$150,000,000
Chugach Electric Association Inc.
____% New Bonds, 2001 Series A Due 2011
Underwriting Agreement
April 11, 2001
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
Chugach Electric Association, Inc., an Alaska electric cooperative
corporation (the "Company"), proposes to issue and sell to you (the
"Underwriter"), $150,000,000 principal amount of its _____% New Bonds, 2001
Series A Due 2011 (the "Securities"). The Securities will be issued pursuant to
the provisions of the Tenth Supplemental Indenture of Trust, dated as of April
1, 2001, to the Indenture of Trust, dated as of September 15, 1991, between the
Company and Security Pacific Bank Washington, N.A., as Trustee (the "Trustee"),
as amended (collectively, the "Indenture").
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement, including a prospectus, relating to the Securities. The registration
statement as amended at the time when it shall become effective, or, if a
post-effective amendment is filed with respect thereto, as amended by such
post-effective amendment at the time of its effectiveness, including in each
case information (if any) deemed to be part of the registration statement at the
time of effectiveness pursuant to Rule 430A under the Securities Act, is
referred to in this Agreement as the "Registration Statement," and the
prospectus in the form first used to confirm sales of Securities is referred to
in this Agreement as the "Prospectus." If the Company has filed an abbreviated
registration statement pursuant to Rule 462(b) under the Securities Act (the
"Rule 462 Registration Statement"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462 Registration
Statement.
The Company hereby agrees with the Underwriter as follows:
1. The Company agrees to issue and sell the Securities to the
Underwriter as hereinafter provided, and the Underwriter, upon the basis of the
representations and warranties, herein contained, but subject to the conditions
hereinafter stated, agrees to purchase the principal amount of Securities at a
price equal to ______% of their principal amount plus accrued interest, if any,
from April 17, 2001 to the date of payment and delivery.
2. The Company understands that the Underwriter intends (i) to make a
public offering of the Securities as soon after (A) the Registration Statement
has become effective and (B) the parties hereto have executed and delivered this
Agreement, as in the judgment of the Underwriter is advisable, and (ii)
initially to offer the Securities upon the terms set forth in the Prospectus.
3. Payment for the Securities shall be made by the Underwriter by wire
transfer in immediately available funds to the account specified by the Company
to the Underwriter on April 17, 2001, or at such other time on the same or such
other date, not later than the fifth Business Day thereafter, as the Underwriter
and the Company may agree upon in writing. The time and date of such payment is
referred to herein as the "Closing Date." As used herein, the term "Business
Day" means any day other than a day on which banks are permitted or required to
be closed in New York City.
Payment for the Securities shall be made against delivery to the
nominee of The Depository Trust Company for the account of the Underwriter of
one or more global notes (collectively, the "Global Note") representing the
Securities, with any transfer taxes payable in connection with the transfer to
the Underwriter duly paid by the Company. The Global Note will be made available
for inspection by the Underwriter at its address set forth above not later than
1:00 P.M., New York City time, on the Business Day prior to the Closing Date.
4. The Company represents and warrants to the Underwriter that:
(a) no order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission, and each preliminary prospectus
filed as part of the Registration Statement as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act, and did
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information relating
to the Underwriter furnished to the Company in writing by the Underwriter
expressly for use therein;
(b) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been instituted
or, to the knowledge of the Company, threatened by the Commission; and the
Registration Statement and Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) comply, or will
comply, as the case may be, in all material respects with the Securities Act and
the Trust Indenture Act of 1939, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "Trust Indenture Act"), and do not
and will not, as of the applicable effective date as to the Registration
Statement and any amendment thereto and as of the date of the Prospectus and any
amendment or supplement thereto, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Prospectus, as amended or
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supplemented, if applicable, at the Closing Date will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; except that the foregoing representations and warranties
shall not apply to statements or omissions in the Registration Statement or the
Prospectus made in reliance upon and in conformity with information relating to
the Underwriter furnished to the Company in writing by the Underwriter expressly
for use therein or information contained in the Form T-1 of the Trustee under
the Trust Indenture Act;
(c) the financial statements, and the related notes thereto, included
in the Registration Statement and the Prospectus present fairly the consolidated
financial position of the Company as of the dates indicated and the results of
its operations and the changes in its consolidated cash flows for the periods
specified; and said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis, and the
supporting schedules included in the Registration Statement present fairly the
information required to be stated therein;
(d) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any change in the
equities, margins or long-term debt of the Company, or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the general affairs, business, prospects, management, financial
position, equities, margins or results of operations of the Company, otherwise
than as set forth or contemplated in the Prospectus; and except as set forth or
contemplated in the Prospectus the Company has not entered into any transaction
or agreement (whether or not in the ordinary course of business) material to the
Company;
(e) the Company has been duly organized and is validly existing as an
electric cooperative corporation in good standing under the laws of the State of
Alaska, with power and authority (corporate and other) to enter into and perform
its obligation under this Agreement, the Indenture and the Securities, to own
its properties and conduct its business as described in the Prospectus, and is
not required to be licensed or qualified for the transaction of business under
the laws of any other jurisdiction;
(f) the Company has no subsidiaries;
(g) this Agreement has been duly authorized, executed and delivered by
the Company;
(h) the Securities have been duly authorized, and, when issued and
delivered pursuant to this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and binding
obligations of the Company entitled to the benefits provided by the Indenture;
the Indenture has been duly authorized, executed and delivered and upon
effectiveness of the Registration Statement will have been duly qualified under
the Trust Indenture Act and constitutes a valid and binding instrument
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enforceable against the Company in accordance with its terms; and the Securities
and the Indenture will conform to the descriptions thereof in the Prospectus;
(i) the Company is not, or with the giving of notice or lapse of time
or both would not be, in violation of or in default under, its Articles of
Incorporation or Bylaws or any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party or by
which it or any of its properties is bound, except for violations and defaults
which individually and in the aggregate are not material to the Company or to
the holders of the Securities; the issue and sale of the Securities and the
performance by the Company of all of the provisions of its obligations under the
Securities, the Indenture and this Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or result in
a breach of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company is a party or by which the Company is bound or
to which any of the property or assets of the Company is subject, nor will any
such action result in any violation of the provisions of the Articles of
Incorporation or the Bylaws of the Company or any applicable law or statute or
any order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its properties or result in the creation
or imposition of any lien upon any of its properties; and no consent, approval,
authorization, order, license, filing, registration or qualification of or with
any such court or federal, state or local governmental agency or body or the
members of the Company or any trustee or holder of any indebtedness or other
obligation is now or under existing law in the future will be required for the
issue and sale of the Securities or the execution, delivery and performance of,
or the consummation by the Company of the transactions contemplated by, this
Agreement or the Indenture, except such consents, approvals, authorizations,
orders, licenses, filings, registrations or qualifications as have been made or
obtained under the Securities Act and as may be required under state securities
or blue sky laws in connection with the purchase and distribution of the
Securities by the Underwriter;
(j) other than as set forth or contemplated in the Prospectus, there
are no legal or governmental investigations, actions, suits or proceedings
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its properties or to which the Company is or may be a party or
to which any property of the Company is or may be the subject which, if
determined adversely to the Company, could individually or in the aggregate
have, or reasonably be expected to have, a material adverse effect on the
general affairs, business, prospects, management, financial position, equities,
margins or results of operations of the Company, and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others; and there are no statutes,
regulations, contracts or other documents that are required to be filed as an
exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus which are not filed or described as
required;
(k) KPMG Peat Marwick LLP, which has certified certain financial
statements of the Company, is an independent public accountant as required by
the Securities Act;
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(l) the Company has good and marketable title in fee simple to all
items of real property and good and marketable title to all personal property
owned by it, in each case free and clear of all liens, encumbrances and defects
except such as are described or referred to in the Prospectus or such as do not
materially affect the value of such property and do not interfere with the use
made or proposed to be made of such property by the Company; and any real
property and buildings held under lease by the Company are held by it under
valid, existing and enforceable leases with such exceptions as are not material
and do not interfere with the use made or proposed to be made of such property
and buildings by the Company;
(m) no relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, members or suppliers of
the Company, which is required by the Securities Act to be described in the
Registration Statement and the Prospectus which is not so described;
(n) the Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as described
in the Prospectus, will not be an "investment company" or an entity "controlled"
by an "investment company", as such terms are defined in the Investment Company
Act of 1940, as amended (the "Investment Company Act");
(o) the Company is not a "holding company" or a "subsidiary company" of
a "holding company" within the meaning of the Public Utility Holding Company Act
of 1935, as amended;
(p) the Company has filed all federal, state, local and foreign tax
returns which have been required to be filed and have paid all taxes shown
thereon and all assessments received by them or any of them to the extent that
such taxes have become due and are not being contested in good faith; and,
except as disclosed in the Prospectus there is no tax deficiency which has been
or might reasonable be expected to be asserted or threatened against the
Company;
(q) the Company owns, possesses or has obtained all licenses, permits,
certificates, consents, orders, approvals and other authorizations
(collectively, the "Authorizations") from, and has made all declarations and
filings with, all federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, domestic or
foreign, necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as conducted as of the date hereof, and
the Company has not received any actual notice of any proceeding relating to
revocation or modification of any such license, permit, certificate, consent,
order, approval or other authorization, except as described in the Registration
Statement and the Prospectus or where the failure to own, possess or obtain such
Authorizations or make such filings could not reasonably be expected to have a
material adverse effect on the Company; and the Company is in substantial
compliance with all laws and regulations relating to the conduct of its business
as conducted as of the date hereof;
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(r) there are no existing or, to the best knowledge of the Company,
threatened labor disputes with the employees of the Company which are likely to
have a material adverse effect on the Company;
(s) the Company (i) is in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
has received all permits, licenses or other approvals required under applicable
Environmental Laws to conduct its businesses, and (iii) is in compliance with
all terms and conditions of any such permit, license or approval, except where
such noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate,
have a material adverse effect on the Company;
(t) During the period beginning from the date hereof and continuing
until the date three months after the Closing Date, the Company will not offer,
sell, contract to sell or otherwise dispose of any securities to any person (as
defined in the Indenture), other than CoBank, ABC, that are substantially
similar to the Securities, except as provided hereunder;
(u) each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") that
is maintained, administered or contributed to by the Company or any of its
affiliates for employees or former employees of the Company and its affiliates
has been maintained in compliance with its terms and the requirements of any
applicable statutes, orders, rules and regulations, including but not limited to
ERISA and the Internal Revenue Code of 1986, as amended ("Code"). No prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of the
Code has occurred with respect to any such plan excluding transactions effected
pursuant to a statutory or administrative exemption. For each such plan which is
subject to the funding rules of Section 412 of the Code or Section 302 of ERISA
no "accumulated funding deficiency" as defined in Section 412 of the Code has
been incurred, whether or not waived, and the fair market value of the assets of
each such plan (excluding for these purposes accrued but unpaid contributions)
exceeded the present value of all benefits accrued under such plan determined
using reasonable actuarial assumptions; and
(v) The Indenture constitutes a direct and valid first lien upon all of
the properties and assets of the Company specifically or generally described or
referred to in the Indenture as being subject to the lien thereof, subject only
to the exceptions referred to in the Indenture and except as set forth under
"Description of the Bonds" in the Prospectus, and will create a similar lien
upon all properties and assets acquired by the Company after the date hereof
(until the Release Date (as defined in the Indenture)) which are required to be
subjected to the lien of the Indenture, when acquired by the Company, subject
only to the exceptions referred to in the Indenture and free from all other
prior liens, charges and encumbrances; the descriptions of all such properties
and assets contained in the granting clauses of the Indenture are correct and
adequate for the purposes of the Indenture; and the Indenture has been duly
recorded as a mortgage of real estate, and any required filings with respect to
6
personal property and fixtures subject to the lien of the Indenture have been
duly made in each place in which such recording or filing is required to
protect, preserve and perfect the lien of the Indenture; and all taxes and
recording and filing fees required to be paid with respect to the execution,
recording or filing of the Indenture, the filing of financing statements related
thereto and similar documents and the issuance of the Securities have been paid.
5. The Company covenants and agrees with the Underwriter as follows:
(a) to use its best efforts to cause the Registration Statement to
become effective at the earliest possible time and, if required, to file the
final Prospectus with the Commission within the time periods specified by Rule
424(b) and Rule 430A under the Securities Act; and to furnish copies of the
Prospectus to the Underwriter in New York City prior to 10:00 a.m., New York
City time, on the Business Day next succeeding the date of this Agreement in
such quantities as the Underwriter reasonably may request;
(b) to deliver, at the expense of the Company, to the Underwriter, two
signed copies of the Registration Statement (as originally filed) and each
amendment thereto, in each case including exhibits and, during the period
mentioned in paragraph (e) below, to the Underwriter as many copies of the
Prospectus (including all amendments and supplements thereto) as it reasonably
may request;
(c) before filing any amendment or supplement to the Registration
Statement or the Prospectus, whether before or after the time the Registration
Statement becomes effective, to furnish to the Underwriter a copy of the
proposed amendment or supplement for review and not to file any such proposed
amendment or supplement to which the Underwriter reasonably objects;
(d) to advise the Underwriter promptly, and to confirm such advice in
writing, (i) when the Registration Statement has become effective, (ii) when any
amendment to the Registration Statement has been filed or becomes effective,
(iii) when any supplement to the Prospectus or any amendment to the Prospectus
is necessary or has been filed and to furnish the Underwriter with copies
thereof, (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or any
preliminary prospectus or for any additional information, (v) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the Prospectus or the initiation or threatening of any
proceeding for that purpose, (vi) of the occurrence of any event, within the
period referenced in paragraph (e) below, as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, and (vii) of the receipt by the
Company of any notification with respect to any suspension of the qualification
of the Securities for offer and sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and to use its best efforts to
7
prevent the issuance of any such stop order, or of any order preventing or
suspending the use of any preliminary prospectus or the Prospectus, or of any
order suspending any such qualification of the Securities, or notification of
any such order thereof and, if issued, to obtain as soon as possible the
withdrawal thereof;
(e) if, during such period of time after the first date of the public
offering of the Securities as in the opinion of counsel for the Underwriter a
prospectus relating to the Securities is required by law to be delivered in
connection with sales by the Underwriter or a dealer, any event shall occur as a
result of which it is necessary to amend or supplement the Prospectus in order
to make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Prospectus to comply with law, forthwith to prepare and
furnish, at the expense of the Company, to the Underwriter and to the dealers
(whose names and addresses the Underwriter will furnish to the Company) to which
Securities may have been sold by the Underwriter and to any other dealers upon
request, such amendments or supplements to the Prospectus as may be necessary so
that the statements in the Prospectus as so amended or supplemented will not, in
the light of the circumstances when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus will comply with law;
(f) to endeavor to qualify the Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as the Underwriter reasonably
shall request and to continue such qualification in effect so long as reasonably
required for distribution of the Securities including filing a general consent
to service of process in any jurisdiction; provided that the Company shall not
be required to qualify to do business in any jurisdiction or take any action
which would subject it to service of process other than service of process
arising out of the offer or sale of Securities in any jurisdiction where it is
not now subject;
(g) to make generally available to its security holders and to the
Underwriter as soon as practicable an earnings statement which will satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 of the Commission
promulgated thereunder covering a period of at least twelve months beginning
with the first fiscal quarter of the Company occurring after the "effective
date" (as defined in Rule 158) of the Registration Statement;
(h) so long as the Securities are outstanding, to furnish to the
Underwriter (i) copies of all reports or other communications (financial or
other) furnished to holders of the Securities, and copies of any reports and
financial statements furnished to or filed with the Commission or any national
securities exchange and (ii) such other information concerning the Company as
the Underwriter reasonably may request;
(i) during the period beginning on the date hereof and continuing to
and including the Business Day following the Closing Date, not to offer, sell,
contract to sell, or otherwise dispose of any debt securities of or guaranteed
by the Company which are substantially similar to the Securities;
8
(j) to use the net proceeds received by the Company from the sale of
the Securities pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds"; and
(k) whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
costs and expenses incident to the performance of its obligations hereunder,
including without limiting the generality of the foregoing, all costs and
expenses (i) incident to the preparation, issuance, execution, authentication
and delivery of the Securities, including any expenses of the Trustee, (ii)
incident to the preparation, printing, reproduction and filing under the
Securities Act of the Registration Statement, the Prospectus and any preliminary
prospectus (including in each case all exhibits, amendments and supplements
thereto), (iii) incurred in connection with the registration or qualification
and determination of eligibility for investment of the Securities under the laws
of such jurisdictions as the Underwriter may designate (including fees of
counsel for the Underwriter and their disbursements), (iv) related to any filing
with National Association of Securities Dealers, Inc., (v) in connection with
the printing (including word processing and duplication costs) and delivery of
this Agreement, the Form T-1, the Indenture, the preliminary and supplemental
blue sky memoranda and any legal investment survey and the furnishing to the
Underwriter and dealers of copies of the Registration Statement and the
Prospectus, including mailing and shipping, as herein provided, (vi) payable to
rating agencies in connection with the rating of the Securities, (vii) any
expenses incurred by the Company in connection with a "road show" presentation
to potential investors, (viii) the cost and charges of any transfer agent, (ix)
the fees and expenses of KPMG Peat Marwick, and (x) the costs of any credit
enhancement for the Securities.
6. The obligation of the Underwriter hereunder to purchase the
Securities on the Closing Date is subject to the performance by the Company of
its obligations hereunder and to the following additional conditions:
(a) the Registration Statement shall have become effective (or if a
post-effective amendment is required to be filed under the Securities Act, such
post-effective amendment shall have become effective) not later than 5:00 P.M.,
New York City time, on the date hereof; and no stop order suspending the
effectiveness of the Registration Statement or any post-affective amendment
shall be in effect, and no proceedings for such purpose shall be pending before
or threatened by the Commission; the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Securities Act and in
accordance with Section 5(a) hereof; and all requests for additional information
shall have been complied with to the satisfaction of the Underwriter;
(b) the representations and warranties of the Company contained herein
are true and correct on and as of the Closing Date as if made on and as of the
Closing Date and the Company shall have complied with all agreements and all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date;
9
(c) subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any downgrading, nor
shall any notice have been given of (i) any downgrading, (ii) any intended or
potential downgrading or (iii) any review or possible change that does not
indicate an improvement, in the rating accorded any securities of or guaranteed
by the Company by any "nationally recognized statistical rating organization,"
as such term is defined for purposes of Rule 436(g)(2) under the Securities Act;
(d) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the equities, margins or
long-term debt of the Company or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the general
affairs, business, properties, prospects, management, financial position,
equities, margins or results of operations of the Company otherwise than as set
forth or contemplated in the Prospectus, the effect of which in the judgment of
the Underwriter makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities on the Closing Date on the terms and
in the manner contemplated in the Prospectus; and the Company has not sustained
since the date of the latest audited financial statements included in the
Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order to decree, otherwise
than as set forth or contemplated in the Prospectus;
(e) the Underwriter shall have received on and as of the Closing Date a
certificate of the General Manager and the Executive Manager, Finance and Energy
Supply of the Company, with specific knowledge about the Company's financial
matters, satisfactory to the Underwriter to the effect set forth in subsections
(a) through (c) (with respect to the respective representations, warranties,
agreements and conditions of the Company) of this section and to the further
effect that there has not occurred any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
general affairs, business, prospects, management, financial position, equities,
margins or results of operations of the Company from that set forth or
contemplated in the Registration Statement;
(f) Heller, Ehrman, White and McAuliffe LLP, counsel for the Company,
shall have furnished to the Underwriter their written opinion, dated the Closing
Date, in form and substance satisfactory to the Underwriter.
(g) Carol Johnson, Esq., general counsel for the Company, shall have
furnished to the Underwriter her written opinion, dated the Closing Date, in
form and substance satisfactory to the Underwriter.
(h) on the effective date of the Registration Statement and the
effective date of the most recently filed post-effective amendment to the
Registration Statement and also on the Closing Date, KPMG Peat Marwick LLP shall
have furnished to the Underwriter letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to the Underwriter,
containing statements and information of the type customarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus;
(i) the Underwriter shall have received on and as of the Closing Date
an opinion of Orrick, Herrington & Sutcliffe LLP, counsel to the Underwriter,
with respect to the validity of the Indenture and the Securities, the
Registration Statement, the Prospectus and other related matters as the
Underwriter may reasonably request, and such counsel shall have received such
10
papers and information as they may reasonably request to enable them to pass
upon such matters; and
(j) on or prior to the Closing Date the Company shall have furnished to
the Underwriter such further certificates and documents as the Underwriter shall
reasonably request and shall have obtained such consents and approvals as may be
required in connection with the issuance and sale of the Securities and the
execution, delivery and performance of this Agreement and the Indenture.
7. The Company agrees to indemnify and hold harmless the Underwriter
and each person, if any, who controls the Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Exchange Act"), from and against any and all
losses, claims, damages and liabilities (including, without limitation, the
legal fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) or any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made (i) in
reliance upon and in conformity with information relating to the Underwriter
furnished to the Company in writing by the Underwriter expressly for use therein
or (ii) in the preliminary prospectus (or any amendment or supplement thereto)
but not in the Prospectus in the case of losses, claims, damages or liabilities
of the Underwriter to a purchaser of the Securities to whom the Underwriter
failed to confirm the purchase and sale of the Securities by delivery of a
Prospectus.
The Underwriter agrees to indemnify and hold harmless the Company, its
directors, its officers who sign the Registration Statement and each person who
controls the Company within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to the Underwriter, but only with reference to information
relating to the Underwriter furnished to the Company in writing by the
Underwriter expressly for use in the Registration Statement, the Prospectus, any
amendment or supplement thereto, or any preliminary prospectus.
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If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for the Underwriter
and such control persons of the Underwriter shall be designated in writing by
the Underwriter and any such separate firm for the Company, its directors, its
officers who sign the Registration Statement and such control persons of the
Company shall be designated in writing by the Company. The Indemnifying Person
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees to indemnify any
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Person shall have requested an Indemnifying Person to reimburse
the Indemnified Person for fees and expenses of counsel as contemplated by the
third sentence of this paragraph, the Indemnifying Person agrees that it shall
be liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30 days after receipt
by such Indemnifying Person of the aforesaid request and (ii) such Indemnifying
Person shall not have reimbursed the Indemnified Person in accordance with such
request prior to the date of such settlement. No Indemnifying Person shall,
without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on claims
that are the subject matter of such proceeding. If the indemnification provided
for in the first and second paragraphs of this Section 7 is unavailable to an
Indemnified Person or insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
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appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriter on the other hand from the offering of the Securities
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and the Underwriter on the other in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriter on
the other shall be deemed to be in the same respective proportions as the net
proceeds from the offering (before deducting expenses) received by the Company
and the total underwriting discounts and the commissions received by the
Underwriter, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate public offering price of the Securities. The
relative fault of the Company on the one hand and the Underwriter on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or by
the Underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall the
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
the Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
The remedies provided for in this Section 7 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law of in equity.
The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of the Underwriter or the person controlling the Underwriter or by or on behalf
of the Company, its officers or directors or any other person controlling the
Company and (iii) acceptance of and payment for any of the Securities.
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8. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Underwriter, by notice given to the
Company, if after the execution and delivery of this Agreement and prior to the
Closing Date (i) trading generally shall have been suspended or materially
limited on or by, as the case may be, any of the New York Stock Exchange, the
American Stock Exchange, the National Association of Securities Dealers, Inc.,
the Chicago Board Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of or guaranteed by the
Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a general moratorium on commercial banking activities in New York
shall have been declared by either federal or New York or Washington state
authorities, or (iv) there shall have occurred any outbreak or escalation of
hostilities or any change in financial markets or any calamity or crisis that,
in the judgment of the Underwriter, is material and adverse and which, in the
judgment of the Underwriter, makes it impracticable to market the Securities on
the terms and in the manner contemplated in the Prospectus.
9. This Agreement shall become effective upon the later of (i)
execution and delivery hereof by the parties hereto and (ii) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
Either the Underwriter or the Company shall have the right to postpone
the Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and in the Prospectus or
in any other documents or arrangements may be effected.
10. If this Agreement shall be terminated by the Underwriter because of
any failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this Agreement or any
condition of the Underwriter's obligations cannot be fulfilled, the Company
agrees to reimburse the Underwriter or for all out-of-pocket expenses (including
the fees and expenses of their counsel) reasonably incurred by the Underwriter
in connection with this Agreement or the offering contemplated hereunder.
11. This Agreement shall inure to the benefit of and be binding upon
the Company, the Underwriter, any controlling persons referred to herein and
their respective successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person, firm or
corporation any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained. No purchaser of Securities
from the Underwriter shall be deemed to be a successor by reason merely of such
purchase.
12. All notices and other communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed or transmitted by any
standard form of telecommunication. Notices to the Underwriter shall be given to
J.P. Morgan Securities Inc., 60 Wall Street, New York, New York 10260-0060
(telefax: (212) 648-5237); Attention: Syndicate Department. Notices to the
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Company shall be given to it at 5601 Minnesota Drive, Anchorage, Alaska
(telefax: (907) 762-4514; Attention: Evan J. Griffith.
13. This Agreement may be signed in counterparts, each of which shall
be an original and all of which together shall constitute one and the same
instrument.
(Remainder of Page Intentionally Left Blank)
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14. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to the conflicts
of laws provisions thereof.
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
CHUGACH ELECTRIC ASSOCIATION, INC.
By:_____________________________
Title:
Accepted: April __, 2001
J.P. Morgan Securities Inc.
By:___________________________
Title:
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