Loading...
HomeMy WebLinkAboutTrinity Plus Funding Co LLC; 1999-12-22;EXECUTION COPY COLLATERALIZED INVESTMENT AGREEMENT This INVESTMENT AGREEMENT, dated as of December 22, 1999 (this "Agreement"), between TRINITY PLUS FUNDING COMPANY, LLC, a New York limited liability company (the "Provider") and CITY OF CARLSBAD, CALIFORNIA (the "Issuer") relating to the issuance of the Issuer's Limited Obligation Refunding Improvement Bonds Reassessment District No. 97-1 (Alga Road and College Boulevard) (the \Bonds"), WITNESSETH: WHEREAS, the Fiscal Agent Agreement (as defined below) establishes various trust funds and accounts for the receipt and disbursement of moneys, all as more fully set forth in the Fiscal Agent Agreement; and WHEREAS, the Issuer is authorized by the Fiscal Agent Agreement to invest certain moneys held in or credited to the Fund (as defined below) under the Fiscal Agent Agreement with the Provider pursuant to the terms and provisions of this Agreement; and WHEREAS, the Provider is willing, on the terms and conditions set forth in this Agreement, to accept such moneys as an investment by the Issuer; NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the Provider and the Issuer 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 Fiscal Agent Agreement. Defined terms referenced herein from the Security Agreement are described in the Information Statement. "Approved Wire Time" means 2:30 p.m., New York time. -Business Day" shall have the meaning set forth in Exhibit A hereto. , "Collateral" means Qualified Investments in the Collateral Account relating to this Agreement held by the Collateral Agent as provided herein and in the Collateral Agent Agreement. "Collateral Account" means an Collateral Account established by the Collateral Agent pursuant to the terms hereof and in accordance with the Collateral Agent Agreement and the Security Agreement. "Collateral Agent" means the party agreeing to serve as Collateral Agent hereunder pursuant to the Collateral Agent Agreement, or any replacement therefor appointed by the Provider and consented to by the Issuer (which consent shall not be unreasonably withheld) that shall agree pursuant to the Collateral Agent Agreement to establish and hold funds and Collateral in the Collateral Account in accordance with the terms of this Agreement. Any Collateral Agent appointed must be a U.S. bank or trust company having combined capital, surplus and undivided profits of at least $25 million. "Collateral Agent Agreement" means the agreement substantially in the form of Exhibit E hereto, between the Collateral Agent and the Provider. "Collateral Requirement Level" means the Collateral requirement level specified in Exhibit A. "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 average of the closing bid and offer prices for such Collateral on the preceding Business Day as reported in Bloornberg Pricing Service (or such other source as is mutually agreed upon by the Issuer and the Provider) plus accrued and unpaid interest to the extent not included therein. "Earnings" means 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. "Fiscal Agent Agreement" means the Fiscal Agent Agreement, dated as of December 1, 1997 by and between the Issuer and First Trust of California, National Association, as amended and supplemented through and including the date of this Agreement. 2 - m Fund" means the Reserve Fund established with respect to the Bonds pursuant to the Fiscal Agent Agreement. "GE Capital" means General Electric Capital Corporation, a New York banking corporation. "Interest Payment Date" has the meaning given that term in Exhibit A hereto. "Information Statement" means Confidential Information Memorandum, dated May 1, 1999, relating to the Provider. "Investment" shall have the meaning given to such term in Section 2.1 hereof. "Investment Date" has the meaning given that term in Exhibit A hereto. *Member" shall have the meaning given that term in the Limited Liability Company Law of New York. "Moody's" means Moody's Investors Service or any successor thereto. "Permitted Withdrawal Purpose" means purposes for which the Fund may be withdrawn pursuant to the Fiscal Agent Agreement; provided, however, that under no circumstances may withdrawals be made for the purpose of reinvestment or in connection with the provision of a surety bond, letter of credit or similar instrument within the Fund. "Portfolio Adviser" shall mean the FGIC MRCA Corp. or any successor thereto specified in the Investment Administration Agreement, dated as of June 23, 1997, between the Provider and FGIC MRCA Corp., as amended and supplemented. "Program Event of Default" has the meaning given that term in the Security Agreement, as described in the Information Statement. \Provider" means TPFC and any successor thereto as the Provider hereunder. "Qualified Investments" mean (i) 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, (ii) bonds, notes, debentures, obligations or other evidences of indebtedness issued or guaranteed by the Federal National Mortgage Association or 3 -- Federal Home Loan Mortgage Corporation, or any other agency or instrumentality of the United States of America, including, but not limited to, mortgage participation certificates, mortgage pass-through certificates, collateralized mortgage obligations and other mortgage-backed securities, and (iii) cash. 'Rate of Earnings" has the meaning given that term in Exhibit A hereto. "Security Agreement" means the Collateral Trust and Security Agreement, dated as of June 23, 1997, between TPFC, GE Capital and the Security Trustee. "Security Trustee" means Bankers Trust Company in its capacity as security trustee under the Security Agreement or any successor thereto appointed pursuant to Section 8.06 of the Security Agreement. \S&P" means Standard & Poor's Ratings Group or any successor thereto. "Termination Date" has the meaning given that term in Exhibit A hereto. "TPFC" means Trinity Plus Funding Company, LLC, a New York limited liability company. SECTION 2. INVESTMENTOFFUNDS 2.1 The Investment. On the terms and subject to the conditions herein set forth, the Issuer shall invest with the Provider and the Provider shall accept as an investment from the Issuer amounts as set forth on Exhibit A hereto, which amounts constitute funds received by the Issuer for deposit in the Fund pursuant to the Fiscal Agent Agreement (such amounts herein referred to as the "Investment"). The Investment shall be payable by the Issuer to the Provider by wire transfer in immediately available funds in accordance with the payment instructions specified in Exhibit B hereto by the Approved Wire Time on the applicable Investment Date in accordance with Exhibit A and Section 2.4 hereof. The Provider may, but shall not be obligated to, accept the Investment described above (or any portion thereof) on any date other than the applicable Investment Date. In the event that the Investment described above (or any portion thereof) is not delivered to the Provider on the applicable Investment Date and the Provider does not elect in its sole discretion to accept such Investment (or portion thereof) on a later date, this Agreement shall terminate in respect of any portion of such Investment not so accepted by the Provider, provided that, only with respect to any additions to the 4 - Investment made pursuant to the terms of Exhibit A hereto, the Issuer shall be liable for any damages, expenses or losses suffered or incurred directly or indirectly by the Provider or any of its affiliates as a result of such nondelivery. 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 the Provider to but excluding the earlier of the applicable Termination Date and the date remitted to the Issuer as provided herein, at the Rate of Earnings with respect thereto, provided that no interest will accrue on or after the applicable Termination Date. Earnings shall be payable in arrears by the Provider to the Issuer on each Interest Payment Date. 2.3 Withdrawal. The Issuer may make withdrawals from each Investment for applicable Permitted Withdrawal Purposes on any Business Day, in each case in such amount as the Issuer shall specify in a written notice in the form of Exhibit C-l hereto received by the Provider at least two Business Days prior to the date specified for any such withdrawal; provided, however, that (i) the Issuer shall not (x) require payment to be made by the Provider earlier than one Business Day prior to the date on which such amounts are to be applied pursuant to the terms and conditions of the Fiscal Agent Agreement or (y) require payment by the Provider in any amount greater than the amount to be so applied by the Issuer for Permitted Withdrawal Purposes; (ii) the Issuer shall not call for any withdrawal in an amount less than $5,000; (iii) the Issuer shall not call for more than two withdrawals per calendar month from the Investment; and (iv) the notice delivered by the Issuer shall specify the amount and date of the withdrawal and shall certify that (x) the withdrawal is being made for Permitted Withdrawal Purposes only, (y) the entire amount being withdrawn will be applied by the Issuer for Permitted Withdrawal Purposes within three Business Days of the withdrawal and (z) all amounts on deposit in the Fund are included in the related Investment or, alternatively, that the total amount being withdrawn hereunder is being drawn only after all other amounts, investments or sources of funding on deposit in such Fund have been drawn upon, redeemed or otherwise utilized in full. If not earlier repaid in full pursuant to this Section or the other provisions hereof, the outstanding principal balance of the Investment, together with all unpaid Earnings thereon, shall be repaid in full on the Termination Date. The principal amount of the Investment may not be withdrawn by the Issuer, and shall not be repayable by the Provider, for any reason except as expressly provided in this Section 2.3 or in Section 3.2 or 5.2 hereof. 5 Any payment due under this Agreement on a day that is not a Business Day shall be due and payable as specified in Exhibit A hereto. 2.4 Wire Transfers. Amounts to be paid hereunder by the Issuer to the Provider shall be paid by the Approved Wire Time by wire transfer of immediately available funds to the Provider's account in accordance with the instructions set forth in Exhibit B hereto or to such other account pursuant to such other instructions as the Provider shall so designate, such designation to be made in writing not less than two Business Days prior to the date of transfer. Unless otherwise agreed to by the Provider, payments to the Provider to be credited as the Investment hereunder shall be deemed made by the Approved Wire Time only if the Provider has received, prior to the Approved Wire Time, either (a) confirmation of the amount of the Investment and the federal funds wire transfer number therefor, or (b) receipt of funds in its account designated in Exhibit B or otherwise designated as set forth above. Any payments to the Provider made or deemed made after the Approved Wire Time shall be treated hereunder as if made on the next Business Day. Amounts to be paid hereunder by the Provider to the Issuer shall be paid by the Approved Wire Time by wire transfer of immediately available funds to the account designated by the Issuer in Exhibit B hereto or to such other account as the Issuer shall so designate, such designation to be made in writing not less than two Business Days prior to the date of transfer. Any fees or costs associated with the transfer of funds hereunder shall be paid by the transferor of the funds. 2.5 Required Notices by Issuer. In addition to all other notices required hereby, the Issuer shall give the Provider (a) thirty days, prior written notice of any advance or other refunding of the Bonds, and (b) notice of any amendments to the Fiscal Agent Agreement. The Issuer shall give the Provider notice of any changes to the draw schedules provided to the Provider with the bid specifications relating to this Agreement. SECTION 3. TERMINATION 3.1 Termination. This Agreement shall terminate with respect to each Investment on the applicable Termination Date, unless earlier terminated in accordance with its terms. 3.2 Credit Events. If any Credit Event shall occur and be continuing then, unless a Program Event of Default has occurred, the Provider shall provide prompt notice thereof referencing the provisions of this Section 3.2 to the Issuer and the Issuer and shall have the right (but not the obligation) within (ten) 10 6 Business Days following the Credit Date (the "Remedial Action Period") to transfer this Agreement and its rights and obligations hereunder to an affiliate of GE Capital or an entity approved by the Issuer, provided that the long term and short term ratings of such transferee or the entity guaranteeing the obligations of such transferee are at least AA/A-l+ by S&P and Aa2/P-1 by Moody's, respectively. If the Provider does not satisfy the requirements of above within the Remedial Action Period: (1) it shall give immediate notice to that effect to the Issuer (the "No Action Notice") ; (2) the Issuer shall have the right, prior to the end of the eight (8) Business Day period succeeding the Remedial Action Period, at the direction of the Issuer, to give notice that it intends to keep this Agreement outstanding; and (3) if the Issuer does not so affirmatively request that this Agreement remain outstanding prior to the close of the eighteenth (18th) Business Day after the Credit Date, the Provider shall be obligated to repay the entire balance of the Investment then on deposit, together with all unpaid Earnings thereon on the nineteenth (19th) Business Day after the applicable Credit Date. Upon such repayment, this Agreement shall terminate. Notwithstanding the foregoing, in the event that the higher of (x) the applicable long term rating of the Provider or the entity provided in accordance with the first paragraph of this Section 3.2, and (y) the rating category applicable to the Collateral pursuant to the guidelines of Moody's and S&P, as applicable, is below *A-" or "A3" by S&P or Moody's, respectively, and Provider does not, within ten Business Days of the publication of the downgrade resulting in such rating provide a replacement obligor meeting the requirements set forth in the first paragraph of this Section 3.2, the Issuer may withdraw the entire balance of the Investment upon written notice given at least ten Business Days prior to the date of withdrawal. SECTION 4. coLLATERAL 4.1 Provision of Collateral. The Provider hereby grants to the Collateral Agent for the benefit of the Issuer a first perfected security interest in and to all Qualified Investments to be held by the Collateral Agent in the Collateral Account. The Collateral Value of the Qualified Investments initially deposited in the Collateral Account shall equal the Collateral Requirement Level. Qualified Investments shall be delivered in accordance with Section 2.02 of the Security Agreement. (4 Collateral Valuation. The Collateral Agent shall, promptly following the opening of business on each Collateral Valuation Date determine the aggregate Collateral Value of 7 .- Collateral held by the Collateral Agent pursuant to this Section 4.1. Upon such determination, the Collateral Agent shall notify the Provider and the Issuer by facsimile transmission or other telecommunication equipment on such date of such amount and provide the Provider and the Issuer any information that the Provider and the Issuer may reasonably request regarding the determination thereof. If such amount is less than the Collateral Requirement Level on such Collateral Valuation Date, the Provider shall, before the close of business on the second Business Day following the date of such determination, arrange for delivery to the Collateral Agent of additional Qualified Investments having an aggregate Collateral Value on such day not less than the amount of such deficiency. The Provider shall give the Collateral Agent notice prior to 4:00 P.M. New York time on each Collateral Valuation Date, of the amount of the Investment as of such Collateral Valuation Date. (b) Withdrawal of Collateral. The Provider shall, by giving electronic notice via the Collateral Agent's electronic custodian system (such notice to be promptly confirmed by telephone) 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 Section 4.1 exceeds the Collateral Requirement Level on such Collateral Valuation Date. Such notice shall specify the Collateral to be withdrawn. Collateral shall also be liquidated and withdrawn by the Collateral Agent pursuant to the instructions of the Provider, for remittance to the Issuer in satisfaction of any required withdrawal or repayment of the Investment hereunder. In addition, the Provider shall be entitled to direct transfer of 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 the Provider has paid to the Issuer the balance of the Investment in accordance with the terms of this Agreement, together with all Earnings thereon. Such notice shall specify the Collateral to be withdrawn. The Collateral Agent shall deliver to the Provider 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 and agreements. (cl Substitution of Collateral. The Provider shall, by giving electronic notice via the Collateral Agent's electronic custodian system (such notice to be promptly confirmed by telephone) to the Collateral Agent, be entitled on any Business Day to substitute for any Collateral other Collateral having the same or a greater Collateral Value at the time of substitution. 8 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 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, deliver to the Provider or its designee the Collateral for withdrawal against delivery of such substitute Collateral as specified by the Provider in such notice. Any such notice shall constitute a representation and warranty by the Provider to the Collateral Agent that the aggregate Collateral Value of the substitute for any Collateral to be withdrawn is equal to or greater than the Collateral to be withdrawn, and the Collateral Agent shall be entitled to rely upon and shall have no liability in connection with the deemed representation. (d) Registration and Repledge of Collateral. Except as provided in Section 5 after the occurrence and during the continuation of an Event of Default of which it has received notice, the Collateral Agent may not sell, pledge or otherwise dispose of any Collateral or any interest therein except for redelivery of Collateral to the Provider or the pledgor thereof. (e) Remedies. (1) If the Issuer shall have exercised the right to declare the entire balance of the Investment and all accrued and unpaid Earnings thereon to be due and payable upon an Event of Default other than a Program Event of Default, pursuant to Section 5.2 hereof, the Collateral Agent at the direction of the Issuer, shall sell the Collateral or any part thereof, in one lot or in separate parcels, for cash or on credit or for future delivery, at the option of the Collateral Agent at the direction of the Issuer, at any public or private sale, and at such price or prices as the Collateral Agent at the direction of the Issuer may deem appropriate, upon two Business Days' prior notice to the Collateral Agent and the Provider of its intention to sell and of the time and place of sale. If the purchaser fails to take up and pay for the Collateral so sold, such Collateral may again be similarly sold. The Collateral Agent or the Issuer 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, that in the sale of securities neither the Collateral Agent nor the Issuer shall be entitled to purchase any of the Collateral at any private sale for less than the market value of such securities. (2) If a Program Event of Default shall occur, the Collateral Agent shall provide immediate notice to the Security Trustee and the Provider of the Collateral Value of all Collateral and other assets in the Collateral Account, and take such actions and have such additional rights as set forth in Section 6.02(b) of the Security Agreement. Not later than fourteen Business Days from 9 the date of said Program Event of Default the Collateral Agent shall apply the proceeds of the Collateral Account to payment of its expenses and amounts due to the Issuer and Security Trustee as set forth below. The Collateral Agent shall give immediate notice to the Provider and the Security Trustee of distributions pursuant to subsection (f), below. (f) Application of Proceeds. The proceeds of any sale of all or any part of the Collateral pursuant to this Section 4.1 shall be applied by the Collateral Agent first to pay costs, expenses and fees of the Collateral Agent in connection with the liquidation other than, in the event that a Program Event of Default has occurred, Deferred Expenses (as defined in the Security Agreement) and second to the payment of the obligations of the Provider to the Issuer due and payable hereunder and third, any excess proceeds shall be transferred to the Security Trustee for deposit in the Facility Account under the Security Agreement or, if TPFC is no longer the Provider, to the applicable Provider. The Provider 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. (9) 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 Issuer or any other person. The Collateral Agent shall prepare and deliver to the Provider by the 20th calendar day of each month a report specifying the identity and principal amount of all Collateral as of the end of the month preceding such report. Provided that an Event of Default or Program Event of Default shall not have occurred and be 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 the Facility Account under the Security Agreement or, if TPFC is no longer the Provider to the applicable Provider, 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 of receipt (if such payments are received by the Collateral Agent after 1:00 p.m. (New York time)). 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) A failure by the Provider to make any payment of the Investment or Earnings when due pursuant to the provisions of this Agreement and the continuation of such failure for one 10 Business Day or more after the Issuer gives the Provider written notice thereof. (b) the occurrence of a Program Event of Default under the Security Agreement. (c) A failure by the Provider to perform or observe any of its material obligations under this Agreement (other than those described in Section 5.1(a) hereof) and the continuation of such failure for five Business Days or more after written notice thereof is given by the Issuer to the Provider with a copy to the Collateral Agent if a Collateral Account has been established with respect to this Agreement. 5.2 Rights and Obligations of Parties upon an Event of Default. Upon the occurrence of any Event of Default other than a Program Event of Default, the Issuer shall have the right to declare the entire balance of the Investment and all accrued and unpaid Earnings thereon to be due and payable immediately and to withdraw such entire balance and unpaid Earnings. Upon the occurrence of a Program Event of Default under the Security Agreement, the entire balance of the Investment and all accrued and unpaid Earnings thereon shall be immediately due and payable to the Issuer. If, as a result of the occurrence of an Event of Default, the entire balance of the Investment and all unpaid Earnings are so withdrawn by or paid to the Issuer, this Agreement shall be terminated on the date of such withdrawal or payment as if such date were the Termination Date. SECTION 6. REPRESENTATIONS AND WARRANTIES 6.1 Issuer Representations and Warranties. The Issuer represents and warrants to the Provider that: (i) it understands that neither the Provider nor any person representing the Provider has made any representation to it with respect to the Provider or the offering or sale of this Agreement other than as expressly set forth herein or in the Information Statement relating to the Provider; (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 constitutes a legal, valid and binding obligation enforceable against such party 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; (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 11 its assets; and (vi) all amounts deposited as the Investment hereunder are funds held by the Issuer pursuant to the Fiscal Agent Agreement. The Issuer hereby makes the representations set forth in Exhibit D and represents and warrants to the Provider that any fees paid by the Provider in connection with the provision of this Investment Agreement have been paid on the Issuer's behalf for services rendered to the Issuer or its agents. 6.2 Provider Representations and Warranties. The Provider represents and warrants to the Issuer that: (i) it is duly authorized to enter into this Agreement and the transactions contemplated hereby; (ii) this Agreement constitutes a legal, valid and binding obligation of the Provider enforceable against the Provider 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; (iii) the execution, delivery and performance of this Agreement by the Provider 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 the Provider or its assets, and (iv) it is authorized to issue Contracts pursuant to Section 4.02 (a) of the Security Agreement. SECTION 7. LIMITATION ON THE PROVIDER'S OBLIGATIONS 7.1 Limited Obligation. In performing its obligations hereunder, neither the Provider nor any of its directors, officers, incorporators, employees, members, 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 Issuer of any moneys payable to the Issuer hereunder; (iii) any acts or omissions of the Issuer, or the parties to the Fiscal Agent Agreement or any other agreement or instrument with respect to the Bonds; (iv) the validity or enforceability of the Bonds or the Fiscal Agent Agreement or any other agreement or instrument with respect to the Bonds; (v) the Issuer's performance of its obligations under this Agreement, the Bonds, or the Fiscal Agent Agreement or any other agreement or instrument with respect to the Bonds; (vi) the effect of the negotiation, delivery and performance by the Provider of this Agreement on the tax-exempt status of the Bonds; (vii) any charges, impositions or penalties incurred by any party arising from performance in accordance with the terms of this Agreement; (viii) any other matter relating to any of the foregoing. Without limiting the foregoing, regardless of whether the 12 Provider has reviewed the Fiscal Agent Agreement or is generally familiar with the terms of Fiscal Agent Agreements or bond resolutions of a similar type, the Provider shall have no duty to comply with the terms of the Fiscal Agent Agreement or to ascertain whether the Issuer is in compliance therewith. The Issuer recognizes that the Provider (or its affiliates) may have other business relationships with the Issuer 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 the Provider to segregate or otherwise separately identify or account for any portion of invested funds and the Provider may aggregate all the invested funds for accounting purposes. The Issuer shall maintain complete and accurate records identifying the principal amount of the Investment held by the Issuer for or credited to the applicable funds and accounts under the Fiscal Agent Agreement. 7.2 Limited Recourse. The obligations of the Provider under this Agreement are solely the corporate obligations of the Provider. No recourse shall be had for the payment of any payment due hereunder or any other obligation or claim arising out of or based upon this Agreement against any Member, shareholder, employee, officer, director, organizer, or agent of the Provider or any shareholder, employee, officer, director, incorporator or agent of any Member. Any accrued obligations owing by the Provider under this Agreement shall be payable by the Provider solely to the extent that funds are available therefor from time to time in accordance with the provisions of the Security Agreement, as described in the Information Statement (and such accrued obligations shall not be extinguished until paid in full). SECTION 8. MISCELLANEOUS 8.1 Information Regarding the Provider. 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 the Provider, including the name of the Provider, without the Provider's prior written consent. 8.2 No Waiver. No failure or delay on the part of the Provider or the Issuer 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 the Provider and the Issuer 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 Issuer and the Provider. None 13 of the terms or provisions of this Agreement may be waived, modified or amended, except in writing duly executed by the Provider and the Issuer. 8.3 Survival. All warranties and representations made by the Issuer or the Provider 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. 8.4 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. Notwithstanding the foregoing, this Agreement, and the obligations and rights arising under this Agreement or any part hereof, may not be sold, pledged or assigned or otherwise transferred by the Provider 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 any successor to the Issuer z Issuer under the Fiscal Agent Agreement shall be considered a successor in interest to the Issuer to this Agreement without the necessity of obtaining the prior written consent of the Provider; and provided further that this Section shall not affect any pledge or grant of any Fund to the Issuer on behalf of Bondholders under the Fiscal Agent Agreement. 8.5 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 such State. 8.6 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. 8.7 Counterparts. This Agreement may be executed in several counterparts and, as so executed, shall constitute one agreement binding upon the parties hereto. 8.8 Integration of Terms. This Agreement, including the Exhibits hereto, 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 14 elsewhere in this Agreement, the terms of Exhibit A shall be deemed controlling. 8.9 Interpretation. The headings of the articles and sections hereof are for convenience of reference only and shall not affect the meaning or construction of any provision hereof. 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 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, electronic means or other telecommunication equipment, in any case addressed to the attention of any of the persons listed on Exhibit B 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 Legend. THIS AGREEMENT HAS NOT BEEN NOR WILL BE REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT" ) , OR THE SECURITIES LAWS OF ANY STATE OR TERRITORY, AND, THIS AGREEMENT 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 EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. BY ITS EXECUTION OF THIS AGREEMENT, THE ISSUER AGREES THAT THIS AGREEMENT IS BEING ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR SALE IN CONNECTION WITH, THE PUBLIC DISTRIBUTION THEREOF. 8.12 Security Agreement. This Agreement is and shall be deemed to be a Contract as such term is used in the Security Agreement. The Issuer accepts and agrees to the payment priorities and other terms relating to Contracts set forth in the Security Agreement, as described in the Information Statement. [THIS SPACE INTENTIONALLY LEFT BLANK] 15 8.13 Ratings. All references to ratings of Moody's or S&P 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. 8.14 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 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 hereto and their successors and permitted assigns. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written. TRINITY PLUS FUNDING PklPANl?, LLC By: CITY OF C$RLSBAD, CALIFORNIA , - By: iL title: tpl07a.doc - EXHIBIT A Principal Terms 1. Investment Amount: 2. Investment Date: $1,847,500. Additions to the Investment shall be permitted in amounts which are required to be deposited in the Fund pursuant to the Fiscal Agent Agreement; provided, however, that (a) the aggregate amount of the Investment on deposit with the Provider shall not exceed $1,847,500 at any time; (b) the Issuer shall not make any additions to the Investment with the Provider in amounts less than $5,000; (cl not more than one such addition to the Investment shall be permitted per calendar month; and (d) the Issuer shall give the Provider written notice in the form set forth in Exhibit C-2 hereto at least two Business Days prior to making any such addition, which notice shall specify the amount of such addition and shall indicate that it is for deposit in the Investment. The Issuer agrees, to the extent permitted by the terms set forth above and the terms of this Agreement, to promptly deposit all amounts in the Fund not being utilized within two Business Days for Permitted Withdrawal Purposes in the Investment. December 22, 1999 with respect to the initial Investment and any date specified in a notice to the Provider, described in item 1. (d) above, with respect to an addition to the Investment. A-l 3. Rate of Earnings: 4. Interest Payment Date: 6.40% per annum, calculated on the basis of a 360-day year composed of twelve 30-day months. The first Business Day prior to each March 2 and September 2, commencing on the Business Day immediately preceding March 2, 2000, and on the Termination Date. 5. Termination Date: September 2, 2011, or if such day is not a Business Day, the next succeeding Business Day. 6. Collateral Requirement Level: On any date of calculation, with respect to Qualified Investments in subsection (i) of the definition thereof 104% of the Investment secured thereby; with respect to Qualified Investments in subsection (ii) of the definition thereof 105% of the Investment Secured thereby; and with respect to Qualified Investments in subsection (iii) of the definition thereof 100% of the Investment secured thereby. 7. Provider Reporting: 8. Payment Convention: The Provider shall send or cause to be sent monthly reports to the Issuer setting forth the amount of each outstanding Investment, deposits and withdrawals with respect thereto, and interest accrued and paid thereon. To the extent that the Provider knows or has received notice of any Program Event of Default, the Provider shall give immediate notice of such Program Event of Default to the Issuer and the Collateral Agent. Except as otherwise provided herein, any payment due under this Agreement on a day that is not a Business Day shall be due and payable on the next succeeding Business Day A-2 9. 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 the City of New York are authorized or required by law or executive order to close. A-3 EXHIBIT B Notices and communications to the parties should be directed to: If to the Provider Trinity Plus Funding Company, LLC c/o FGIC MICA Corp. 115 Broadway New York, New York 10006 Attention: William McPartland Operations Manager Telephone No.: (212) 312-3469 Telecopier No.: (212) 312-3460 If to the Issuer: City of Carlsbad 1635 Faraday Avenue Carlsbad, California 92008 Attention: Finance Director Telephone No.: (760) 602-2430 Telecopier No.: (760) 602-8553 If to the Collateral Agent: Bankers Trust Company Corporate Trust and Agency Group 4 Albany Street, 10th Floor New York, New York 10006 Attention: Structured Finance Telephone No.: (212) 250-6513 Telecopier No.: (212) 250-6439 Wire Transfer Information - unless otherwise designated as provided herein, wire instructions and transfers shall be made as follows: If to the Provider: FEDERAL FUNDS WIRE TRANSFER TO: Bankers Trust Company, New York, New York ABA NUMBER: 021001033 A/C: 999-111-96 F/C/T a/c 091791 - Trinity Plus F/F/C a/c 091628(Collateral Account) REFERENCE: Carlsbad 97-1 If to the Issuer: FEDERAL FUNDS WIRE TRANSFER TO: City of Carlsbad Wells Fargo Bank ABA NUMBER: 121000248 A/C: 4159281716 REFERENCE: Reassessment 97-l If to the Collateral Agent: Bankers Trust Company Corporate Trust and Agency Group 4 Albany Street, 10th Floor New York, New York 10006 Attention: Structured Finance Telephone No.: (212) 250-6513 Telecopier No.: (212) 250-6439 EXHIBIT C-l FORM OF DRAW REQUEST (FOR FLEX WITHDRAWALS THAT ARE NOT ALREADY SCHEDULED IN THE INVESTMENT AGREEMENT) [Letterhead of Issuer] Trinity Plus Funding Company, LLC 115 Broadway New York, New York 10006 Attention: Bill McPartland, Operations Manager Fax: l-212-312-3460 Phone: 1-212-312-3469 Re: Investment Agreement, dated as of December 22, 1999, between the City of Carlsbad, California and Trinity Plus Funding Company, LLC The undersigned hereby requests a withdrawal pursuant to the above-referenced Investment Agreement as set forth below: INVESTMENT FROM WHICH WITHDRAWAL IS TO BE MADE: REQUESTED WITHDRAWAL DATE: NOTICE DAYS: AMOUNT: PURPOSE OF WITHDRAWAL: Payment instruction, if different than those contained in the Investment Agreement: Telephone Number of Issuer: The above request has been reviewed against the terms contained in the above-referenced Investment Agreement, including the applicable notice period for withdrawals, and is in accordance with the terms and conditions thereof. THE CERTIFICATIONS REQUIRED BY SECTION 2.3 OF SAID INVESTMENT AGREEMENT ARE ATTACHED HERETO. Name: Title: Date Please confirm receipt of this [fax] by Trinity Plus Funding Company, LLC at telephone number 1-212-312-3469. EXHIBIT C-2 FORM OF NOTICE of ADDITION TO INVESTMENT (FOR ADDITIONAL DEPOSITS TO THE INVESTMENT THAT ARE NOT ALREADY SCHEDULED IN THE INVESTMENT AGREEMENT) [Letterhead of Issuer] Trinity Plus Funding Company, LLC 115 Broadway New York, New York 10006 Attention: Bill McPartland, Operations Manager Fax: l-212-312-3460 Phone: 1-212-312-3469 Re: Investment Agreement, dated as of December 22, 1999, between the City of Carlsbad and Trinity Plus Funding Company, LLC The undersigned hereby notifies the above addressee pursuant to the above-referenced Investment Agreement of an addition to the Investment thereunder as set forth below: INVESTMENT TO WHICH DEPOSIT IS TO BE ADDED (insert applicable Investment where above-referenced Investment Agreement specifies more than one Investment under the definition of such term): REQUESTED DEPOSIT DATE: NOTICE DAYS: AMOUNT: Telephone Number of Issuer: The above request has been reviewed against the terms contained in the above-referenced Investment Agreement, including the applicable notice period for additions to the applicable Investment, and is in accordance with the terms and conditions thereof. All amounts to be deposited in the Investment are on deposit in the related Fund. Terms used herein and not defined shall have the meanings ascribed to them in the above-referenced Investment Agreement. Name: Title: Date Please confirm receipt of this [fax] by Trinity Plus Funding Company, LLC at telephone number 1-212-312-3469 EXHIBIT D The Issuer hereby represents and warrants to Trinity Plus Funding Company, LLC (the "Provider") that a Chief Financial Officer or other executive officer of the Issuer or a person holding an equivalent position has reviewed this Exhibit D and that: I. The Issuer is not a natural person or a company owned directly or indirectly by or for two or more natural persons who are related as siblings or spouse (including former spouses), or direct lineal descendants by birth or adoption, spouses of such persons, or a foundation, charitable organization or trust established by or for the benefit of such persons. II. The Issuer (a) is not (i) a broker or dealer owning less than $25,000,000 in investments, or (ii) a partnership, common trust fund, special trust, pension fund or retirement plan or other entity, in which the partners or participants, as the case may be, may designate the particular investments to be made or the allocation thereof, and (b) either: (1) is a governmental entity such as a state, city, county, or an agency or instrumentality thereof, established by statute for purposes of, and engaged exclusively in, providing services for the public welfare and or/other governmental services, or (2) has not invested more than 40% of its assets in securities (including investment agreements) of the Provider, giving effect to the amount invested under the Agreement. III. The Issuer has received an Information Statement and has had access to such financial and other information as it has deemed necessary in connection with its decision to enter into the Agreement. IV. The Issuer either: (a) is a corporation, body corporate and politic or other entity that is deemed a corporation under applicable law and invests on a discretionary basis not less than $100,000,000 in securities. For purposes of this subsection (a), the term securities does not include (i) securities of issuers that are affiliated with the Issuer, (ii) securities that are part of an unsold allotment to or subscription by the Issuer (if the Issuer is a broker or dealer), (iii) securities issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank deposit notes and certificates of deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities owned but subject to a repurchase agreement and (viii) currency, interest rate and commodity swaps; or (b) is a Qualified Purchaser, as defined in Section 2(a)(51) of the Investment Company Act of 1940 (the "1940 Act") and, accordingly, alone or in combination with any parent company, any majority-owned subsidiaries of that parent company and any majority-owned subsidiaries of the Issuer, owns and invests on a discretionary basis not less than $25 million(l) in assets, net of any indebtedness incurred to acquire or for the purpose of acquiring such assets, which assets consist only of the following: (1) (2) (3) (4) securities, such as stocks or bonds traded on a securities exchange or regularly traded or quoted in the over-the-counter market, and representing no more than 25% of the voting securities (as defined in the 1940 Act) of an issuer that neither controls nor is under common issuer(2); control with the real estate held for investment purposes; and cash and cash equivalents (including foreign currencies, certificates of deposit, bankers acceptances and the net cash surrender value of any insurance policies) held for investment purposes; or securities of an issuer that controls, is controlled by or is under common control with the Issuer, provided that any such issuer is one of the following entities: i) a registered investment company; ii) a private (unregistered) investment company; (1) Such assets have been valued at their fair market value on the most recent practicable date or at their cost, other than in the case of commodity futures contracts, options on commodity futures contracts, and options on physical commodities, which have been valued at the amount of initial margin or option premium. (2) "Control" for this purpose and for purposes of subparagraph (2) is as defined in the 1940 Act, and is presumed to exist where there is ownership of more than 25% of the voting securities (as defined in the 1940 Act) of an issuer. iii) a commodity pool; iv) a broker or other financial intermediary; VI VI a bank; a bank; vi) vi) an insurance company; an insurance company; vii) vii) a foreign bank or insurance company as a foreign bank or insurance company as defined in Rule 3a-6 under the 1940 Act; defined in Rule 3a-6 under the 1940 Act; viii) an issuer of asset-backed securities excepted from registration under the 1940 Act pursuant to Rule 3a-7; ix) a company required to report under the Securities Exchange Act of 1934; x) a company with a class of securities listed on a "designated offshore securities market" as defined in Rule 902 of Regulation S under the 1933 Act; or xi) a company with a shareholders' equity of more than $50 million (computed in accordance with Generally Accepted Accounting Principles); (5) commodity futures contracts, options on commodity futures contracts, and options on physical commodities traded on a market or exchange and held for investment purposes; (6) physical commodities for which the above contracts are available and which are held for investment purposes; or (cl is beneficially owned entirely by persons for whom the representations in subparagraphs (a) or (b) of Article IV of this Exhibit D are true. V. The Issuer was not formed, reformed or recapitalized for the specific purpose of investing in the Contracts (as defined in the Security Agreement) or any other securities of the Provider. VI. Either (a) the Issuer is not an investment company excepted from the 1940 Act pursuant to Section 3(c) (1) or Section 3(c)(7) thereof, or (b) it has received the consent of its beneficial owners with respect to its treatment as a Qualified Purchaser in the manner required by Section 2(a) (51)(C) of the 1940 Act and rules thereunder. The Issuer is entering into the Agreement for its own account (or for the account of other entities which meet the requirements set forth in items I-VI, above) and understands and acknowledges that the Provider will rely on the foregoing in complying with Section 3(c)(7) of the Investment Company Act of 1940 and other securities laws. The Issuer further agrees that the deposit of any funds with the Provider on an Investment Date shall constitute a representation that, on such Investment Date, the representations and warranties set forth above are true and correct. EXHIBIT E COLLATERAL AGENT AGREEMENT COLLATERAL AGENT AGREEMENT, dated as of December 22, 1999, by and between TRINITY PLUS FUNDING COMPANY, LLC, a New York limited liability company (the \Provider") and Bankers Trust Company, as collateral agent (the "Collateral Agent"). WHEREAS, Provider and City of Carlsbad, California (the "Issuer") have entered into a Collateralized Investment Agreement dated as of the date hereof (the "Investment Agreement"), pursuant to which the Provider has agreed to accept the Investment (as defined in the Investment Agreement) and pay Earnings (as defined in the Investment Agreement) to the Issuer; and WHEREAS, Provider desires to enter into this Agreement for the purpose of providing for a Collateral Agent as described in the Investment Agreement; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and set forth, the Provider and the Collateral Agent hereby agree as follows: SECTION 1. DEFINITIONS Capitalized Terms used herein and not defined shall have the meanings ascribed to them in the Investment Agreement. SECTION 2. APPOINTMENT OF COLLATERAL AGENT 2.1. Appointment by Provider. The Provider hereby appoints Bankers Trust Company as Collateral Agent under the Investment Agreement (a copy of which has been delivered to the Collateral Agent). 2.2 Acceptance of Appointment and Establishment of Account. The Collateral Agent hereby accepts appointment as Collateral Agent under the Investment Agreement and agrees to establish and maintain the Collateral Account pursuant to the Investment Agreement and agrees to perform all functions of the Collateral Agent as specified herein and in the Investment Agreement and the Security Agreement. All terms of the Investment Agreement and the Security Agreement relating to the Collateral Agent shall be deemed incorporated herein by reference (specifically, with respect to the Security Agreement, Sections 2.03-2.07 and 7.06- 7.09). ,- 2.3 Crediting of Collateral. (a) The parties hereto and the Collateral Agent agree that certain Collateral to be delivered to the Collateral Agent for deposit in the Collateral Account may be in the form of credits to the account of the Collateral Agent on the books for registration of book-entry securities maintained by the Federal Reserve Bank pursuant to applicable regulations (the "Book-Entry System"). In such case, Provider shall authorize and instruct the Collateral Agent to deposit in the Book-Entry System on a continuous and ongoing basis all Collateral credited to the Account and to utilize the Book-Entry System to the extent possible in connection with its performance hereunder, including without limitation, in connection with settlements of purchases and sale of Collateral. (b) In the event that any Collateral held by the Collateral Agent is in the form of cash, the Collateral Agent shall place such cash in a corresponding demand deposit account which shall be established as a subaccount of the Collateral Account. The Collateral Agent shall not pledge, repledge, hypothecate, rehypothecate, lend, relend or commingle any Collateral or other deposits to the Collateral Account with other collateral or with its own assets. SECTION 3. TERMINATION This Agreement shall terminate upon the earlier of (1) expiration of the Investment Agreement in accordance with its terms without any Event of Default, (2) repayment in full of the Investment and payment of all other amounts payable by the Provider under the Investment Agreement, or (3) notice in writing signed by each of the parties to the Investment Agreement that the Investment Agreement is no longer in effect. SECTION 4. REPRESENTATIONS AND WARRANTIES 4.1 Representations and Warranties of Provider. Provider represents and warrants to the Collateral Agent that: (i) it is duly authorized to enter into the Investment Agreement and this Agreement and the transactions contemplated thereby and hereby; (ii) the Investment Agreement and this Agreement constitute legal, valid and binding obligations of Provider enforceable against it in accordance with their respective terms, subject to bankruptcy, insolvency and similar laws affecting creditors' rights generally and subject as to enforceability to general principles of equity; (iii) the execution, delivery and performance of the Investment Agreement and this Agreement by Provider does not and will not result in a 2 C breach or violation of our cause a default under, its charter or by-laws or any provision of any agreement, instrument, judgment, injunction or order applicable to or binding upon Provider or its assets; (iv) upon transfer and delivery of any Collateral to the Collateral Agent, Provider is and will have good and marketable title to the Collateral free and clear of all liens and adverse claims other than the lien and security interests granted under the Investment Agreement. 4.4 Representations and Warranties of the Collateral Agent. The Collateral Agent represents and warrants to Provider that (i) it has the corporate power, authority and legal right to enter into this Agreement and the transactions contemplated hereby; (ii) this Agreement constitutes a legal, valid and binding obligation of it enforceable against it in accordance with the terms subject as to enforceability to general principles of equity and the application of judicial discretion in a proceeding at law or in equity; and (iii) the execution, delivery and performance of this Agreement by it does not and will not result in a breach or violation of its charter or bylaws. SECTION 5. LIMITATION ON PROVIDER'S OBLIGATIONS Neither Provider nor any of its directors, officers, employees, agents or representatives shall be liable or responsible for: (i) the use or application by the Collateral Agent of any Collateral received by the Collateral Agent for deposit in the Collateral Account hereunder or (ii) the Collateral Agent's performance of their respective obligations under this Agreement. SECTION 6. THE COLLATERAL AGENT 6.1 Limitations on Liability. The Collateral Agent shall not be liable for any loss or damage, including counsel fees or expenses, resulting from its actions or omission to act or otherwise, except for any such loss or damage arising out of its own negligence or willful misconduct. The Collateral Agent shall have no obligation hereunder for costs, expenses, damages, liabilities or claims, including attorney's fees or expenses, which are sustained or incurred by reason of any action or inaction by the Book-Entry System, or a clearing system or their respective successors or nominees. In no event shall the Collateral Agent be liable to Provider, the Issuer or any third party for special, indirect or consequential damages, or lost profits or loss of business, arising under or in connection with this Agreement or the Investment Agreement, even if previously informed of the possibility of such damages and regardless of the form of action. The Collateral Agent may, with respect to questions of law, apply for and obtain the advice and opinion of 3 counsel, and shall be fully protected with respect to anything done or omitted by it in good faith in conformity with such advice or opinion. The Collateral Agent shall not be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including without limitation, acts of God, earthquakes, fires, floods, wars, civil or military disturbances, sabotage, epidemics, riots, interruptions, loss or malfunctions of utilities, transportation, accidents, labor disputes, acts of civil or military authority, governmental actions or inability to obtain labor, material, equipment or transportation. The Collateral Agent shall not be liable for any Collateral received by it until such Collateral are actually delivered. The Collateral Agent shall not be under any duty or obligation to ascertain whether any Collateral at any time delivered to or held by it hereunder are such property as may be held by Provider or the Issuer or any entities for which either acts. The Collateral Agent shall be under no obligation to inquire into, and shall not be liable for the title, validity or genuineness of the issue of any Collateral, the legality of the purchase or sale thereof or the propriety of the amount paid or received therefore, and the due authority of any person to act on behalf of Provider or the Issuer with respect to Collateral held in the Account. The Collateral Agent shall have no responsibility for maintaining the value of the Collateral or ensuring that any Collateral is properly Delivered to it, except as otherwise provided herein; provided that the Collateral Agent shall be responsible for holding the Collateral in accordance with the provisions hereof. The Collateral Agent shall have no responsibility for, or liability in connection with, monitoring the Provider's performance under the Investment Agreement, the Security Agreement or any other documents relating thereto. Nothing in this Agreement shall require the Collateral Agent to advance or risk its own funds, nor shall the Collateral Agent be required to cover overdrafts or failed trades with its own funds. The Collateral Agent shall not be liable for losses on Qualified Investments. 6.2 Reliance. The Collateral Agent shall be entitled to rely upon any certificate, written instruction or oral instruction received by the Collateral Agent and reasonably believed by the Collateral Agent to be duly authorized and delivered. Unless a Responsible Officer (as defined herein) of the Collateral Agent has been given notice to the contrary in accordance with Section 7.7 hereof, the Collateral Agent, in performing its obligations with respect to the Collateral hereunder, shall be entitled to assume that no Event of Default has occurred and the Collateral Agent shall incur no liability under this Agreement for taking, in reliance upon such 4 - assumption, any action that is otherwise in compliance with this Agreement or for failing to take, in reliance upon such assumption, any action that is otherwise required by this Agreement. For purposes of this Section, Responsible Officer means any officer of the Collateral Agent's Trust and Agency Group and the party indicated in the notice address listed in the Agreement unless other notice instructions given by the Collateral Agent in which case the party indicated in said instructions shall be a Responsible Officer. 6.3 Access to Books & Records. Provider and the Issuer, or their authorized representatives, shall have access to the Collateral Agent's books and records maintained with respect to the Collateral and the Collateral Account and its contents during the Collateral Agent's normal business hours. Upon the reasonable request of Provider or the Issuer, such books and records shall be made available for inspection and copying by the Provider or the Issuer and/or their authorized representatives, as the case may be, at the expense of such requesting party. 6.4 No Implied Duties. The Collateral Agent shall have no duties or responsibilities except such duties and responsibilities as are specifically set forth in this Agreement and the Investment Agreement and no covenant or obligation shall be implied in this Agreement against the Collateral Agent. 6.5 Resignation or Removal of Collateral Agent. (a) Subject to the further provisions of this Section, the Collateral Agent may resign at any time as Collateral Agent hereunder by its delivery to Provider and the Issuer of not less than 30 days' prior written notice of resignation. In addition, (i) upon any material breach of its duties hereunder by the Collateral Agent, the Issuer may, on 30 days' prior written notice to the Collateral Agent and Provider, remove the Collateral Agent from its position as agent hereunder, and (ii) so long as no Event of Default shall have occurred and be continuing hereunder or under the Investment Agreement, Provider may on 30 days prior written notice to the Collateral Agent and the Issuer, remove the Collateral Agent from its position as agent hereunder. Upon any such resignation or removal, Provider shall appoint a successor Collateral Agent. Until such time as a successor Collateral Agent is appointed, the Collateral Agent shall continue to serve as collateral agent hereunder and the provisions hereof shall remain in full force and effect. The Provider agrees to use its best efforts to appoint a successor within 30 days of any resignation of the Collateral Agent. If no successor is appointed within 30 days of the effective date of any resignation or removal specified in the notice thereof, the Collateral Agent or the Issuer may petition a court of competent jurisdiction to appoint a successor. 5 (b) Upon acceptance by a qualified successor Collateral Agent of its appointment hereunder, the Collateral Agent shall deliver to such successor all Collateral or other moneys, securities or other delegations of instruments held in the Collateral Account in its possession. (cl It is expressly agreed and acknowledged by Provider that the Collateral Agent is not guaranteeing performance of or assuming any liability for the obligations of Provider or the Issuer hereunder nor is it assuming any credit risk associated with transactions hereunder, which liabilities and risks are the responsibility of Provider and the Issuer; further, it is expressly agreed that the Collateral Agent is not undertaking to make credit available to the Issuer or Provider to enable it to complete transactions hereunder. 6.6 Indemnification by the Provider. The Provider shall indemnify the Collateral Agent, its officers, employees, directors and its agents for, and hold the Collateral Agent; its officers, employees, directors and its agents harmless against any loss, liability or expense (including the costs and expenses, including attorney's fees and expenses, of defending against any claim of liability) arising out of or in connection with this Agreement or the Investment Agreement, except such loss, liability or expense as shall result from Collateral Agent's negligence, bad faith or willful misconduct. The obligations of the Provider under this section shall survive the termination of this Agreement and the resignation or removal of the Collateral Agent and shall be paid subject to the terms of the Security Agreement. 6.7 Compensation and Reimbursement. The Provider agrees: (a) to pay to Collateral Agent from time to time, reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) as set forth in a letter agreement between the Provider and the Collateral Agent and (b) to reimburse the Collateral Agent upon its request for all reasonable expenses, disbursements and advances incurred or made by it as Collateral Agent in accordance with any provision of, or carrying out its duties and obligations under, this Agreement (including the reasonable compensation and fees and the expenses and disbursements of its agents, any independent certified public accountants and independent counsel), except any expense, disbursement or advances as may be attributable to negligence, bad faith or willful misconduct on its part. Any obligations of the Provider pursuant to this Section shall be paid in the priority specified in the Security Agreement. Notwithstanding the foregoing, however, the 6 Collateral Agent hereby waives any right of setoff, bankers lien or counterclaim with respect to the Collateral and the Collateral Account. It is understood that the Issuer is not liable for any fees or expenses of the Collateral Agent. SECTION 7. MISCELLANEOUS 7.1 Survival. All warranties and representations made by the Collateral Agent or the Provider 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. 7.2 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. 7.3 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 such State. 7.4 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. 7.5 Counterparts. This Agreement may be executed in several counterparts and, as so executed, shall constitute one agreement binding upon the parties hereto. 7.6 Interpretation. The headings of the articles and sections hereof are‘ for convenience of reference only and shall not affect the meaning or construction of any provision hereof. 7.7 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 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 or other telecommunication equipment, in any case addressed to the attention of any of the persons listed on Exhibit B to the Investment Agreement at the addresses specified therein, or at such other address or to the attention of such other persons as such party shall have designated to the 7 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. 7.8 Security Agreement. The Collateral Agent accepts and agrees to the payment priorities and other terms relating to payment of fees, expenses and any other amounts payable hereunder set forth in the Security Agreement. [THIS SPACE INTENTIONALLY LEFT BLANK] 8 7.9 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 to the Investment Agreement and their successors and permitted assigns), any right, remedy or 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 hereto and to the Investment Agreement and their successors and permitted assigns. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written. TRINITY PLUS FU??DINC CC)MPANY, LLC By: Title'y Vice President BANKERS TRUST COMPANY, as Collateral Agent By: Title: Tpl07a.doc i” Ji~l;ll~ci;ll (;u;rfxtlt~ I~lilw~mw * ccrlllplll! 1 1 .? Hlrultl\\~:l\ \I?\ hrk. \\' 10000 (“1’) 312-3000 (800) :w-0001 A GE Capital Company - m m December 22, 1999 City of Carlsbad, California Bankers Trust Company New York, New York Re: Investment Agreement, dated as of December 22, 1999, between City of Carlsbad, California and Trinity Plus Funding Company, LLC Ladies and Gentlemen: I am Senior Counsel of Financial Guaranty Insurance Company, an affiliate of FGIC MRCA Corp., which is a common member of Trinity Plus Funding Company, LLC (the nProviderN), and have been requested to render an opinion in connection with the transactions contemplated by the above-referenced Investment Agreement (the "Investment Agreement"). I have examined such company records, certificates and other documents as I have considered necessary or appropriate for purposes of rendering this opinion, including the Investment Agreement, the Collateral Agent Agreement, dated as of December 22, 1999 (the "Collateral Agent Agreement"), by and between Bankers Trust Company and the Provider, and the Collateral Trust and Security Agreement, dated as of June 23, 1997 (the "Security Agreement") among the Provider, Bankers Trust Company, as Security Trustee, and General Electric Capital Corporation. Based upon and subject to the foregoing, I am of the opinion that: 1. The Provider has been duly organized and is validly existing as a limited liability company in good standing under the laws of the State of New York. 2. Each of the Investment Agreement and the Collateral Agent Agreement has been duly and validly authorized, executed and delivered by the Provider and constitutes the valid and binding agreement of the Provider enforceable against the Provider in accordance with its terms, subject to bankruptcy, insolvency, reorganization or other similar Financial Guaranty Insurance Company City of Carlsbad Bankers Trust Company December 22, 1999 Page 2 laws affecting the enforcement of creditors' rights as they would apply to the bankruptcy, insolvency or reorganization of the Provider and except as the enforcement thereof may be limited by general equitable principles (regardless of whether the issue of enforceability is considered in a proceeding in equity or at law). 3. The Investment Agreement is a 'ContractN under the Security Agreement payable in accordance with the terms of the Security Agreement from the funds and accounts established thereunder in priorities set forth therein. I express no opinion herein as to any law other than the laws of the State of New York. Very truly yours, Carolanne Gardner Senior Counsel Investment Contract Provider Certificate The undersigned officer of Trinity Plus Funding Company, LLC (the \Provider"), hereby certifies that: (a) No brokerage commissions or other fees were paid or are expected to be paid to any person by the Provider in connection with the Investment Agreement between City of Carlsbad, California (the 'Issuer"), and the Provider, dated as of December 22, 1999 (the 'Agreement"), except as listed below. All brokerage commissions are paid to the recipient on behalf of the Issuer. Recipient Amount Fund Services Advisors $8,000 (b) The interest rate on the Agreement is not less than the interest rate then available from the Provider at the time of its bid for the Agreement on reasonably comparable contracts, if any, offered to other persons from a source of funds other than gross proceeds of an issue of tax-exempt bonds, assuming equal brokerage commissions and fees. Dated: December 22, 1999 tpl07.DOC