EXHIBIT 10.8
STANDBY CERTIFICATE PURCHASE AGREEMENT
dated as of
_______ __, ____
between
Kansas Electric Power Cooperative, Inc.
and
[name of Bank]
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions....................................... 3
SECTION 1.02. Accounting Terms and Determinations............... 9
SECTION 1.03. Incorporation of Certain Definitions.............. 9
ARTICLE II
COMMITMENT TO PURCHASE CERTIFICATES
SECTION 2.01. Commitment to Purchase Unremarketed Certificates. 9
SECTION 2.02. Method of Purchasing............................. 10
SECTION 2.03. Termination or Reduction of Available Commitment. 11
SECTION 2.04. Sale by the Bank of Certificates................. 12
SECTION 2.05. Commitment Fees.................................. 13
SECTION 2.06. Disbursements by the Bank........................ 14
SECTION 2.07. General Provisions as to Payments................ 16
SECTION 2.08. Computation of Interest and Fees................. 16
SECTION 2.09. Extension of Scheduled Termination Date.......... 17
ARTICLE III
CONDITIONS TO PURCHASE
SECTION 3.01. Conditions to Each Purchase...................... 17
ARTICLE IV
CONDITIONS TO EFFECTIVENESS
SECTION 4.01. Conditions to Effectiveness...................... 19
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/1/ The Table of Contents is not a part of this Agreement.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Existence and Power.............................. 21
SECTION 5.02. Corporate and Governmental Authorization;
Noncontravention................................. 21
SECTION 5.03. Valid and Binding Agreements..................... 22
SECTION 5.04. Financial Information............................ 22
SECTION 5.05. Litigation....................................... 22
SECTION 5.06. No Defaults...................................... 22
SECTION 5.07. Offering Materials............................... 22
SECTION 5.08. Not a Public Utility Holding Company............. 22
SECTION 5.09. Not an Investment Company........................ 23
SECTION 5.10. Incorporation of Representations and Warranties
by Reference..................................... 23
ARTICLE VI
COVENANTS
SECTION 6.01. Information...................................... 23
SECTION 6.02. Payment of Obligations........................... 24
SECTION 6.03. Conduct of Business and Maintenance of Existence. 24
SECTION 6.04. Inspection of Property, Books and Records........ 25
SECTION 6.05. Incorporation by Reference....................... 25
SECTION 6.06. Consolidations, Mergers and Sales of Assets...... 25
SECTION 6.07. Related Documents................................ 26
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default................................ 26
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices.......................................... 29
SECTION 8.02. No Waivers....................................... 30
SECTION 8.03. Expenses; Documentary Taxes; Indemnification;
Reduced Return................................... 30
ii
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SECTION 8.04. Liability of the Bank............................ 32
SECTION 8.05. Amendments and Waivers........................... 33
SECTION 8.06. Successors and Assigns........................... 33
SECTION 8.07. Governing Law.................................... 34
SECTION 8.08. Counterparts; Integration........................ 35
SECTION 8.09. Severability..................................... 35
SECTION 8.10. Headings......................................... 35
Exhibit A - Form of Opinion of Special Finance Counsel for the Cooperative
Exhibit B - Form of Opinion of General Counsel of the Cooperative
Exhibit C - Form of Letter from Trustee and Tender Agent to Bank
iii
STANDBY CERTIFICATE PURCHASE AGREEMENT
AGREEMENT dated as of _____ __, ____ between KANSAS ELECTRIC POWER
COOPERATIVE, INC. and [NAME OF BANK].
WHEREAS, in 1988 the Kansas Electric Power Cooperative, Inc., a Kansas
non-profit electric generation and transmission cooperative corporation
(together with its successors, the "Cooperative"), prepaid certain of its loans
from the Federal Financing Bank, which were guaranteed by the Administrator (the
"Administrator") of the Rural Electrification Administration of the Department
of Agriculture (which has been succeeded with respect to the administration of
certain electric and telephone loan programs by the Rural Utilities Service, an
agency of the United States Department of Agriculture established pursuant to
Section 232 of the Federal Cooperative Insurance Reform and Department of
Agriculture Reorganization Act of 1994 (Pub.L. 103-354, 108 Stat. 3178)
(together with its successors, the "RUS")), with amounts borrowed from the
National Rural Utilities Cooperative Finance Corporation, a District of Columbia
cooperative association (together with its successors, "CFC"), pursuant to a
Loan Agreement dated as of February 15, 1988 between CFC and the Cooperative
(the "Original Loan Agreement" and, as amended by the First Amendment to Loan
Agreement dated as of December 20, 1996 and effective as provided therein (the
"First Amendment to Loan Agreement") and as further amended and supplemented
from time to time in accordance with the terms thereof and hereof, the "Loan
Agreement");
WHEREAS, CFC established the Rural Electric Cooperative Grantor Trusts
(KEPCO) Series 1988 K1-1988 K3 (collectively, the "Original Trusts") for the
purpose of holding the notes (the "Original Notes") evidencing the Cooperative's
repayment obligations under the loan (the "1988 Loan") made by CFC to the
Cooperative pursuant to the Original Loan Agreement, which obligations were
guaranteed by the United States of America, acting through the Administrator of
the RUS (as amended and supplemented from time to time in accordance with the
terms thereof and hereof, the "Federal Guaranty");
WHEREAS, the Cooperative and CFC desire to cause "Note One" and "Note
Two" of the Original Notes, evidencing portions of the 1988 Loan in the original
principal amounts of $11,075,000 and $51,340,000, respectively (as amended and
supplemented by the First Amendment to Loan Agreement and as
further amended and supplemented from time to time in accordance with the terms
thereof and hereof, collectively, the "Notes"), to be purchased by CFC on a date
agreed to by CFC, the RUS and the Cooperative and on which such purchase is
permitted to occur (the "Refinancing Date") and to cause the amendment of the
1988 Loan and the Notes pursuant to the First Amendment to Loan Agreement to
become effective on the Refinancing Date; and
WHEREAS, the Notes are eligible for redemption or purchase on any
Business Day (as defined in the Loan Agreement) on or after the Business Day
immediately prior to December 15, 1997; and
WHEREAS, the Cooperative has notified the trustee under the Original
Trusts that, with the approval of the Administrator, it desires that CFC
purchase the Notes and that such trustee redeem the related certificates of
beneficial interest therein and terminate the related Original Trusts on the
Refinancing Date, for the purpose of amending certain terms of the 1988 Loan and
the Notes and issuing new certificates of beneficial interest therein; and
WHEREAS, CFC, as lender under the Loan Agreement, depositor of the
Original Trusts and servicer of the Notes, has agreed to cause the Notes, with
the Federal Guaranty endorsed thereon, to be delivered to the Trustee (as
defined below) on the Refinancing Date for deposit in the Rural Electric
Cooperative Grantor Trust (KEPCO) Series 1997 (the "Trust") created pursuant to
the Trust Agreement dated as of December 20, 1996 and effective as provided
therein (as amended and supplemented from time to time in accordance with the
terms thereof and hereof, the "Trust Agreement") among CFC, the Cooperative and
The First National Bank of Chicago, as trustee (together with its successors,
the "Trustee");
WHEREAS, the Cooperative has entered into the Swap Agreement (as
defined below) with the Swap Provider (as defined below) which has been assigned
to the Trust, such assignment to be effective automatically on the Refinancing
Date, and pursuant to which the Swap Provider will pay to the Trustee a variable
rate of interest and the Trustee will pay a fixed rate of interest;
WHEREAS, the Cooperative and the Swap Provider each believe that they
will derive financial benefit with respect to the transactions contemplated by
the Swap Agreement if a liquidity facility is obtained from the Bank providing
for the timely payment of the purchase price with respect to unremarketed
certificates of beneficial interest
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tendered or deemed tendered pursuant to the Trust Agreement on or prior to the
Scheduled Termination Date as provided herein; and
WHEREAS, the Bank is willing to purchase and hold such certificates of
beneficial interest tendered or deemed tendered pursuant to the Trust Agreement,
all upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Capitalized terms used herein but not
otherwise defined herein shall have the following meanings:
"Agreement" means this Standby Certificate Purchase Agreement, as the
same may from time to time be amended or supplemented.
"Authorized Representative" means any of the Executive Vice President,
Chief Executive Officer, Director-Finance and Accounting and General Counsel of
the Cooperative.
"Available Commitment" as of any date means the sum of the Available
Principal Commitment and the Available Interest Commitment, in each case as of
such date.
"Available Interest Commitment" initially means the amount set forth
opposite the name of the Bank as its "Interest Commitment" on the signature
pages hereof on the Effective Date, which amount is equal to ___ days of
interest distributable in respect of the aggregate principal amount of the
Certificates, calculated at the rate of [18]% per annum and on the basis of the
actual number of days elapsed in a year of 360 days, and thereafter means such
initial amount adjusted from time to time as follows: (a) downward by an amount
that bears the same proportion to such initial amount as the amount of any
reduction in the Available Principal Commitment pursuant to the definition of
"Available Principal Commitment" bears to the initial Available Principal
Commitment and (b) upward by an amount that bears the same proportion to such
initial amount as the amount of any increase in the Available Principal
Commitment pursuant to clause (c) of the definition of "Available
3
Principal Commitment" bears to the initial Available Principal Commitment.
"Available Principal Commitment" initially means the amount set forth
opposite the name of the Bank as its "Principal Commitment" on the signature
pages hereof and thereafter means such initial amount adjusted from time to time
as follows: (a) downward by the amount of any reduction of the Available
Principal Commitment pursuant to the first sentence of Section 2.03; (b)
downward by the principal amount of any Certificates purchased by the Bank
pursuant to Section 2.02; and (c) subject to the proviso to the first sentence
of Section 2.03, upward by the principal amount of any Certificates, theretofore
purchased by the Bank pursuant to Section 2.02, which are sold by the Bank
(regardless of the purchase price received for such Certificates).
"Bank" means [name of Bank] and its successors.
"Bank Rate" means (i) with respect to any disbursement by the Bank of
the Purchase Price of any Unremarketed Certificate, (a) for any day during the
period from the date such disbursement is made to but excluding the earliest of
(x) the 90th day from and after such date and (y) the date such disbursement is
required to be paid (whether at maturity or by acceleration or otherwise), the
Base Rate for such day, (b) for any day from and after such 90th day to but
excluding the date such disbursement is required to be paid (whether at maturity
or by acceleration or otherwise), the sum of the Base Rate plus 1% and (c) on
and after the date such disbursement is required to be paid (whether at maturity
or by acceleration or otherwise), the sum of the Base Rate plus 2% and (ii) with
respect to any overdue amount, the sum of the Base Rate plus 2%.
"Base Rate" means, for any day, a rate per annum equal to the higher
of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"Business Day" means any day, except (i) a Saturday, Sunday or other
day on which commercial banks in New York City and any other city or cities in
which the principal offices of the Trustee, the Remarketing Agent and the
Servicer are located are authorized by law to close, (ii) a legal public holiday
under 5 U.S.C. (S) 6103 for the purpose of statutes relating to pay and leave of
employees or any other day declared to be a legal public holiday for the purpose
of statutes relating to pay and leave of employees by Federal statute or Federal
Executive order,
4
(iii) any day which is not a "Local Business Day" (as defined in the Swap
Agreement) and (iv) any day on which the New York Stock Exchange is closed.
"Certificate" means a Rural Electric Cooperative Grantor Trust
Certificate (KEPCO) Series 1997 executed and delivered by the Trustee pursuant
to the Trust Agreement representing an undivided fractional interest in the
assets of the Trust.
"Commitment" means the Available Commitment determined without regard
to any adjustment to the Available Principal Commitment made pursuant to clause
(b) or (c) of the definition thereof.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"DTC" has the meaning set forth in Section 2.01(c).
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 4.01.
"Event of Default" has the meaning set forth in Section 7.01.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day
and (ii) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate quoted to Xxxxxx
Guaranty Trust Company of New York on such day on such transactions as
determined by the Bank.
"Government" means the United States of America, acting through the
Administrator of the RUS.
"Indemnitee" has the meaning set forth in Section 8.03(b).
5
"Interest Payment Date" means each date on which interest is
distributable in respect of the Certificates.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, the
Cooperative shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loan Guarantee and Servicing Agreement" means the Loan Guarantee and
Servicing Agreement dated as of February 15, 1988, as amended by the First
Amendment to Loan Guarantee and Servicing Agreement dated as of December 20,
1996 and effective as provided therein, among the United States of America,
acting through the Administrator of the RUS, the Cooperative, CFC and the
Trustee, and as further amended and supplemented from time to time in accordance
with the terms thereof and hereof.
"Moody's" means Xxxxx'x Investors Service, Inc., a Delaware
corporation, and its successors and assigns, and if such corporation shall be
dissolved or liquidated or no longer perform the functions of a securities
rating agency, "Moody's" shall be deemed to refer to any other nationally
recognized statistical rating organization (other than S&P) designated by the
Bank and not disapproved by the Cooperative if such an organization shall exist.
"Xxxxxx Guaranty" means Xxxxxx Guaranty Trust Company of New York.
"Notice of Bank Purchase" has the meaning set forth in Section 2.02.
"Offering Statement" means (i) the [describe offering materials]
relating to the Certificates dated [date], as the same may from time to time be
amended or supplemented, and (ii) each other document used by the Cooperative,
the Trust, CFC or the Remarketing Agent in offering or remarketing the
Certificates.
"Parent" means, with respect to the Bank, any Person controlling the
Bank.
"Participant" has the meaning set forth in Section 8.06(b).
6
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Prime Rate" means the rate of interest publicly announced by Xxxxxx
Guaranty in New York City from time to time as its Prime Rate.
["Prior Liquidity Facility" means [describe Liquidity Facility to be
replaced].]*
"Purchase Contract" means the Forward Certificate Purchase Agreement
dated December 20, 1996 among CFC, the Cooperative and Alex. Xxxxx & Sons
Incorporated.
"Purchase Date" means any Business Day during the Purchase Period with
respect to which the Bank has received a Notice of Bank Purchase pursuant to
Section 2.02 hereof.
"Purchase Notice" has the meaning specified in Section 2.04(a).
"Purchase Period" means the period from the date hereof to and
including the earlier of (i) the Scheduled Termination Date, (ii) the date on
which no Certificates are outstanding and (iii) the date on which the Commitment
has been terminated in its entirety pursuant to Section 2.03 or Article VII.
"Purchase Price" with respect to any Certificates means the aggregate
principal amount of such Certificates plus Stated Interest distributable with
respect to such Certificates as of the Purchase Date.
"Purchased Certificate" means any Certificate purchased pursuant to
Section 2.02 until such time, if ever, as such Certificate is deemed no longer a
Purchased Certificate pursuant to Section 2.04(b).
"Purchaser" has the meaning specified in Section 2.04(a).
"Regulations" means the regulations promulgated by the RUS amending 7
C.F.R. Chapter XVII by adding Part 1786 and implementing the provisions of
Section 1401 of the Omnibus Budget Reconciliation Act of 1987 (P.L. 100-203)
-------------------
* Include in any Alternate Liquidity Facility.
7
relating to Section 306(A) of the Rural Electrification Act of 1936 (7 U.S.C.
(S)(S) 901 et seq.), as amended.
"Related Documents" means the Trust Agreement, the Certificates, the
Loan Agreement, the Notes, the Loan Guarantee and Servicing Agreement, the
Federal Guaranty, the Swap Agreement, the Remarketing Agreement and the Offering
Statement. For purposes of this Agreement, references to the Related Documents,
when used with reference to any Person, shall refer only to those Related
Documents to which such Person is a party or to which such Person is otherwise
subject.
"Remarketing Agent" means Alex. Xxxxx & Sons Incorporated, or any
successor or assigns permitted under the Remarketing Agreement and the Trust
Agreement.
"Remarketing Agreement" means the Remarketing Agreement dated as of
December 20, 1996 and effective as provided therein by and between the
Cooperative and the Remarketing Agent, as amended and supplemented from time to
time in accordance with the terms hereof and thereof.
"S&P" means Standard & Poor's Rating Services, a division of The
McGraw Hill Companies, Inc., a New York corporation, and its successors and
assigns, and if such division shall be dissolved or liquidated or no longer
perform the functions of a securities rating agency, "S&P" shall be deemed to
refer to any other nationally recognized statistical rating organization (other
than Moody's) designated by the Bank and not disapproved by the Cooperative if
such an organization shall exist.
"Scheduled Termination Date" means [date] or such later date to which
the Scheduled Termination Date shall have been extended pursuant to Section 2.09
(or if such day is not a Business Day, the next preceding Business Day).
"Stated Interest" means, with respect to any Certificates and for any
period, the amount of interest which is distributable with respect thereto
during such period.
"Swap Agreement" means the International Swap Dealers Association
("ISDA") Master Agreement dated as of December 20, 1996 between Xxxxxx Guaranty
and the Cooperative, including the Schedule to the Master Agreement and the
Credit Support Annex to such Schedule, each dated as of December 20, 1996, and
the Confirmation with respect thereto dated __________________, pursuant to
which the Cooperative and Xxxxxx Guaranty have entered into a U.S.
8
Dollar Interest Rate Swap Transaction (MGT Deal No. _______), in each case as
amended and supplemented from time to time.
"Swap Provider" means (i) Xxxxxx Guaranty, as counterparty under the
Swap Agreement or (ii) the provider of any Alternate Swap Agreement.
"Tender Agent" means The First National Bank of Chicago, as tender
agent under the Trust Agreement, or any successor in such capacity.
"Unremarketed Certificate" means any Certificate which is tendered
and/or deemed tendered (or otherwise available) for purchase pursuant to the
provisions of the Trust Agreement, unless the same has been remarketed by the
Remarketing Agent and the proceeds from the remarketing thereof have been
received by the Remarketing Agent or the Tender Agent.
SECTION 1.02. Accounting Terms and Determina tions. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles, as in effect from time to time,
applied on a basis consistent (except for changes concurred in by the
Cooperative's independent public accountants) with the most recent accounting
report of the Cooperative delivered or required to be delivered, as the case may
be, by Section 5.04 or 6.01.
SECTION 1.03. Incorporation of Certain Definitions. Each capitalized
term used herein and not otherwise defined herein shall have the meaning
provided therefor (including through incorporation by reference) in the Trust
Agreement.
ARTICLE II
COMMITMENT TO PURCHASE CERTIFICATES
SECTION 2.01. Commitment to Purchase Unremarketed Certificates. The
Bank agrees, on the terms and conditions contained in this Agreement, to
purchase Unremarketed Certificates from time to time during the Purchase Period
at the Purchase Price. The aggregate principal amount (or portion thereof) of
any Unremarketed Certificate purchased on any Purchase Date shall not exceed the
Available
9
Principal Commitment on such date. The aggregate amount of the Purchase Price
comprising interest on any Purchase Date shall not exceed the lesser of (1) the
Available Interest Commitment on such date and (2) if the Purchase Date is other
than an Interest Payment Date, the aggregate amount of interest distributable in
respect of such Certificate from and including the next preceding Interest
Payment Date to but excluding such Purchase Date and, if the Purchase Date is an
Interest Payment Date, zero. The Bank agrees that all amounts paid by it with
respect to the Purchase Price of Unremarketed Certificates shall be paid from
its own funds and shall not be paid from funds or property of the Cooperative.
SECTION 2.02. Method of Purchasing. Pursuant to Section 9.3(i) of
the Trust Agreement, the Tender Agent will give notice to the Bank as provided
below if, on any Purchase Date, Unremarketed Certificates are to be purchased by
the Bank pursuant to this Section. If on any Purchase Date the Bank receives
not later than 11:30 A.M. (New York City time) a telephonic notice, confirmed in
writing, from the Tender Agent, pursuant to Section 9.3(i) of the Trust
Agreement (such notice to be referred to as a "Notice of Bank Purchase"),
specifying (i) that Unremarketed Certificates are to be purchased by the Bank on
such Purchase Date pursuant to this Section, (ii) the aggregate Purchase Price
of such Unremarketed Certificates and (iii) the amount of such aggregate
Purchase Price comprising principal and interest, respectively, the Bank will,
unless it determines that any of the applicable conditions specified in Section
3.01 are not satisfied, transfer not later than 2:30 P.M. (New York City time)
on such Purchase Date to the Tender Agent in immediately available funds, an
amount equal to the aggregate Purchase Price of such Unremarketed Certificates
for deposit into the "Purchase Account" (the "Purchase Account") within the
"Purchase and Remarketing Fund" established pursuant to Section 9.6 of the Trust
Agreement. For purposes of determining compliance with the preceding sentence,
payment shall be deemed transferred when the Bank has delivered (or has caused
to be delivered) appropriate wire transfer instructions to an appropriate
Federal Reserve Bank and has received an appropriate acknowledgment of such
instructions from such Federal Reserve Bank. A Notice of Bank Purchase shall be
irrevocable after receipt thereof by the Bank. The Bank (in its capacity as
purchaser of Certificates pursuant to this Agreement) shall have no
responsibility for, or incur any liability in respect of, any act, or any
failure to act, by the Tender Agent which results in the failure of the Tender
Agent (x) to credit the Purchase Account with funds made available to the Tender
Agent by the Bank pursuant to this
10
Section or (y) to effect the purchase of Certificates with such funds pursuant
to this Section and Sections 9.3(b)(ii) and 9.3(g) of the Trust Agreement.
Certificates purchased pursuant to this Section 2.02 shall be promptly
transferred by book-entry to the Bank's participant account at DTC (or, if the
Certificates are no longer held in book-entry only form at DTC, shall be
promptly registered in the name of the Bank or, if directed by the Bank in
writing, its nominee or designee, and shall be promptly delivered by the Tender
Agent to or as directed by the Bank and, prior to such delivery, shall be held
in trust by the Tender Agent for the benefit of the Bank).
SECTION 2.03. Termination or Reduction of Available Commitment. (a)
Upon any redemption, repayment or other payment of all or any portion of the
principal amount of the Certificates, the aggregate Available Principal
Commitment shall automatically be reduced by the principal amount of the
Certificates so redeemed, repaid or otherwise paid as the case may be; provided
that, if at the time of any reduction in the Available Principal Commitment
pursuant to this sentence any of the Certificates are Purchased Certificates,
the portion of such reduction attributable to such Purchased Certificates shall
not become effective unless and until such Certificates are no longer Purchased
Certificates.
(b) Except as otherwise provided herein, the Commitments shall
terminate on the Scheduled Termination Date.
(c) Notwithstanding the foregoing, if an Event of Default described
in subsection (a) of Section 7.01 has occurred and is continuing, the Bank may
deliver a notice to that effect to the Cooperative, the Trustee and the
Remarketing Agent and the Commitment shall terminate as follows:
(i) in the case of any Event of Default described in subsection
(a)(i) of Section 7.01, the Commitment shall terminate in accordance with
the provisions of paragraph (1) of Section 7.01; and
(ii) in the case of any Event of Default described in subsection
(a)(ii) of Section 7.01, the Commitment shall terminate in accordance with
the provisions of paragraph (2) of Section 7.01 (it being understood that
the obligation of the Bank to purchase Unremarketed Certificates hereunder
shall be suspended immediately upon the occurrence of such Event of Default
and shall
11
be subject to reinstatement or termination, as the case may be, as provided
in paragraph (2) of Section 7.01).
Upon any such termination of the Commitment, the Bank shall have no further
obligation to purchase Unremarketed Certificates.
(d) In addition, the Commitment shall terminate on the date on which
the Trustee notifies the Bank that an Alternate Liquidity Facility has been
deposited with the Trustee and is effective.
(e) The Cooperative may, upon at least ten Business Days' prior
notice to the Bank, but only if an Alternate Liquidity Facility is then
effective, terminate the Commitment at any time (i) following imposition of an
increase in or adjustment to the commitment fee payable hereunder by virtue of
the occurrence of an event or condition as described in Section 8.03(c) hereof
or (ii) if the Bank's short-term debt securities shall be rated below "A-1" by
S&P or below "P-1" by Xxxxx'x or such ratings shall be withdrawn or suspended or
(iii) if the Bank shall have breached its obligation under this Agreement to
purchase Unremarketed Certificates, provided that in the event of any such
termination, the Bank shall receive any and all amounts then due and owing to
the Bank under this Agreement. The Cooperative and the Bank agree that Xxxxxx
Guaranty (or, if any Person other than Xxxxxx Guaranty or an affiliate of Xxxxxx
Guaranty is the Swap Provider, such other Person) shall pay such amounts so long
as the Swap Agreement with Xxxxxx Guaranty (or its affiliate) or such other
Person, as the case may be, is in effect and the Swap Provider has received all
amounts in respect of Swap Provider Payments and any Termination Amount then due
to it under the Swap Agreement, it being understood and agreed that the
Cooperative shall remain obligated to pay such amounts to the extent that Xxxxxx
Guaranty or such other Person, as the case may be, is not obligated, or fails,
to pay such amounts.
SECTION 2.04. Sale by the Bank of Certificates. (a) Purchase
Notices. Prior to 11:30 A.M. (New York City time) on any Business Day on which
the Bank holds Purchased Certificates, the Remarketing Agent may deliver a
notice (a "Purchase Notice") to the Bank and the Cooperative stating that it has
located a purchaser (the "Purchaser") for some or all of such Certificates and
that such Purchaser desires to purchase on such Business Day Certificates at a
price of par plus Stated Interest that would be distributable on such Business
Day if such Business Day were an Interest Payment Date.
12
(b) Sale of Remarketed Certificates. The Bank shall sell any
Purchased Certificate or Certificates to any Purchaser on the same Business Day
that the Purchase Notice is received by the Bank in accordance with subsection
(a) of this Section. Subject to the payment of the purchase price thereof as
provided hereinafter, such Purchased Certificate or Certificates shall
thereafter be deemed not to be a Purchased Certificate or Certificates and the
Bank will deliver such Purchased Certificate or Certificates to the Tender Agent
by 2:30 P.M. (New York City time) on such Business Day against receipt of the
purchase price therefor, in an amount at least equal to the sum of principal
thereof plus Stated Interest that would be distributable in respect of such
principal amount on such Business Day if such Business Day were an Interest
Payment Date, in immediately available funds at the Bank's address referred to
in Section 8.01.
(c) Other Terms Relating to Sales. Any sale of a Purchased
Certificate, or portion thereof, pursuant to this Section shall, to the fullest
extent permitted by applicable law, be without recourse to the seller and
without representation or warranty of any kind. Purchased Certificates sold
pursuant to this Section 2.04 shall be deemed to have been sold on a last in,
first out basis with the Certificates being most recently purchased being deemed
to have been sold first.
SECTION 2.05. Commitment Fees. During the Purchase Period, a
commitment fee shall be payable to the Bank, which commitment fee shall (a)
accrue for each day from and including the Effective Date to and including the
last day of the Purchase Period at the rate of 0.__% per annum on the amount of
the Available Commitment on such day and (b) be payable on each date on which
the Cooperative is obligated to make a payment under the Swap Agreement. The
Cooperative and the Bank agree that Xxxxxx Guaranty (or, if any Person other
than Xxxxxx Guaranty or an affiliate of Xxxxxx Guaranty is the Swap Provider,
such other Person) shall pay such commitment fee so long as the Swap Agreement
with Xxxxxx Guaranty (or its affiliate) or such other Person, as the case may
be, is in effect and the Swap Provider has received all amounts in respect of
Swap Provider Payments and any Termination Amount then due to it under the Swap
Agreement, it being understood and agreed that the Cooperative shall remain
obligated to pay such commitment fee to the extent that Xxxxxx Guaranty or such
other Person, as the case may be, is not obligated, or fails, to pay such
commitment fee; provided, however, that the Cooperative shall have no obligation
to pay such unpaid commitment fee to the extent that the sum of such unpaid
13
commitment fee and the unpaid amounts payable under Sections 2.06(e) and 8.03(c)
hereof exceed an amount equal to 0.25% per annum (computed on the basis of a
year of 365 days (or 366 days in a leap year) and paid for the actual number of
days elapsed (including the first day but excluding the last day) in the period
for which payment is due) of the Commitment.
SECTION 2.06. Disbursements by the Bank. (a) Each disbursement made
by the Bank of the Purchase Price of Unremarketed Certificates purchased on any
Purchase Date (a "disbursement") shall bear interest on the outstanding
principal amount thereof, for each day from the date such disbursement is made
until such disbursement is repaid or required to be repaid hereunder, at a rate
per annum equal to the Bank Rate for such day. Such interest shall be payable
in arrears (x) on each Interest Payment Date until the date such disbursement is
repaid or required to be repaid pursuant to subsection (b) below, (y) upon the
date such disbursement is so repaid or required to be repaid and (z) after such
repayment date, upon demand on the first Interest Payment Date occurring after
such repayment date or the date of such demand, as the case may be.
(b) Each disbursement shall be payable as follows:
(i) The portion (if any) of each disbursement attributable to
the payment of the portion of Purchase Price consisting of Stated Interest
shall be repaid, together with interest accrued thereon, on the first
Interest Payment Date occurring after the making of such disbursement.
(ii) The remaining portion of such disbursement shall be repaid,
together with interest accrued thereon, on each date on which any principal
of the Purchased Certificate(s) purchased with the proceeds of such
disbursement is paid, whether at maturity, upon redemption or otherwise
(including any portion of the purchase price attributable to principal paid
upon the remarketing of such Purchased Certificate(s)), as and to the
extent required in clause (c) below; provided that if all such Purchased
Certificate(s) have been remarketed, any remaining unpaid portion of such
disbursement shall be repaid, together with interest accrued thereon, on
the first Interest Payment Date occurring after such remarketing.
(c) Payments in respect of principal and interest or of the purchase
price received by the Bank in respect of
14
any Purchased Certificates (whether at maturity, upon redemption or otherwise,
including payments made with the proceeds of amounts received upon the
remarketing of such Purchased Certificates) shall be applied in the following
order of priorities: first, to the payment of interest on the related
disbursement that is due and unpaid hereunder; second, to the repayment of the
principal amount of the related disbursement; and third, to the extent of any
excess, to Xxxxxx Guaranty (or, if any Person other than Xxxxxx Guaranty or an
affiliate of Xxxxxx Guaranty is the Swap Provider, such other Person).
(d) The payment obligations under this Section 2.06 shall be credited
by and to the extent of any amounts which are paid in respect of the Purchased
Certificates, received by the Bank and applied to such payment in accordance
with subsection (c) above, and such obligation shall be discharged to such
extent; provided that in the event that all or part of any such amount is
recovered from the Bank as a preference, fraudulent transfer or similar payment
under any bankruptcy, insolvency or similar law, such obligation shall be
reinstated as though such amount had not been paid.
(e) The Cooperative and the Bank agree that Xxxxxx Guaranty (or, if
any Person other than Xxxxxx Guaranty or an affiliate of Xxxxxx Guaranty is the
Swap Provider, such other Person) will pay to the Bank (i) each amount payable
under clause (i) of Section 2.06(b), (ii) on each Interest Payment Date
applicable to any Purchased Certificate purchased with the proceeds of any
disbursement, the excess, if any, of the amount of interest payable in respect
of such disbursement over the amount of Stated Interest distributable in respect
of such Purchased Certificate, (iii) on each date on which any Purchased
Certificate purchased with the proceeds of any disbursement is redeemed or paid
at maturity, the excess, if any, of the amount of interest payable in respect of
such disbursement over the amount of Stated Interest distributable in respect of
such Purchased Certificate and (iv) on the first Interest Payment Date occurring
after the remarketing of all Purchased Certificate(s) purchased with the
proceeds of any disbursement, the amount (if any) payable pursuant to the
proviso to clause (ii) of Section 2.06(b), in each case to the extent such
amounts are unpaid and so long as the Swap Agreement with Xxxxxx Guaranty (or
its affiliate) or such other Person, as the case may be, is in effect and the
Swap Provider has received all amounts in respect of Swap Provider Payments and
any Termination Amount due to it under the Swap Agreement, it being understood
and agreed that the Cooperative shall remain obligated to pay such amounts to
15
the extent that Xxxxxx Guaranty or such other Person, as the case may be, is not
obligated, or fails, to pay such amounts; provided, however, that the
Cooperative shall not be obligated to pay such amounts to the extent that the
sum of such unpaid amounts and the unpaid fees and other amounts payable under
Sections 2.05 and 8.03(c) hereof exceed an amount equal to 0.25% per annum
(computed on the basis of a year of 365 days (or 366 days in a leap year) and
paid for the actual number of days elapsed (including the first day but
excluding the last day) in the period for which payment is due) of the
Commitment. The obligation of Xxxxxx Guaranty (or such other Person) under this
Section 2.06(e) may be further evidenced by documentation mutually acceptable to
the Bank and Xxxxxx Guaranty (or such other Person).
SECTION 2.07. General Provisions as to Payments. (a) Except as
otherwise provided in Section 2.04, all payments to be received by the Bank
hereunder shall be received by it no later than 1:00 P.M. (New York City time)
on the due date therefor, and any payment received by the Bank after 1:00 P.M.
(New York City time) shall be deemed to have been received by the Bank on the
next Business Day. All payments by or on behalf of the Cooperative to the Bank
hereunder shall be made in U.S. dollars and in immediately available funds. All
such payments, unless otherwise directed by the Bank in writing, shall be
transferred to the Bank at its address referred to in Section 8.01. If any
payment due hereunder is due on a day that is not a Business Day, then such
amount shall be due on the next succeeding Business Day. If the date for any
payment of principal is extended pursuant to the preceding sentence, by
operation of law or otherwise, interest thereon shall be payable for such
extended time.
(b) Any overdue payment hereunder shall bear interest, payable on
demand on the first Interest Payment Date occurring after the date of such
demand (or, if no Certificates are outstanding, on demand), for each day
thereafter until paid in full, at a rate equal to the sum of the Base Rate plus
2%.
SECTION 2.08. Computation of Interest and Fees. Interest based on
the Prime Rate and fees shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). Interest based on the
Federal Funds Rate shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but excluding the
last day).
16
SECTION 2.09. Extension of Scheduled Termination Date. (a) By the
180th day prior to the Scheduled Termination Date, the Bank shall give to the
Cooperative and (if it is not the Bank) Xxxxxx Guaranty notice as to whether, in
its sole discretion, it elects to extend or not to extend the Scheduled
Termination Date and, in the case of any election to extend, specifying the
period of such extension; provided that if the Bank gives notice that the
Scheduled Termination Date will not be extended, the Purchase Period will expire
upon the Scheduled Termination Date then in effect.
(b) If the Scheduled Termination Date is extended, the Cooperative
shall be deemed to have made the representations and warranties contained herein
and in the Related Documents on and as of the date on which the Scheduled
Termination Date is so extended.
ARTICLE III
CONDITIONS TO PURCHASE
SECTION 3.01. Conditions to Each Purchase. The obligation of the
Bank to purchase Unremarketed Certificates hereunder on any Purchase Date is
subject to receipt by the Bank of a Notice of Bank Purchase as required by
Section 2.02, the condition that the Unremarketed Certificates to be so
purchased are not held by or for the account of the Cooperative or any affiliate
thereof and the further condition that none of the following events or
conditions shall exist:
(a) the Government shall fail, wholly or parti ally, to make a payment
when and as required under the Federal Guaranty;
(b) the Administrator or any other Federal governmental authority or
official with competent jurisdiction shall claim or assert in writing that the
Federal Guaranty is invalid or unenforceable against the Government, or the
Administrator or any other Federal governmental authority or official with
competent jurisdiction shall repudiate in writing the obligations of the
Government or deny that the Government has any further liability under the
Federal Guaranty; or the validity or enforceability of the Federal Guaranty
shall be contested in any contest or proceeding (including an appellate
proceeding) directly or indirectly by the Administrator or any other Federal
governmental authority or official with competent
17
jurisdiction and, in the case of a Person other than the Administrator or any
other Federal governmental authority or official with competent jurisdiction,
the Government shall fail to defend or assert such validity or enforceability or
to appeal such contest or proceeding pursuant to appropriate proceedings or
actions;
(c) any governmental authority with competent jurisdiction shall
announce, find or rule that the Federal Guaranty is null and void or otherwise
invalid or unenforceable against the Government;
(d) the Federal Guaranty shall be cancelled or terminated, or shall be
amended or modified such that payment of principal of or interest on any Note
shall not be guaranteed thereby, or shall cease to constitute a full faith and
credit obligation of the United States of America;
(e) a court of competent jurisdiction shall enter a final
nonappealable judgment that the Federal Guaranty is not valid and binding on or
enforceable against the Government;
(f) an "Illegality" (as defined in the Swap Agreement), other than an
Illegality with respect to the Cooperative, shall have occurred and be
continuing;
(g) any governmental authority with competent jurisdiction shall
announce, find or rule that the Swap Agreement is null and void or otherwise
invalid or unenforceable against either party thereto;
(h) the Swap Agreement shall be cancelled or terminated without
payment of all amounts required under Section 7.5 of the Trust Agreement or
replacement thereof by an Alternate Swap Agreement; or
(i) a court of competent jurisdiction shall enter a final
nonappealable judgment that the Swap Agreement is not valid and binding on or
enforceable against either party thereto.
Each purchase hereunder shall be deemed to be a representation and warranty by
the Cooperative on and as of the date of such purchase as to the fact that none
of the events specified in clauses (a) through (i), inclusive, of this Section
3.01 shall have occurred and be continuing.
18
ARTICLE IV
CONDITIONS TO EFFECTIVENESS
SECTION 4.01. Conditions to Effectiveness. This Agreement shall
become effective on the date on which each of the following conditions shall
have been satisfied (or waived in accordance with Section 8.05):
(a) The Bank shall have received on or before the Effective Date:
(i) counterparts hereof signed by each of the parties hereto;
(ii) an opinion of each of Xxxxxx & Xxxxxx L.L.P., special
finance counsel for the Cooperative, dated the Effective Date, and of
Xxxxxx Xxxx, Esq., General Counsel of the Cooperative, dated the Effective
Date, substantially in the forms required to be delivered on the
Refinancing Date pursuant to the Purchase Contract;
(iii) copies of resolutions of the Board of Directors of the
Cooperative authorizing the execution, delivery and performance by the
Cooperative of this Agreement, certified by the Secretary or an Assistant
Secretary of the Cooperative (which certificate, dated the Effective Date,
shall state that such resolutions are in full force and effect on the
Effective Date and have not been amended or supplemented in any manner);
(iv) certified copies of all approvals, authorizations or
consents of, or notices to or filings or registrations with, any
governmental body, agency or official required for the Cooperative to
execute, deliver or perform this Agreement or any of the Related Documents;
(v) a certificate of the Secretary or an Assistant Secretary of
the Cooperative, dated the Effective Date, certifying as to the names and
true signatures of the officers of the Cooperative authorized to execute
this Agreement and any other document to be delivered by the Cooperative
hereunder;
(vi) evidence that, upon issuance, the Certificates will receive
credit ratings of AAA/A-1
19
or higher from S&P and Aa1/P-1 or higher from Xxxxx'x;
(vii) copies, certified to be true and complete, of each of the
Related Documents (including all amendments or supplements thereto);
(viii) a letter, dated the Effective Date, from the Trustee and
Tender Agent to the Bank substantially in the form of Exhibit C hereto;
[(ix) an executed copy of each document, instrument, certificate
and opinion delivered pursuant to each Related Document (together with, in
the case of each such opinion (other than any opinion of counsel to the
underwriter or Remarketing Agent delivered solely to the underwriter or the
Remarketing Agent, respectively), a letter from the counsel rendering such
opinion to the effect that the Bank is entitled to rely on such opinion as
if it were addressed to the Bank);]* and
(x) such other documents, instruments, approvals (and, if
requested by the Bank, certified duplicates of executed copies thereof) or
opinions as the Bank may reasonably request.
(b) The following statements shall be true and shall be deemed to have
been represented by the Cooperative as being true on and as of the Effective
Date, and the Bank shall have received a certificate of an Authorized
Representative of the Cooperative dated the Effective Date, stating that, to the
best of such officer's knowledge after due inquiry, no event or condition
described in Section 3.01 has occurred and is continuing, or would result from
the effectiveness of this Agreement.
(c) [All conditions precedent to (i) the issuance of the Certificates
under the Related Documents and under applicable law, (ii) the creation of the
Trust, the refinancing of the Notes and the deposit thereof in the Trust, (iii)
the continuation of the Federal Guaranty and (iv) the purchase of the
Certificates by the underwriter under the Purchase Contract (other than delivery
of this Agreement) shall have been satisfied without waiver, and each such
issuance, creation,
-----------------
* Include for initial Liquidity Facility.
20
continuation and purchase shall have occurred.]* [All conditions precedent to
the substitution of the Prior Liquidity Facility under the Trust Agreement shall
have occurred, including, without limitation, the payment of all amounts payable
to the provider of such Prior Liquidity Facility in respect thereof, and the
Prior Liquidity Facility shall have been terminated.]**
The Bank shall promptly notify the Cooperative, the Trustee, the Swap Provider
and the Remarketing Agent of the Effective Date, and such notice shall be
conclusive and binding on all parties hereto.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Cooperative represents and warrants, as of the date hereof, each
Purchase Date and each anniversary of the Effective Date that:
SECTION 5.01. Existence and Power. The Cooperative is a non-profit
electric generation and transmission cooperative corporation duly organized,
validly existing and in good standing under the laws of the State of Kansas and
has full power and authority and all material governmental licenses,
authorizations, consents and approvals required to own and operate its
properties and to carry on its activities as now conducted.
SECTION 5.02. Corporate and Governmental Authorization;
Noncontravention. The execution, delivery and performance by the Cooperative of
this Agreement and the Related Documents are within its corporate powers, have
been duly authorized by all necessary action, require no action by or in respect
of, or filing with, any governmental body, agency or official (other than
approvals by the Administrator, which have been obtained), do not violate any
provision of its Articles of Incorporation or bylaws and do not contravene, or
constitute a default under, any provision of applicable law or regulation, or of
any agreement, judgment, injunction, order, decree or other instrument binding
upon the Cooperative or any of its assets or result in the creation or
imposition of any Lien on any asset of the Cooperative.
-----------------
* Include for initial Liquidity Facility.
** Include for any Alternate Liquidity Facility.
21
SECTION 5.03. Valid and Binding Agreements. This Agreement and each
Related Document constitutes a valid and binding agreement of the Cooperative.
SECTION 5.04. Financial Information. The audited balance sheet of
the Cooperative as at December 31, 19/20__ and the related audited statements of
operations, changes in patronage capital (deficit) and cash flows for the fiscal
year then ended, a copy of which has been delivered to the Bank, fairly present
the financial condition of the Cooperative at such date and the results of
operations for such year, in conformity with generally accepted accounting
principles.
SECTION 5.05. Litigation. Except as disclosed in the Offering
Statement, there is no action, suit or proceeding pending against or, to the
knowledge of the Cooperative, threatened against or affecting the Cooperative
before any court or arbitrator or any governmental body, agency or official in
which there is a reasonable possibility of an adverse decision which could
materially adversely affect the business, financial position or results of
operations of the Cooperative or that in any manner draws into question the
validity or enforceability of this Agreement or the Related Documents.
SECTION 5.06. No Defaults. The Cooperative is not in default in the
payment of any amounts due and payable in respect of any indebtedness of the
Cooperative that is guaranteed, either directly or indirectly, by the United
States of America.
SECTION 5.07. Offering Materials. The Offering Statement is accurate
in all material respects for the purposes for which its use is or shall be
authorized; and the Offering Statement does not, and any supplement or amendment
thereto shall not, contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made therein, in the
light of the circumstances under which they are or were made, not misleading;
provided that the Cooperative makes no represen tation as to the accuracy or
completeness of the information relating to the Bank provided in writing by the
Bank for inclusion in the Offering Statement.
SECTION 5.08. Not a Public Utility Holding Company. The Cooperative
is not subject to regulation as a "holding company", or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", as such terms are defined in, and
is not otherwise subject to regulation
22
under, the Public Utility Holding Company Act of 1935, as amended.
SECTION 5.09. Not an Investment Company. The Cooperative is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 5.10. Incorporation of Representations and Warranties by
Reference. The Cooperative hereby makes to the Bank the same representations
and warranties as are made by it in the Trust Agreement and each other Related
Document, which representations and warranties, as well as the related defined
terms contained therein, are hereby incorporated by reference with the same
effect as if each and every such representation and warranty and defined term
were set forth herein in its entirety. No amendment to any such representation
and warranty or defined term made pursuant to any such Related Document shall be
effective to amend such representation and warranty or defined term as
incorporated by reference herein without the prior consent of the Bank.
ARTICLE VI
COVENANTS
The Cooperative agrees that, so long as the Bank has any Commitment
hereunder or any amount payable under any Purchased Certificate remains unpaid:
SECTION 6.01. Information. The Cooperative will deliver, or cause to
be delivered, to the Bank:
(a) as soon as available and in any event within 120 days after
the end of each fiscal year of the Cooperative, a balance sheet of the
Cooperative as of the end of such fiscal year and the related statements of
operations, changes in patronage capital (deficit) and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on without material qualification by the
Cooperative's independent public accountants;
(b) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year of the
Cooperative, a balance sheet of the Cooperative as of the end of such quarter
and the related statements of operations, changes in patronage capital (deficit)
and cash flows
23
for such quarter and for the portion of the Cooperative's fiscal year ended at
the end of such quarter, setting forth in the case of such statements of
operations and changes in patronage capital (deficit) and cash flows in
comparative form the figures for the corresponding quarter and the corresponding
portion of the Cooperative's previous fiscal year, all certified (subject to
normal year-end adjustments) as to fairness of presentation, generally accepted
accounting principles and consistency by an Authorized Representative of the
Cooperative;
(c) within five days after any Authorized Representative of the
Cooperative obtains knowledge of any Default, if such Default is then
continuing, a certificate of an Authorized Representative of the Cooperative
specifying the nature of such Default, the period of its existence and the
action which the Cooperative is taking or proposes to take with respect thereto;
(d) simultaneously with the furnishing thereof, a copy of any
report or other information delivered by the Cooperative to the Trustee or CFC
or (if not the same Person as the Bank) the Swap Provider pursuant to any
Related Document or furnished to (or available to be furnished to) holders of
Certificates; and
(e) from time to time with such information regarding the
Cooperative (including without limitation the financial position, results of
operations, business or prospects of the Cooperative) as the Bank may reasonably
request;
SECTION 6.02. Payment of Obligations. The Cooperative will pay and
discharge, at or before maturity, all of its material obligations and
liabilities, including, without limitation, tax liabilities, except where the
same may be contested in good faith by appropriate proceedings, and will
maintain, in accordance with generally accepted accounting principles,
appropriate reserves for the accrual of the same.
SECTION 6.03. Conduct of Business and Maintenance of Existence. The
Cooperative will continue to engage in business as now conducted by it, and,
except as otherwise permitted in Section 6.06 hereof, will preserve, renew and
keep in full force and effect its corporate existence and will take all action
to maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of
24
its business and to perform its obligations under this Agreement and the Related
Documents.
SECTION 6.04. Inspection of Property, Books and Records. The
Cooperative will keep proper books of record and account in which full, true and
correct entries shall be made of all dealings and transactions in relation to
its business and activities and will permit representatives of the Bank at the
Bank's expense to visit and inspect any of its properties, to examine and make
abstracts from any of its books and records and to discuss its affairs, finances
and accounts with its officers, employees and independent public accountants,
all at such reasonable times and as often as may reasonably be desired.
SECTION 6.05. Incorporation by Reference. The Cooperative will
perform and comply with each and every obligation, covenant and agreement
required to be performed or observed by it in or pursuant to the Trust
Agreement, the Loan Agreement and each other Related Document, which provisions,
as well as the related defined terms contained therein, are hereby incorporated
by reference herein with the same effect as if each and every such provision
were set forth herein in its entirety. To the extent that any such incorporated
provision permits the Trustee or the holders of one or more Certificates or any
other Person or Persons to waive compliance with such provision or requires that
a document, opinion or other instrument or any event or condition be acceptable
or satisfactory to the Trustee or the holders of one or more Certificates or any
other Person or Persons, for purposes of this Agreement, such provision shall be
complied with only if it is waived by the Bank and such document, opinion or
other instrument and such event or condition shall be acceptable or satisfactory
only if it is acceptable or satisfactory to the Bank unless such consent is not
required pursuant to Section 6.07. No amendment to, or waiver of, such
obligations, covenants and agreements or defined terms made pursuant to any of
the Related Documents shall be effective to amend or waive such obligations,
covenants and agreements and defined terms as incorporated by reference herein
without the consent of the Bank unless such consent is not required pursuant to
Section 6.07.
SECTION 6.06. Consolidations, Mergers and Sales of Assets. The
Cooperative will not (i) terminate, wind up, liquidate or dissolve its affairs
or consolidate or merge with or into any Person or (ii) sell, transfer, convey
or lease (whether in a single transaction or a series of transactions) all or
substantially all of its properties or assets to any Person, unless, in the case
of any such consolidation or merger with or into any Person or any such
25
sale, transfer or lease to any Person, such Person shall have assumed, in
writing, the obligations of the Cooperative hereunder.
SECTION 6.07. Related Documents. The Cooperative will not enter into
or consent to any amendment, supplement or modification to, or termination or
waiver of, and will not accept the benefit of any waiver of, any provision of
any of the Related Documents without the Bank's prior consent if such amendment,
supplement, modification, termination or waiver might in any way adversely
affect the rights or interests of the Bank hereunder or thereunder; provided
that the Cooperative shall not, without the Bank's prior consent, (i) consent
to, or otherwise permit to be made, any termination or amendment of or
modification to the Federal Guaranty or (ii) include, or permit to be included,
any material or reference relating to the Bank in any offering or remarketing
circular or document (other than any offering or remarketing materials in effect
on the Effective Date) or tombstone advertisement used in connection with the
offering and sale or the re-offering and resale or the remarketing of the
Certificates.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) (i) any one or more of the events or conditions set forth in
clauses (a) through (e), inclusive, of Section 3.01 shall occur or exist or (ii)
any one or more of the events or conditions set forth in clauses (f) through
(i), inclusive, of Section 3.01 shall occur or exist;
(b) any interest on any Note or any fees or other amounts
payable hereunder (including any principal of or any interest on any
disbursement made by the Bank of the Purchase Price of any Unremarketed
Certificate) shall not be paid within six Business Days after the date thereof;
(c) the Cooperative shall fail to observe or perform any
covenant contained in Section 6.06 or 6.07;
(d) the Cooperative shall fail to observe or perform any
covenant or agreement applicable to it and
26
contained in this Agreement (other than those covered by clause (b) or (c)
above) or in any Related Document for 90 days after written notice thereof has
been given to the Cooperative by the Bank;
(e) any representation, warranty, certification or statement
made by the Cooperative in this Agreement or in any Related Document or in any
certificate, financial statement or other document delivered pursuant hereto or
thereto shall prove to have been incorrect in any material respect when made (or
deemed made);
(f) the Cooperative shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any action to authorize any of the foregoing;
(g) an involuntary case or other proceeding shall have been
commenced against the Cooperative seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or the
Cooperative or any court or governmental authority having jurisdiction over the
Cooperative shall have declared a moratorium or taken similar action with
respect to any debts of the Cooperative; or
(h) any representation, warranty, certification or statement
made or deemed made by the Government or the Administrator under or pursuant to
any Related Document or in any document, instrument, statement or certificate
delivered in connection herewith or therewith shall prove to have been incorrect
in any material respect when made or deemed made;
27
(i) any provision of this Agreement or any Related Document
(other than the Federal Guaranty and the Swap Agreement) shall at any time cease
to be legal, valid, binding and enforceable on the Cooperative, the Servicer or
the Government, as the case may be, or shall be declared to be null and void, or
the legality, validity or enforceability of any of the foregoing or of the
transactions contemplated thereby shall be contested by the Cooperative, the
Servicer, the Administrator, the Government or any other governmental authority
having competent jurisdiction;
(j) any event or condition which constitutes an "event of
default" under any Related Document shall have occurred and be continuing; or
(k) the holders of the Certificates shall for any reason cease
to have any unencumbered interest in the Trust, or the Trustee, the Servicer,
the Cooperative, the Administrator, the Government or any other governmental
authority having competent jurisdiction shall so assert in writing;
then the Bank may take one or more of the following actions:
(1) In the case of any Event of Default specified in subsection (a)(i) of
Section 7.01, the Commitment and the obligation of the Bank to purchase
Unremarketed Certificates hereunder shall terminate immediately without notice
or demand to any Person. Promptly upon the occurrence of such Event of Default,
the Bank shall give written notice of the same to the Cooperative, the Trustee
and the Remarketing Agent; provided, however, that the Bank shall not incur any
liability or responsibility whatsoever by reason of the Bank's failure to give
such notice and such failure shall in no way affect the termination of the
Commitment and the obligation of the Bank to purchase Unremarketed Certificates
pursuant to this Agreement.
(2) In the case of any Event of Default specified in subsection (a)(ii) of
Section 7.01, the obligation of the Bank to purchase Unremarketed Certificates
shall be suspended immediately (but not terminated) without notice or demand to
any Person and thereafter the Bank shall be under no obligation to purchase any
Unremarketed Certificate until such obligation is reinstated as described below
in this paragraph (2). Promptly upon the occurrence of such Event of Default,
the Bank shall notify the Cooperative, the Trustee and
28
the Remarketing Agent of such suspension; provided, however, that the Bank shall
not incur any liability or responsibility whatsoever by reason of the Bank's
failure to give such notice and such failure shall in no way affect the
suspension of the obligation of the Bank to purchase Unremarketed Certificates
pursuant to this Agreement. If the Bank receives notice on or before the close
of business on the fifth Business Day following the occurrence of such Event of
Default that an Alternate Swap Agreement has been deposited with the Trustee and
is effective, then the obligation of the Bank to purchase Unremarketed
Certificates hereunder shall thereupon be reinstated (unless the Commitment has
been terminated pursuant to any other provision of this Agreement). If the Bank
fails to receive notice by the close of business on such fifth Business Day that
an Alternate Swap Agreement has been deposited with the Trustee and is
effective, then the Commitment and the obligation of the Bank to purchase
Unremarketed Certificates hereunder shall, unless previously terminated pursuant
to any other provision of this Agreement, at such time terminate without notice
or demand and, thereafter, the Bank shall be under no obligation to purchase
Unremarketed Certificates. A suspension pursuant to this paragraph (2) shall not
in any event extend the Scheduled Expiration Date or affect any other remedy
under this Section 7.01.
(3) In the case of any Event of Default, the Bank shall have the right to
take any actions permitted by applicable law and to pursue all remedies
(including, without limitation, the right to demand and receive specific
performance provided at law or in equity); provided, however, that the Bank
shall not have the right to terminate or suspend the Commitment or its
obligation to purchase Unremarketed Certificates other than as provided in
paragraph (1) or (2) above or the right to accelerate any amount due hereunder
at any time prior to the termination of the Commitment in accordance with this
Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices. All notices, requests, consents and other
communications to any party hereunder shall be in writing (including bank wire,
telex, telecopier or similar writing) and shall be given to such party at its
address, telex or telecopy number set forth on the signature
29
pages hereof, or at such other address or telex or telecopier number as such
party may hereafter specify for the purpose by at least five Business Days'
prior notice to the other party. Each such notice, request, consent or other
communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section and the appropriate
answerback is received, (ii) if given by telecopy, when such telecopy is
transmitted to the specified telecopier number and its receipt is acknowledged,
(iii) if given by mail, 72 hours after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid or (iii) if given
by any other means, when delivered at the address specified in this Section;
provided that notices to the Bank pursuant to Section 2.02 and 2.04 shall be
effective immediately upon receipt thereof.
SECTION 8.02. No Waivers. No failure or delay by the Bank in
exercising any right, power or privilege hereunder or under any Purchased
Certificate or other Related Document shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
SECTION 8.03. Expenses; Documentary Taxes; Indemnification; Reduced
Return. (a) The Cooperative and the Bank agree that Xxxxxx Guaranty (or, if
any Person other than Xxxxxx Guaranty or an affiliate of Xxxxxx Guaranty is the
Swap Provider, such other Person) shall pay the reasonable out-of-pocket
expenses of the Bank, including the reasonable fees and disbursements of counsel
for the Bank, in connection with the preparation, execution and delivery of (x)
this Agreement and (y) any Related Documents scheduled to become effective on or
about the Effective Date, so long as the Swap Agreement with Xxxxxx Guaranty (or
its affiliate) or such other Person, as the case may be, is in effect and the
Swap Provider has received all amounts in respect of Swap Provider Payments and
any Termination Amount then due to it under the Swap Agreement, it being
understood and agreed that the Cooperative shall remain obligated to pay such
amounts to the extent that Xxxxxx Guaranty or such other Person is not
obligated, or fails, to pay such amounts. The Cooperative shall pay all out-of-
pocket expenses, including the reasonable fees and disbursements of counsel for
the Bank, in connection with (i) any waiver or consent hereunder or under any
Related Document or any amendment hereof or thereof or (ii) any Default or
alleged Default hereunder or thereunder, including in connection
30
with any collection, bankruptcy, insolvency and other enforcement proceedings
resulting therefrom. In addition, the Cooperative shall be obligated to pay any
and all stamp, transfer, documentary and other taxes, assessments, charges and
fees payable or determined to be payable in connection with the execution,
delivery, filing or recording of this Agreement or any Related Document or any
instrument filed or recorded in connection with the transactions contemplated
hereby or thereby and shall agree to hold each Bank harmless from and against
any and all liabilities with respect to or resulting from any delay in paying or
omitting to pay any such taxes, assessments, charges or fees.
(b) The Cooperative, to the fullest extent it may lawfully do so,
hereby indemnifies the Bank and their respective affiliates and the respective
directors, officers, agents and employees of each of the foregoing (each an
"Indemnitee") and holds each Indemnitee harmless from and against any and all
claims, damages, losses, liabilities, cost or expenses which such Indemnitee may
incur (or which may be claimed against such Indemnitee by any Person whatsoever)
by reason of any untrue statement or alleged untrue statement of any material
fact contained (or incorporated by reference) in the Offering Statement or in
any supplement or amendment thereof, or the omission or alleged omission to
state therein a material fact necessary to make such statements, in the light of
the circumstances under which they are or were made, not misleading, except
insofar as such claims, damages, losses, liabilities, costs or expenses are
caused by any such untrue statement or alleged untrue statement or omission
based upon information relating to the Bank furnished to the Cooperative in
writing by the Bank expressly for use therein.
(c) If the Bank shall have determined that, after the date hereof,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of the Bank (or its Parent) as a consequence of the Bank's
obligations hereunder to a level below that which the Bank (or its Parent) could
have achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by the Bank to be material, then from time to time, following receipt by
31
the Cooperative, the Swap Provider and the Trustee of a certificate claiming
compensation under this Section, as described below, but in no event earlier
than the earliest date of payment by the Cooperative under the Swap Agreement
occurring at least 90 days following receipt by the Cooperative and the Trustee
of notice by the Bank pursuant to the immediately succeeding sentence, the Bank
shall be paid such additional amount or amounts as will compensate the Bank (or
its Parent) for such reduction, it being understood and agreed that such
additional amount or amounts shall be paid by Xxxxxx Guaranty (or, if any Person
other than Xxxxxx Guaranty or an affiliate of Xxxxxx Guaranty is the Swap
Provider, such other Person) so long as the Swap Agreement with Xxxxxx Guaranty
(or its affiliate) or such other Person, as the case may be, is in effect and
the Swap Provider has received all amounts in respect of Swap Provider Payments
and any Termination Amount then due to it under the Swap Agreement, it being
understood and agreed that the Cooperative shall remain obligated to pay such
amounts to the extent that Xxxxxx Guaranty or such other Person, as the case may
be, is not obligated, or fails, to pay such amounts; provided, however, that the
Cooperative shall have no obligation to pay such unpaid amounts to the extent
that the sum of such unpaid amounts and the unpaid fees and other amounts
payable under Sections 2.05 and 2.06(e) hereof exceed an amount equal to 0.25%
per annum (computed on the basis of a year of 365 days (or 366 days in a leap
year) and paid for the actual number of days elapsed (including the first day
but excluding the last day) in the period for which payment is due) of the
Commitment. The Bank will promptly notify the Cooperative, the Swap Provider and
the Trustee of any event of which it has knowledge, occurring after the date
hereof, which will entitle the Bank to compensation pursuant to this Section. A
certificate of the Bank claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such amount, the
Bank may use any reasonable averaging and attribution methods.
SECTION 8.04. Liability of the Bank. (a) The Cooperative assumes any
and all risks with respect to the acts or omissions of the Trustee, the Tender
Agent and the Remarketing Agent in connection with its use of this Agreement or
any amounts made available by the Bank hereunder. Neither the Bank nor any of
its officers, directors, employees or agents shall be liable or responsible for
any of the following: (i) the use that may be made of this Agreement or any
amounts made available by the Bank hereunder or for any acts or omissions of the
Trustee, the Tender Agent or the Remarketing Agent in
32
connection therewith; (ii) the validity, sufficiency or genuineness of documents
(except for the validity and enforceability of the Bank's obligations
hereunder), even if such documents should in fact prove to be in any or all
respects invalid, insufficient, fraudulent or forged; or (iii) any other
circumstances whatsoever in making or failing to make payment under this
Agreement, except only that the Cooperative shall have a claim against the Bank
and the Bank shall be liable to the Cooperative to the extent, but only to the
extent, of any direct, as opposed to consequential, damages suffered by the
Cooperative that the Cooperative proves were proximately caused by the Bank's
breach of its obligation to make payment under this Agreement strictly in
accordance with the terms hereof or for any direct loss or damage caused by the
gross negligence or willful misconduct of the Bank; provided, however, that the
maximum amount of damages recoverable by the Cooperative as provided above is
expressly limited to an amount equal to the Available Commitment. In furtherance
and not in limitation of the foregoing, the Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.
(b) It is understood that in connection with the offering, sale or
remarketing of Certificates, the Bank shall, as between the Bank and the
Cooperative, be responsible for its compliance with any registration,
qualification or other requirements under any federal or state law or regulation
applicable to it, and the Bank shall, as between the Bank and the Cooperative,
indemnify the Cooperative against any claims or liabilities arising out of any
failure to so comply; provided that nothing herein shall be construed to require
the Bank to indemnify against or otherwise be responsible for compliance with
any requirements under federal or state law or regulations with respect to any
securities laws or any information provided in connection with the offering,
sale or remarketing of Certificates other than such information provided by the
Bank as a description of the Bank.
SECTION 8.05. Amendments and Waivers. Any provision of this
Agreement may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by the Cooperative and the Bank and, if the Bank is not
Xxxxxx Guaranty, approved by Xxxxxx Guaranty.
SECTION 8.06. Successors and Assigns. (a) The obligations of the
Cooperative under this Agreement shall continue until the later of the Scheduled
Termination Date and the date upon which all amounts due and owing to the
33
Bank shall have been paid in full. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Cooperative may not assign or otherwise
transfer any of its rights under this Agreement without the prior consent of the
Bank; provided, however, that the obligations of the Cooperative pursuant to
Sections 8.03(a) and (b) shall survive the termination of this Agreement.
(b) The Bank may at any time grant to one or more banks or other
institutions (each a "Participant") partici pating interests in its Commitment
or any or all of its Purchased Certificates. In the event of any such grant by
the Bank of a participating interest to a Participant, whether or not upon
notice to the Cooperative, the Bank shall remain responsible for the performance
of its obligations hereunder, and the Cooperative shall continue to deal solely
and directly with the Bank in connection with the Bank's rights and obligations
under this Agreement. Any agreement pursuant to which the Bank may grant such a
participating interest shall provide that the Bank shall retain the sole right
and responsibility to enforce the obligations of the Cooperative hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement. The Cooperative agrees that each
Participant shall, to the extent provided in its participation agreement, be
entitled to the benefits of Section 8.03(c) with respect to its participating
interest; provided that no Participant shall be entitled to receive any greater
amount pursuant to such provisions than the transferor Bank would have been
entitled to receive thereunder in respect of the participating interest granted
by such Bank had it not granted such participating interest. An assignment or
other transfer which is not permitted by subsection (c) below shall be given
effect for purposes of this Agreement only to the extent of a participating
interest granted in accordance with this subsection (b).
(c) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Purchased Certificates to a Federal Reserve Bank.
No such assignment shall release the transferor Bank from its obligations
hereunder.
SECTION 8.07. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York.
34
SECTION 8.08. Counterparts; Integration. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
SECTION 8.09. Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
SECTION 8.10. Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
KANSAS ELECTRIC POWER
COOPERATIVE, INC.
By ___________________________
Title: Executive Vice President and Chief
Executive Officer
X.X. Xxx 0000
Xxxxxx, Xxxxxx 00000
Attention: Executive Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Commitments
-----------
Principal
Commitment: $[57,390,000] [NAME OF BANK]
Interest
Commitment: $ By
----------- --------------------------------------
Title:
[Address of Bank]
-------------------------
Telecopier:
Total Commitments Attention:
Payment (wire) instructions:
$
=================
[Acknowledged:
XXXXXX GUARANTY TRUST COMPANY
OF NEW YORK, individually and
as the initial Swap Provider
By
-------------------------]
Title:
36
EXHIBIT A
FORM OF
OPINION OF SPECIAL FINANCE COUNSEL FOR
THE COOPERATIVE
---------------------------
[see form of opinion to be delivered pursuant
to the Purchase Contract at the Refinancing Date]
A-1
EXHIBIT B
FORM OF
OPINION OF GENERAL COUNSEL OF
THE COOPERATIVE
-----------------------------
[see form of opinion to be delivered pursuant
to the Purchase Contract at the Refinancing Date]
B-1
EXHIBIT C
FORM OF TRUSTEE'S AND
TENDER AGENT'S LETTER
---------------------
[Dated the Effective Date]
[name of Bank]
[address of Bank]
Re: Standby Certificate Purchase Agreement dated as of [date] between Kansas
Electric Cooperative, Inc. and [name of Bank] (as amended from time to
time, the "Agreement")
Gentlemen:
We refer to the above-referenced Agreement. Terms used herein and not
otherwise defined herein are used herein as defined in (or incorporated by
reference in) the Agreement.
We hereby agree to enforce the provisions of the Trust Agreement for
your benefit to the extent applicable. The undersigned, in its capacity as
Trustee and Tender Agent, further agrees to perform its obligations under the
Trust Agreement.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee and as Tender Agent
By
-------------------------------
Title:
C-1
