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HomeMy WebLinkAboutInvestment Agreement for BondsEXECUTION VERSION INVESTMENT AGREEMENT This INVESTMENT AGREEMENT dated as of February 11, 2003, (this "Agreement "), by and between CDC FUNDING CORP., a New York corporation (" CDCFC ") and UNION BANK OF CALIFORNIA, N.A., as fiscal agent (the "Fiscal Agent ") pursuant to a Fiscal Agent Agreement, dated as of December 18, 2002 (the "Authorizing Document ") between the City of Gilroy (the "Issuer ") and the Fiscal Agent providing for the issuance of $7,185,000 City of Gilroy (Santa Clara County, California) Community Facilities District No. 2000 -1 (Highway 152) Special Tax Bonds Series 2002 (the "Bonds "), WITNESSETH: WHEREAS, the Authorizing Document identified above establishes various trust finds and accounts for the receipt and disbursement of moneys, all as more fully set forth in the Authorizing Document; and WHEREAS, the Fiscal Agent (at the written direction of the Issuer) is authorized by the Authorizing Document to invest certain moneys held in or credited to the Fund (as defined below) under the Authorizing Document with CDCFC pursuant to the terms and provisions of this Agreement; and WHEREAS, CDCFC is willing, on the terms and conditions set forth in this Agreement, to accept such moneys as an investment by the Fiscal Agent into its Muni Program as defined in the CDC IXIS Guarantee. NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, CDCFC and the Fiscal Agent hereby agree as follows: SECTION 1. DEFINITIONS As used herein, the following terms have the following meanings. Capitalized terms used herein and not defined shall have the meanings ascribed to them in the Authorizing Document. Affiliate" shall mean, with respect to a person or entity, any other person or entity that controls, is controlled by or under common control with such person or entity. "Authorizing Document "has the meaning given such term in the introductory paragraph of this Agreement. "CDC IXIS Guarantee" means the Guarantee dated as of July 1, 2001 by the Guarantor, which, among other things, guarantees the payment obligations of CDCFC hereunder. "Earnings " means, with respect to any Investment, interest earned and accrued on the outstanding balance of such Investment in accordance with the provisions of Section 2.2 hereof. `Event of Default "has the meaning given that term in Section 5.1 hereof. "Guarantee" means the CDC IXIS Guarantee; provided, however, that if any Replacement Guarantee is delivered pursuant to Section 3.1 hereof, "Guarantee" shall mean the Replacement Guarantee. `Guarantor " means CDC Finance -CDC IXIS, a French bank (societe anonyme) governed by French law. "Minimum Rating" for a financial institution means the minimum credit rating required for such type of financial institution to serve as the provider of an uncollateralized investment agreement but in no event less than "AA -" by S &P and "Aa3" by Moody's. "Moody's " means Moody's Investors Service, Inc. or any successor thereto. shm-ed' (g)lagmtsifundinglform_doclG -00991 Gilroy CFD Hwy 152 2002 execution "Permitted Withdrawal Purpose" means the purposes for which moneys in the Fund may be withdrawn as permitted by the Authorizing Document and described in Exhibit A, Part I; provided, however, that under no circumstances may withdrawals be made for the direct or indirect purpose of reinvestment. "Ratings Event" has the meaning given that term in Section 4.2 hereof. "Replacement Guarantee" means a financial guaranty insurance policy, surety bond, letter of credit of guarantee which replaces the Guarantee then in effect, issued by an Affiliate of the Guarantor or by an entity approved by the Fiscal Agent, in favor of the Fiscal Agent, guaranteeing the payment of amounts payable by CDCFC hereunder, the terms of which are no less favorable to the Fiscal Agent than the terms of the CDC IXIS Guarantee. "Replacement Guarantor" means the issuer of a Replacement Guarantee. "S &P" means Standard & Poor's Ratings Services, a Division of The McGraw -Hill Companies or any successor thereto. The following terms shall have the meanings given such terms in Exhibit A: "Business Day" "Collateral" "Collateral Agent" "Collateral Requirement Level" "Collateral Value" "Fund" "Interest Payment Date" "Investment" "Investment Amount" "Investment Date" "Rate of Earnings" "Termination Date" "Withdrawal Limitations" SECTION 2. LNVESTMENT OF FUNDS 2.1 The Investment. On the terms and subject to the conditions herein set forth, the Fiscal Agent shall invest with CDCFC and CDCFC shall accept as an investment from the Fiscal Agent amounts as set forth in Exhibit A, Part I (the "Investment Amount ", "Amounts" and /or "Additional Investments", as applicable), which amounts constitute funds received by the Fiscal Agent for deposit in the Fund pursuant to the Authorizing Document (the amounts deposited for such Fund are referenced in Exhibit A, Part I as a corresponding `Investment" for such Fund). All Investments (or the applicable portions thereof) shall be payable by the Fiscal Agent to CDCFC by wire transfer in immediately available funds in accordance with the payment instructions specified in Exhibit A. Part III.B. on the applicable Investment Date in accordance with Exhibit A, Part I and Section 2.4 hereof. CDCFC may, but shall not be obligated to, accept an Investment (or a portion thereof) on a date other than the Investment Date designated for such Investment. 2.2 Interest. Interest on the outstanding principal balance of each Investment shall accrue daily as of the close of business each day from and including the date of receipt thereof by CDCFC to but excluding the earlier of the Termination Date and the date remitted to the Fiscal Agent as provided herein, at the Rate of Earnings with respect thereto, provided that no interest will accrue on or after the Termination Date. Earnings on the Investment shall be payable in arrears or credited to the designated account by CDCFC to the Fiscal Agent on each Interest Payment Date as set forth in Exhibit A, Part I. 2.3 Withdrawal. Subject to the conditions set forth in Exhibit A, Part i the Fiscal Agent may make withdrawals from an Investment for applicable Permitted Withdrawal Purposes on any Business Day, in each case in such shared' (g) lagmtslfundinglform_doclG -00991 Gilroy CFD Hwy 152 2002 execution amount and on such date as the Fiscal Agent shall specify in a written notice in the form of Exhibit B hereto; provided, however, that the Fiscal Agent shall not require payment by CDCFC in any amount greater than the amount to be so applied by the Fiscal Agent for such applicable Permitted Withdrawal Purposes. If not earlier repaid in full pursuant to this Section or the other provisions hereof, the outstanding principal balance of each Investment, together with all unpaid Earnings thereon, shall be repaid in full on the Termination Date for such Investment. 2.4 Wire Transfers. Amounts to be invested hereunder with CDCFC shall be transferred by the Fiscal Agent to CDCFC by wire transfer of immediately available funds to CDCFC's account in accordance with the instructions set forth in Exhibit A, Part III or to such other account pursuant to such other instructions as CDCFC shall so designate, such designation to be made in writing not less than two Business Days prior to the date of transfer. Amounts to be paid hereunder by CDCFC to the Fiscal Agent shall be paid by wire transfer of immediately available funds to the account designated by the Fiscal Agent in Exhibit A, Part III or to such other account as the Fiscal Agent shall so designate, such designation to be made in writing not less than two Business Days prior to the date of transfer. 2.5 Required Notices. (a) In addition to all other notices required hereby, the Fiscal Agent shall (i) give CDCFC notice of any proposed amendments to the Authorizing Document relevant to this Agreement and material to CDCFC (including copies of any such proposed amendments) prior to the effectiveness thereof and (ii) give CDCFC written notice of any proposed redemption, refinancing, or other restructuring of the Bonds (in whole or in part) which would have an impact on the Investment Amount with such notice to be delivered to CDCFC not less than 30 days nor more than 60 days before the date fixed for such redemption, refinancing or restructuring. (b) CDCFC shall send or cause to be sent monthly reports to the Fiscal Agent and the Issuer setting forth the outstanding amount of each Investment, deposits and withdrawals with respect thereto, and interest accrued and paid thereon. If this Agreement is then subject to the collateral requirements of Exhibit A, Part II hereof, such reports shall also set forth the type of Collateral, the Collateral Requirement Level for that type of Collateral, and the Collateral Value on the Collateral Valuation Date, and the name of the Collateral Agent (if any) holding the collateral. The Fiscal Agent shall review such reports upon its receipt thereof. Any such reports may be sent by mail or facsimile to the attention of any person of the recipient identified on Exhibit A. Part III. (c) CDCFC shall notify the Fiscal Agent within ten (10) days of (i) any Event of Default hereunder, (ii) any suspension, withdrawal, downgrading or other change of the long -term senior unsecured debt rating of the Guarantor, or (iii) any Ratings Event (as defined in 4.2 hereof). SECTION 3. GUARANTEE 3.1 The Fiscal Agent, in entering into this Agreement, is and will be relying on the CDC IXIS Guarantee; provided, however, that, without limiting the terns of the CDC IXIS Guarantee, the Fiscal Agent acknowledges and agrees for purposes of this Agreement and the CDC IXIS Guarantee that the Guarantor will be released from its obligations in respect of this Agreement if the Guarantor delivers a Replacement Guarantee provided that the claims - paying ability or the long -term, senior unsecured debt obligations of the Replacement Guarantor are rated AA- by S &P and Aa3 by Moody's at the time of replacement. SECTION 4. TERMINATION; DOWNGRADE; COLLATERALIZATION 4.1 Tennination. This Agreement shall tenninate with respect to any Investment on the Termination Date for such Investment as specified in Exhibit A, Part I, unless earlier terminated in accordance with its terns and any unexpended amounts shall be returned to the Fiscal Agent. 4.2 Ratings Event. If the ratings of the long -term, senior unsecured debt obligations of the Guarantor (or any Replacement Guarantor) are, at any time while the Guarantee (or any Replacement Guarantee) is in effect with respect to this Agreement, suspended, withdrawn or rated below AA- or Aa3 by S &P or Moody's (in either case, a "Ratings shared' (g) lagmtslfundinglforni_doclG -00991 Gilroy CFD Hwy 152 2002 execution Event "), CDCFC shall have the right (but not the obligation) to take one of the following actions within ten (10) days (or such other period agreed to by the parties) of such Ratings Event: (i) deliver, or cause to be delivered, Collateral to the Collateral Agent and grant, or cause to be granted, to the Fiscal Agent a first priority security interest under the applicable Uniform Commercial Code or other applicable law in and to Collateral, which Collateral shall have a Collateral Value equal to the Collateral Requirement Level; or (ii) repay the entire balance of any Investment then on deposit, together with all unpaid Earnings thereon, with the Agreement to terminate automatically upon such repayment. Provided, however, during such 10 -day period (or such other period agreed to by the parties), CDCFC will have the right (but not the obligation) to take either of the following actions in lieu of taking action under clause (i) or (ii): (x) transfer this Agreement and the rights and obligations of CDCFC hereunder to an entity (reasonably satisfactory to the Fiscal Agent) whose long -term, senior unsecured debt obligations or claims paying ability, or whose guarantor's long term, senior unsecured debt obligations or claims paying ability, are rated at not less than the Minimum Rating; or (xi) deliver a Replacement Guarantee of a Replacement Guarantor (reasonably satisfactory to the Fiscal Agent) whose long term, senior unsecured debt obligations or claims paying ability are rated at not less than the Minimum Rating. If CDCFC does not take any of the actions set forth in clauses (i), (x) or (xi) above within ten (10) days of such Ratings Event, and provided such Ratings Event is then continuing, the Fiscal Agent shall have the right, at the direction of the Issuer, to require CDCFC, by written notice to CDCFC, to repay the entire principal balance of the Investment then on deposit, together with all unpaid Earnings thereon. Upon any such repayment in full by CDCFC, this Agreement shall terminate automatically and any Collateral then held by the Collateral Agent for the benefit of the Fiscal Agent will be returned to CDCFC. (b) If the ratings of the long -term, senior unsecured debt obligations of the Guarantor (or any Replacement Guarantor) are, at any time while the Guarantee (or any Replacement Guarantee) is in effect with respect to this Agreement, suspended, withdrawn or downgraded below A- by S &P or below A3 by Moody's, then, CDCFC will give immediate notice of such suspension, withdrawal or downgrade to the Trustee and the Bond Insurer and CDCFC shall, within 5 Business Days, repay the entire balance of any Investment then on deposit, together with all unpaid Earnings thereon. Upon any such repayment in full by CDCFC, this Agreement shall terminate automatically and any Collateral then held by the Collateral Agent for the benefit of the Trustee will be returned to CDCFC. 4.3 Collateralization. Unless otherwise provided pursuant to Section 4.2 above and Exhibit A. Part I1, this Agreement shall not be subject to any collateral requirements on the part of CDCFC or the Guarantor. SECTION 5. DEFAULT 5.1 Events of Default. The following events shall constitute Events of Default under this Agreement (each an "Event of Default "): (a) CDCFC and the Guarantor on behalf of CDCFC fail to make any payment of an Investment or Earnings thereon when due pursuant to the provisions of this Agreement and such failure continues for one Business Day or more after the Fiscal Agent gives CDCFC and the Guarantor written notice thereof. shared' (g)lagmtslfundinglforin_doclG -00991 Gilroy CFD Hwy 152 2002 execution (b) CDCFC or the Guarantor commences a case in bankruptcy relating to it, is adjudicated as insolvent or bankrupt, petitions or applies for the appointment of any receiver or trustee for itself or any substantial part of its property or initiates any proceeding relating to it seeking a court order for reorganization, arrangement, conservation, liquidation, or dissolution under applicable bankruptcy or similar applicable laws; or, any such proceeding is initiated against CDCFC or the Guarantor and CDCFC or the Guarantor, as the case may be, indicates in writing its consent thereto or such proceeding is not dismissed within 90 days; or such an order is entered against CDCFC or Guarantor. (c) CDCFC fails to perform or observe any of its obligations under this Agreement (other than those described in Section 5.1(a) hereof) and such failure continues for ten Business Days or more after written notice thereof is given by the Fiscal Agent to CDCFC. (d) Any representation or warranty of CDCFC under this Agreement or of the Guarantor under the Guarantee is determined to have been false or misleading when made. (e) Except as permitted by the terms of Section 3 hereof or by the terns of the Guarantee, the Guarantee expires, terminates or is repudiated by the Guarantor in respect of this Agreement, or any other event occurs and is continuing which causes the Guarantee to cease to be in full force and effect in respect of this Agreement, or any action is taken by the Guarantor which challenges the validity or enforceability of the Guarantee in respect of this Agreement. 5.2 Rights and Obligations of Parties upon an Event of Default. Upon the occurrence and continuation of an Event of Default under Section 5.1(b) hereof, the entire principal balance of the Investment and all accrued and unpaid Earnings thereon shall be due and immediately payable. Upon the occurrence and continuation of any other Event of Default, the Fiscal Agent (at the direction of the Issuer) shall have the right to declare the entire principal balance of the Investment and all accrued and unpaid Earnings thereon to be due and immediately payable and to withdraw such entire balance and unpaid Earnings. If, as a result of the occurrence and continuation of an Event of Default, the entire principal balance of the Investment and all unpaid Earnings are so withdrawn by the Fiscal Agent, this Agreement shall be terminated on the date of such withdrawal as if such date were the Termination Date for the Investment hereunder. SECTION 6. REPRESENTATION AND WARRANTIES; COVENANTS 6.1 Fiscal Agent and Issuer Representations and Warranties. The Fiscal Agent and the Issuer each represents and warrants to CDCFC and the Guarantor that: (i) it understands that neither CDCFC nor the Guarantor nor any person representing CDCFC or the Guarantor has made any representation to it with respect to CDCFC, the Guarantor or this Agreement or the Guarantee other than as expressly set forth herein; (ii) the legend set forth in Section 8.11 hereof has been called to its attention; (iii) it is duly authorized to enter into this Agreement and the transactions contemplated hereby; (iv) this Agreement has been duly executed and delivered by it and constitutes a legal, valid and binding obligation enforceable against such party in accordance with its terns, subject to bankruptcy, insolvency and similar laws affecting creditors' rights generally, and subject further as to enforceability, to general principles of equity; (v) the execution, delivery and performance of this Agreement by it does not and will not result in a breach or violation of or cause a default under, its charter or enabling legislation or by -laws or any provision of any law, regulation, order, license, decree, judgment or agreement applicable to or binding upon it or its assets; (vi) it is not entering into this Agreement or making any deposit hereunder nor relying on the Guarantee with a view to any distribution of this Agreement, the Guarantee or any interest herein or therein in violation of the Securities Act or any other applicable securities law; and (vii) the moneys invested under this Agreement consist of amounts on deposit in the Fund identified in Exhibit A. The Issuer represents and warrants to CDCFC and the Guarantor that (i) and this Agreement qualifies as a permitted investment under the Authorizing Document; (ii) it has had access to such financial and other information concerning CDCFC and the Guarantor as it has deemed necessary in connection with its decision to make each Investment hereunder and (iii) the fees, if any, paid by CDCFC in connection with the provisions of this Agreement have been paid on the Issuer's behalf for services rendered to the Issuer or its agents. The Fiscal Agent represents and warrants to CDCFC and the Guarantor that it is authorized by the terms of the Authorizing Document to enter into this Agreement and snake the Investment contemplated by this Agreement. shared' (g)lagmtslfun ding lform_doclG -00991 Gilroy CFD Hwy 152 2002 execution 6.2 CDCFC Representations and Warranties. CDCFC represents and warrants to the Fiscal Agent and the Issuer that: (i) it is duly authorized to enter into this Agreement and the transactions contemplated hereby; (ii) this Agreement has been duly executed and delivered by it and constitutes a legal, valid and binding obligation of CDCFC enforceable against CDCFC in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting creditors' rights generally, and subject further as to enforceability, to general principles of equity; and (iii) the execution, delivery and performance of this Agreement by CDCFC does not and will not result in a breach or violation of, or cause a default under, its charter or by -laws or any provision of any law, regulation, order, license, decree, judgment or agreement applicable to or binding upon CDCFC or its assets. 6.3 Fiscal Agent and Issuer Covenants. The Fiscal Agent (with respect to itself and parties within its control) and Issuer each covenants and agrees that it will not cause or consent to, nor will it permit any other person to cause or consent to, any amendment of or waiver with respect to the Authorizing Document as they relate to this series of Bonds or take any other action that (i) causes this Agreement to fail to qualify as a permitted investment under the Authorizing Document or (ii) might adversely affect the financial position of CDCFC or reduce its expected economic benefits with respect to this Agreement. The Issuer expressly covenants that it shall not replace the Reserve Fund under the Authorizing Document with respect to the Bonds by substituting a surety bond, letter of credit or similar instrument in lieu thereof. 6.4 Redemption. In the event of a redemption (excluding a Mandatory Prepayment Redemption and Mandatory Sinking Fund Redemption, as defined in Sections 2.03(A)(i) and 2.03(A)(iii) of the Authorizing Document) or refunding in whole or in part of the Bonds in accordance with the Authorizing Document, all amounts deposited in the debt service reserve fund (or in a comparable reserve fund) for the refunding bonds shall be invested under this Agreement in the manner contemplated on Exhibit A hereto with respect to the Reserve Fund, provided the maximum amounts deposited in the debt service reserve fund (or in a comparable reserve fund) for the refunding bonds shall not exceed the Reserve Requirement for the Reserve Fund as of the date of this Agreement. In the event the refunding bonds require or utilize a debt service reserve fund or similar form of reserve with a requirement greater than the Reserve Requirement for the Reserve Fund as of the date of this Agreement, CDCFC shall, at its option, accept or decline any amount in excess of such Reserve Requirement as of the date of this Agreement or negotiate the terms of its acceptance. In the event the refunding bonds do not require or utilize a debt service reserve fund or similar form of reserve of the Bonds is effected, the Investment hereunder with respect to the Reserve Fund shall terminate, the entire Investment then on deposit (including any accrued but unpaid Earnings) with respect to the Reserve Fund shall be repaid in full by CDCFC to the Fiscal Agent, and an amount (The "Termination Amount "), shall be calculated in accordance with this Section 6.4 on the date of such early withdrawal. In connection with any such termination, the Termination Amount shall be (i) the arithmetic average of the quotations obtained by Winters & Co., LLC or another independent third party (mutually acceptable to the Issuer and CDCFC) from three or more providers of investment agreements, mutually acceptable to the Issuer and CDCFC, with each quotation to be an amount to be paid to such provider (expressed as a negative number) or by such provider (expressed as a positive number) in order for such provider to invest with CDCFC such withdrawn amount(s) on the terms and conditions set forth in this Agreement for the remainder of the term hereunder with respect to the Reserve Fund or (ii) any other amount mutually agreed upon by the Issuer and CDCFC. In the event of any early withdrawal pursuant to this Section 6.4, (i) the Tennination Amount (if negative) shall be payable by the Issuer to CDCFC on the date of such early withdrawal, and (ii) if the Termination Amount (if positive) shall be payable by CDCFC to the Issuer on the date of such termination with respect to this Section 6.4. The Issuer and the Fiscal Agent acknowledge and agree that, for purposes of paragraph (a) of the definition of "Investment Agreements" under the Authorizing Document, any redemption or refunding in whole or in part of the Bonds that results in a Termination Amount being payable by the Issuer under this Section 6.4 shall constitute a withdrawal for reinvestment. shared' (g)lagmtslfun ding lform_doclG -00991 Gilroy CFD Hwy 152 2002 execution SECTION 7. LIMITATION ON CDCFC'S OBLIGATIONS 7.1 In performing its obligations hereunder, neither CDCFC nor any of its directors, officers, employees, agents, shareholders, representatives or affiliates make any representation or warranty with respect to, nor shall any of them be liable or responsible for, (i) the payment of any amounts owing on or with respect to the Bonds; (ii) the use or application by the Fiscal Agent of any moneys payable to the Fiscal Agent hereunder; (iii) any acts or omissions of the Fiscal Agent, the Issuer, or the parties to the Authorizing Document or any other agreement or instrument with respect to the Bonds; (iv) the validity or enforceability of the Bonds or the Authorizing Document or any other agreement or instrument with respect to the Bonds; (v) the Fiscal Agent's or the Issuer's performance of its obligations under this Agreement; (vi) the Fiscal Agent's or the Issuer's performance of its obligations with respect to the Bonds or the Authorizing Document, or any other agreement or instrument with respect to the Bonds; (vii) the effect of the negotiation, delivery and performance by CDCFC of this Agreement on the tax - exempt status of the Bonds; (viii) any charges, impositions or penalties incurred by any party arising from performance in accordance with the terms of this Agreement; or (ix) any other matter relating to any of the foregoing. Without limiting the foregoing, regardless of whether CDCFC has reviewed the Authorizing Document or is generally familiar with the terms of indentures or bond resolutions of a similar type, CDCFC shall have no duty to comply with the terns of the Authorizing Document or to ascertain whether the Fiscal Agent or the Issuer is in compliance therewith. The Fiscal Agent and the Issuer each recognize that CDCFC and the Guarantor (or their affiliates) may have other business relationships with the Issuer, the Fiscal Agent and with other entities or persons party to other agreements or instruments with respect to the Bonds. For purposes of this Agreement, it shall not be necessary for CDCFC to segregate or otherwise separately identify any portion of the invested funds. SECTION 8. NUSCELLANEOUS 8.1 Information Regarding CDCFC and the Guarantor. The Issuer hereby agrees that it will not, nor will it permit any other person to, include in any official statement, offering circular, information memorandum or other disclosure document prepared with respect to the Bonds, any information relating to CDCFC or the Guarantor, including the name of CDCFC or the Guarantor; provided, that in connection with disclosure regarding the Investment, (i) the names of the Guarantor and CDCFC may be disclosed, but only if the Guarantor is identified as "CDC Finance -CDC IXIS, a French bank (societe anonyme) governed by French law ", and CDCFC is identified as a subsidiary of the Guarantor, and (ii) the Rate of Earnings and Termination Date hereunder, and information set forth in the monthly reports delivered pursuant to Section 2.5(b) hereof, may be disclosed. 8.2 Set -Off. It is recognized by the parties hereto that the obligation of CDCFC to accept Investments hereunder and to repay such Investments, together with Earnings thereon, as provided herein, constitutes an obligation of CDCFC which is unconditional with no right of recoupment, counterclaim, subrogation or set -off by CDCFC with respect to amounts owing to CDCFC by the Fiscal Agent, by the Issuer, by any holder of Bonds, or by any other person; provided, that Investments hereunder and each withdrawal request has been made by the Fiscal Agent in accordance with the terms of this Agreement. 8.3 No Waiver; Amendment. No failure or delay on the part of CDCFC or the Fiscal Agent in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or remedy preclude any other right or remedy. The rights and remedies of CDCFC and the Fiscal Agent hereunder are each cumulative and are not exclusive of any rights or remedies provided by law or equity or in any other contract between the Fiscal Agent and CDCFC or the Guarantor. None of the terms or provisions of this Agreement may be waived, modified or amended except in writing duly executed by CDCFC, the Fiscal Agent, and the Issuer. 8.4 Survival. All warranties and representation made by the Fiscal Agent, the Issuer or CDCFC in this Agreement or in any of the instruments or documents delivered pursuant to this Agreement regardless of any investigation made shall be considered to have been relied upon by the other parties hereto and shall survive the delivery of any instruments or documents. 8.5 Successors and Assigns. This Agreement and all obligations and rights arising hereunder shall inure to the benefit of and be binding upon the parties hereto and their respective successors, assigns and beneficiaries. shared' (g)lagmts fun ding lform_doc l G- 00991 Gilroy CFD Hwy 1511002 execution Notwithstanding the foregoing, neither this Agreement, the obligations and rights arising under this Agreement, nor any part hereof, may be sold, pledged or assigned or otherwise transferred by CDCFC, the Fiscal Agent or the Issuer without the prior written consent of the other parties hereto and any such attempted sale, pledge, assignment or transfer shall be void ab initio; provided, however, that CDCFC may transfer this Agreement or any of its rights, interests or obligations hereunder (i) to any Affiliate of CDCFC if from and after such transfer, the obligations of the transferee hereunder shall either be guaranteed by the Guarantor under the same terms or terms at least as favorable to the Fiscal Agent as the terms of the Guarantee or shall be rated not less than AA- by S &P or Aa3 by Moody's or (ii) as provided in Section 4.2 hereof; provided, further, that any successor to the Fiscal Agent as trustee under the Authorizing Document shall be considered a successor in interest to the Fiscal Agent with respect to this Agreement without the necessity of obtaining the prior written consent of CDCFC; and provided, further, that this Section shall not affect any pledge or grant of the Fund to the Fiscal Agent on behalf of Bondholders under the Authorizing Document. 8.6 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed in New York. 8.7 Severability of Provisions. If any one or more of the provisions contained in this Agreement is declared invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. 8.8 Counterparts. This Agreement may be executed in several counterparts and, as so executed, shall constitute one agreement binding upon the parties hereto. 8.9 Integration of Terms. This Agreement, including Exhibit A contains the entire agreement among the parties relating to the subject matter hereof and supersedes all oral statements and prior writings with respect thereto. In the event of any discrepancy between terms in Exhibit A and terms appearing elsewhere in this Agreement, the terns of Exhibit A shall be deemed controlling. 8.10 Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given upon delivery if delivered by hand (against receipt), or as of the date of delivery as shown on the receipt if mailed at a post office in the United States by registered or certified mail, postage prepaid, return receipt requested, or as of the date of acknowledgment if transmitted by facsimile transmission of other telecommunication equipment, in any case addressed to the attention of any of the persons listed on Exhibit A. Part III hereto, or at such other address or to the attention of such other persons as such party shall have designated to the other parties hereto in a written notice. Any notices given by facsimile transmission or other telecommunication equipment shall be orally confirmed by the sender immediately after such notice is transmitted. 8.11 Leeend. NEITHER THIS AGREEMENT NOR THE GUARANTEE HAVE BEEN OR WILL BE REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT "), OR THE SECURITIES LAWS OF ANY STATE OR TERRITORY, AND, EXCEPT IN CONNECTION WITH AN ASSIGNMENT HEREOF TO THE GUARANTOR UPON A PAYMENT BY THE GUARANTOR UNDER THE GUARANTEE, THIS AGREEMENT AND THE GUARANTEE MAY BE SOLD, TRANSFERRED OR ASSIGNED ONLY AS PERMITTED HEREUNDER AND ONLY IF REGISTERED PURSUANT TO THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS, OR IF AN EXCEPTION FROM REGISTRATION IS AVAILABLE. BY ITS EXECUTION OF THIS AGREEMENT, THE TRUSTEE AND THE ISSUER EACH AGREES THAT THIS AGREEMENT AND THE GUARANTEE ARE BEING ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR SALE IN CONNECTION WITH, THE PUBLIC DISTRIBUTION THEREOF. 8.12 Rating s. All references to ratings of S &P and Moody's herein shall refer to the actual referenced ratings or, if the applicable ratings structure has been revised, to the then current equivalent thereof at the time the applicable determination is made. 8.13 No Third Party Beneficiaries. Nothing expressed or implied herein is intended or shall be construed to confer upon any person (other than the parties hereto and their successors and permitted assigns), any right, remedy or shared' (g)lugnttslfi ndinglform_doclG -00991 Gilroy CFD Hwy 152 2002 execution claim by reason of this Agreement or any term hereof, and all terms contained herein shall be for the sole and exclusive benefit of the parties thereto and their successors and permitted assigns. shared' (g)lagmts1fundinglform_doclG -00991 Gilroy CFD Hwy 152 2002 execution IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written. CDC FUNDING CORP. Title: �r Title: Vrilliam Dr nnh Director UNION BANK OF CALIFORNIA, N.A., as Fiscal Agent Title: Acknowledged and Accepted by: CITY OF GILROY, for and on behalf of the City of Gilroy Community Facilities District No. 2000 -1 (Highway 152) ) g, � /Q Title: L 12%%/ TA 4#fS,4W IL shared' (g) lagmtslfundinglform_doclG -00991 Gilroy CFD Hwy 152 2002 execution 10 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written. CDC FUNDING CORP. Title: Title: UNION BANK OF CALIFORNIA, N.A., as Fiscal Agent Title: Acknowledged and Accepted by: CITY OF GILROY, for and on behalf of the City of Gilroy Community Facilities District No. 2000 -1 (Highway 152) Title: L /;P `/ 7A E AfP'k C,4 shared' (g) lagmts funding lform_docIG -00991 Gilroy CFD Hwy 152 2002 execution 10 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written. CDC FUNDING CORP. Title: Title: UNION BANK OF CALIFORNIA, N.A., as Fiscal Agent Title: Acknowledged and Accepted by: CITY OF GILROY, for and on behalf of the City of Gilroy Community Facilities District No. 2000 -1 (Highway 152) Title: Gilroy City Treasurer shared' (g)lagmtslfundingl form_doclG -0099/ Gilroy CFD Hwv 152 2002 execution 10 EXHIBIT A Part I— Certain Defined Terms 1. Business Day: The term "Business Day ", as used in the Investment Agreement, shall mean any day which is not a Saturday or a Sunday or a day on which banks located in New York, New York and San Francisco, California are authorized or required by law or executive order to close. 2. Fund: As established under the Authorizing Document, the Capitalized Interest Account within the Bond Fund (herein, the "Capitalized Interest Account "). a. Interest Pavment Date: Earnings will be payable (i) five (5) Business Days prior to each March 1 and September 1, commencing five Business Days prior to March 1, 2003 and (ii) (to the extent of any amounts remaining in the Fund) on the Termination Date. b. Investment: With respect to the Fund, the Initial Investment received by CDCFC, plus Earnings not yet paid in accordance with the Investment Agreement, less any withdrawals made in accordance with the Investment Agreement. c. Investment Amount: Initial Investment: $627,000.00 Additional Investments: None. d. Investment Date: February 11, 2003. e. Permitted Withdrawal Purpose: Withdrawals shall be made by the Fiscal Agent in accordance with the Authorizing Document. The Permitted Withdrawal Purpose shall be specified on the draw request delivered to CDCFC, in the form of Exhibit B. f Withdrawal Limitations: With respect to any withdrawal hereunder, (a) CDCFC must receive the Fiscal Agent's written notice in the form of Exhibit B at least two (2) Business Days prior to the date specified for such withdrawal; and (b) the Fiscal Agent shall not request payment to be made by CDCFC earlier than two (2) Business Days prior to the date on which such amount is to be applied pursuant to the terms and conditions of the Authorizing Document, and the amount so withdrawn shall be applied for such Permitted Withdrawal Purpose. The Fiscal Agent shall not (i) make more than four withdrawals hereunder during any month and (ii) shall not make withdrawals for the direct or indirect purpose of reinvestment. g. Rate of Earnings: 1.11% per annum, calculated on the basis of a 360 -day year composed of twelve 30 -day months. h. Termination Date: September 1, 2004 or, if earlier, the date on which (i) the Bonds are redeemed, repaid or called in whole or are refinanced through an advance or current refunding, or (ii) all amounts invested hereunder have been withdrawn. shared' (g)lagmtslfun ding lform_doclG -00991 Gilroy CFD Hwy 152 2002 execution 11 3. Fund: As established under the Authorizing Document, the Reserve Fund (herein, the "Reserve Fund "). a. Interest Payment Date: Earnings will be payable (i) five (5) Business Days prior to each March 1 and September 1, commencing five Business Days prior to March 1, 2003 and (ii) (to the extent of any amounts remaining in the Fund) on the Termination Date. b. Investment: With respect to the Fund, the Initial Investment and any Additional Investment received by CDCFC, plus Earnings not yet paid in accordance with the Investment Agreement, less any withdrawals made in accordance with the Investment Agreement. c. Investment Amount: Initial Investment: $570,000.00 Additional Investments: Additional Investments shall be made to the extent any withdrawals with respect to the Reserve Fund have been made to cover debt service deficiencies on the Bonds in accordance with the Authorizing Document, with such Additional Investments to be made as soon as amounts are available to the Fiscal Agent but in no event later than 12 months after such withdrawal. After such 12 month period, the Fiscal Agent shall notify CDCFC of the amount of any deposit into the Reserve Fund under the Authorizing Document and, at the option of CDCFC, such amount shall be invested with CDCFC under this Agreement. With respect to any Additional Investment hereunder, (a) CDCFC must receive the Fiscal Agent's written notice in the form of Exhibit B at least one (1) Business Day prior to the date specified for such Additional Investment, (b) the Fiscal Agent shall not make more than two (2) Additional Investments hereunder during any calendar month, (c) the minimum amount of such Additional Investment shall be $5,000, and (d) such Additional Investment may be made hereunder only to the extent that it shall correspond to the Bonds. Notwithstanding the foregoing, at no time shall the aggregate amount invested with CDCFC hereunder exceed at any time the lesser of (1) the Reserve Requirement (as defined in the Authorizing Document) with respect to Bonds as in effect as of the date hereof, or (2) $570,000. d. Investment Date: February 11, 2003; and the date on which any Additional Investment is actually received by CDCFC from the Fiscal Agent. e. Permitted Withdrawal Purpose: Withdrawals shall be made by the Fiscal Agent in order to pay debt service deficiencies in accordance with the Authorizing Document or in the event of a Mandatory Prepayment Redemption or Mandatory Sinking Fund Redemption in whole or in part as defined in Sections 2.03(A)(i) and 2.03(A)(iii) of the Authorizing Document. The Pennitted Withdrawal Purpose shall be specified on the draw request delivered to CDCFC, in the form of Exhibit B. f. Withdrawal Limitations: With respect to any withdrawal hereunder, (a) CDCFC must receive the Fiscal Agent's written notice in the form of Exhibit B at least two (2) Business Days prior to the date specified for such withdrawal; and (b) the Fiscal Agent shall not request payment to be made by CDCFC earlier than two (2) Business Days prior to the date on which such amount is to be applied pursuant to the terms and conditions of the Authorizing shared' (g)lagmtslf4ndinglform_doclG -00991 Gilroy CFD Hriry 152 2002 execution 12 Document, and the amount so withdrawn shall be applied for such Pennitted Withdrawal Purpose. The Fiscal Agent shall not (i) make more than four withdrawals hereunder during any month and (ii) shall not make withdrawals for the direct or indirect purpose of reinvestment. g. Rate of Earnings: 4.31% per annum, calculated on the basis of a 360 -day year composed of twelve 30 -day months. h. Termination Date: September 1, 2027 or, if earlier, subject to Section 6.4 of this Agreement, the date on which (i) the Bonds are redeemed, repaid or called in whole or are refinanced through an advance or current refunding, or (ii) all amounts invested hereunder have been withdrawn and no Additional Investment can reasonably be expected. Part I1 -- Collateral Requirements Upon Ratings Event II. 1 Provisions with Respect to Collateral. In the event that a Ratings Event occurs and CDCFC delivers Collateral pursuant to Section 4.2 hereof, the provisions of this Part II. 1 shall apply. (a) Grant of Security Interest. As security for the prompt and complete payment when due of the Investment, CDCFC hereby pledges, assigns, conveys and transfers to the Fiscal Agent, and hereby grants to the Fiscal Agent a first and prior security interest under the Uniform Commercial Code or other applicable law in and to, and general first lien upon and interest in and to, the Collateral as security pursuant to and in accordance with the provisions of this Agreement. (b) Delivery. On the relevant date, CDCFC shall deliver to the Collateral Agent Collateral with an aggregate Collateral Value that equals or exceeds the Collateral Requirement Level with respect to the Investment. (c) Collateral Valuation. The Collateral Agent shall, promptly following the opening of business on each Collateral Valuation Date, determine the aggregate Collateral Value of Collateral held by the Collateral Agent pursuant to this Part II.1, and shall notify CDCFC and the Fiscal Agent by telephone on such date (such notice to be confirmed in writing) of such amount and provide CDCFC and the Fiscal Agent any information that CDCFC and the Fiscal Agent may reasonably request regarding the Collateral Agent's determination thereof. if such amount is less than the Collateral Requirement Level on such Collateral Valuation Date, CDCFC shall before the close of business on the second Business Day following the date of such determination, deliver to the Collateral Agent additional Collateral having an aggregate Collateral Value on such day not less than the amount of such deficiency. (d) Withdrawal of Collateral. CDCFC shall, by giving telephonic notice (such notice to be confirmed in writing) to the Collateral Agent, be entitled to withdraw Collateral on any Collateral Valuation Date to the extent that the aggregate Collateral Value of Collateral held by the Collateral Agent pursuant to this Part II.1 exceeds the Collateral Requirement Level on such Collateral Valuation Date. Such notice shall specify the Collateral to be withdrawn. In addition, CDCFC shall be entitled to withdraw all Collateral on any Business Day by delivering written notice to the Collateral Agent (together with executed copies of all pertinent documents and agreements relating thereto) to the effect that (i) the applicable ratings issued by Moody's and S &P in respect of the Guarantor have been reinstated or raised to the Minimum Rating; or (ii) CDCFC has paid to the Fiscal Agent the balance of all Investments, together with all Earnings thereon in accordance with this Agreement; or (iii) CDCFC has satisfied the requirements of clause (ii), (x) or (xi) of Section 4.2. Such notice shall specify the Collateral to be withdrawn. The Collateral Agent shall deliver to CDCFC the Collateral so specified as soon as practicable following receipt of such notice, but in any event no later than the close of business on the second Business Day following receipt of such notice and such documents. (e) Substitution of Collateral. CDCFC shall be entitled on any Business Day, upon giving telephonic notice (such notice to be confirmed in writing) to the Collateral Agent, to substitute for any Collateral other Collateral having the same or greater Collateral Value at the time of substitution. Such notice shall specify the Collateral to be withdrawn and the substitute Collateral to be delivered to the Collateral Agent. The Collateral Agent shall as soon as shared' (g)lagmtslfundirnglform_doclG -00991 Gilroy CFD Hwy 152 2002 execution 13 practicable following receipt of such notice, but in any event no later than the close of business on the Business Day following receipt of such notice, deliver to CDCFC the Collateral so specified for withdrawal against delivery by CDCFC of such substitute Collateral. (0 Reeistration and Replete of Collateral. Except after the occurrence and during the continuation of an Event of Default, the Collateral Agent may not sell, pledge or otherwise dispose of Collateral or any interest therein except for redelivery of Collateral to CDCFC or the pledgor thereof. (g) Remedies. If any Event of Default shall occur and be continuing, the Collateral Agent at the direction of the Fiscal Agent shall, to the extent permitted by applicable law, (i) be entitled to exercise any of the rights and remedies of a secured party with respect to the Collateral, including any such rights and remedies under the Uniform Commercial Code and, in addition, (ii) following notice to CDCFC to the extent required by applicable law but without demand of performance, terminate this Agreement and sell the Collateral or any part thereof, in one lot or in separate parcels, for cash or on credit or on future delivery, at the option and at the sole discretion of the Collateral Agent, at any public or private sale, and at such price or prices as the Collateral Agent (at the direction of the Fiscal Agent) may deem appropriate. If the purchaser fails to take up and pay for the Collateral so sold, such Collateral may again be similarly sold. The Collateral Agent, the Fiscal Agent or CDCFC may be the purchaser of any or all of the Collateral sold and thereafter shall hold such Collateral free from any right of redemption, stay or appraisal; provided, however, no Collateral consisting of securities may be purchased in a private sale for less than the fair market value of such securities. (h) Application of Proceeds. The proceeds of any sale of all or any part of the Collateral pursuant to this Part IL1 shall be applied by the Collateral Agent first to all reasonable expenses and fees (including, without limitation, reasonable fees and expenses of legal counsel) or taxes imposed or incurred, after the occurrence of an Event of Default, in connection with (i) the custody, care, sale or collection of, or realization upon, any of the Collateral or, (ii) the preservation or enforcement of any rights of the Collateral Agent hereunder and second to the payment of the obligations of CDCFC hereunder. CDCFC shall remain liable for any such obligations remaining unpaid from the foregoing proceeds and shall be entitled to any surplus after any application of such proceeds. (i) Other Requirements. All Collateral delivered to the Collateral Agent hereunder shall be segregated by the Collateral Agent from other assets of the Collateral Agent, the Fiscal Agent or any other person. The Collateral Agent shall prepare and deliver to CDCFC by the 20th calendar day of each month a report specifying the identity and location of all Collateral as of the end of the month preceding such report. So long as an Event of Default has not occurred nor is continuing, all payments of interest or other amounts payable on any Collateral delivered to the Collateral Agent hereunder shall be remitted by the Collateral Agent to CDCFC on the date of receipt thereof (if such payments are received by the Collateral Agent by 1:00 p.m. (New York time) or on the Business Day following the date or receipt (if such payments are received by the Collateral Agent after 1:00 p.m. (New York time). 0) Collateral Agent Fees. CDCFC shall bear all fees, costs and expenses of the Collateral Agent with regard to Collateral with respect to this Agreement. Part II.2 Collateral Definitions. "Collateral" means (i) cash and securities issued or guaranteed by the United States Government, including United States Treasury obligations and any other obligations the timely payment of the principal of and interest on which are guaranteed by the United States Government ( "Government Securities "), and (ii) bonds, notes, debentures, obligations or other evidences of indebtedness issued or guaranteed by the Government National Mortgage Association ( "GNMAs "), Fannie Mae ( "FNMs ") or Federal Home Loan Mortgage Corporation ( "FHLMCs "), or any other agency or instrumentality of the United States or America including but not limited to, mortgage participation certificates, mortgage pass- through certificates, and other mortgage- backed securities. "Collateral Agent " means Bankers Trust Company or, if mutually agreed to by the Fiscal Agent and CDCFC, any other third -party custodian or collateral agent. shared' (g) lagmtslfundinglform_doclG -00991 Gilroy CFD Hwy 152 2002 execution 14 "Collateral Requirement Level " means with respect to Government Securities, GNMAs, FNMAs and FHLMCs, 103% of the outstanding principal balance of the Investment secured thereby and accrued and unpaid Earnings thereon. "Collateral Valuation Date" means each Tuesday or if such day is not a Business Day the next succeeding Business Day. "Collateral Value" as of any date means, in the case of cash, the amount thereof and, in the case of other Collateral, at any time the closing bid price for such Collateral on the preceding Business Day as reported in The Wall Street Journal (or such other source as is mutually agreed upon by the Fiscal Agent and CDCFC) plus accrued and unpaid interest to the extent not included therein. shared' (g)lagmtslfun ding lform_doclG -00991 Gilroy CFD Hwy 152 2002 execution 15 Part III -- Notices and Wire Instructions A. Notices and communications to the parties should be directed to: If to CDCFC: CDC Funding Corp. 9 West 57°i Street, 36'h Floor New York, New York 10019 Attention: Michael P. Frasco Telephone No.: (212) 891 -6202 Facsimile No.: (212) 891 -3319 If to the Fiscal Agent: Union Bank of California, N.A. Corporate Trust Department 475 Sansome Street, 12`h Floor San Francisco, CA 94111 Attention: Douglas Schlafer Telephone No.: (415) 296 -6747 Facsimile No.: (415) 296 -6757 Email: Doti gl as. schlafer &uboc.com If to the Issuer: City of Gilroy 7351 Rosanna Street Gilroy, CA 95020 Attention: Michael Dorn Telephone No.: (408) 846 -0212 or 0204 Facsimile No.: (408) 846 -0500 Email: mdorn &ci. igilroy ca.us B. Wire Transfer Infonnation - unless otherwise designated, wire instructions and transfers shall be made as follows: If to CDCFC: FEDERAL FUNDS WIRE TRANSFER TO BANK NAME: BANKERS TRUST COMPANY, NEW YORK, NEW YORK ABA NO.: 021 001 033 FOR: CDC FUNDING CORP. DDA ACCT. NO.: 008 78 411 REFERENCE: GILROY CFD (HWY 152) 2002 G- 00991 -001 (Cap Int Acct) G- 00991 -002 (Reserve Fund) If to the Fiscal Agent: FEDERAL FUNDS WIRE TRANSFER TO: BANK NAME: Union Bank of California, N.A. ABA NO.: 122000496 TRUST DEPT / TRUSDG / BRANCH 262 FCC: If to Reserve: 6711700004 / GILROY 2002 RESERVE If to Cap Interest: 6711700002 / GILROY 2002 CAPINT shared' (g)Iagintslfun ding lfor:n_doclG -00991 Gilroy CFD Hwy 152 2002 execution 16 EXEIIBIT B FORM OF WITHDRAWAL/DEPOSIT REQUEST (FOR FLEX WITHDRAWAL/DEPOSIT DATES THAT ARE NOT ALREADY SCHEDULED IN THE INVESTMENT AGREEMENT) [Letterhead of Fiscal Agent] [Date] CDC FUNDING CORP. 9 West 57th Street New York, New York 10019 Attention: Helen Tellas Fax: (212) 891 -6290 Phone: (212) 891 -6161 Re: Investment Agreement, dated as of February 11, 2003 by and between CDC FUNDING CORP. ( "CDCFC ") and UNION BANK OF CALIFORNIA, N.A. (the "Fiscal Agent "). The undersigned hereby requests a withdrawal /deposit pursuant to the above - referenced Investment Agreement as set forth below: CDC FUNDING CORP. REFERENCE: GILROY CFD (HWY 152) 2002 G- 00991 -001 (Cap Int Acct) G-00991-002 (Reserve Fund) INVESTMENT /FUND TO BE WITHDRAWN /DEPOSITED: DATE OF WITHDRAWAL /DEPOSIT: NOTICE DAYS: AMOUNT: PURPOSE OF WITHDRAWAL /DEPOSIT: Payment instructions, including bank, ABA #, account number, account name, reference: Telephone Number of Fiscal Agent: The above request has been reviewed against the terms contained in the above - referenced Investment Agreement, including the applicable notice period for with and is in accordance with the terms and conditions thereof. Name: Title: Please confirm receipt of this [fax] by CDC FUNDING CORP. with Helen Tellas at telephone number (212) 891 -6161. shared' (g)Iagmtslfun ding lforn2_doclG -00991 Gilroy CFD Hwy 152 2002 execution 17