EXHIBIT 1.1
[FORM OF UNDERWRITING AGREEMENT]
CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT
BANK SPECIAL PURPOSE TRUST [_]-1
RATE REDUCTION CERTIFICATES
[_] FUNDING LLC
[NAME OF UTILITY]
UNDERWRITING AGREEMENT
New York, New York
[_], 1997
To the Representatives
named in Schedule I
hereto of the Under-
writers named in
Schedule II hereto
Ladies and Gentlemen:
1. Introduction. California Infrastructure and Economic Development
-------------
Bank Special Purpose Trust [_]-1 (the "Trust") proposes to sell to the
underwriters named in Schedule II hereto (the "Underwriters"), for whom you (the
"Representatives") are acting as representatives, the principal amount of the
certificates identified in Schedule I hereto (the "Certificates"). If the firm
or firms listed in Schedule II hereto include only the firm or firms listed in
Schedule I hereto, then the terms "Underwriters" and "Representatives", as used
herein, shall each be deemed to refer to such firm or firms.
The Trust was formed pursuant to a declaration and agreement of trust
dated as of _______________, 1997, between the California Infrastructure and
Economic Development Bank (the "Infrastructure Bank") and Bankers Trust
(Delaware), as Delaware trustee (the "Delaware Trustee"), and the Certificates
will be issued pursuant to an amended and restated declaration and agreement of
trust dated as of _____, 1997 (as amended and supplemented from time to time,
the "Trust Agreement"), among the Infrastructure Bank, the Delaware Trustee and
Bankers Trust Company, as certificate trustee (the "Certificate Trustee"). The
assets of the Trust will consist solely of the [_] Funding LLC Notes, Series
_____ (the "Notes"), issued by
2
[_] Funding LLC (the "Note Issuer"), and the proceeds thereof. The Notes will be
issued pursuant to an indenture dated as of __________, 1997 (as amended and
supplemented from time to time, including any Series Supplement, the
"Indenture"), between the Note Issuer and Bankers Trust Company, as Note Trustee
(the "Note Trustee"), and purchased by the Certificate Trustee, on behalf of the
Trust, pursuant to a note purchase agreement dated as of ______, 1997 (the "Note
Purchase Agreement"), between the Note Issuer and the Certificate Trustee. Each
Class of Certificates will correspond to a Class of Notes and will represent
undivided interests in such underlying Class of Notes and the proceeds thereof.
The Notes will be secured primarily by the Transition Property described in the
related Issuance Advice Letter. Such Transition Property will be sold to the
Note Issuer by [Name of Utility], a California corporation (the "Company"),
pursuant to a sale agreement dated as of _______________, 1997 (the "Sale
Agreement"), between the Company, as seller, and the Note Issuer. Other
Transition Property may be sold to the Note Issuer by the Company pursuant to an
agreement substantially similar to the Sale Agreement. The Transition Property
will be serviced pursuant to a servicing agreement dated as of _______________,
1997 (as amended and supplemented from time to time, the "Servicing Agreement"),
between the Company, as servicer, and the Note Issuer.
Capitalized terms used and not otherwise defined herein shall have the
meanings given to them in the Indenture.
2. Representations and Warranties. Each of the Company and the Note
-------------------------------
Issuer represents and warrants to, and agrees with, each Underwriter as set
forth below in this Section 2. Certain terms used in this Section 2 are defined
in paragraph (c) hereof.
(a) If the offering of the Certificates is a Delayed Offering (as
specified in Schedule I hereto), paragraph (i) below is applicable and, if
the offering of the Certificates is a Non-Delayed Offering (as so
specified), paragraph (ii) below is applicable.
(i) The Note Issuer and the Notes and the Certificates meet the
requirements for the use of Form S-3 under the Securities Act of 1933
(the "Act"), and the Note Issuer has filed with the Securities and
Exchange Commission (the "Commission") 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 Certificates. The Note 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
3
registration statement, as so amended, has become effective. The
offering of the Certificates is a Delayed Offering and, although the
Basic Prospectus may not include all the information with respect to
the Certificates 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
Note Issuer will next file with the Commission 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 Certificates
and the offering thereof. As filed, such final prospectus supplement
shall include all required information with respect to the
Certificates and the offering thereof and, except to the extent the
Representatives shall agree in writing to a modification, shall be in
all substantive respects in the form furnished to you prior to the
Execution Time or, to the extent not information and other changes
(beyond that contained in the Basic Prospectus and any Preliminary
Final Prospectus) as the Note Issuer has advised you, prior to the
Execution Time, will be included or made therein.
(ii) The Note Issuer and the Notes and the Certificates meet the
requirements for the use of Form S-3 under the Act and the Note Issuer
has filed with the Commission 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 Certificates. The Note Issuer may have filed
one or more amendments thereto, including a Preliminary Final
Prospectus, each of which has previously been furnished to you. The
Company will next file with the Commission either (x) a final
prospectus supplement relating to the Certificates 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 Note 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
Certificates and the offering thereof. As filed, such final prospectus
supplement or such amendment and form
4
of final prospectus supplement shall contain all Rule 430A
Information, together with all other such required information, with
respect to the Certificates and the offering thereof and, except to
the extent the Representatives shall agree in writing to a
modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
Basic Prospectus and any Preliminary Final Prospectus) as the Note
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 and
the Trust Agreement 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 Note Issuer nor
-------- -------
the Company makes any representations or warranties as to (i) that part of
the Registration Statement which shall constitute the Statement of
Eligibility and Qualification (Form T-1) under the Trust Indenture Act of
the Note Trustee, (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 Note Issuer by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Registration Statement or
the Final Prospectus (or any supplement thereto) or (iii) the information
included
5
in the Registration Statement under the captions "The Trust" and "The
Infrastructure Bank".
(c) The terms which follow, when used in this Agreement, shall have
the meanings indicated. The term "the Effective Date" shall mean each date
that the Registration Statement and any post-effective amendment or
amendments thereto became or become effective and each date after the date
hereof on which a document incorporated by reference in the Registration
Statement is filed. "Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto. "Basic
Prospectus" shall mean the prospectus referred to in paragraph (a) above
contained in the Registration Statement at the Effective Date including, in
the case of a Non-Delayed Offering, any Preliminary Final Prospectus.
"Preliminary Final Prospectus" shall mean any preliminary prospectus
supplement to the Basic Prospectus which describes the Certificates and the
offering thereof and is used prior to filing of the Final Prospectus.
"Final Prospectus" shall mean the prospectus supplement relating to the
Certificates 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 Certificates, 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
Certificates and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A. Any
reference herein to the Registration Statement, the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Exchange Act on
or before the Effective Date of the Registration Statement or the issue
of the Basic Prospectus, any Preliminary Final Prospectus or Final
6
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, andy Preliminary Prospectus or Final
Prospectus shall be deemed to be incorporated therein by reference. A "Non-
Delayed Offering" shall mean an offering of securities which is intended to
commence promptly after the effective date of a registration statement,
with the result that, pursuant to Rules 415 and 430A, all information
(other than Rule 430A Information) with respect to the securities so
offered must be included in such registration statement at the effective
date thereof. A "Delayed Offering" shall mean an offering of securities
pursuant to Rule 415 which does not commence promptly after the effective
date of a registration statement, with the result that only information
required pursuant to Rule 415 need be included in such registration
statement at the effective date thereof with respect to the securities so
offered. Whether the offering of the Certificates is a Non-Delayed Offering
or a Delayed Offering shall be set forth in Schedule I hereto.
3. Purchase and Sale. Subject to the terms and conditions and in
-----------------
reliance upon the representations and warranties herein set forth, the Trust
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Trust, at the purchase price set forth in
Schedule I hereto the principal amount of the Certificates set forth opposite
such Underwriter's name in Schedule II hereto.
4. Delivery and Payment. Delivery of and payment for the
---------------------
Certificates shall be made on the date and at the time specified in Schedule I
hereto (or such later date not later than five business days after such
specified date as the Representatives shall designate), which date and time may
be postponed by agreement between the Representatives and the Note Issuer or as
provided in Section 9 hereof (such date and time of delivery and payment for the
Certificates being herein called the "Closing Date"). Delivery of the
Certificates shall be made to the Representatives for the respective accounts of
the several Underwriters against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the Trust
by certified or official bank check or checks drawn on or by a New York Clearing
House bank and payable in next day funds or by wire transfer of immediately
available funds. Delivery of the Certificates shall be made at such location as
the Representatives shall reasonably
7
designate at least one business day in advance of the Closing Date and payment
for the Certificates shall be made at the office specified in Schedule I hereto.
The Certificates to be so delivered shall be initially represented by
Certificates registered in the name of Cede & Co., as nominee of The Depository
Trust Company ("DTC"). The interests of beneficial owners of the Certificates
will be represented by book entries on the records of DTC and participating
members thereof. Definitive Certificates will be available only under limited
circumstances.
The Trust agrees to have the Certificates available for inspection,
checking and packaging by the Representatives 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 Note Issuer. The Note Issuer covenants and
----------------------------
agrees with the several Underwriters that:
(i) The Note 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 Certificates, the Note 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
Note 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 Note Issuer will
cause the Final Prospectus, properly completed, and any supplement thereto
to be filed with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The Note Issuer
will promptly advise the Representatives (i) when the Registration
Statement, if not effective at the Execution Time, and any amendment
thereto, shall have become effective, (ii) when the Final Prospectus, and
any supplement thereto, shall have been filed with the Commission pursuant
to Rule 424(b), (iii) when, prior to termination of the offering of the
Certificates, any amendment to the Registration Statement shall have been
filed or become effective, (iv) of any request by the Commission for any
amendment of the Registration Statement or supplement to the Final
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 the institution or threatening of any proceeding
for that purpose and (vi) of the receipt by
8
the Note Issuer of any notification with respect to the suspension of the
qualification of the Certificates for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. The Note
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 Certificates
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
Note Issuer promptly will (i) prepare and file with the Commission, subject
to the second sentence of paragraph (a) of this Section 5, an amendment or
supplement which will correct such statement or omission or effect such
compliance and (ii) supply any supplemented Prospectus to you in such
quantities as you may reasonably request.
(iii) As soon as practicable, the Note Issuer will cause the Trust to
make generally available to the Certificateholders and to the
Representatives an earnings statement or statements of the Trust which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under the
Act.
(iv) The Note Issuer will furnish to the Representatives and counsel
for the Underwriters, without charge, copies of the Registration Statement
(including exhibits thereto) and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Act, as many copies of any
Preliminary Final Prospectus and the Final Prospectus and any supplement
thereto as the Representatives may reasonably request. The Note Issuer
shall furnish or cause to be furnished to the Representatives copies of all
reports on Form SR required by Rule 463 under the Act. The Note Issuer will
pay the expenses of printing or other production of all documents relating
to the offering.
(v) The Note Issuer will arrange for the qualification of the
Certificates for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in effect
so long as required for the distribution of the Certificates and will
arrange for the determination of
9
the legality of the Certificates for purchase by institutional investors.
(vi) Until the business date set forth on Schedule I hereto, the
Note Issuer will not, without the consent of the Representatives, offer,
sell or contract to sell, or otherwise dispose of, directly or indirectly,
or announce the offering of, any asset-backed securities of a trust or
other special purpose vehicle (other than the Certificates).
(vii) For a period from the date of this Agreement until the
retirement of the Certificates, or until such time as the Underwriters
shall cease to maintain a secondary market in the Certificates, whichever
occurs first, the Note Issuer will deliver to the Representatives the
annual statements of compliance and the annual independent auditor's
servicing reports furnished to the Note Issuer or the Note Trustee pursuant
to the Servicing Agreement or the Indenture, as applicable, as soon as such
statements and reports are furnished to the Note Issuer or the Note
Trustee.
(viii) So long as any of the Certificates are outstanding, the Note
Issuer will furnish to the Representatives (i) as soon as available, a copy
of each report of the Trust filed with the Commission under the Exchange
Act, or mailed to Certificate-holders, (ii) a copy of any filings with the
California Public Utility Commission pursuant to the Financing Order,
including, but not limited to, any Advice Letters, and (iii) from time to
time, any information concerning the Company or the Note Issuer, and, to
the extent readily available, the Infrastructure Bank or the Trust, as the
Representatives may reasonably request.
(ix) To the extent, if any, that any rating necessary to satisfy the
condition set forth in Section 6(r) of this Agreement is conditioned upon
the furnishing of documents or the taking of other actions by the Note
Issuer on or after the Closing Date, the Note Issuer shall furnish such
documents and take such other actions.
(b) Covenants of the Company. The Company covenants and agrees with
------------------------
the several Underwriters that:
(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 Commission of any stop order suspending the
effectiveness of the Registration Statement and, if issued, to obtain as
soon as possible the withdrawal thereof.
10
(ii) As soon as practicable, the Company will cause the Trust to
make generally available to the Certificateholders and to the
Representatives an earnings statement or statements of the Trust which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under the
Act.
(iii) The Company will arrange for the qualification of the
Certificates for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in effect
so long as required for the distribution of the Certificates and will
arrange for the determination of the legality of the Certificates for
purchase by institutional investors.
(iv) Until the business date set forth on Schedule I hereto, the
Company will not, without the consent of the Representatives, offer, sell
or contract to sell, or otherwise dispose of, directly or indirectly, or
announce the offering of, any asset-backed securities of a trust or other
special purpose vehicle (other than the Certificates).
(v) So long as any of the Certificates are outstanding, the Company
will furnish to the Representatives (i) as soon as available, a copy of
each report of the Trust filed with the Commission under the Exchange Act,
or mailed to Certificate-holders, (ii) a copy of any filings with the
California Public Utility Commission pursuant to the Financing Order,
including, but not limited to, any Advice Letters, and (iii) from time to
time, any information concerning the Company or the Note Issuer and, to the
extent readily available, the Infrastructure Bank or the Trust, as the
Representatives may reasonably request.
(vi) To the extent, if any, that any rating necessary to satisfy the
condition set forth in Section 6(r) of this Agreement is conditioned upon
the furnishing of documents or the taking of other actions by the Company
on or after the Closing Date, the Company shall furnish such documents and
take such other actions.
6. Conditions to the Obligations of the Underwriters. The
--------------------------------------------------
obligations of the Underwriters to purchase the Certificates shall be subject to
the accuracy of the representations and warranties on the part of the Note
Issuer and the Company contained herein and on the part of the Company contained
in Article III of the Sale Agreement and in Section 6.01 of the Servicing
Agreement as of the Execution Time and the Closing Date, to the accuracy of the
statements of the Note Issuer, the Company and the Trust made in any
certificates pursuant to the provisions
11
hereof, to the performance by the Note Issuer, the Company and the Trust 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 Representatives agree 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 Representatives shall have received opinions of counsel for
the Company, portions of which may be delivered by [_], outside counsel for
the Company, portions of which may be delivered by [_], in-house counsel
for the Company, portions of which may be delivered by [_], special
regulatory counsel for the Company, and portions of which may be delivered
by [_], special Delaware counsel for the Company, each dated the Closing
Date, in form and substance reasonably satisfactory to the Representatives,
to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full
corporate power and authority to own its properties, conduct its
business as presently conducted and execute, deliver and perform its
obligations under this Agreement, the Sale Agreement and the Servicing
Agreement, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction to the extent that such qualification and good standing
is or shall be necessary to protect the validity and enforceability of
this Agreement, the Basic Documents to which the Company is party and
each other instrument or agreement necessary or appropriate to the
proper administration of this Agreement and the transactions
contemplated hereby;
12
(ii) the Sale Agreement and the Servicing Agreement have been
duly authorized, executed and delivered, and constitute legal, valid
and binding instruments enforceable against the Company in accordance
with their 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);
(iii) to the best knowledge of such counsel, there is no pending
or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries of a character required to be
disclosed in the Registration Statement which is not adequately
disclosed in the Final Prospectus, and there is no franchise, contract
or other document of a character required to be described in the
Registration Statement or Final Prospectus, or to be filed as an
exhibit, which is not described or filed as required;
(iv) this Agreement has been duly authorized, executed and
delivered by the Company;
(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 the California Government Code, the PU Code and the Act and such
as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Certificates by
the Underwriters and such other approvals (specified in such opinion)
as have been obtained;
(vi) subject to the ultimate outcome of any Petition to the
California Supreme Court for Writ of Review by The Utility Reform
Network, neither the execution and delivery of this Agreement, the
Sale Agreement, the Servicing Agreement, nor the consummation of the
transactions contemplated by this Agreement, the Sale Agreement or the
Servicing Agreement, nor the fulfillment of the terms of this
Agreement, the Sale 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 charter, bylaws or other organizational
documents of the Company, or conflict with or breach any of the
material terms or provisions of,
13
or constitute (with or without notice or lapse of time) a default
under the charter, 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 known to
such counsel and 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 Basic Documents), or (C) violate any law or any order, rule or
regulation 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; and
(vii) the transfer of the Transition Property by the Seller to
the Note Issuer pursuant to the Sale Agreement conveys the Seller's
right, title and interest in the Transition Property to the Note
Issuer and will be treated as an absolute transfer of all of the
Seller's right, title, and interest in the Transition Property, other
than for federal and state income and franchise tax purposes. Such
transfer of the Transition Property is perfected and is of first
priority.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of California or the United States, 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 Company. References
to the Final Prospectus in this paragraph (b) include any supplements
thereto at the Closing Date.
(c) The Representatives shall have received opinions of counsel for
the Note Issuer, portions of which may be delivered by [_], outside
counsel for the Note Issuer, portions of which may be delivered by [_],in-
house counsel for the Note Issuer, portions of which may be delivered by
[_], special regulatory counsel for the Note Issuer, and portions of which
may be delivered by [_], special Delaware counsel for the Note Issuer, each
dated the Closing Date, in form and substance reasonably satisfactory to
the Representatives, to the effect that:
(i) the Note Issuer has been duly formed and is validly existing
as a single member limited liability company and is in good standing
under
14
the laws of the State of Delaware, with full power and authority to
execute, deliver and perform its obligations under this Agreement, the
Sale Agreement, the Servicing Agreement, the Indenture, the Note
Purchase Agreement and the Notes;
(ii) the Sale Agreement, the Servicing Agreement, the Indenture
and the Note Purchase Agreement have been duly authorized, executed
and delivered, and constitute legal, valid and binding instruments
enforceable against the Note Issuer in accordance with their 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 the Notes 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 Trust in accordance
with the terms of the Note Purchase Agreement, will constitute legal,
valid and binding obligations of the Note Issuer entitled to the
benefits of the Indenture and any related Series Supplement (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);
(iii) the Notes, the Indenture and the Note Purchase Agreement
conform to the descriptions thereof contained in the Final Prospectus;
(iv) the Indenture has been duly qualified under the Trust
Indenture Act;
(v) to the best knowledge of such counsel, there is no pending
or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Note Issuer, or relating to the Notes, the Financing Order or the
Statute of a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Final Prospectus,
and there is no franchise, contract or other document of a character
required to be described in the Registration Statement or Final
Prospectus, or to be filed as an exhibit, which is not described or
filed as required; and the statements included or incorporated in the
Final Prospectus under the headings "Energy Deregulation and New
California Market Structure" (to the extent the Statute is described),
"Description of the Transition Property", "The Note Issuer",
"Servicing" (to the
15
extent the Servicing Agreement is described) and "Description of the
Notes" fairly summarize the matters described therein;
(vi) 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); to the best knowledge
of such counsel, 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 (other than the financial
statements and other financial and statistical information contained
therein as to which such counsel need express no opinion) comply as to
form in all material respects with the applicable requirements of the
Act, the Exchange Act and the Trust Indenture Act and the respective
rules thereunder; and such counsel has no reason 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;
(vii) this Agreement has been duly authorized, executed and
delivered by the Note Issuer;
(viii) 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 the California Government Code, the PU Code and the Act and such
as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Certificates by
the Underwriters and such other approvals (specified in such opinion)
as have been obtained;
(ix) subject to the ultimate outcome of any Petition to the
California Supreme Court for Writ of Review by The Utility Reform
Network, neither the execution and delivery of this Agreement, the
16
Sale Agreement, the Servicing Agreement, the Indenture or the Note
Purchase Agreement, nor the issue and sale of the Notes, nor the
consummation of the transactions contemplated by this Agreement, the
Sale Agreement, the Servicing Agreement, the Indenture or the Note
Purchase Agreement, nor the fulfillment of the terms of this
Agreement, the Sale Agreement, the Servicing Agreement, the Indenture
or the Note Purchase Agreement by the Note Issuer, 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 charter, bylaws or other organizational documents of the Note
Issuer, 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 known to
such counsel and to which the Note Issuer is a party or by which the
Note Issuer is bound, (B) result in the creation or imposition of any
lien upon any properties of the Note Issuer pursuant to the terms of
any such indenture, agreement or other instrument, or (C) violate any
law or any order, rule or regulation applicable to the Note Issuer of
any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Note Issuer, or any of its properties;
(x) to the extent that the provisions of Section 843 of the PU
Code apply to the grant of a security interest by the Note Issuer in
the Collateral pursuant to the Indenture, the Indenture creates in
favor of the Note Trustee a security interest in the rights of the
Note Issuer in the Collateral, and such security interest is
enforceable against the Note Issuer and third parties [(subject to the
rights of any third parties holding security interests in such
Collateral perfected in the manner described in Section 843(a) of the
PU Code)], and has attached. Such security interest created by the
Indenture in the Collateral has been perfected, and such perfected
security interest is of first priority (subject to Section 843(g) of
the PU Code). To the extent that the provisions of Section 843 of the
PU Code do not apply to the grant of a security interest by the Note
Issuer in the Collateral pursuant to the Indenture, the Indenture
creates in favor of the Note Trustee a security interest in the rights
of the Note Issuer in the Collateral, and such security interest is
enforceable against the Note Issuer and third parties with respect to
such Collateral. Such
17
security interest is perfected, and such perfected security
interest is of first priority [(subject to Section 843(g) of the
PU Code)] [ADD LANGUAGE RE LIEN SEARCHES WERE CONDUCTED AND NO
THIRD PARTIES HAVE ANY LIENS]; and
(xi) the Note Issuer is not an "investment company" or
under the "control" of an "investment company" as such terms are
defined under the Investment Company Act of 1940, as amended.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
State of California or the United States, 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
Note Issuer and public officials. References to the Final Prospectus
in this paragraph (c) include any supplements thereto at the Closing
Date.
(d) The Representatives shall have received opinions of counsel
for the Trust and the Infrastructure Bank, portions of which may be
delivered by ▇▇▇▇▇ & ▇▇▇▇ LLP, outside counsel for the Trust and The
Infrastructure Bank, portions of which may be delivered by ▇▇▇▇▇▇
▇▇▇▇▇▇▇, in-house counsel for the Infrastructure Bank, and portions of
which may be delivered by [_], special Delaware counsel for the
Trust, each dated the Closing Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
(i) the Certificates conform to the descriptions thereof
contained in the Final Prospectus;
(ii) the Trust has been duly formed and is validly existing
as a Delaware business trust and is in good standing under the
laws of the State of Delaware, with full power and authority to
execute, deliver and perform its obligations under this Agreement
and the Certificates;
(iii) the Infrastructure Bank has been duly formed and is
validly existing as a public body established within the state
government of the State of California and is in good standing
under the laws of the State of California, with full power and
authority to execute, deliver and perform its obligations under
the Trust Agreement;
18
(iv) the Trust Agreement has been duly authorized,
executed and delivered by the Infrastructure Bank and constitutes
a legal, valid and binding instrument enforceable against the
Infrastructure Bank 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);
(v) the Certificates have been duly authorized and
executed and, when authenticated in accordance with the
provisions of the Trust Agreement and delivered to and paid for
by the Underwriters pursuant to this Agreement, will be duly
issued and entitled to the benefits of the Trust Agreement;
(vi) the Trust Agreement has been duly qualified under the
Trust Indenture Act;
(vii) to the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any court
or governmental agency, authority or body or any arbitrator
involving the Infrastructure Bank or relating to the
Certificates, the Financing Order or the Statute of a character
required to be disclosed in the Registration Statement which is
not adequately disclosed in the Final Prospectus, and there is no
franchise, contract or other document of a character required to
be described in the Registration Statement or Final Prospectus,
or to be filed as an exhibit, which is not described or filed as
required; and the statements included or incorporated in the
Final Prospectus under the headings "Description of the
Certificates," "The Trust," and "The Infrastructure Bank" fairly
summarize the matters described therein and the statements
included or incorporated in the Final Prospectus under the
headings "Certain Federal Income Tax Consequences", "State
Taxation" and "ERISA Considerations", to the extent that they
constitute matters of California [, Delaware] or federal law or
legal conclusions with respect thereto, provide a fair and
accurate summary of such law of conclusions;
(viii) 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); to the
best knowledge of
19
such counsel, 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 (other than the financial
statements and other financial and statistical information
contained therein as to which such counsel need express no
opinion) comply as to form in all material respects with the
applicable requirements of the Act, the Exchange Act and the
Trust Indenture Act and the respective rules thereunder; and such
counsel has no reason 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;
(ix) this Agreement has been duly authorized, executed and
delivered by the Trust;
(x) 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 the California Government Code, the
PU Code and the Act and such as may be required under the blue
sky laws of any jurisdiction in connection with the purchase and
distribution of the Certificates by the Underwriters and such
other approvals (specified in such opinion) as have been
obtained;
(xi) subject to the ultimate outcome of any Petition to the
California Supreme Court for Writ of Review by The Utility Reform
Network, neither the execution and delivery of this Agreement or
the Trust Agreement, nor the issue and sale of the Certificates,
nor the consummation of the transactions contemplated by this
Agreement or the Trust Agreement, nor the fulfillment of the
terms of this Agreement or the Trust Agreement by the
Infrastructure Bank 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 charter,
bylaws or other organizational documents of the Infrastructure
Bank, or conflict with or breach
20
any of the material terms or provisions of, or constitute (with or
without notice or lapse of time) a default under, any indenture,
agreement or other instrument known to such counsel and to which the
Infrastructure Bank is a party or by which the Infrastructure Bank is
bound, (B) result in the creation or imposition of any lien upon any
properties of the Infrastructure Bank pursuant to the terms of any
such indenture, agreement or other instrument, or (C) violate any law
or any order, rule or regulation applicable to the Infrastructure Bank
of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Infrastructure Bank, or any of its properties;
and
(xii) the Trust is not an "investment company" or under the
"control" of an "investment company" as such terms are defined under
the Investment Company Act of 1940, as amended.
In rendering such opinion, such counsel may rely (A) as to matters
involving the of laws of any jurisdiction other than the State of
California or the United States, 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 Trust, the Infrastructure Bank
and public officials. References to the Final Prospectus in this paragraph
(d) include any supplements thereto at the Closing Date.`
(e) The Representatives shall have received an opinion of ▇▇▇▇▇▇ &
▇▇▇▇▇▇, counsel to the Note Trustee, dated the Closing Date, in form and
substance reasonably satisfactory to the Representatives, to the effect
that:
(i) the Note Trustee is a banking corporation duly incorporated
and validly existing under the laws of the State of New York, with
full corporate trust power to accept the office of trustee under the
Indenture and to enter into and perform its obligations under the
Indenture;
(ii) the Indenture has been duly authorized, executed and
delivered, and constitutes a legal, valid and binding instrument
enforceable against the Note Trustee in accordance with its terms
(subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws or
equitable
21
principles affecting creditors' rights generally from time to time in
effect); and
(iii) the Notes have been duly authenticated by the Note Trustee.
(f) The Representatives shall have received an opinion of ▇▇▇▇▇▇ &
▇▇▇▇▇▇, counsel to the Certificate Trustee, dated the Closing Date, in form
and substance reasonably satisfactory to the Representatives, to the effect
that:
(i) the Certificate Trustee is duly incorporated and is validly
existing as a banking corporation in good standing under the laws of
the State of New York, with full corporate trust power and authority
to enter into and perform its obligations under the Trust Agreement
and, on behalf of the Trust, under the Note Purchase Agreement;
(ii) the Trust Agreement and, on behalf of the Trust, the Note
Purchase Agreement have been duly authorized, executed and delivered
by the Certificate Trustee, and constitute legal, valid and binding
instruments enforceable against the Certificate Trustee in accordance
with their 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 Certificate Trustee has duly executed, authenticated
and delivered the Certificates issued on the Closing Date on behalf of
the Trust;
(g) The Representatives shall have received an opinion of ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & Finger, counsel to the Delaware Trustee, dated the Closing Date,
in form and substance reasonably satisfactory to the Representatives, to
the effect that:
(i) the Delaware Trustee is duly incorporated and is validly
existing as a banking corporation in good standing under the laws of
the State of Delaware, with full corporate trust power and authority
to enter into and perform its obligations under the Trust Agreement;
and
(ii) the Trust Agreement has been duly authorized, executed and
delivered by the Delaware Trustee, and constitutes a legal, valid and
binding instrument enforceable against the Delaware Trustee in
accordance with its terms
22
(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);
(h) The Representatives shall have received from Cravath, Swaine &
▇▇▇▇▇, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Notes and the
Certificates, the Indenture, the Trust Agreement, the Registration
Statement, the Final Prospectus (together with any supplement thereto) and
other related matters as the Representatives may reasonably require, and
the Company, the Note Issuer and the Trust shall have furnished to such
counsel such documents as they request for the purpose of enabling them to
pass upon such matters.
(i) The Representatives shall have received a certificate of the Note
Issuer, signed by the Chairman of the Board or the President and the
principal financial or accounting officer of the Note 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 Agreement and that:
(i) the representations and warranties of the Note Issuer in
this 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 Note 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, to the Note Issuer'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 the condition (financial or other),
earnings, business or properties of the Note Issuer, whether or not
arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Final Prospectus (exclusive of
any supplement thereto).
23
(j) The Representatives shall have received a certificate of the
Company, signed by the Chairman of the Board or 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 Agreement and that:
(i) the representations and warranties of the Company in this
Agreement and in Article III of the Sale Agreement and in Section 6.01
of 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 the condition (financial or other),
earnings, business or properties of the Company and its subsidiaries
taken as a whole, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated in
the Final Prospectus (exclusive of any supplement thereto).
(k) At the Closing Date, [name of accountants] shall have furnished
to the Representatives (i) a letter or letters (which may refer to letters
previously delivered to one or more of the Representatives), dated as of
the Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants within
the meaning of the Act and the Exchange Act and the
24
respective applicable published rules and regulations thereunder and
stating in effect that they have performed certain specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the general
accounting records of the Company and its subsidiaries) set forth in the
Registration Statement and the Final Prospectus, including information
specified by the Underwriters and set forth under the captions "Prospectus
Summary," "Description of the Transition Property," "The Seller and the
Servicer," "Description of the Notes," and "Description of the
Certificates" in the Final Prospectus, agrees with the accounting records
of the Company and its subsidiaries, excluding any questions of legal
interpretation, and (ii) the opinion or certificate, dated as of the
Closing Date, in form and substance satisfactory to the Representatives,
satisfying the requirements of Section 2.10(7) of the Indenture.
References to the Final Prospectus in this paragraph (k) include any
supplement thereto at the date of the letter.
In addition, except as provided in Schedule I hereto, at the Execution
Time, [name of accountants] shall have furnished to the Representatives a
letter or letters, dated as of the Execution Time, in form and substance
satisfactory to the Representatives, to the effect set forth above.
(l) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Final Prospectus (exclusive of any supplement
thereto), there shall not have been any change, or any development
involving a prospective change, in or affecting either (i) the business,
properties or financial condition of the Company, the Note Issuer or the
Infrastructure Bank or (ii) the Transition Property, the Notes, the
Certificates, the Financing Order or the Statute, the effect of which is,
in the judgment of the Representatives, so material and adverse as to make
it impractical or inadvisable to proceed with the offering or delivery of
the Notes or the Certificates as contemplated by the Registration Statement
(exclusive of any amendment thereof) and the Final Prospectus (exclusive of
any supplement thereto).
(m) The Representatives shall have received on the Closing Date an
opinion letter or letters of [_], counsel to the Company and the Note
Issuer, dated the Closing Date, in form and substance reasonably
satisfactory to the Representatives,
25
(i) with respect to the characterization of the transfer of the
Transition Property by the Company to the Note Issuer as a "true sale" for
bankruptcy purposes and (ii) to the effect that a court would not order the
substantive consolidation of the assets and liabilities of the Note Issuer
with those of the Company in the event of a bankruptcy, reorganization or
other insolvency proceeding involving the Company.
(n) The Representatives shall have received on the Closing Date an
opinion letter of ▇▇▇▇▇ & ▇▇▇▇ LLP, outside counsel to the Infrastructure
Bank and the Trust, dated the Closing Date, in form and substance
reasonably satisfactory to the Representatives, to the effect that a court
would not order the substantive consolidation of the assets and liabilities
of the Infrastructure Bank with those of the Trust.
(o) The Representatives shall have received on the Closing Date an
opinion letter or letters of counsel for the Company, portions of which may
be delivered by [_], outside counsel for the Company, portions of which may
be delivered by [_], special regulatory counsel for the Company, and
portions of which may be delivered by [_], in-house counsel for the
Company, each dated the Closing Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that: (i) subject to the
ultimate outcome of any Petition to the California Supreme Court for Writ
of Review filed by The Utility Reform Network, the Financing Order and the
Issuance Advice Letter have been duly authorized and adopted by the CPUC
and are in full force and effect; in reliance on the opinion of ▇▇▇▇▇ &
Wood LLP that the Certificates are "rate reduction bonds" under Section
840(e) of the PU Code, as of the issuance of the Certificates, the
Certificates are entitled to the protections provided in the first
sentences of PU Code Sections 841(c) and 842(d); (ii) no person may
challenge the Financing Order in California state courts other than in a
proceeding pursuant to a Petition for Writ of Review brought by The Utility
Reform Network to the California Supreme Court; (iii) the likelihood that
the ultimate outcome of any Petition to the California Supreme Court for
Writ of Review filed by The Utility Reform Network will result in a
material breach in the representations and warranties of the Company set
forth in Sections 3.08(d) and 3.08(f) of the Sale Agreement is remote; and
(iv) the True-Up Adjustments (as defined in the Servicing Agreement) cover
any default by an ESP (as defined in the Servicing Agreement) under an ESP
Service Agreement (as defined in the Servicing Agreement) and any surcharge
imposed by a bankruptcy court in respect of [describe surcharge].
26
(p) The Representatives shall have received on the Closing Date an
opinion letter or letters of counsel for the Infrastructure Bank and the
Trust, portions of which may be delivered by ▇▇▇▇▇ & ▇▇▇▇ LLP, outside
counsel for the Infrastructure Bank and the Trust, and portions of which
may be delivered by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, in-house counsel for the Infrastructure
Bank, each dated the Closing Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that: (i) Proposition
218 of the initiative provisions of the Constitution of California does not
apply to AB 1890; (ii) any state action (whether by legislative, CPUC,
initiative or otherwise) to revoke or limit the Financing Order, the
Issuance Advice Letters, the Transition Property or the Fixed Transition
Amounts in a manner which would substantially impair the rights of
Certificateholders would be subject to a successful constitutional
contracts clause defense; (iii) the Infrastructure Bank has validly
authorized and approved the formation of the Trust, the issuance of the
Certificates and all other transactions and actions contemplated by the
Basic Documents; such authorizations and approvals are valid, in full force
and effect and are not subject to review or appeal; the Certificates
qualify as "rate reduction bonds" under Section 840(e) of the PU Code; and
(iv) any existing challenges to the Infrastructure Bank's Resolution or
actions taken by the Infrastructure Bank in connection therewith have no
merit.
(q) The Representatives shall have received on the Closing Date an
opinion letter or letters of [_], special Delaware counsel to the Note
Issuer, dated the Closing Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that: (i) if properly
presented to a Delaware court, a Delaware court applying Delaware law,
would conclude that (x) in order for a person to file a voluntary
bankruptcy petition on behalf of the Note Issuer, the prior unanimous
written consent of the Member and the Independent Director, as provided in
Section 9(j)(iii) of the Amended and Restated Limited Liability Company
Agreement of the Note Issuer (the "LLC Agreement"), is required, and (y)
such provision, contained in Section 9(j)(iii) of the LLC Agreement, that
requires the unanimous written consent of the Member and the Independent
Director in order for a person to file a voluntary bankruptcy petition on
behalf of the Note Issuer, constitutes a legal, valid and binding agreement
of the Member and is enforceable against the Member, in accordance with its
terms; and (ii) the LLC Agreement constitutes a legal, valid and binding
agreement of the Member thereunder, and is enforceable against the Member
in accordance with its terms.
27
(r) The Notes and the Certificates shall have been rated in the
highest long-term rating category by each of the Rating Agencies.
(s) On or prior to the Closing Date, the Note Issuer shall have
delivered to the Representatives evidence, in form and substance reasonably
satisfactory to the Representatives, that appropriate filings have been or
are being made in accordance with the PU Code and other applicable law
reflecting the grant of a security interest by the Note Issuer in the
Collateral to the Note Trustee, including the filing of the UCC financing
statements in the office of the Secretary of State of California.
(t) On or prior to the Closing Date, the Note Issuer shall have
delivered to the Representatives evidence, in form and substance
satisfactory to the Representatives, of the California Public Utility
Commission's issuance of the Financing Order relating to the Transition
Property.
(u) On or prior to the Closing Date, the Company shall have delivered
to the Representatives evidence, in form and substance reasonably
satisfactory to the Representatives, that the Company has obtained a
release of the Transition Property from the lien of [describe the Company's
current indenture].
(v) Prior to the Closing Date, the Note Issuer, the Company and the
Trust shall have furnished to the Representatives such further information,
certificates, opinions and documents as the Representatives may reasonably
request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of
such cancelation shall be given to the Note Issuer and the Trust in writing or
by telephone or telegraph confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Cravath, Swaine & ▇▇▇▇▇, counsel for the
Underwriters, at Worldwide Plaza, 825 Eighth Avenue, New York, New York, or at
any other office designated by counsel for the Underwriters, on the Closing
Date.
28
7. Reimbursement of Underwriters' Expenses. If the sale of the
----------------------------------------
Certificates 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 or the Note Issuer or
the Trust to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company and
the Note 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 Certificates [, provided that the
aggregate amount payable by the Company and the Note Issuer pursuant to this
Section 7 shall not exceed $__________ [to be discussed].]
8. Indemnification and Contribution. (a) The Company and the Note
---------------------------------
Issuer will, jointly and severally, indemnify and hold harmless each
Underwriter, the directors, officers, 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 contained in
the registration statement for the registration of the Certificates as
originally filed or in any amendment thereof, or in the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and will reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that (i) neither the Company nor the
-------- -------
Note 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 Note Issuer by or on behalf of any Underwriter through the Representatives
specifically for inclusion therein, (ii) neither the Company nor the Note 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
29
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Note Issuer by or on behalf of the Infrastructure
Bank specifically for inclusion therein and (iii) such indemnity with respect to
any Preliminary Final Prospectus 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 Certificates
that are the subject thereof if such person did not receive a copy of the Final
Prospectus (or the Final Prospectus as supplemented) at or prior to the
confirmation of the sale of such Certificates to such person in any case where
such delivery is required by the Act and the untrue statement or omission of a
material fact contained in the Preliminary Final Prospectus was corrected in the
Final Prospectus (or the Final Prospectus as supplemented). This indemnity
agreement will be in addition to any liability which the Company and the Note
Issuer may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, the Note Issuer, each of their directors, each of their officers
who signs the Registration Statement, and each person who controls the Company
or the Note Issuer within the meaning of either the Act or the Exchange Act, to
the same extent as the foregoing indemnity from the Company and the Note Issuer
to each Underwriter, but only with reference to written information relating to
such Underwriter furnished to the Note Issuer by or on behalf of such
Underwriter through the Representatives specifically for inclusion in the
documents referred to in the foregoing indemnity[, and each Underwriter
severally will reimburse the Company and the Note Issuer for any legal or other
expenses reasonably incurred by either of them in connection with investigating
or defending any such loss, claim, damage, liability or action.] This indemnity
agreement will be in addition to any liability which any Underwriter may
otherwise have. The Note Issuer acknowledges that the statements set forth in
the last paragraph of the cover page, under the heading "Underwriting" or "Plan
of Distribution" in any Preliminary Final Prospectus or the Final Prospectus
constitute the only information furnished in writing by or on behalf of the
several Underwriters for inclusion in the documents referred to in the foregoing
indemnity, and you, as the Representatives, confirm that such statements are
correct.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party
30
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, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. 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 Note 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 Note
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 Note Issuer and
by the Underwriters
31
from the offering of the Certificates and the Notes; provided, however, that in
-------- -------
no case shall any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Certificates) be responsible for
any amount in excess of the underwriting discount or commission applicable to
the Certificates purchased by such Underwriter hereunder. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the Company, the Note Issuer 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 Note Issuer and of the Underwriters in connection with
the statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Note Issuer shall be
deemed to be equal to the total net proceeds from the offering (before deducting
expenses) of the Certificates (which shall be equal to the net proceeds from the
sale of the Notes to the Trust (before deducting expenses)), and benefits
received by the Underwriters shall be deemed to be equal to the total
underwriting discounts and commissions, in each case as set forth on the cover
page of the Final Prospectus. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to information provided
by the Note Issuer or the Underwriters. The Company, the Note Issuer and the
Underwriters agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, and each person who controls
the Note Issuer within the meaning of either the Act or the Exchange Act, each
officer of the Note Issuer who shall have signed the Registration Statement and
each director of the Note Issuer shall have the same rights to contribution as
the Note Issuer, subject in each case to the applicable terms and conditions of
this paragraph (d).
[(e) Pursuant to a separate letter agreement, the Infrastructure Bank
shall agree to indemnify and hold harmless the Underwriters, the directors,
officers, employees and agents of each Underwriter and each person who controls
any Underwriter within the meaning of either the Act or the Exchange Act, to the
same extent as the indemnity set forth in clause (a) above, but only with
reference to written information furnished to the Note Issuer by or on
32
behalf of the Infrastructure Bank specifically for inclusion in the documents
referred to in clause (a) above.]
9. Default by an Underwriter. If any one or more Underwriters shall
--------------------------
fail to purchase and pay for any of the Certificates agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the nondefaulting Underwriters shall be obligated severally to take
up and pay for (in the respective proportions which the amount of Certificates
set forth opposite their names in Schedule II hereto bears to the aggregate
amount of Certificates set forth opposite the names of all the remaining
Underwriters) the Certificates which the defaulting Underwriter or Underwriters
agreed but failed to purchase; provided, however, that in the event that the
-------- -------
aggregate amount of Certificates which the defaulting Underwriter or
Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
amount of Certificates set forth in Schedule II hereto, the nondefaulting
Underwriters shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Certificates, and if such nondefaulting
Underwriters do not purchase all the Certificates, this Agreement will terminate
without liability to any nondefaulting Underwriter, the Note Issuer or the
Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
seven days, as the Representatives shall determine in order that the required
changes in the Registration Statement and the Final Prospectus or in any other
documents or arrangements may be effected. Nothing contained in this Agreement
shall relieve any defaulting Underwriter of its liability, if any, to the Note
Issuer and any nondefaulting Underwriter for damages occasioned by its default
hereunder.
10. Termination. This Agreement shall be subject to termination in
------------
the absolute discretion of the Representatives, by notice given to the Note
Issuer and the Trust prior to delivery of and payment for the Certificates, if
prior to such time (i) there shall have occurred any change, or any development
involving a prospective change, in or affecting either (A) the business,
properties or financial condition of the Note Issuer, the Infrastructure Bank or
the Company or (B) the Transition Property, the Notes, the Certificates, the
Financing Order or the Statute, the effect of which, in the judgment of the
Representatives, materially impairs the investment quality of the Certificates
or makes it impractical or inadvisable to market the Certificates, (ii) trading
in the Company's Common Stock shall have been suspended by the Commission 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
33
shall have been declared either by Federal, New York State or California State
authorities or (iv) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the judgment of the Representatives, impracticable or inadvisable to
proceed with the offering or delivery of the Certificates as contemplated by the
Final Prospectus (exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective
-------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, the Note Issuer or its officers, the Trust or its
officers and of the Underwriters set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or
on behalf of any Underwriter or of the Company, the Note Issuer, the Trust or
any of the officers, directors or controlling persons referred to in Section 8
hereof, and will survive delivery of and payment for the Certificates. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancelation of this Agreement.
12. Notices. All communications hereunder will be in writing and may
--------
be given by United States mail, courier service, telegram, telex, telemessage,
telecopy, telefax, cable or facsimile (confirmed by telephone or in writing in
the case of notice by telegram, telex, telemessage, telecopy, telefax, cable or
facsimile) or any other customary means of communication, and any such
communication shall be effective when delivered, or if mailed, three days after
deposit in the United States mail with proper postage for ordinary mail prepaid,
and if sent to the Representatives, to them at the address specified in Schedule
I hereto; and if sent to the Company, to it at [_], Attention: [_]; and if sent
to the Note Issuer, to it at [_], Attention: [_]; and if sent to the Trust, to
it at [_], Attention: [_]. The parties hereto, by notice to the others, may
designate additional or different addresses for subsequent communications.
13. Successors. This Agreement will inure to the benefit of and be
-----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed
---------------
in accordance with the laws of the State of [_].
15. Counterparts. This Agreement may be signed in any number of
-------------
counterparts, each of which shall be deemed an
34
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 Note Issuer, the Trust and the several Underwriters.
Very truly yours,
[NAME OF UTILITY],
by
__________________________
Name:
Title:
[_] FUNDING LLC,
by
_________________________
Name:
Title:
CALIFORNIA INFRASTRUCTURE AND
ECONOMIC DEVELOPMENT BANK
SPECIAL PURPOSE TRUST [_]-1,
by
________________________
Name:
Title:
35
The foregoing Agreement is
hereby confirmed and accepted
as of the date specified in
Schedule I hereto.
[SALOMON BROTHERS INC]
[▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED]
▇▇▇▇▇▇ BROTHERS
by [SALOMON BROTHERS INC]
[▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED]
by
________________________
Name:
Title:
For themselves and the other
several Underwriters, if any,
named in Schedule II to the
foregoing Agreement.
or
[SALOMON BROTHERS INC]
[▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED]
by
__________________________
Name:
Title:
For itself and the other
several Underwriters, if any,
named in Schedule II to the
foregoing Agreement.
SCHEDULE I
Underwriting Agreement dated
Registration Statement No.
Representative(s):
Title, Purchase Price and Description of Certificates:
Title:
Principal amount:
Purchase price (include accrued
interest or amortization, if
any):
Redemption provisions:
Other provisions:
Closing Date, Time and Location:
Type of Offering: [Delayed Offering or Non-Delayed Offering]
Date referred to in Section 5(f) after which the Company and the Note Issuer may
offer or sell asset-backed securities in a trust or special purpose vehicle
without the consent of the Representative(s):
SCHEDULE II
Underwriters Principal Amount
------------ of Certificates to
be Purchased
------------------
$
____________________
Total................................. $
====================