EXHIBIT 10.3
FORM OF NOTE PURCHASE AGREEMENT
EXHIBIT 10.3
L&W DRAFT
9/24/97
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (the "Agreement"), dated as of
---------
[_______________], 1997, is made by and between [Acronym of Utility] Funding
LLC, a Delaware limited liability company (the "Note Issuer"), and
-----------
[_______________], a [_______________], as certificate trustee (in such
capacity, the "Certificate Trustee") for the California Infrastructure and
-------------------
Economic Development Bank Special Purpose Trust [Acronym of Utility-1], a not-
for-profit business trust organized under the laws of the State of Delaware (the
"Trust"), pursuant to that certain Amended and Restated Declaration and
Agreement of Trust (the "Trust Agreement"), dated as of [_____________], 1997
----- ---------------
among [_____________], as Delaware Trustee, the Certificate Trustee and the
California Infrastructure and Economic Development Bank, as Originator.
RECITALS
A. Capitalized terms used herein without definition shall have the
meanings ascribed to them in that certain Indenture (the "Note Indenture"),
--------------
dated as of [_____________], 1997, between Note Issuer and [_____________], a
[______________], as trustee (the "Note Trustee"), which is incorporated herein
------------
by this reference.
B. On the Closing Date, and on the terms set forth herein, the Note
Issuer has agreed to sell to the Certificate Trustee and the Certificate Trustee
has agreed to purchase from the Note Issuer [$__________] in principal amount of
[Acronym of Utility] Funding LLC Notes, Series 1997-1 (the "Notes"), issued
-----
pursuant to the Note Indenture.
AGREEMENT
NOW, THEREFORE, on the terms and conditions set forth below and for
good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Note Issuer and the Certificate Trustee agree as follows:
1. SALE OF NOTES
a. Authorization of Notes.
----------------------
On or before the Closing Date, the Note Issuer shall have caused to be
authorized pursuant to the Note Indenture the issuance of a series of Notes in
such classes and principal amounts as set forth in Schedule 1(a) attached hereto
and incorporated herein by this reference.
b. Issuance and Purchase.
---------------------
On the basis of the representations, warranties and covenants
contained in this Agreement and in the Note Indenture (collectively, the "Note
----
Purchase Documents"), and subject to the terms and conditions of the Note
------------------
Purchase Documents, the Note Issuer agrees to issue and sell to the Certificate
Trustee, and the Certificate Trustee agrees to purchase from the Note Issuer,
the Notes
set forth in Schedule 1(a) hereto. The purchase price of each class of Notes is
set forth in Schedule 1(a) attached hereto, and the aggregate purchase price of
the Notes shall be an amount equal to the excess of (i) the aggregate proceeds
of the Certificates over (ii) the sum of (A) all underwriting discounts given in
connection with the Certificates and (B) all fees and other expenses associated
with the issuance of the Certificates.
c. Delivery.
--------
Delivery of, and payment of the purchase price for the Notes shall be
made at [______ a.m. (P.S.T.)] on the Closing Date at the offices of
[_______________________] or such other location as may be mutually acceptable
to the Note Issuer and the Certificate Trustee.
2. CONDITIONS PRECEDENT
The obligations of the Certificate Trustee to purchase the Notes under
this Agreement are subject to the satisfaction of each of the following
conditions:
a. All the representations and warranties of the Note Issuer contained in
this Agreement shall be true and correct on the Closing Date with the same force
and effect as if made on and as of the Closing Date.
b. Neither the Notes nor the Certificates shall have received a lower
rating by any Rating Agency than that on which the Notes or the Certificates,
respectively, were marketed.
c. The Certificate Trustee shall have received on the Closing Date an
Officer's Certificate dated the Closing Date confirming the matters set forth in
Sections 2(a) and 2(b).
d. The Certificate Trustee shall have received a copy of the executed
Note Indenture (certified by an Authorized Officer of the Note Issuer) which
shall have been entered into by the Note Issuer and the Note Trustee.
e. The Note Issuer shall not have failed at or prior to the Closing Date
to perform or comply in any material respect with any of the agreements herein
contained and required to be performed or complied with by the Note Issuer at or
prior to the Closing Date.
3. REPRESENTATIONS AND WARRANTIES
To induce the Certificate Trustee to enter into this Agreement and to
purchase the Notes, the Note Issuer represents and warrants to the Certificate
Trustee on the date of this Agreement that the following statements are true,
correct and complete:
a. The Note Issuer has been duly organized, is validly existing as a
limited liability company in good standing under the laws of the State of
Delaware and has the organizational power and authority to carry on its business
as described in the Registration Statement covering the Notes (the "Registration
------------
Statement") and to own, lease and operate its properties, and is duly registered
---------
[and is in good standing] as a foreign limited liability company authorized to
do business in the State of California.
2
b. This Agreement has been duly authorized, executed and delivered by the
Note Issuer.
c. The Note Indenture has been duly authorized by the Note Issuer and, on
the Closing Date, will have been validly executed and delivered by the Note
Issuer. When the Note Indenture has been duly executed and delivered by the Note
Issuer, the Note Indenture will be a valid and binding agreement of the Note
Issuer, enforceable against the Note Issuer in accordance with its terms except
as (i) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing Date, the Note
Indenture will conform in all material respects to the requirements of the Trust
Indenture Act, and the rules and regulations of the Commission applicable to an
indenture which is qualified thereunder.
d. The Notes have been duly authorized and, on the Closing Date, will
have been validly executed and delivered by the Note Issuer. When the Notes have
been issued, executed and authenticated in accordance with the provisions of the
Note Indenture and delivered to and paid for by the Certificate Trustee in
accordance with the terms of this Agreement, the Notes will be entitled to the
benefits of the Note Indenture and will be valid and binding obligations of the
Note Issuer, enforceable in accordance with their terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability.
e. No Default or Event of Default under the Note Indenture has occurred,
is occurring or would reasonably occur as a result of the sale of the Notes
pursuant to the terms hereof.
f. The execution, delivery and performance of this Agreement and the
other Basic Documents by the Note Issuer, compliance by the Note Issuer with all
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the California
Government Code, the PU Code, the Securities Act of 1933, as amended (the
"Securities Act"), or the securities or Blue Sky laws of the various states),
--------------
(ii) conflict with or constitute a breach of any of the terms or provisions of,
or a default under, the limited liability company agreement of the Note Issuer,
(iii) violate or conflict with any applicable law or any rule, regulation,
judgment, order or decree of any court or any governmental body or agency having
jurisdiction over the Note Issuer or its property[, except ______________], (iv)
result in the imposition or creation of (or the obligation to create or impose)
a lien under, any agreement or instrument to which the Note Issuer is a party or
by which the Note Issuer or its respective property is bound, except under the
Basic Documents and any statutory lien under Section 843(g) of the PU Code.
g. To the best knowledge of the Note Issuer, there are no legal or
governmental proceedings pending or threatened to which the Note Issuer is or
reasonably could be a party or to which any of its property is or reasonably
could be subject, which might result, singly or in the aggregate, in a material
adverse effect on the value of the Notes[, except ___________________].
3
h. The Note Issuer is not and, after giving effect to the offering and
sale of the Notes and the application of the net proceeds thereof as described
in the Registration Statement, will not be, an "investment company," as such
term is defined in the Investment Company Act of 1940, as amended.
i. The Note Issuer is not and, after giving effect to the offering and
sale of the Notes and the application of the net proceeds thereof as described
in the Registration Statement, will not be, a "holding company," as such term is
defined in the Public Utilities Holding Company Act of 1935, as amended.
j. The Note Issuer has not taken any action that might cause this
Agreement or the issuance or sale of the Notes to violate Regulation G (12
C.F.R. Part 207), Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R.
Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System.
k. Since the date as of which information is given in the Registration
Statement other than as set forth in the Registration Statement (exclusive of
any amendments or supplements thereto subsequent to the date of this Agreement),
(i) there has not occurred any material adverse change or any development
involving a prospective material adverse change in the condition, financial or
otherwise, or the earnings, business, management or operations of the Note
Issuer and (ii) the Note Issuer has not incurred any material liability or
obligation, direct or contingent.
l. No Rating Agency has indicated to the Note Issuer that it has assigned
(or is considering assigning) a lower rating to the Notes or the Certificates
than that on which the Notes or the Certificates, respectively, were marketed.
m. Each certificate signed by any officer of the Note Issuer and
delivered to the Certificate Trustee or counsel for the Certificate Trustee
shall be deemed to be a representation and warranty by the Note Issuer to the
Certificate Trustee as to the matters covered thereby.
4. COVENANTS
The Note Issuer covenants and agrees that, until payment in full of
the Notes, unless the Certificate Trustee shall otherwise give prior written
consent, the Note Issuer shall perform all covenants in this Section 4.
a. To advise the Certificate Trustee promptly and, if requested by the
Certificate Trustee, confirm such advice in writing, of the issuance by the
Commission or any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Note for offering or sale
in any jurisdiction designated by the Certificate Trustee in Schedule 4(a)
attached hereto and made a part hereof, or the initiation of any proceeding by
the Commission, any state securities commission or any other federal or state
regulatory authority for such purpose. The Note Issuer shall use its best
efforts to prevent the issuance of any stop order or order suspending the
qualification or exemption of any Note under the Securities Act, or any state
securities or Blue Sky laws and, if at any time the Commission or any state
securities commission or other federal or state regulatory authority shall issue
an order suspending the qualification or exemption of any Note under the
Securities Act, or any state
4
securities or Blue Sky laws, the Note Issuer shall use its best efforts to
obtain the withdrawal or lifting of such order at the earliest possible time.
b. Not to claim voluntarily the benefit of any usury laws against the
holders of any Notes. To resist actively any attempts to claim the benefit of
any usury laws against the holders of any Notes.
c. To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Notes.
d. At the written request of the Certificate Trustee or the
Infrastructure Bank, to provide, or cause to be provided, to the Certificate
Trustee or the Infrastructure Bank, as applicable, a copy of any requested
certificate, notice, opinion or other document delivered to the Note Trustee
pursuant to the terms of the Note Indenture.
5. MISCELLANEOUS
a. Fees
----
If for any reason the Notes are not delivered by or on behalf of the
Note Issuer as provided herein (other than as a result of any termination of
this Agreement pursuant to the terms hereof), the Note Issuer agrees to
reimburse the Certificate Trustee for all out-of-pocket expenses (including the
reasonable fees and disbursements of counsel) reasonably incurred by it. The
Note Issuer also agrees to reimburse the Certificate Trustee[, the Delaware
Trustee and the Infrastructure Bank] and [their respective] officers, directors
and each person, if any, who controls the Certificate Trustee[, the Delaware
Trustee or the Infrastructure Bank] within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act for any and all fees and
expenses (including without limitation the reasonable fees and expenses of
counsel) reasonably incurred by them in connection with enforcing their rights
under this Agreement (including without limitation its rights under this Section
5(a)).
b. Effective Date of Agreement
---------------------------
This Agreement shall become effective upon the execution and delivery
of this Agreement by the parties hereto.
c. Survival of Representations and Agreements
------------------------------------------
All agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement and the purchase of the
Notes hereunder. Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of the Note Issuer set forth in Section 5(a) shall
survive the payment of the Notes and the termination of this Agreement.
d. Notice
------
Unless otherwise specifically provided herein, all notices,
directions, consents and waivers required under the terms and provisions of this
Agreement shall be in English and in writing,
5
and any such notice, direction, consent or waiver may be given by United States
mail, courier service, telegram, telex, telemessage, telecopy, telefax, cable or
facsimile (confirmed by telephone or in writing in the case of notice by
telegram, telex, telemessage, telecopy, telefax, cable or facsimile) or any
other customary means of communication, and any such notice, direction, consent
or waiver shall be effective when delivered, or if mailed, three days after
deposit in the United States mail with proper postage for ordinary mail prepaid,
if to the Note Issuer, to:
[Acronym of Utility] Funding LLC
_____________________________________
_____________________________________
Attention:___________________________
Facsimile:___________________________
Telephone:___________________________
if to the Certificate Trustee, to:
_____________________________________
_____________________________________
Attention:___________________________
Facsimile:___________________________
Telephone:___________________________
[if to the Delaware Trustee, to:
_____________________________________
_____________________________________
Attention:___________________________
Facsimile:___________________________
Telephone:___________________________]
[if to the Infrastructure Bank, to:
_____________________________________
_____________________________________
Attention:__________________________
Facsimile:__________________________
Telephone:__________________________]
e. Parties
-------
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Note Issuer, the
Certificate Trustee[, the Delaware Trustee, the Infrastructure Bank], the
directors and officers of the Certificate Trustee[, the Delaware Trustee, the
Infrastructure Bank], any controlling persons referred to herein, the directors,
officers and independent manager of the Note Issuer (not in their individual
capacities but in their respective capacities as
6
directors, officers or independent manager of the Note Issuer) and their
respective successors and assigns, all as and to the extent provided in this
Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement, except as contemplated by the Trust Agreement and the
other Basic Documents. The term "successors and assigns" shall not include a
purchaser of any of the Notes from the Certificate Trustee merely because of
such purchase.
f. Governing Law
-------------
This Agreement shall be governed by, and shall be construed and
enforced in accordance with, the internal laws of the State of California,
without regard to conflicts of laws OR principles.
g. Severability
------------
If any provision of this Agreement shall be prohibited or invalid
under applicable law, the Agreement shall be ineffective only to such extent,
without invalidating the remainder of the Agreement.
h. Further Assurances
------------------
The Note Issuer agrees to execute and deliver such instruments and
take such actions as the Certificate Trustee may, from time to time, reasonably
request in order to effectuate the purpose and to carry out the terms of this
Agreement.
i. Headings
--------
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
j. Counterparts
------------
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
7
IN WITNESS WHEREOF, the Note Issuer and the Certificate Trustee have
caused this Note Purchase Agreement to be duly executed by their respective
officers, thereunto duly authorized and duly attested, all as of the day and
year first above written.
[Acronym of Utility] FUNDING LLC,
a Delaware limited liability company
By:___________________________________
Name:_________________________________
Title:________________________________
[CERTIFICATE TRUSTEE]
By:___________________________________
Name:_________________________________
Title:________________________________
8
SCHEDULE 1(A)
NOTES
-------------------------------------------------------------------------------------------------
CLASS OF NOTE PRINCIPAL AMOUNT PURCHASE PRICE
------------- ---------------- --------------
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
-------------------------------------------------------------------------------------------------
9
SCHEDULE 4(A)
BLUE SKY JURISDICTIONS
10
