INVESTMENT AGREEMENT
INVESTMENT AGREEMENT dated as of July 31, 1996 by and among AMBAC
CAPITAL FUNDING, INC., a Delaware corporation ("ACFI"), OLD DOMINION ELECTRIC
COOPERATIVE ("Old Dominion"), a wholesale power supply cooperative organized
under the laws of the Commonwealth of Virginia, and AMBAC INDEMNITY CORPORATION
("AMBAC"), a Wisconsin-domiciled stock insurance corporation.
WHEREAS, pursuant to a Participation Agreement, dated as of July 1, 1996
(the "Participation Agreement"), by and among Old Dominion, Clover Unit 2
Generating Trust (the "Facility Owner"), Wilmington Trust Company (the "Owner
Trustee"), EPC Corporation (the "Owner Participant") and Utrecht-America Finance
Co. (the "Agent"), Old Dominion has arranged for the parties thereto to take
various actions in connection with the Transaction; and
WHEREAS, pursuant to an Operating Equipment Agreement, dated as of July
1, 1996 (the "Operating Equipment Agreement"), by and between the Facility Owner
and Old Dominion, the Facility Owner has conveyed the Equipment Interest (as
such term is defined in the Operating Equipment Agreement) to Old Dominion for a
term of years; and
WHEREAS, pursuant to a Operating Foundation Agreement, dated as of July
1, 1996 (the "Operating Foundation Agreement"; the Participation Agreement, the
Operating Equipment Agreement and the Operating Foundation Agreement are
sometimes hereinafter referred to collectively as the "Subject Agreements"), by
and between the Facility Owner and Old Dominion, the Facility Owner has conveyed
the Foundation Interest to Old Dominion for a term of years; and
WHEREAS, AMBAC has agreed to issue its Surety Bond No. SB0457BE (the
"Surety Bond") guaranteeing certain payments required to be made by Old Dominion
pursuant to the Subject Agreements, subject to the terms and conditions of the
Surety Bond; and
WHEREAS, to induce AMBAC to issue the Surety Bond, Old Dominion has
agreed to (i) pay the premium for such Surety Bond, (ii) reimburse AMBAC for all
payments made by AMBAC pursuant to the Surety Bond and (iii) to secure its
obligation to reimburse AMBAC for all such payments made pursuant to a Guaranty
Agreement, dated as of July 1, 1996 (the "Guaranty Agreement"), by and between
Old Dominion and AMBAC; and
WHEREAS, to secure its obligations to AMBAC under the Guaranty
Agreement, Old Dominion has agreed to invest certain monies with ACFI pursuant
to this Agreement and to grant to AMBAC a perfected security interest this
Investment Agreement pursuant to an Investment Agreement Pledge Agreement, dated
as of July 1, 1996 (the "Pledge Agreement"), by and among Old Dominion, the
Owner Participant, the Facility Owner and AMBAC; and
WHEREAS, ACFI is willing, on the terms and conditions set forth in this
Agreement, to accept the investment of Invested Monies (as hereinafter
defined).
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and set forth, ACFI, Old Dominion and AMBAC hereby
agree as follows:
SECTION 1. DEFINITIONS
As used herein, the following terms have the following meanings:
1.1. "Agreement" means this Investment Agreement entered into by
and among ACFI, Old Dominion and AMBAC.
1.2. "Approved Wire Time" means no later than 1:30 p.m. New York
City Time.
1.3. "Business Day" means any day other than a Saturday or Sunday or
other day on which commercial banking institutions are authorized or required by
law, regulation or executive order to be closed in (i) Glen Allen, Virginia,
(ii) the city and state in which the principal corporate trust office of the
Owner Trustee is located, (iii) the city and state in which the principal office
of the Agent is located, (iv) the city and state in which the principal office
of AMBAC is located or (v) Amsterdam, The Netherlands. Any payment due hereunder
on a day that is not a Business Day shall be due and payable on the next
succeeding Business Day.
1.4. "Collateral" means cash, direct obligations of the Department of
the Treasury of the United States of America ("Treasuries"), and obligations of
the Government National Mortgage Association ("GNMA's), the Federal National
Mortgage Association ("FNMA's") or the Federal Home Loan Mortgage Corporation
("FHLMC's").
1.5 "Collateral Requirement" means (i) in the case of cash, 100% of
Invested Monies, (ii) in the case of Treasuries and GNMA's, 104% of Invested
Monies, and (iii) in the case of FNMA's or FHLMC's, 105% of Invested Monies.
1.6. "Custodian" has the meaning set forth in Section 4.2(a)(ii).
1.7. "Downgrade" means any reduction of the rating on the
Guarantor's claims-paying ability below the levels specified in Section 4.2 or
any withdrawal of a rating.
1.8. "Earnings" means interest earned in accordance with the
provisions of Section 2.2 hereof.
1.9. "Effective Date" means July 31, 1996.
1.10. "Event of Default" has the meaning given that term in
Section 5.1 hereof.
1.11. "Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to (a) the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York; or (b) if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by Old Dominion from three federal funds brokers of
recognized standing selected by it.
1.12. "Guarantee" means the financial guaranty insurance policy of
the Guarantor attached hereto as Exhibit B.
1.13. "Guarantor" means AMBAC Indemnity Corporation, a
Wisconsin-domiciled stock insurance company.
1.14. "Guaranty Agreement Deposit" means the amounts to be
invested hereunder (initially, $24,378,659.53) as contemplated by the Guaranty
Agreement.
1.15. "Interest Payment Date" means the fifth day of each
January and July (or the next succeeding Business Day if such fifth day is
not a Business Day) commencing January 5, 1997.
1.16. "Interest Payment Procedures" means that Earnings will be retained
hereunder and compounded until each Interest Payment Date and will be wire
transferred in immediately available funds to Old Dominion on each Interest
Payment Date in the amounts set forth in Exhibit C attached hereto.
1.17. "Invested Monies" means the Guaranty Agreement Deposit.
1.18. "Market Value" means, on any Business Day, with respect to
securities constituting Collateral one of the following three methods, which
method shall be consistently applied: (i) valuation of the Collateral computed
on the basis of the bid price last quoted by the Federal Reserve Bank of New
York on the valuation date and printed in The Wall Street Journal or the New
York Times; or (ii) valuation of the Collateral by a nationally recognized
pricing service whose valuation method consists of the composite average of
various bid price quotes on the valuation date; or (iii) valuation of the
Collateral based on the lower of two dealer bids on the valuation date. Such
dealers or their parent holding companies must be rated at least investment
grade by S&P and Xxxxx'x and must be market makers in the securities being
valued. In the event that the Custodian or such agent is unable to obtain the
price of a particular security from a pricing information service on any
Business Day, the market value of such securities shall be determined by the
Custodian or such agent in the exercise of its discretion based on information
furnished to the Custodian or such agent by one or more brokers in such
securities or the Custodian or such agent may price such securities using a
formula utilized by the Custodian or such agent for such purpose in the ordinary
course of its business.
1.19. "Moody's" means Xxxxx'x Investors Service, Inc. and its
successors.
1.20 "Permitted Withdrawal Purpose" means the payment to AMBAC of any
amounts payable by Old Dominion to AMBAC pursuant to the Guaranty Agreement
which have not been paid by Old Dominion prior to the expiration of the grace
period specified in clauses (a) or (b), as applicable, of Section 3.01 of the
Guaranty Agreement. Notwithstanding the foregoing, however, other than as
permitted under Sections 4.2, 4.3 or 5.3 hereof, in no event shall a withdrawal
for the purpose of reinvesting Invested Monies in another investment constitute
a "Permitted Withdrawal Purpose".
1.21. "Rate of Earnings" means 7.24% per annum calculated on a
30/360 day count basis.
1.22. "S & P" means Standard & Poor's Ratings Group and its
successors.
1.23. "Termination Date" means January 4, 2020.
1.24. "Uniform Commercial Code" means the Uniform Commercial Code as in
effect in the State of New York on the date such law is applied; provided,
however, that, in the event that, by reason of mandatory provisions of law, any
or all of the attachment, perfection or priority of any security interest
granted under this Agreement is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York, the term "Uniform
Commercial Code" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions thereof relating to such attachment,
perfection or priority and for purposes of definitions related to such
provisions.
1.25. "Withdrawal Amount" means the amount specified by AMBAC in
the notice delivered pursuant to Section 2.3(b).
1.26. "Withdrawal Date" means (i) the date specified in the
notice delivered pursuant to Section 2.3(b) and (ii) any date on which the
Invested Monies are withdrawn pursuant to Sections 4.2 or 5.2.
SECTION 2. INVESTMENT OF FUNDS
2.1. Delivery of Funds. On the Effective Date, Old Dominion shall
deliver Invested Monies to ACFI for the credit of ACFI's account as specified in
Exhibit A hereto and ACFI shall accept the Invested Monies from Old Dominion.
2.2. Interest. Interest on the outstanding balance of the Invested
Monies shall accrue daily as of the close of business each day during the term
of this Agreement at the Rate of Earnings, from and including the Effective Date
to but excluding the Termination Date. No interest will accrue on or after the
Termination Date unless such Termination Date is not a Business Day in which
case interest will accrue to but excluding the next succeeding Business Day.
Earnings shall be paid on each Interest Payment Date, in arrears, in accordance
with the Interest Payment Procedure.
2.3. Withdrawals. (a) Except as provided in Sections 4.2, 4.3 or
5.2, the only withdrawals in respect of the Guaranty Agreement Deposit
which will be permitted are withdrawals made at the direction of AMBAC on a
Withdrawal Date in the applicable Withdrawal Amount for a Permitted Withdrawal
Purpose.
(b) Except as provided in Sections 4.2, 4.3 or 5.2, ACFI will only honor
a request for a withdrawal in respect of the Guaranty Agreement Deposit if AMBAC
delivers written notice via telecopy to ACFI two (2) Business Days prior to any
such withdrawal specifying the amount to be withdrawn and the Withdrawal Date
and certifying that (i) the withdrawal is only being made for a Permitted
Withdrawal Purpose, (ii) the amount to be paid by ACFI is to be applied by AMBAC
for such purpose within one Business Day following the withdrawal, and (iii) the
amount to be withdrawn is not greater than the amount to be so applied by AMBAC.
2.4. Wire Transfers. The initial amount to be transferred by Old
Dominion to ACFI hereunder shall be transferred by the Approved Wire Time by
wire transfer of same day funds to ACFI's account as specified in Exhibit A
hereto. Amounts to be transferred hereunder by ACFI to either Old Dominion or
AMBAC shall be transferred by the Approved Wire Time by wire transfer of same
day funds to the account designated by the Old Dominion or AMBAC, as the case
may be, in Exhibit A hereto or to such other account as Old Dominion or AMBAC
shall so designate, such designation to be made in writing not less than seven
(7) 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. Any expenses incurred as a result of delays or errors in the wire
transfer of funds shall be reimbursed to the prejudiced party pursuant to
Section 8 hereof.
2.5. Required Notices. ACFI hereby agrees to provide to Old Dominion and
AMBAC (i) monthly reports by the tenth Business Day of each month identifying
this Agreement and setting forth (A) the current balance of the Invested Monies,
(B) the amount of interest accrued on the Invested Monies in such month, and (C)
any Collateral held by the Custodian identifying such Collateral by type, and
the Market Value of such Collateral as of the most recent date of valuation
thereof and (ii) immediate written notice of any Downgrade.
SECTION 3. GUARANTEE
Old Dominion, in entering into this Agreement, is and will be relying
on the Guarantee of the Guarantor, a copy of which is attached hereto as
Exhibit B.
SECTION 4. TERMINATION; COLLATERALIZATION
4.1. Scheduled Termination. This Agreement shall terminate on the
Termination Date. At such time, all amounts not previously withdrawn pursuant to
the provisions of this Agreement, together with all accrued and unpaid Earnings
up to but excluding the Termination Date, as calculated as provided in this
Agreement, shall be paid to Old Dominion in immediately available funds.
4.2. Downgrade. If the claims-paying ability rating of the Guarantor is
at any time withdrawn or reduced below "AA" or "Aa2" by S&P or Moody's,
respectively, ACFI shall immediately notify the Old Dominion, and, at the
direction of Old Dominion, within ten (10) days after receipt of such notice,
ACFI shall:
(i) return the remaining Invested Monies and Earnings to Old
Dominion at no penalty,
(ii) deliver Collateral to the Custodian and grant to Old Dominion a
first and prior perfected security interest under the Uniform Commercial Code in
and to such Collateral, which Collateral shall at all times have a Market Value
at least equal to the Collateral Requirement; or
(iii) obtain a new guarantor acceptable to Old Dominion, who is rated at
least "AA" and "Aa2" by S&P and Moody's, respectively.
4.3. Provisions With Respect to Collateral. In the event that ACFI
is required, pursuant to Section 4.2 hereof, to deliver Collateral, the
provisions of this Section 4.3 shall apply.
(a) Collateral Valuation. The Custodian shall, promptly
following the opening of business on each Tuesday, or if any such Tuesday is not
a Business Day, on the next following Business Day, determine the aggregate
Market Value of Collateral held by the Custodian pursuant to this Section 4.3,
and shall notify Old Dominion and ACFI by telephone on such date (such notice to
be confirmed in writing) of such amount and provide Old Dominion or ACFI any
information that either of them may reasonably request regarding the
determination thereof. If such amount is less than the Collateral Requirement on
such day, ACFI shall, before the close of business on the Business Day following
the date of such determination, deliver to the Custodian additional Collateral
having an aggregate Market Value on such day not less than the amount of such
deficiency.
(b) Withdrawal of Collateral. ACFI shall upon one (1) Business
Day's telephonic notice (such notice to be confirmed in writing) to the
Custodian and Old Dominion, be entitled to withdraw Collateral on any Business
Day to the extent that the Market Value of Collateral held by the Custodian
pursuant to this Section 4.3 exceeds the Collateral Requirement on such day.
Such notice shall specify such information as the Custodian or Old Dominion may
require with respect to the Collateral to be withdrawn. The Custodian shall
deliver to ACFI the Collateral so specified before the close of business on the
second Business Day following receipt of such notice; provided, however, that
only so much Collateral may be withdrawn as will not reduce the Market Value of
the Collateral on the day of withdrawal to less than the Collateral Requirement
on such day.
(c) Substitution of Collateral. ACFI shall, upon one (1)
Business Day's telephonic notice (such notice to be confirmed in writing) to the
Custodian and Old Dominion, be entitled on any Business Day to substitute for
any Collateral other Collateral having the same or a greater Market Value at the
time of substitution. Such notice shall specify the Collateral to be withdrawn
and the substitute Collateral to be delivered to the Custodian. The Custodian
shall as soon as practicable following receipt of such notice, but no later than
the second Business Day following receipt of such notice, deliver to ACFI the
Collateral so specified for withdrawal against delivery by ACFI of such
substitute Collateral.
(d) Registration and Repledge of Collateral. Except upon
the occurrence of an Event of Default, neither Old Dominion nor the Custodian
may sell, pledge or otherwise dispose of any Collateral or any interest therein
except for redelivery of Collateral to ACFI and except as pursuant to the Pledge
Agreement.
(e) Remedies. If any Event of Default shall occur and be
continuing, the Custodian shall, upon receipt of written instructions from
Old Dominion to do so (i) exercise such rights for the enforcement of ACFI's
obligations hereunder as are expressly provided herein or are otherwise provided
under applicable law, (ii) 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 (iii) to the extent permitted by
applicable law, without demand of performance and without notice to ACFI except
as provided below, take either or both of the following actions:
(i) 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
and at the sole discretion of Old Dominion, at any public or private sale, and
at such price or prices as Old Dominion may deem appropriate, upon two (2)
Business Days' prior notice to ACFI 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. Old Dominion or the Custodian
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 Old Dominion nor the
Custodian shall be entitled to purchase any of the Collateral at any private
sale for less than the Market Value of such securities; or
(ii) give ACFI written notice of Old Dominion's proposal to
retain the Collateral in satisfaction of all of the outstanding payment
obligations of ACFI under this Agreement, and if ACFI does not give Old Dominion
notice of objection on or before the second Business Day after Old Dominion
gives such notice of its proposal to retain such Collateral, Old Dominion will
retain the Collateral free from any claim or right of any nature whatsoever of
ACFI, including any rights in equity or right of redemption. If ACFI provides
notices of objection, the Custodian will be obligated to take the actions
specified in Section 4.3(e) (i) above.
(f) Application of Proceeds. The proceeds of any sale of all
or any part of the Collateral pursuant to this Section 4.3 shall be applied by
Old Dominion first to all reasonable expenses and fees (including, without
limitation, fees and expenses of legal counsel) or taxes imposed upon or
incurred by Old Dominion and/or the Custodian after the occurrence of an Event
of Default in connection with (a) the custody, care, sale or collection of, or
realization upon, any of the Collateral or (b) the preservation or enforcement
of any rights of Old Dominion hereunder and second to the payment of the
obligations of ACFI hereunder. ACFI 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.
(g) Requirements of Custodian; Expenses of Custodian. All
Collateral delivered to the Custodian shall be segregated by the Custodian from
other assets of the Custodian, Old Dominion or any other person. The Custodian
shall prepare and deliver to Old Dominion and ACFI by the tenth Business Day of
each month a report specifying the identity and location of all Collateral as of
the end of the month preceding such report. Provided that the Collateral
Requirement is maintained and that no Event of Default shall have occurred and
be continuing, all payments of principal or interest on any Collateral received
by the Custodian shall be remitted to ACFI as promptly as possible after receipt
thereof. All fees, costs and expenses incurred by the Custodian shall be paid by
ACFI.
SECTION 5. DEFAULT
5.1. Events of Default. Each of the following events shall
constitute events of default under this Agreement (each an "Event of
Default"):
(a) Failure by ACFI and the Guarantor on behalf of ACFI to (i) make any
payment of Invested Monies or Earnings when due pursuant to the provisions of
this Agreement or (ii) deliver or maintain Collateral at the times and in the
amounts required by Sections 4.2 and 4.3 hereof.
(b) If either ACFI or the Guarantor commences a case in bankruptcy
relating to it, is adjudicated an 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
under any reorganization, arrangement, or dissolution under applicable
bankruptcy or similar insolvency laws; or, if any such proceeding is initiated
against ACFI or the Guarantor and ACFI or the Guarantor, as the case may be,
indicates in any manner its consent thereto or such proceeding is not dismissed
within 60 days.
(c) A failure by ACFI to perform or observe any of its material
obligations under this Agreement (other than those described in Section 5.1(a)
hereof) when such failure continues for ten (l0) Business Days or more after
written notice thereof is given by Old Dominion to ACFI.
(d) The expiration, termination (other than pursuant to its terms), or
repudiation of the Guarantee or any other event which causes the Guarantee to
cease to be in full force and effect or any action by the Guarantor which
challenges the validity of the Guarantee.
5.2. Rights and Obligations of Parties upon an Event of Default. Upon
the occurrence of an Event of Default specified in Section 5.1(b) hereof, in
addition to the remedies set forth in Section 4.3(e) hereof, all Invested Monies
and Earnings thereon shall automatically become due and payable immediately
without notice, receipt of which is hereby waived by ACFI. Upon the occurrence
of any other Event of Default specified in Section 5.1 hereof, in addition to
the remedies set forth in Section 4.3(e) hereof, Old Dominion may declare all
Invested Monies and Earnings to be due and payable immediately. If, as a result
of the occurrence of an Event of Default specified in Section 5.1, all Invested
Monies and Earnings are withdrawn at the direction of Old Dominion, this
Agreement shall be terminated on the date of such withdrawal as if such date
were a Termination Date.
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 Old Dominion represents and warrants to ACFI that: (i) it
understands that neither the Agreement nor the Guarantee has been or will be
registered under the Securities Act of l933, as amended (the "Securities Act")
or any other applicable securities law (including the Blue Sky laws of any
state) and, except in connection with an assignment hereof to the Guarantor upon
a payment by the Guarantor under the Guarantee, that neither the Agreement nor
the Guarantee may be offered, sold, transferred, pledged (except as pursuant to
the Pledge Agreement), hypothecated or otherwise disposed of, unless either
registered pursuant to, or exempt from registration under, the Securities Act
and any other applicable securities laws; (ii) it understands that neither ACFI
nor any person representing ACFI has made any representation to it with respect
to ACFI or the offering or sale of this Agreement or the Guarantee other than as
set forth herein; (iii) the legend set forth in Section 9.10 hereof has been
called to its attention; (iv) it has had access to such financial and other
information concerning ACFI and the Guarantor as it has deemed necessary in
connection with its decision to invest the Invested Monies hereunder; (v) it is
duly authorized to enter into this Agreement and the transactions contemplated
hereby; (vi) this Agreement constitutes a legal, valid and binding obligation of
Old Dominion enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and subject as to enforceability to general principles of equity in a proceeding
at law or in equity; (vii) the execution, delivery and performance of this
Agreement by Old Dominion does not result in a breach or violation of, or cause
a default under any provision of any applicable law, regulation, order, license,
decree, judgment, indenture, contract or agreement binding upon the District or
its assets or cause the creation of any lien or encumbrance on any of its
properties; and (viii) it is not investing in this Agreement or the Guarantee
with a view to any distribution thereof in violation of the Securities Act.
6.2 ACFI represents and warrants to Old Dominion 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 ACFI enforceable against it in accordance with its terms, subject
to bankruptcy, insolvency and similar laws affecting creditors' rights generally
and subject as to enforceability to general principles of equity in a proceeding
at law or in equity; (iii) the execution, delivery and performance of this
Agreement by ACFI 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 applicable
agreement, instrument, judgment, injunction or order applicable to or binding
upon ACFI or its assets, and (iv) on each occasion that ACFI delivers Collateral
to the Custodian, Old Dominion will have a valid first prior perfected and
enforceable lien on such Collateral, free from all claims of third parties.
SECTION 7. LIMITATION ON ACFI'S OBLIGATIONS
7.1. In performing its obligations hereunder, neither ACFI nor any of
its directors, officers, employees, agents or representatives shall be liable or
responsible for: (i) the payment of any amounts owing on or with respect to the
Surety Bond or the Guaranty Agreement; (ii) the use or application by Old
Dominion or AMBAC of any monies payable to AMBAC or Old Dominion hereunder;
(iii) any acts or omissions of Old Dominion under or with respect to the Surety
Bond or the Guaranty Agreement; (iv) the validity or enforceability of the
Surety Bond or the Guaranty Agreement; or (v) Old Dominion's or AMBAC's
performance of its obligations under this Agreement or the Surety Bond or the
Guaranty Agreement. Without limiting the foregoing, regardless of whether ACFI
has reviewed the Surety Bond or the Guaranty Agreement or is generally familiar
with the terms of agreements of a similar type, ACFI shall have no duty to
comply with the terms of the Surety Bond or the Guaranty Agreement or to
ascertain whether Old Dominion is in compliance therewith. For purposes of this
Agreement, it shall not be necessary for ACFI to segregate or otherwise
separately identify or account for the portion of the Invested Monies and ACFI
may aggregate all the invested funds for accounting purposes. ACFI shall
maintain complete and accurate records identifying the principal amount of
Invested Monies. ACFI shall furnish monthly statements to Old Dominion and AMBAC
identifying the amount of Invested Monies held hereunder and the amount of
Earnings accrued on such Invested Monies in the preceding month as set forth in
Section 2.5 hereof.
7.2. The obligation of ACFI to pay the amounts due and payable under
this Agreement is absolute, irrevocable and unconditional and ACFI hereby waives
any right of recoupment, counterclaim, subrogation or setoff with respect to the
Invested Monies.
SECTION 8. REIMBURSEMENT
Delays caused by errors or failures in transfers of funds hereunder
shall be compensated by the party retaining the funds due to error and by the
prompt payment of interest for the loss of availability of such funds shall be
made to the party prejudiced thereby in accordance with the following formula:
Interest = [(amount of funds lost) x (Federal Funds Rate)] x (No. of days funds
lost)/360.
SECTION 9. MISCELLANEOUS
9.1. No Waiver. No failure or delay on the part of ACFI, Old Dominion or
AMBAC 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 ACFI, Old
Dominion or AMBAC hereunder are cumulative and are not exclusive of any rights
or remedies provided by law or equity. Any remedies set forth in any other
contract between Old Dominion and ACFI and/or AMBAC are separate and distinct
from those set forth in this Agreement. None of the terms or provisions of this
Agreement may be waived modified or amended, except in writing duly signed by
ACFI, Old Dominion and AMBAC.
9.2. Survival. All warranties and representations made by Old Dominion
or ACFI 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.
9.3. 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 and subject to the Pledge Agreement, this
Agreement, and the obligations and rights arising out of this Agreement or any
part hereof, shall not be sold, pledged or assigned or otherwise transferred by
ACFI, Old Dominion or AMBAC 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 ACFI may transfer this
Agreement or any of its interests or obligations hereunder to any subsidiary of
AMBAC Inc. if from and after such transfer and the assumption by the transferee
of ACFI's obligations hereunder, the obligations of the transferee hereunder
shall be guaranteed by the Guarantor under terms at least as favorable to Old
Dominion as the terms of the Guarantee; and, provided further, that any
successor to (i) Old Dominion under the Surety Bond, the Guaranty Agreement or
the Pledge Agreement and (ii) AMBAC under the Surety Bond, the Guaranty
Agreement or the Pledge Agreement shall be considered a successor in interest to
Old Dominion or AMBAC, as the case may be, with respect to this Agreement
without the necessity of obtaining the prior written consent of ACFI. No consent
shall be required for the transfer of this Agreement to any successor entity
appointed in accordance with this Agreement or the pledge of this Agreement
pursuant to the Pledge Agreement.
9.4. 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.
9.5. 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.
9.6. Counterparts. This Agreement may be executed in several
counterparts and, as so executed, shall constitute one agreement binding upon
the parties hereto.
9.7. Integration of Terms. This Agreement contains the entire
agreement between the parties relating to the subject matter hereof and
supersedes all oral statements and prior writings with respect thereto.
9.8. 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.
9.9. 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 (with receipt), or as of the date of delivery
shown on the receipt if mailed at a post office in the United States of America
by registered or certified mail, postage prepaid, return receipt requested, or
as of the date of acknowledgment if transmitted by telex, rapifax or other
telecommunication equipment, in any case addressed to the attention of the
person listed on Exhibit A hereto, or at such other address or to the attention
of such other person as such party shall have designated to the other party
hereto in a written notice. Any notices given by telex, rapifax or other
telecommunication equipment shall be orally confirmed by the sender immediately
after such notice is transmitted.
9.10. Legend. NEITHER THIS AGREEMENT NOR THE ATTACHED GUARANTEE HAVE
BEEN OR WILL BE REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE, AND, EXCEPT IN CONNECTION WITH AN
ASSIGNMENT HEREOF TO THE GUARANTOR UPON A PAYMENT BY THE GUARANTOR UNDER THE
GUARANTY, THIS AGREEMENT AND THE GUARANTEE MAY BE SOLD, TRANSFERRED OR ASSIGNED
ONLY AS PERMITTED HEREUNDER AND ONLY IF REGISTERED PURSUANT TO THE SECURITIES
ACT OR IF AN EXEMPTION FROM REGISTRATION IS AVAILABLE. BY ITS EXECUTION OF THIS
AGREEMENT, OLD DOMINION AND AMBAC AGREE THAT THE 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
AMBAC CAPITAL FUNDING, INC. AMBAC INDEMNITY CORPORATION
By: /s/ ILLEGIBLE By: /s/ ILLEGIBLE
------------------------------- -------------------------------
Title: Vice President Title: First Vice President
By: /s/ Xxxxxx Xxxxxxx
-------------------------------
Title: Managing Director
OLD DOMINION ELECTRIC COOPERATIVE
By: /s/ ILLEGIBLE
------------------------------
Title:
EXHIBIT A
Notices and communications to the parties should be directed to:
IF TO ACFI: IF TO OLD DOMINION:
AMBAC Capital Funding, Inc. Old Dominion Electric Cooperative
000 Xxxxx Xxxxx Xxxx 0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000 Xxxx Xxxxx , Xxxxxxxx 00000
Telephone No.: (000) 000-0000 Telephone No.: 000-000-0000
Telecopier No. : (000) 000-0000 Telecopier No.: 000-000-0000
Attention: Xxxx Xxxxxxxx Attention: Vice President of Accounting
and Finance
IF TO AMBAC:
AMBAC Indemnity Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Wire Transfer Information - unless otherwise designated as provided herein, wire
instructions and transfers shall be made as follows:
TO ACFI: TO OLD DOMINION:
Bank of New York Nationsbank
ABA Number 0000-0000-0 ABA No.: 000-0000-00
Beneficiary Bank: GLA 111-569 GSCS for the account of Old Dominion
Electric Cooperative
Account No. 00000000
Attention: Xxxxxxxx Xxxxxxx Reference: Clover Unit 2
FTC: ACF Attn: Xxxxxxx Xxxxx
TO AMBAC:
Citibank, N.A.
ABA# 00000000
A/C# 40609486
EXHIBIT B
FORM OF INSURANCE POLICY
FINANCIAL GUARANTY INSURANCE POLICY
AMBAC Indemnity Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
INVESTMENT AGREEMENT: POLICY NUMBER: FC0014BE
Investment Agreement dated as of July 31, 1996 by and among
AMBAC Capital Funding, Inc., Old Dominion
Electric Cooperative ("Old Dominion") and
AMBAC Indemnity Corporation
PREMIUM: $
AMBAC INDEMNITY CORPORATION (AMBAC) A Wisconsin Stock Insurance Company in
consideration of the payment of the premium and subject to the terms of this
Policy, hereby agrees to pay to Old Dominion that portion of repayments of
principal of and payments of interest on Invested Monies invested pursuant to
the above-described investment agreement (the "Investment Agreement") which
shall become Due For Payment but shall be unpaid by reason of Nonpayment.
AMBAC will make such payments to Old Dominion within one business day following
notification to AMBAC of Nonpayment.
AMBAC shall disburse repayments of principal of Invested Monies and payments of
interest on Invested Monies which are then Due for Payment but are unpaid to Old
Dominion only upon receipt of written notice from Old Dominion setting forth the
amount which is then Due for Payment. AMBAC shall, to the extent that it makes
repayments of principal of or payments of interest on Invested Monies, become
subrogated to the rights of Old Dominion in accordance with the terms hereof,
and to evidence such subrogation Old Dominion shall execute such assignments or
documents of transfer with respect to Old Dominion's rights under the Investment
Agreement as may be reasonably determined by AMBAC. To the extent that AMBAC
makes payments under this Policy to Old Dominion, Old Dominion shall be deemed
to have assigned to AMBAC its interests in the Investment Agreement and any
collateral pledged thereunder to the extent of the payments so made.
As used herein, the term "Old Dominion" shall have the meaning given that term
in the Investment Agreement. "Due for Payment" shall mean, with respect to
repayments of principal, that a "Withdrawal Date", as that term is defined in
the Investment Agreement, has been reached and, with respect to payments of
interest, shall mean that an "Interest Payment Date", as that term is defined in
the Investment Agreement, has been reached, in each instance subject to the
terms and conditions of the Investment Agreement. "Invested Monies" shall have
the meaning given that term in the Investment Agreement. "Nonpayment" shall mean
the failure of Old Dominion to have received repayments of principal of and/or
payments of interest on Invested Monies from AMBAC Capital Funding, Inc. when
such payments have become Due for Payment.
In the event that any repayment of principal of or payment of interest on the
Invested Monies has been deemed to be a voidable transfer under the provisions
of the United States Bankruptcy Code, 11 U.S.C. Section 101 et seq., and
theretofore been disgorged or recovered from Old Dominion or any pledgee of Old
Dominion, AMBAC shall make payment to Old Dominion of such amounts, if
sufficient funds are not otherwise available for payment of such disgorgement or
recovery.
This Policy is noncancelable. The premium on this Policy is not refundable for
any reason. This Policy does not insure against loss other than Nonpayment. In
the event that AMBAC were to become insolvent, any claims arising under the
Policy would be excluded from coverage by the Connecticut Insurance Guaranty
Association.
IN WITNESS WHEREOF, AMBAC has caused this Policy to be executed and attested on
its behalf this 31st day of July, 1996.
Attest: _______________________ By: _______________________
Assistant Secretary Vice President
Effective Date: July 31, 1996
EXHIBIT C
Old Dominion Electric Cooperative
DRAWS FROM GUARANTY AGREEMENT
GUARANTY AGREEMENT DEPOSIT FUND
DATE DEPOSIT FUND BALANCE
7/30/96 0.00 24,378,659.53
1/5/97 742,424.68 24,396,171.84
7/5/97 154,613.40 25,124,699.86
1/5/98 1,389,328.81 24,644,885.18
7/5/98 153,742.90 25,383,287.12
1/5/99 1,376,383.55 24,925,778.56
7/5/99 152,759.77 25,675,331.97
1/5/00 1,375,635.04 25,229,143.95
7/5/00 151,697.99 25,990,740.97
1/5/01 1,374,524.89 25,557,080.90
7/5/01 150,550.22 26,331,697.01
1/5/02 1,373,331.67 25,911,572.77
7/5/02 149,309.50 26,700,262.20
1/5/03 1,372,041.69 26,294,770.00
7/5/03 147,968.30 27,098,672.37
1/5/04 1,370,647.27 26,708,997.04
7/5/04 146,518.51 27,529,344.22
1/5/05 2,807,399.36 25,718,507.12
7/5/05 (90,014.78) 26,739,531.86
1/5/06 1,611,904.26 26,095,598.65
7/5/06 148,665.40 26,891,593.92
1/5/07 1,371,372.04 26,493,697.58
7/5/07 147,272.06 27,305,497.37
1/5/08 1,559,422.55 26,734,533.82
7/5/08 146,429.13 27,555,894.81
1/5/09 1,748,045.34 26,805,372.86
7/5/09 146,181.20 27,629,546.16
1/5/10 1,747,787.56 26,881,948.17
7/5/10 145,913.18 27,709,161.51
1/5/11 1,747,508.91 26,964,724.25
7/5/11 145,623.47 27,795,223.80
1/5/12 1,747,207.69 27,054,203.21
7/5/12 145,310.30 27,888,255.07
1/5/13 1,746,882.08 27,150,927.82
7/5/13 144,971.75 27,988,819.66
1/5/14 1,746,530.11 27,255,484.82
7/5/14 144,605.80 28,097,527.57
1/5/15 1,746,149.63 27,368,508.44
7/5/15 144,210.23 28,215,038.22
1/5/16 1,745,738.34 27,490,684.26
7/5/16 143,782.60 28,342,064.43
1/5/17 1,745,293.75 27,622,753.41
7/5/17 143,320.36 28,479,376.72
1/5/18 1,744,813.17 27,765,516.99
7/5/18 142,820.69 28,627,808.02
1/5/19 1,052,519.88 28,611,614.79
7/5/19 847,355.25 28,800,000.00
1/5/20 28,800,000.00 0.00
