the Company is necessary
with respect thereto.
(iv) This Underwriting Agreement, the Sale Agreement,
the Servicing Agreement, the Bonds, the Indenture, and all
other Basic Documents to which the Issuer is a party have
been duly authorized, executed and delivered by the Issuer,
and constitute valid and legally binding obligations of the
Issuer, enforceable according to their terms (except to the
extent limited by bankruptcy, insolvency or reorganization
laws or by laws relating to or affecting the enforcement of
creditors' rights and by general equity principles); and no
authorization, notice, consent or action by the holders of
any outstanding equity interest in the Issuer is necessary
with respect thereto.
(v) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation of the transactions contemplated herein, except
such as have been obtained under Pennsylvania law and such
as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and
distribution of the Bonds by the Underwriters and such other
approvals (specified in such opinion) as have been obtained.
(vi) Sections 2804 and 2812 of the Competition Act
are authorized by and validly enacted pursuant to the
Pennsylvania Constitution.
(vii) The QRO has been duly authorized and issued by
the Pennsylvania Public Utility Commission in accordance
with the Competition Act; and the QRO and the process by
which it was issued comply with all applicable laws, rules
and regulations, and the QRO is in full force and effect.
(viii) The Bonds are "transition bonds" within the
meaning of the Competition Act, the Bonds are entitled to
the protections provided in Section 2812(c) of the
Competition Act, and the issuance and sale of the Bonds and
the consummation of the transactions contemplated by the
Basic Documents comply in all respects with the requirements
of the Competition Act and the QRO.
(ix) The Commonwealth Pledge set forth in Section
2812(c) of the Competition Act is enforceable according to
its terms pursuant to Pennsylvania and federal law.
(x) Under Section 2812(b)(3) of the Competition Act,
neither the QRO nor the intangible transition charges
authorized to be imposed and collected pursuant to the QRO
may be revoked, reduced, postponed, impaired or terminated
by any subsequent action of the Pennsylvania Public Utility
Commission.
(xi) Under the Taking Clauses of the United States
and Commonwealth of Pennsylvania Constitutions, the
Commonwealth of Pennsylvania could not repeal or amend the
Competition Act or take any action in contravention of the
pledge set forth in Section 2812(c)(2) of the Competition
Act without paying just compensation to the holders of the
Bonds if so doing would constitute a permanent appropriation
of the property interest of the holders of the Bonds in the
Transferred Intangible Transition Property and would deprive
the holders of the Bonds of their reasonable expectations
arising from their investment in the Bonds.
(xii) Under the Contract Clauses of the United States
and Commonwealth of Pennsylvania Constitutions, the
Commonwealth of Pennsylvania could not repeal or amend the
Competition Act or take any other action that substantially
impairs the rights of holders of the Bonds, without making
adequate compensation by law pursuant to Section 2812(c)(2)
of the Competition Act, unless such action is a reasonable
exercise of the sovereign powers of the Commonwealth of
Pennsylvania and is of a character appropriate to the public
purpose justifying such action. A court would not hold that
the Commonwealth of Pennsylvania could reduce, modify, alter
or take any other action with respect to the Transferred
Intangible Transition Property that would substantially
impair the rights of holders of the Bonds unless this action
is reasonable and appropriate to further a legitimate public
purpose.
(xiii) The Seller is an "assignee" within the meaning
of Section 2812(g) of the Competition Act and the transfer
of the Intangible Transition Property from the Company to
the Seller pursuant to the Contribution Agreement, and from
the Seller to the Issuer pursuant to the Sale Agreement,
have been effected in compliance with the Competition Act.
(xiv) Holders of the Bonds are entitled to the
protections provided in the first sentence of Section
2812(c)(2) of the Competition Act. The QRO authorizes the
issuance of up to $2.85 billion aggregate principal amount
of transition bonds, the transfer of Intangible Transition
Property from the Company to the Seller, the transfer of the
Transferred Intangible Transition Property from the Seller
to the Issuer, the imposition of Intangible Transition
Charges, and the collection thereof from consumers of
electricity within the Company's historic electric service
area who receive electric distribution service from the
Company or its successor, annual adjustments to the
Intangible Transition Charges and, in the last twelve months
preceding the scheduled maturity of the latest maturing
Class of Bonds, monthly or quarterly adjustments, in order
to ensure full recovery of Intangible Transition Charges and
the appointment of the Company as servicer for a specified
contractual fee. The sections of the QRO authorizing the
preceding matters have been declared irrevocable and are
entitled to the protection of Section 2812(b)(3) of the
Competition Act, which prohibits the PUC from reducing,
postponing, impairing or terminating such an order or the
Intangible Transition Charges authorized to be imposed and
collected under such an order by its subsequent action.
(xv) The Issuer will not be subject to utility gross
receipts taxes or any other taxes imposed by the
Commonwealth of Pennsylvania or by any of its agencies,
instrumentalities or political subdivisions, other than
franchise taxes in respect of the capital stock value of the
Issuer.
(xvi) The descriptions of both federal and
Pennsylvania tax consequences to holders of the Bonds set
forth in the Final Prospectus under "Material Income Tax
Matters for the Transition Bondholders" are accurate and
complete in all material respects.
(xvii) The transfer of the Intangible Transition
Property by the Company to the Seller pursuant to the
Contribution Agreement and the Assignment was an absolute
transfer of the entire right, title and interest in (as in a
"true sale" of) the Intangible Transition Property by the
Company directly to the Seller; this transfer of the
Intangible Transition Property is perfected; and immediately
prior to the execution and delivery of the Sale Agreement,
the Seller owns all right, title and interest in and to the
Intangible Transition Property.
(xviii) Searches have been made of the relevant
filing offices and based on those searches, there is not on
file under the Pennsylvania Uniform Commercial Code or the
Competition Act any filing that purports to cover the
Intangible Transition Property, other than the filings
required hereunder.
(xix) Either (1) (A) the transfer of the Transferred
Intangible Transition Property by the Seller to the Issuer
pursuant to the Sale Agreement is an absolute transfer of
the entire right, title and interest of the Seller in (as in
a "true sale" of) the Transferred Intangible Transition
Property, (B) such transfer is perfected, and (C) such
transfer has priority over any other transfer by the Seller
of the Transferred Intangible Transition Property; or (2)
(A) the Sale Agreement creates in favor of the Issuer a
security interest in the rights of the Seller in the
Transferred Intangible Transition Property, (B) such
security interest is valid and enforceable against the
Seller and third parties and has attached, (C) such security
interest is perfected, and (D) such perfected security
interest is of first priority.
(xx) A court would not order the substantive
consolidation of the assets and liabilities of the Issuer
with those of the Company or Group in the event of a
bankruptcy, reorganization or other insolvency proceeding
involving the Company or Group.
(xxi) A court would not order the substantive
consolidation of the assets and liabilities of the Seller
with those of the Company or Reserves in the event of a
bankruptcy, reorganization or other insolvency proceeding
involving the Company or Reserves.
(xxii) Neither the Intangible Transition Property nor
any interest therein would become property of the estate of
Group or Reserves under 11 U.S.C. ss. 541(a)(1) or (6) as a
result of the Contribution Agreement or the Assignment in a
case under the Bankruptcy Code in which Group or Reserves
was the debtor and the automatic stay of 11 U.S.C. ss.
362(a) would not apply to prevent the collections of
Intangible Transition Charges from being applied as provided
in the Basic Documents.
(xxiii) The Bonds have been duly authorized and
executed, and when authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by
the Underwriters in accordance with the terms hereof, will
constitute legal, valid and binding obligations of the
Issuer entitled to the benefits of the Indenture (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).
(xxiv) The Bonds, the Indenture, the Servicing
Agreement, the Contribution Agreement and the Sale Agreement
conform to the descriptions thereof contained in the
Registration Statement and the Final Prospectus.
(xxv) The Indenture has been duly qualified under the
Trust Indenture Act, and the Contribution Agreement, the
Sale Agreement and the Servicing Agreement are not required
to be registered under the Trust Indenture Act.
(xxvi) There is no pending or threatened action, suit
or proceeding before any court or governmental agency,
authority or body or any arbitrator involving the Issuer, or
relating to the Bonds, the QRO or the collection of
Intangible Transition Charges or the use and enjoyment of
Intangible Transition Property under the Competition Act of
a character required to be disclosed in the Registration
Statement that 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, that is not described or filed as required.
(xxvii) The statements included or incorporated in
the Final Prospectus in the base prospectus under the
headings "Risk Factors -- Legal, Legislative or Regulatory
Action that May Adversely Affect Your Investment," "Risk
Factors -- Unusual Nature of Intangible Transition Property,"
"The Competition Act," "PP&L's Restructuring Plan," "The PUC
Order and the Intangible Transition Charges," "Prior Legal
Challenges to the Competition Act or the PUC Order," "The
Transition Bonds," "The Contribution Agreement," "The Sale
Agreement," "The Servicing Agreement," "The Indenture" and
"ERISA Considerations" and in the prospectus supplement
under the headings "The Series ▇▇▇▇-▇ ▇▇▇▇▇," and
"Description of Intangible Transition Property" fairly
summarize the matters described therein.
(xxviii) 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) has been made in the manner and within the time
period required by Rule 424(b); no stop order suspending the
effectiveness of the Registration Statement has been issued,
no proceedings for that purpose have been instituted or
threatened, and the Registration Statement and the Final
Prospectus 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;
all portions of the Registration Statement and the Final
Prospectus that describe Pennsylvania law are accurate in
all material respects, including (but not limited to)
descriptions of the Competition Act, the QRO, Intangible
Transition Property and the Intangible Transition Charges;
and no facts have come to the attention of such counsel to
lead them to believe that at the Effective Date the
Registration Statement contained any untrue statement of a
material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading or that the Final Prospectus as of
its date and the Closing Date includes any untrue statement
of a material fact 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.
(xxix) Neither the execution and delivery of this
Underwriting Agreement, the Contribution Agreement, the Sale
Agreement, the Servicing Agreement, the Indenture, nor the
issuance and sale of the Bonds, nor the consummation of the
transactions contemplated by this Underwriting Agreement,
the Contribution Agreement, the Sale Agreement, the
Servicing Agreement and the Indenture, nor the fulfillment
of the terms of this Underwriting Agreement, the
Contribution Agreement, the Sale Agreement, the Servicing
Agreement and the Indenture, will (A) conflict with, result
in any breach of any of the terms or provisions of, or
constitute (with or without notice or lapse of time) a
default under the Amended and Restated Limited Liability
Company Agreement of the Issuer, or under the Amended and
Restated Limited Liability Company Agreement of the Seller,
or conflict with or breach any of the material terms or
provisions of, or constitute (with or without notice or
lapse of time) a default under, any indenture, agreement or
other instrument to which the Issuer or the Seller is a
party or by which the Issuer or the Seller is bound, (B)
result in the creation or imposition of any lien upon any
properties of the Issuer or the Seller pursuant to the terms
of any such indenture, agreement or other instrument (other
than as contemplated by the Indenture), or (C) violate any
law or any order, rule or regulation promulgated by the
United States, the State of Delaware, or the Commonwealth of
Pennsylvania applicable to the Issuer or the Seller of any
court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality
having jurisdiction over the Issuer, or any of its
properties.
(xxx) (A) The Indenture creates in favor of the
Trustee a security interest in the rights of the Issuer in
the Intangible Transition Property including proceeds of or
arising from Intangible Transition Charges to secure the
Bonds, (B) such security interest is valid and enforceable
against the Issuer and third parties and has attached under
the Competition Act, (C) such security interest is perfected
under the Competition Act, and (D) such perfected security
interest is of first priority under the Competition Act.
(xxxi) (A) The Indenture creates in favor of the
Trustee a security interest in the rights of the Issuer in
the Collateral, other than the Collateral described in
paragraph (xxx) above, (B) such security interest is valid
and enforceable against the Issuer and third parties and has
attached, (C) such security interest is perfected, and (D)
such perfected security interest is of first priority.
(xxxii) The Issuer is not, and after giving effect to
the offering and sale of the Bonds and the application of
the proceeds thereof as described in the Final Prospectus,
will not be 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.
(xxxiii) Unless adequate compensation is made by law
for the protection of holders of the Bonds, the Competition
Act and the QRO require the Commonwealth of Pennsylvania and
the PUC to require the imposition of intangible transition
charges at times and in amounts that are designed to ensure
the collection of intangible transition charge revenues
sufficient to discharge the Bonds in accordance with their
terms.
(xxxiv) The Intangible Transition Property and the
other Collateral are not subject to the lien created by the
Mortgage Indenture, and the transfer of the Intangible
Transition Property to the Seller on May 13, 1999 pursuant
to the terms and conditions of the Contribution Agreement
was, and the transfer of other Collateral to the Issuer on
the date of issuance of the Bonds, is free and clear of the
lien created by the Mortgage Indenture.
(xxxv) There presently is no judicial, statutory or
constitutional authority for placing a voter initiative or
referendum with state-wide application on a ballot in any
election in the Commonwealth of Pennsylvania.
(xxxvi) The Competition Act is severable; the
invalidation of any provision of the Competition Act that
does not adversely affect the holders of the Bonds would not
invalidate the provisions that do affect the holders of the
Bonds.
(xxxvii) An attempt by the Commonwealth of
Pennsylvania, the PUC or any other entity to repeal, amend
or otherwise impair the Competition Act or the rights of the
holders of the Bonds would be subject to preliminary
injunction if a court of competent jurisdiction hearing a
request for preliminary injunction finds that such relief is
necessary to prevent immediate and irreparable harm which
cannot be compensated by damages, that greater injury will
occur from refusing the injunction than from granting it,
that the preliminary injunction will restore the parties to
the status quo as it existed immediately before the alleged
wrongful conduct, that the alleged wrong is manifest and the
injunction is reasonably suited to ▇▇▇▇▇ it and that the
right to such relief by the challenging party is clear.
Further, upon final adjudication of the challenged repeal,
amendment or impairment, a court of competent jurisdiction
would permanently enjoin the alleged wrongful conduct if the
court concluded that such conduct constitutes a legal wrong
for which no adequate remedy at law was available.
(xxxviii) Such other opinions as may be required by
the Rating Agencies.
In rendering such opinions, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than
the Commonwealth of Pennsylvania, the State of Delaware, the State of New
York, the State of Nevada or the federal laws of the United States of
America, to the extent deemed proper and specified in such opinion, upon
the opinion of other counsel of good standing believed to be reliable and
who are satisfactory to counsel for the Underwriters, and (B) as to matters
of fact, to the extent deemed proper, on certificates of responsible
officers of the Issuer, the Seller, Group, Reserves, the Company and public
officials. References to the Final Prospectus in this paragraph (c) include
any supplements thereto at the Closing Date.
(d) The Representative shall have received an opinion of
counsel to the Trustee, dated the Closing Date, in form and
substance reasonably satisfactory to the Representative, to the
effect that:
(i) the Trustee is validly existing as a banking
corporation in good standing under the laws of the State of
New York; and
(ii) the Indenture has been duly authorized, executed
and delivered, and constitutes a legal, valid and binding
instrument enforceable against the 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 Bonds have been duly authenticated by the
Trustee.
(e) The Representative shall have received from ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, such
opinion or opinions, dated the Closing Date, with respect to the
issuance and sale of the Bonds, the Indenture, the Registration
Statement, the Final Prospectus (together with any supplement
thereto) and other related matters as the Representative may
reasonably require, and the Company, the Seller, and the Issuer
shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(f) The Representative shall have received a certificate of
the Issuer, signed by a duly authorized manager of the Issuer,
dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Final Prospectus, any supplement to the Final Prospectus and this
Underwriting Agreement and that:
(i) the representations and warranties of the Issuer
in this Underwriting Agreement and in the Indenture are true
and correct in all material respects on and as of the
Closing Date with the same effect as if made on the Closing
Date, and the Issuer has complied with all the agreements
and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no
proceedings for that purpose have been instituted or
threatened; and
(iii) since the dates as of which information is
given in the Final Prospectus (exclusive of any supplement
thereto), there has been no material adverse change in (A)
the condition (financial or other), prospects, business or
properties of the Issuer, whether or not arising from
transactions in the ordinary course of business, or (B) the
Transferred Intangible Transition Property, except as set
forth in or contemplated in the Final Prospectus (exclusive
of any supplement thereto).
(g) The Representative shall have received a certificate of
the Company, signed by the President and the principal financial or
accounting officer of the Company, dated the Closing Date, to the
effect that the signers of such certificate have carefully examined
the Registration Statement, the Final Prospectus, any supplement to
the Final Prospectus and this Underwriting Agreement and that:
(i) the representations and warranties of the Company
in this Underwriting Agreement, the Contribution Agreement,
the Sale Agreement and the Servicing Agreement are true and
correct in all material respects on and as of the Closing
Date with the same effect as if made on the Closing Date,
and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no
proceedings for that purpose have been instituted or, to the
Company's knowledge, threatened; and
(iii) since the dates as of which information is
given in the Final Prospectus (exclusive of any supplement
thereto), there has been no material adverse change in (A)
the Company's financial position or results of operation, or
(B) the Transferred Intangible Transition Property.
(h) The Representative shall have received a certificate of
the Seller, signed by a duly authorized manager of the Seller,
dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Final Prospectus, any supplement to the Final Prospectus and this
Underwriting Agreement and that:
(i) the representations and warranties of the Seller
in this Underwriting Agreement, the Contribution Agreement
and 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 Seller has complied
with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the
Closing Date; and
(ii) 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 the
Seller's financial position or results of operation.
(i) The Representative shall have received a certificate of
the Company, signed by the President and the principal financial or
accounting officer of the Company, dated the Closing Date, to the
effect that:
(i) the representations and warranties of Group and
Reserves in this Underwriting Agreement and in the
Contribution 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 Group and Reserves have
complied with all the agreements and satisfied all the
conditions on their part to be performed or satisfied at or
prior to the Closing Date; and
(ii) 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 the
condition (financial or other), prospects, earnings,
business or properties of Group or Reserves, whether or not
arising from transactions in the ordinary course of
business.
(j) At the Closing Date, PricewaterhouseCoopers LLP shall
have furnished to the Representative (i) a letter or letters (which
may refer to letters previously delivered to the Representative),
dated as of the Closing Date, in form and substance satisfactory to
the Representative, confirming that they are independent
accountants within the meaning of the Act and the Exchange Act and
the respective applicable published rules and regulations
thereunder and stating in effect that they have performed certain
specified procedures as a result of which they determined that
certain information of an accounting, financial or statistical
nature set forth in the Registration Statement and the Final
Prospectus, agrees with the accounting records of the Company and
its subsidiaries, excluding any questions of legal interpretation,
and (ii) the opinion or certificate, dated as of the Closing Date,
in form and substance satisfactory to the Representative,
satisfying the requirements of Section 2.10(7) of the Indenture.
In addition, except as provided in Schedule I hereto, at the
Execution Time, PricewaterhouseCoopers LLP shall have furnished to
the Representative a letter or letters, dated as of the Execution
Time, in form and substance satisfactory to the Representative, to
the effect set forth above.
(k) 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 occurred any change, or any development involving a
prospective change, in or any event affecting either (i) the
business, prospects, properties or financial condition of the
Company, the Seller or the Issuer, or (ii) the Transferred
Intangible Transition Property, the Bonds, the QRO or the
Competition Act, the effect of which is, in the judgment of the
Representative, so material and adverse as to make it impractical
or inadvisable to proceed with the offering or delivery of the
Bonds as contemplated by the Registration Statement (exclusive of
any amendment thereof) and the Final Prospectus (exclusive of any
supplement thereto).
(l) The Bonds shall have been rated in the highest long-term
rating category by each of the Rating Agencies.
(m) On or prior to the Closing Date, the Issuer shall have
delivered to the Representative evidence, in form and substance
reasonably satisfactory to the Representative, that appropriate
filings have been made in accordance with the Competition Act and
other applicable law reflecting (1) the transfer of the Intangible
Transition Property by the Company directly to the Seller,
including the filing of notices with the PUC under the Competition
Act and of UCC financing statements in the office of the Secretary
of the Commonwealth of Pennsylvania, (2) the transfer of the
Transferred Intangible Transition Property by the Seller to the
Issuer, including the filing of UCC financing statements in the
office of the Secretary of State of the State of Nevada and the
filing of notices with the PUC under the Competition Act, and (3)
the grant of a security interest by the Issuer in the Collateral to
the Trustee, including the filing of notices with the PUC under the
Competition Act and of UCC financing statements in the office of
the Secretary of the Commonwealth of Pennsylvania.
(n) On or prior to the Closing Date, the Company shall have
delivered to the Representative evidence, in form and substance
satisfactory to the Representative, of the Pennsylvania Public
Utility Commission's issuance of the QRO relating to the
Transferred Intangible Transition Property.
(o) Prior to the Closing Date, the Issuer, the Seller and
the Company shall have furnished to the Representative such further
information, certificates, opinions and documents as the
Representative may reasonably request.
If any of the conditions specified in this Section 7 shall
not have been fulfilled in all material respects when and as provided in
this Underwriting Agreement, or if any of the opinions and certificates
mentioned above or elsewhere in this Underwriting Agreement shall not be in
all material respects reasonably satisfactory in form and substance to the
Representative and counsel for the Underwriters, this Underwriting
Agreement and all obligations of the Underwriters hereunder may be canceled
at, or at any time prior to, the Closing Date by the Representative. Notice
of such cancellation shall be given to the Issuer in writing or by
telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 7
shall be delivered at the office of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP in the City of New York on the Closing Date.
8. Indemnification and Contribution.
(a) The Company, the Seller and the Issuer 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 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 or are
based upon any untrue statement or alleged untrue statement of a
material fact or any 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, contained in (i) the Transferred
Intangible Transition Property Information and the Computational
Materials and ABS Term Sheets delivered to investors by any
Underwriter to the extent such loss, claim, damage or liability
arises from the Transferred Intangible Transition Property
Information and (ii) the Registration Statement for the
registration of the Bonds 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 and, except as hereinafter in this Section 8
provided, will reimburse each such indemnified party 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 none of the Company, the Seller
or the Issuer 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 Issuer, the
Seller or the Company by or on behalf of any Underwriter through
the Representative specifically for inclusion therein or Trust
Indenture Act statement of eligibility; provided further, that 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 Bonds 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 (i) the Company, the Seller or the Issuer had
previously furnished copies of the Final Prospectus to the
Representative, (ii) delivery of the Final Prospectus was required
by the Act to be made to such person, (iii) the untrue statement or
omission of a material fact contained in the Preliminary Final
Prospectus was corrected in the Final Prospectus and (iv) there was
not sent or given to such person, at or prior to the written
confirmation of the sale of such Bonds to such person, a copy of
the Final Prospectus. This indemnity agreement will be in addition
to any liability which the Company, the Seller and the Issuer
otherwise may have. As used herein, the term "TRANSFERRED
INTANGIBLE TRANSITION PROPERTY INFORMATION" means information,
whether in written or electronic format or otherwise, regarding the
Transferred Intangible Transition Property provided to the
Underwriters by or on behalf of the Company or the Issuer.
(b) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, the Seller and the Issuer,
each of their directors, each of their officers who signs the
Registration Statement, and each person who controls the Company,
the Seller or the Issuer within the meaning of either the Act or
the Exchange Act, to the same extent as the foregoing indemnity
from the Company, the Seller and the Issuer to each Underwriter,
but only with reference to (i) written information relating to such
Underwriter furnished to the Issuer, the Seller or the Company by
or on behalf of such Underwriter through the Representative
specifically for inclusion in the documents referred to in the
foregoing indemnity and (ii) untrue statements or alleged untrue
statements in the Computational Materials or ABS Term Sheets
delivered to the purchasers of the Bonds by such Underwriter except
to the extent that such losses, claims, damages or other
liabilities arise from factual errors in the Transferred Intangible
Transition Property Information. This indemnity agreement will be
in addition to any liability which any Underwriter may otherwise
have.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof; but the
failure so to notify the indemnifying party (i) will not relieve it
from liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraph (a)
or (b) above. The indemnifying party shall be entitled to appoint
counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying
party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or
parties except as set forth below); provided, however, that such
counsel shall be reasonably satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear
the reasonable fees, costs and expenses of such separate counsel if
(i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a
conflict of interest, or (ii) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. 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 includes an unconditional release
of each indemnified party from all liability arising out of such
claim, action, suit or proceeding.
(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
Seller, the Issuer and the Underwriters agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal
or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "LOSSES") to which
the Issuer and one or more of the Underwriters may be subject in
such proportion as is appropriate to reflect the relative benefits
received by the Issuer and by the Underwriters from the offering of
the Bonds. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company, the Issuer,
the Seller and the Underwriters shall contribute in such proportion
as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company, the Issuer, the Seller and
of the Underwriters in connection with the statements or omissions
which resulted in such Losses as well as any other relevant
equitable considerations. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission
relates to information provided by the Company, the Issuer, the
Seller or the Underwriters. The Company, the Issuer, the Seller 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(d),
each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer,
employee and agent of an Underwriter shall have the same rights to
contribution as such Underwriter, and each person who controls the
Issuer, the Seller or the Company within the meaning of either the
Act or the Exchange Act, each officer of the Issuer, the Seller or
the Company who shall have signed the Registration Statement and
each director of the Issuer, the Seller or the Company shall have
the same rights to contribution as the Issuer, the Seller or the
Company, subject in each case to the applicable terms and
conditions of this paragraph (d). The Underwriters' obligations to
contribute pursuant to this Section 8 are several in proportion to
the respective principal amounts of Bonds set forth opposite their
names in Schedule II hereto and not joint.
(e) Notwithstanding the provisions of this Section 8, no
Underwriter shall be required to contribute any amount in excess of
the amount by which the total price of the Bonds underwritten by it
and distributed to the public exceeds the amount of any damages
which such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged
omission.
9. Reimbursement of Expenses. If the sale of the Bonds
provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof or
because of any refusal, inability or failure on the part of the Company,
the Seller or the Issuer to perform any agreement herein or comply with any
provision hereof other than by reason of a default (including under Section
10) by any of the Underwriters, the Company, the Seller and the Issuer
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 Bonds; provided, however, that the
reimbursement of fees and expenses of counsel to the Underwriters shall be
subject to the engagement letter dated June 4, 1999 between the Company and
the Representative.
10. Default by an Underwriter. If any Underwriter or
Underwriters defaults in their obligations under this Underwriting
Agreement, the non-defaulting Underwriters may make arrangements
satisfactory to the Issuer and the Company for the purchase of such Bonds
by other persons, including any of the Underwriters, but if no such
arrangement are made by the Closing Date, the other Underwriters shall be
obligated, severally in the proportion that their respective commitments in
Schedule II hereto bear to the total commitment of the non-defaulting
Underwriters set forth opposite the names of all the remaining
Underwriters, to purchase the Bonds that the defaulting Underwriter or
Underwriters agreed but failed to purchase. In the event that any
Underwriter or Underwriters defaults in their obligations to purchase Bonds
hereunder, the Company may by prompt written notice to the non-defaulting
Underwriters postpone the Closing Date for a period of not more than seven
full business days to effect whatever changes may thereby be made necessary
in the Registration Statement and the Final Prospectus or in any other
documents, and the Company will promptly file any amendments to the
Registration Statement or supplements to the Final Prospectus that may
thereby be necessary. As used in this Underwriting Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing contained in this Underwriting Agreement shall relieve any
defaulting Underwriter of its liability, if any, to the Issuer, the Seller
and the Company and any non-defaulting Underwriter for damages occasioned
by its default hereunder.
11. Termination. This Underwriting Agreement shall be
subject to termination, in the absolute discretion of the Representative,
by notice given to the Issuer prior to delivery of and payment for the
Bonds, if prior to such time (i) there shall have occurred any change, or
any development involving a prospective change, in or any event affecting
either (A) the business, prospects, properties or financial condition of
the Issuer, the Seller, or the Company or (B) the Transferred Intangible
Transition Property, the Bonds, the QRO or the Competition Act, the effect
of which, in the judgment of the Representative, materially impairs the
investment quality of the Bonds or makes it impractical or inadvisable to
market the Bonds, (ii) trading in the Common Stock of PP&L Resources, Inc.
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 Pennsylvania 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 Representative, impracticable or
inadvisable to proceed with the offering or delivery of the Bonds as
contemplated by the Final Prospectus (exclusive of any supplement thereto)
and the Representative shall have made a similar determination with respect
to all other underwritings of stranded cost asset-backed securities in
which it is participating and has the contractual right to make such a
determination.
12. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers, the Issuer or its officers,
Group or its officers, Reserves or its officers, the Seller or its
officers, and of the Underwriters set forth in or made pursuant to this
Underwriting Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter or of the
Company, the Issuer, Group, Reserves, the Seller or any of the officers,
directors or controlling persons referred to in Section 8 hereof, and will
survive delivery of and payment for the Bonds. The provisions of Sections 7
and 8 hereof shall survive the termination or cancellation of this
Underwriting Agreement.
13. Notices. All communications hereunder will be in writing
and may be given by United States mail, courier service, telecopy, telefax
or facsimile (confirmed by telephone or in writing in the case of notice by
telecopy, telefax or facsimile) or any other customary means of
communication, and any such communication shall be effective when
delivered, or if mailed, three days after deposit in the United States mail
with proper postage for ordinary mail prepaid, and if sent to the
Representative, to it at the address specified in Schedule I hereto; and if
sent to the Company, to it at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: Senior Vice President and Chief Financial Officer; if sent to
the Seller to it at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Manager; and if sent to the Issuer, to it at Two
North Ninth Street, ▇▇▇▇ 9-2, Room 3, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
Manager. The parties hereto, by notice to the others, may designate
additional or different addresses for subsequent communications.
14. Successors. This Underwriting Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and controlling persons referred
to in Section 8 hereof, and no other person will have any right or
obligation hereunder.
15. Applicable Law. This Underwriting Agreement will be
governed by and construed in accordance with the laws of the State of New
York.
16. Counterparts. This Underwriting Agreement may be signed
in any number of counterparts, each of which shall be deemed an original,
which taken together shall constitute one and the same instrument.
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 Seller, the Issuer and the several
Underwriters.
Very truly yours,
PP&L, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
and Chief Financial Officer
PP&L TRANSITION BOND COMPANY LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
____________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Manager
CEP SECURITIES CO. LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
___________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Manager
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date specified in Schedule I hereto.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
__________________________
Name: ▇. ▇. ▇▇▇▇▇▇▇
Title: Vice President
For itself and the other several
Underwriters, if any, named in Schedule II
to the foregoing Underwriting Agreement.
SCHEDULE I
Underwriting Agreement dated July 29, 1999
Registration Statement No. 333-75369
Representative:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Title, Purchase Price and Description of Bonds:
Title: PP&L Transition Bond Company LLC Transition Bonds,
Series 1999-1
Principal amount, Price to
Public, Underwriting Discounts
and Commissions and Proceeds
to Issuer:
Total
Principal Underwriting
Amount of Discounts and Proceeds to
Class Bond Rate Price to Public Commissions Issuer
-------------- ------------ --------------- --------------- --------------
Per Class A-1 Bond $ 293,000,000 6.08% 99.99269% 0.22400% 99.76869%
Per Class A-2 Bond $ 178,000,000 6.41% 99.98213% 0.30000% 99.68213%
Per Class A-3 Bond $ 303,000,000 6.60% 99.99922% 0.35000% 99.64922%
Per Class A-4 Bond $ 201,000,000 6.72% 99.99466% 0.40000% 99.59466%
Per Class A-5 Bond $ 313,000,000 6.83% 99.96589% 0.45000% 99.51589%
Per Class A-6 Bond $ 223,000,000 6.96% 99.98204% 0.50000% 99.48204%
Per Class A-7 Bond $ 455,000,000 7.05% 99.99491% 0.60000% 99.39491%
Per Class A-8 Bond $ 454,000,000 7.15% 99.99409% 0.67500% 99.31909%
--------------
Total $ 2,420,000,000
Plus, the Underwriters will be
reimbursed by the Issuer for
expenses pursuant to the
engagement letter dated June 4,
1999 between the Company and
the Representative
Original Issue Discount (if any): None
Redemption provisions: At the Issuer's option when the
outstanding principal balance
of the Bonds has been reduced
to 5% of the original principal
balance.
Other provisions: None
Closing Date, Time and Location: August 10, 1999, 10:00 a.m.;
offices of Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, New
York, New York
Type of Offering: Delayed Offering
Date referred to in Section 5(a)(vi) and Section 5(b)(ii) after which the
Company, the Seller and the Issuer may offer or sell asset-backed
securities without the consent of the Representative: January 29, 2000
SCHEDULE II
Principal Amount of Bonds to be Purchased (in thousands)
Class A-1 Class A-2 Class A-3 Class A-4 Class A-5 Class A-6 Class A-7 Class A-8
Underwriters Bonds Bonds Bonds Bonds Bonds Bonds Bonds Bonds Total
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ $172,870 $105,020 $178,770 $118,590 $184,670 $131,570 $268,450 $267,860 $1,427,800
Credit Suisse First
Boston $29,300 $17,800 $30,300 $20,100 $31,300 $22,300 $45,500 $45,400 $242,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. $29,300 $17,800 $30,300 $20,100 $31,300 $22,300 $45,500 $45,400 $242,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney $29,300 $17,800 $30,300 $20,100 $31,300 $22,300 $45,500 $45,400 $242,000
Banc One Capital
Markets, Inc. $2,930 $1,780 $3,030 $2,010 $3,130 $2,230 $4,550 $4,540 $24,200
Chase Securities Inc. $8,790 $5,340 $9,090 $6,030 $9,390 $6,690 $13,650 $13,620 $72,600
First Union Capital
Markets Corp. $8,790 $5,340 $9,090 $6,030 $9,390 $6,690 $13,650 $13,620 $72,600
Mellon Financial
Markets, Inc. $8,790 $5,340 $9,090 $6,030 $9,390 $6,690 $13,650 $13,620 $72,600
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Inc. $1,465 $890 $1,515 $1,005 $1,565 $1,115 $2,275 $2,270 $12,100
Pryor, McClendon, Counts
& Co., Inc. $1,465 $890 $1,515 $1,005 $1,565 $1,115 $2,275 $2,270 $12,100
Total $293,000 $178,000 $303,000 $201,000 $313,000 $223,000 $455,000 $454,000 $2,420,000
EXHIBIT A
This information has been prepared in connection with the issuance of the
securities described herein, and is based on information provided by PP&L,
Inc. with respect to the expected characteristics of the intangible
transition property securing these securities. The actual characteristics
and performance of the intangible transition property will differ from the
assumptions used in preparing these materials, which are hypothetical in
nature. Changes in the assumptions may have a material impact on the
information set forth in these materials. No representation is made that
any performance or return indicated herein will be achieved. This
information may not be used or otherwise disseminated in connection with
the offer or sale of these or any other securities, except in connection
with the initial offer or sale of these securities to you to the extent set
forth below. NO REPRESENTATION IS MADE AS TO THE APPROPRIATENESS,
USEFULNESS, ACCURACY OR COMPLETENESS OF THESE MATERIALS OR THE ASSUMPTIONS
ON WHICH THEY ARE BASED. The underwriters disclaim any and all liability
relating to this information, including without limitation any express or
implied representations and warranties for, statements contained in, and
omissions from this information. Additional information is available upon
request. These materials do not constitute an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any particular trading strategy. ANY SUCH OFFER TO BUY OR
SELL ANY SECURITY WOULD BE MADE PURSUANT TO A DEFINITIVE PROSPECTUS AND
PROSPECTUS SUPPLEMENT PREPARED BY THE ISSUER WHICH WOULD CONTAIN MATERIAL
INFORMATION NOT CONTAINED IN THESE MATERIALS. SUCH PROSPECTUS AND
PROSPECTUS SUPPLEMENT WILL CONTAIN ALL MATERIAL INFORMATION IN RESPECT OF
ANY SUCH SECURITY OFFERED THEREBY AND ANY DECISION TO INVEST IN SUCH
SECURITIES SHOULD BE MADE SOLELY IN RELIANCE UPON SUCH PROSPECTUS AND
PROSPECTUS SUPPLEMENT. ANY CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN
ARE TO BE READ IN CONJUNCTION WITH SUCH PROSPECTUS AND PROSPECTUS
SUPPLEMENT. In the event of any such offering, these materials, including
any description of the intangible transition property contained herein,
shall be deemed superseded, amended and supplemented in their entirety by
such Prospectus and Prospectus Supplement. To Our Readers Worldwide: In
addition, please note that this information has been provided by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co., Incorporated and approved by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
International Limited, a member of the Securities and Futures Authority,
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Japan Ltd. We recommend that investors obtain the advice
of their ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Japan
Ltd. representative about the investment concerned. NOT FOR DISTRIBUTION TO
PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES AND FUTURES AUTHORITY.