EXHIBIT 10.4
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FIRST AMENDMENT TO
LOAN GUARANTEE AND SERVICING AGREEMENT
Executed as of December 20, 1996
Effective as set forth herein
among
UNITED STATES OF AMERICA
acting through the Administrator of the
Rural Utilities Service
as Guarantor,
KANSAS ELECTRIC POWER COOPERATIVE, INC.
as the Cooperative,
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE COOPERATION
as the Lender,
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE COOPERATION
as the Servicer,
and
THE FIRST NATIONAL BANK OF CHICAGO
as the Trustee
Rural Electric Cooperative Grantor Trusts (KEPCO)
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TABLE OF CONTENTS
Page
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Parties........................................................................... 1
Recitals.......................................................................... 1
ARTICLE 1
Amendments to Original Loan Guarantee Agreement
Section 1.1 Amendments to Article I.......................................... 3
Section 1.2 Amendments to Article II......................................... 6
Section 1.3 Amendments to Article V.......................................... 6
Section 1.4 Amendment to Article VI.......................................... 7
Section 1.4A Amendment to Article VII......................................... 7
Section 1.5 Amendments to Article XII........................................ 8
Section 1.6 Amendments to Schedule I......................................... 9
Section 1.7 Amendment to Schedule II (Note One) to Loan
Guarantee Agreement.............................................. 10
Section 1.8 Amendment to Schedule II (Note Two) to Loan
Guarantee Agreement.............................................. 11
ARTICLE 2
Further Amendments to Original Loan Guarantee Agreement
Section 2.1 Amendments to Schedule I......................................... 11
ARTICLE 3
Consents; Representations and Warranties
Section 3.1 Consent and Approval of the RUS; Representation of the RUS....... 12
Section 3.2 Consent and Approval of the Cooperative; Representations of the
Cooperative...................................................... 12
Section 3.3 Consent and Approval of the Lender; Representations of the Lender 13
Section 3.4 Consent and Approval of the Servicer; Representations
of the Servicer.................................................. 14
Section 3.5 Consent and Approval of the Trustee.............................. 15
ARTICLE 4
Miscellaneous
Section 4.1 Effective Date................................................... 16
Section 4.2 Definitions...................................................... 16
Section 4.3 Assignment By Cooperative of Rights Under Swap Agreement......... 16
Section 4.4 Successor Entities............................................... 16
Section 4.5 Governing Law.................................................... 16
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THIS FIRST AMENDMENT TO LOAN GUARANTEE AND SERVICING AGREEMENT (this
"Agreement"), entered into as of December 20, 1996 and effective as provided
herein, is entered into among the UNITED STATES OF AMERICA, acting through the
Administrator (the "Administrator") of the Rural Utilities Service ("RUS"), 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)
(successor to the Rural Electrification Administration with respect to the
administration of certain electric and telephone loan programs); KANSAS ELECTRIC
POWER COOPERATIVE, INC. (the "Cooperative"), a Kansas nonprofit cooperative
corporation; NATIONAL RURAL UTILITIES COOPERATIVE FINANCE COOPERATION, as the
Servicer, a District of Columbia cooperative association ("CFC" or the
"Servicer"); NATIONAL RURAL UTILITIES COOPERATIVE FINANCE COOPERATION, as the
Lender, a District of Columbia cooperative association ("CFC" or the "Lender")
and THE FIRST NATIONAL BANK OF CHICAGO, a national banking association,
organized under the laws of the United States of America (hereinafter called the
"Trustee"), solely in its capacity as trustee under each of the trust agreements
referred to below, for the purpose of amending that certain Loan Guarantee and
Servicing Agreement, dated as of February 15, 1988, among the Administrator of
the RUS (as successor to the Rural Electrification Administration), the
Cooperative, the Servicer, the Lender, and the Trustee (the "Original Loan
Guarantee Agreement").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Cooperative has heretofore entered into loans with the Federal
Financing Bank (hereinafter called the "FFB," and such loans hereinafter
collectively called the "FFB Loans"), which loans were guaranteed by the
Administrator of RUS pursuant to section 306 of the Rural Electrification Act of
1936, as amended (7 U.S.C. (S) 901 et seq.) (hereinafter called the "Act"); and
WHEREAS, the Administrator of RUS determined, pursuant to Section 306A of
the Act and the regulations published by RUS implementing Section 306A of the
Act (7 C.F.R. Part 1786) (hereinafter called the "Regulations"), that certain of
the FFB Loans, or certain of the advances made by the FFB to the Cooperative on
account of the FFB Loans, were eligible for prepayment under Section 306A of the
Act; and
WHEREAS, pursuant to that certain Loan Agreement, dated as of February 15,
1988 (the "Lender Loan Agreement") between the Lender and the Cooperative, the
Lender made a loan to the Cooperative in the principal amount of $62,487,163.21
(the "Lender Loan") for the sole purpose of financing the Cooperative's
prepayment of the FFB Loans, and the Administrator of RUS transferred the
guarantee of the FFB Loans to the Lender Loan, as contemplated by Section 306A
of the Act, upon the terms and subject to the conditions provided in the Lender
Loan Agreement; and
WHEREAS, the Cooperative executed Lender Loan Note One and Lender Loan Note
Two, more particularly described in Annex C to the Lender Loan Agreement
(respectively, "Lender Loan Note One" and "Lender Loan Note Two"), evidencing a
portion of the Lender Loan in the original principal amounts of $11,075,000 and
$51,340,000, respectively; and
WHEREAS, the Trustee, pursuant to that certain Trust Agreement, dated as of
February 15, 1988, among the Servicer, the Cooperative and the Trustee (the "K1
Trust Agreement"), established Cooperative Utility Trust (KEPCO) 1988-K1 (the
"K1 Trust") for the purpose of holding Lender Loan Note One; and
WHEREAS, the Trustee, pursuant to that certain Trust Agreement, dated as of
February 15, 1988, among the Servicer, the Cooperative and the Trustee (the "K2
Trust Agreement," together with the K1 Trust Agreement, the "Trust Agreements"),
established Cooperative Utility Trust (KEPCO) ▇▇▇▇-▇▇ (▇▇▇ "▇▇ ▇▇▇▇▇," together
with the K1 Trust the "Original Trusts") for the purpose of holding Lender Loan
Note Two; and
WHEREAS, the Lender as depositor of the Original Trusts and Servicer of
Lender Loan Note One and Lender Loan Note Two caused Lender Loan Note One and
Lender Loan Note Two to be delivered to the K1 Trust and the K2 Trust,
respectively; and
WHEREAS, pursuant to the Trust Agreements, certificates of beneficial
interests (the "Original Certificates") in 100% of the Original Trusts were
issued to the Lender in consideration of the Lender's deposit of Lender Loan
Note One and Lender Loan Note Two into the Original Trusts; and
WHEREAS, the Lender has transferred and sold such Original Certificates to
certificateholders; and
WHEREAS, the Servicer serviced Lender Loan Note One and Lender Loan Note
Two upon the terms and subject to the conditions of the Original Loan Guarantee
Agreement; and
WHEREAS, pursuant to Section 3.9 of the Lender Loan Agreement, Lender Loan
Note One and Lender Loan Note Two may be prepaid or purchased prior to their
stated maturities, provided that, among other things, the Servicer gives its
consent to a purchase if it is to continue serving in such capacity, and full
payment is delivered to the Trustee at least 30 days prior to the proposed
prepayment or purchase date; and
WHEREAS, Lender Loan Note One and Lender Loan Note Two will be eligible for
prepayment or purchase on any Business Day (as defined in the Lender Loan
Agreement) on or after the Business Day immediately prior to December 15, 1997;
and
WHEREAS, pursuant to the terms and subject to the conditions of that
certain First Amendment to Loan Agreement, entered into as of even date
herewith, between the Cooperative and the Lender (the "First Amendment to Loan
Agreement"), and Section 3.9 of the Lender Loan Agreement, the Lender will, on
the Deposit Date (as defined in the First Amendment to Loan Agreement), notify
the Trustee of the Lender's intent to purchase Lender Loan Note One and Lender
Loan Note Two on a date specified by the Cooperative pursuant to the First
Amendment to Loan Agreement (the "Refinancing Date"), on which date the Trustee
will redeem the related Original Certificates and terminate the related Original
Trusts and the Lender will deposit Lender Loan Note One and Lender Loan Note Two
into the Series 1997 Trust (as defined in that certain Trust
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Agreement, entered into as of even date herewith, among the Cooperative, CFC and
the Trustee (the "1997 Trust Agreement")), the Trustee will issue new
certificates of beneficial interests therein (the "Certificates"); and
WHEREAS, the Cooperative has entered into the Swap Agreement (as defined
in the 1997 Trust Agreement) with the Swap Provider (as defined in the 1997
Trust Agreement), which Swap Agreement will be assigned to and deposited in the
Series 1997 Trust on the Refinancing Date, pursuant to which the Swap Provider
will pay to the 1997 Trust a variable rate of interest and the 1997 Trust will
pay to the Swap Provider a fixed rate of interest; and
WHEREAS, CFC desires to continue to service Lender Loan Note One and Lender
Loan Note Two and receive the benefits therefrom; and
WHEREAS, CFC and the Cooperative desire to amend the Original Loan
Guarantee Agreement for the purpose of making certain additions thereto and
deletions therefrom to reflect the above transactions; and
WHEREAS, such acts will result in the reduction of the interest rate
payable by the Cooperative relating to such obligations, thereby improving the
financial strength of the Cooperative as contemplated by Section 306A of the
Act; and
WHEREAS, the RUS, as the guarantor of Lender Loan Note One and Lender Loan
Note Two, will benefit from such reduction in interest rate; and
WHEREAS, the RUS, the Servicer, the Lender, the Trustee and the Cooperative
have consented, pursuant to Sections 8.1 and 12.1(b) of the Original Loan
Guarantee Agreement to the amendment of certain provisions of the Original Loan
Guarantee Agreement for the purpose of reflecting the aforesaid transactions;
and
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the RUS, the Servicer, the Lender, the Trustee and the Cooperative agree to
amend the Original Loan Guarantee Agreement as follows:
ARTICLE 1
AMENDMENTS TO ORIGINAL LOAN GUARANTEE AGREEMENT
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Effective on the Refinancing Date, and subject to deposit of the Notes in
the Series 1997 Trust, the Original Loan Guarantee Agreement shall be amended as
follows:
SECTION 1.1 AMENDMENTS TO ARTICLE I. Article I shall be amended as
follows:
(A) The definition of "Business Day" shall be deleted in its entirety and
the following shall be substituted in lieu thereof:
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"Business Day" shall have the meaning assigned to it in the 1997 Trust
Agreement.
(B) The definition of "Lender Loan Agreement" shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
"Lender Loan Agreement" shall mean that certain Loan Agreement, dated as of
February 15, 1988, between the Cooperative and the Lender, as amended by that
certain First Amendment to Lender Loan Agreement.
(C) The definition of "Trust Agreements" shall be amended and restated in
its entirety as follows:
"Trust Agreements" shall mean the 1997 Trust Agreement.
(D) The definition of "Trusts" shall be deleted in its entirety and the
following shall be substituted in lieu thereof:
"Trusts" shall mean the Series 1997 Trust.
(E) The following definition shall be inserted in alphabetical order:
"First Amendment to Lender Loan Agreement" shall mean that certain First
Amendment to Loan Agreement, entered into as of December 20, 1996, between the
Cooperative and the Lender.
(F) The following definition shall be inserted in alphabetical order:
"First Amendment to Loan Guarantee Agreement" shall mean that certain
First Amendment to Loan Guarantee and Servicing Agreement, entered into as of
December 20, 1996, among the Cooperative, CFC, the Trustee and the Rural
Utilities Service on behalf of the United States of America (as successor to the
Rural Electrification Administration).
(G) The following definition shall be inserted in alphabetical order:
"Lender Loan Note One" shall mean Lender Loan Note One described in the
recitals to the First Amendment to Loan Guarantee Agreement and in Schedule II
(Note One) to this Agreement.
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(H) The following definition shall be inserted in alphabetical order:
"Lender Loan Note Two" shall mean Lender Loan Note Two described in the
recitals to the First Amendment to Loan Guarantee Agreement and in Schedule II
(Note Two) to this Agreement.
(I) The following definition shall be inserted in alphabetical order:
"1997 Trust Agreement" shall mean the Trust Agreement, entered into as of
December 20, 1996, among CFC, the Cooperative and the Trustee.
(J) The following definition shall be inserted in alphabetical order:
"Refinancing Date" shall mean December 18, 1997.
(K) The following definition shall be inserted in alphabetical order:
"Series 1997 Trust" shall mean the Rural Electric Cooperative Grantor Trust
(KEPCO) Series 1997, created by the 1997 Trust Agreement, and into which Lender
Loan Note One and Lender Loan Note Two shall be deposited on the Refinancing
Date.
(L) The following definition shall be inserted in alphabetical order:
"Swap Agreement" shall have the meaning assigned to it in the 1997 Trust
Agreement.
(M) The following definition shall be inserted in alphabetical order:
"Swap Provider" shall have the meaning assigned to it in the 1997 Trust
Agreement.
(N) Section 1.2 shall be amended and restated in its entirety as follows:
"SECTION 1.2. Rules of Construction. Unless the context shall otherwise
indicate, the terms defined in Section 1.1 hereof include the plural as well as
the singular and the singular as well as the plural. The words "herein",
"hereof", "hereto" and "hereunder", and words of similar import, refer to this
Agreement as a whole. The word "person" includes corporations, associations and
public bodies, as well as natural persons. Persons and entities named herein
shall include such persons and entities, their successors and assigns.
References herein to any document or agreement (including this Agreement) shall
mean that document or agreement as it may have
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been or may be amended, restated or supplemented from time to time."
SECTION 1.2 AMENDMENTS TO ARTICLE II. Article II shall be amended as
follows:
(A) Section 2.3 shall be amended and restated in its entirety as follows:
Principal payments on the Lender Loan Notes will be due by 11:00 a.m. (New
York, New York time) on the dates and in the amounts set forth on Schedule II
hereto, unless such payments are accelerated because the RUS shall have failed
to pay under the Guarantee of any Lender Loan Note any amount required to be
paid under Section 3.2 hereof or any Guarantee of a Lender Loan Note shall not
be the valid, binding and enforceable obligation of the RUS. The Cooperative
will have the option of prepaying any Lender Loan Note, in whole but not in
part, or requiring the holder of any Lender Loan Note to sell such Lender Loan
Note to a third party designated by the Cooperative, on the dates specified in
Schedule II hereto.
(B) Section 2.4 shall be amended and restated in its entirety as follows:
Payments of Guaranteed Interest on each of the Lender Loan Notes will be
due by 11:00 a.m. (New York, New York time) on the Interest Payment Dates for
such Lender Loan Note or upon acceleration of such Lender Loan Note.
SECTION 1.3 AMENDMENTS TO ARTICLE V. Article V shall be amended as
follows:
(A) Section 5.2(a) shall be amended and restated in its entirety as
follows:
(a) if the Cooperative shall fail to pay on the scheduled due date the
amount of any installment of principal of the respective Lender Loan Note then
due or the Guaranteed Interest on the respective Lender Loan Note accrued
through such date and the Servicer of such Lender Loan Note receives notice of
such failure pursuant to the respective Trust Agreement, such Servicer shall use
its best efforts to deliver such notice to RUS within two hours of receipt by
Servicer of same and in no event later than 4:00 p.m. District of Columbia time
on the Business Day next following the date such Servicer receives such notice,
a written notice thereof in the form of Annex E hereto (a "Default Notice")
specifying the amount thereof, including how much is principal and how much is
Guaranteed Interest, setting forth in reasonable detail the basis for and method
of calculation of the amount of principal and Guaranteed Interest, certifying
that the amount of such Guaranteed Interest does
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not exceed the Maximum Interest Rate for such Lender Loan Note, specifically
identifying the particular Lender Loan Note and the person to whom and the
account to which any payment under the Guarantee of such Lender Loan Note with
respect to such default is to be wired as the payee of such Lender Loan Note,
and certifying that the person so identified is the Payee of such Lender Loan
Note, and shall submit to RUS, as soon as possible thereafter, a report setting
forth its views as to the reasons for the default, how long it expects the
Cooperative to be in default and what corrective actions the Cooperative states
it is taking to cure such default or achieve a current debt service position (as
the case may be); and
SECTION 1.4 AMENDMENT TO ARTICLE VI. Article VI shall be amended as
follows:
(A) Section 6.1 shall be amended by deleting subsection (c) and, in place
thereof, substituting a new subsection (c) as follows:
(c) the amount of Termination Payment, if any, that the Cooperative would
be required to pay, under Section 6 of the Swap Agreement, if it were to
terminate such Swap Agreement on such date. It is the intent of the Cooperative
and RUS that if RUS pays such amounts, it shall have the right of subrogation
thereto under the Mortgage.
(B) Section 6.3(b) shall be amended and restated to read in its entirety as
follows:
if the Lender Loan Note is bearing interest at a Fixed Rate at the time of
such prepayment or purchase, on any date on which the Cooperative would be
permitted under the terms of the Lender Loan Agreement to prepay such Lender
Loan Note.
SECTION 1.4A AMENDMENT TO ARTICLE VII. Article VII shall be amended as
follows:
(A) Section 7.2 shall be amended by adding a new subsection (c) as follows:
(c) In the event that a Mortgage Default has occurred, and subject to any
limitations thereon contained in the Mortgage, in addition to its rights under
Section 7.2(b) hereof, RUS shall have the legal power to exercise all the
rights, powers and privileges (i) of a holder of each Lender Loan Note, (ii) to
recover judgment in its own name or on behalf of the holders of the Lender Loan
Notes and to apply the proceeds thereof towards satisfaction of payments made by
RUS under the Guarantee of each Lender Loan Note, (iii) to file such proofs of
claim and other papers and documents as may be advisable to have the claims of
RUS and the holders of the Lender Loan Notes
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allowed in any bankruptcy, insolvency or other judicial proceedings relative to
the Cooperative, its creditors or its property, (iv) to vote, in its sole
discretion and without regard to the interests of any holder of a Lender Loan
Note but solely with regard to the interests of RUS, on any plan of
reorganization or any other matter in any such bankruptcy, insolvency or other
judicial proceedings and (v) to make or approve any amendment, compromise,
modification or other change in the obligations of the Cooperative in respect of
the Lender Loan Notes. Upon any such action by RUS referred to in this
subsection (c) that would in any way adversely affect any Lender Loan Note or
Notes, RUS shall be obligated, in the place and stead of the Cooperative, to pay
under the Guarantee of each Lender Loan Note so affected the principal of and
Guaranteed Interest on such Lender Loan Note or Notes as and when due without
taking into account any vote, plan of reorganization, amendment, compromise,
modification or other change made or approved by RUS pursuant to this subsection
(c), and the Payee shall thereupon deliver to RUS and the Cooperative a release
and discharge of any further obligation of the Cooperative to the Payee under
the Lender Loan Note. In consideration of the obligation of RUS to make such
payments as scheduled, (x) the Cooperative shall be obligated to pay to RUS
(without duplication of any amounts paid under the last sentence of subsection
(b) above) an amount equal to the entire balance of the Lender Loan Note and all
interest thereon in accordance with Section 11.1 hereof, and (y) the Lender, the
Servicer and the Trustee hereby assign all their respective rights, if any, to
exercise any powers granted to RUS under this subsection (c), which assignment
shall also be binding on all assignees or transferees of any Lender Loan Note.
SECTION 1.5 AMENDMENTS TO ARTICLE XII. Article XII shall be amended as
follows:
(A) Section 12.2 shall be amended and restated in its entirety as follows:
All communications and notices under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered by hand or by telecopy,
when such telecopy is transmitted to the specified telecopier number and its
receipt is acknowledged or, except as to notices delivered under Section 5.2(a),
mailed, postage prepaid, by certified mail, return receipt requested, or by
overnight mail, return receipt requested, to the appropriate addresses specified
in Schedule I hereto, or at such other address as any party may designate by
notice to the other parties hereto in accordance with this Section 12.2.
Notices by telecopy to the RUS shall be followed by another form of written
notice permitted hereby and shall not be deemed received unless the sender
receives oral confirmation of
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receipt from the RUS. Any notice address provided in Schedule I hereto may be
amended, and this Agreement shall be amended to include such amended notice
address, upon the provision, in accordance herewith, of notice of such amended
notice address to all parties entitled to receive notices listed on Schedule I
hereto.
SECTION 1.6 AMENDMENTS TO SCHEDULE I. Schedule I shall be amended as
follows:
(A) Paragraph 20 shall be deleted in its entirety and the following shall
be inserted in lieu thereof:
The regulatory bodies, administrative agencies and governmental
authorities whose approvals are required, as referred to in Section 10.2(e)
hereof, is/are as follows: NONE.
(B) The first notice address in Paragraph 28, "If to REA:," shall be
amended and restated to read as follows:
If to RUS:
Rural Utilities Service
United States Department of Agriculture
Washington, D.C. 20250-1535
Telecopy No: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Director, Financial Operations Division
Subject: KEPCO - Kansas 54
with a copy addressed to:
Rural Utilities Services
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Telecopy No: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Administrator
Subject: KEPCO - Kansas 54
(C) The third notice address in Paragraph 28, "If to the Lender:," shall
be amended and restated to read as follows:
If to the Lender:
National Rural Utilities Cooperative Finance Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ - ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: 708/709-6779
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Attention of Finance Officer
(D) The fourth notice address in Paragraph 28, "If to the Servicer:,"
shall be amended and restated to read as follows:
If to the Servicer:
National Rural Utilities Cooperative Finance Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ - ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: 708/709-6779
Attention of Finance Officer
(E) The fifth notice address in Paragraph 28, "If to the Trustee:," shall
be amended and restated to read as follows:
If to the Trustee:
The First National Bank of Chicago
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention of Corporate Trust Administration
(F) The definition of "Certificate" in paragraph 29 shall be deleted in
its entirety and the following shall be substituted in lieu thereof:
"Certificate" or "1997 Certificate" shall mean a Rural Electric Cooperative
Grantor Trust Certificate (KEPCO) 1997 evidencing a Fractional Interest,
executed, authenticated and delivered by the Trustee substantially in the form
of Exhibit A to the 1997 Trust Agreement. "Certificate Rate", with respect to
such certificate shall have the meaning specified in the 1997 Trust Agreement.
SECTION 1.7 AMENDMENT TO SCHEDULE II (NOTE ONE) TO LOAN GUARANTEE
AGREEMENT. Schedule II (Note One) shall be amended as follows:
(A) The last sentence of the paragraph entitled "Prepayment or Purchase
Dates" shall be amended and restated to read as follows:
Lender Loan Note One may be prepaid or purchased on any Business Day; provided
that if the Swap Agreement is in effect, provision must be made for termination
of the Swap Agreement as provided therein (including payment of all amounts
payable by the Cooperative or the
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RUS in connection with such termination if any). The Cooperative hereby agrees
to pay such amounts, but such payments are not guaranteed by the RUS.
(B) The paragraph entitled "Prepayment Premium" shall be deleted in its
entirety.
SECTION 1.8 AMENDMENT TO SCHEDULE II (NOTE TWO) TO LOAN GUARANTEE
AGREEMENT. Schedule II (Note Two) shall be amended as follows:
(A) The last sentence of the paragraph entitled "Prepayment or Purchase
Dates" shall be amended and restated to read as follows:
Lender Loan Note Two may be prepaid or purchased on any Business Day; provided
that (y) if the Swap Agreement is in effect, provision must be made for
termination of the Swap Agreement as provided therein (including payment of all
amounts payable by the Cooperative or the RUS in connection with such
termination if any). The Cooperative hereby agrees to pay such amounts, but such
payments are not guaranteed by the RUS.
(B) The paragraph entitled "Prepayment Premium" shall be deleted in its
entirety.
ARTICLE 2
FURTHER AMENDMENTS TO ORIGINAL LOAN GUARANTEE AGREEMENT
-------------------------------------------------------
On the Refinancing Date, effective on the sale of the Certificates by CFC
to a person other than an affiliate of CFC pursuant to a registered public
offering of the Certificates or an offering of the Certificates that is exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933, the
Original Loan Agreement shall be further amended as follows:
SECTION 2.1 AMENDMENTS TO SCHEDULE I. Schedule I shall be amended as
follows:
(A) Paragraph 8(a) shall be deleted in its entirety and the following
shall be substituted in lieu thereof:
The "Fixed Rate" of interest referred to in Section 1.1 hereof shall mean
the sum of (i) 7.654% per annum and (ii) the Servicer Spread; provided, however,
that (y) if at any time on or after the Refinancing Date, the Certificates have
been registered with the United States Securities and Exchange Commission and
are issued in a registered public offering, the Fixed Rate shall, pursuant to
the mechanism provided in the Swap Agreement (as defined in the 1997 Trust
Agreement), thereafter be reduced by 10 basis points (.10%) per annum and (z) if
at any time on or after the Refinancing Date, all
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requirements of ERISA are satisfied so that the Series 1997 Certificates can be
sold without any limitations to "employee benefit plans" (as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended), the Fixed Rate shall, pursuant to the mechanism provided in the
Swap Agreement (as defined in the 1997 Trust Agreement), thereafter be reduced
by 5 basis points (.05%) per annum.
ARTICLE 3
CONSENTS; REPRESENTATIONS AND WARRANTIES
----------------------------------------
SECTION 3.1 CONSENT AND APPROVAL OF THE RUS; REPRESENTATION OF THE RUS.
(A) The RUS hereby consents to and approves of (i) the amendments and
modifications made to the Lender Loan Agreement and the Original Loan Guarantee
Agreement, (ii) the execution and delivery of the First Amendment to Loan
Agreement, 1997 Trust Agreement and this Agreement, and (iii) the carrying out
of all the transactions contemplated by such documents, including but not
limited to, the Purchase (as defined in the First Amendment to Loan Agreement)
of the Lender Loan Note One and Lender Loan Note Two and, upon the effectiveness
of such amendments and modifications, confirms its guarantee of the Lender Loan
Note One and Lender Loan Note Two, as amended thereby.
(B) The representations and warranties originally made by the RUS in
Section 10.1 of the Original Loan Guarantee Agreement are incorporated herein by
reference as if set forth in their entirety herein. The RUS hereby represents
that such representations and warranties are true and correct on the date
hereof. As incorporated by reference herein, the term "Agreement" shall be
deemed to mean the Original Loan Guarantee Agreement and this Agreement.
SECTION 3.2 CONSENT AND APPROVAL OF THE COOPERATIVE; REPRESENTATIONS OF
THE COOPERATIVE.
(A) The Cooperative hereby consents to and approves of the amendments and
modifications made to the Lender Loan Agreement and the Original Loan Guarantee
Agreement and to the execution and delivery of the First Amendment to Loan
Agreement, 1997 Trust Agreement and this Agreement.
(B) The representations and warranties originally made by the Cooperative
in Section 10.2 of the Original Loan Guarantee Agreement (other than in Sections
10.2 (i) and (k)-(n)) are incorporated herein by reference as if set forth in
their entirety herein. The Cooperative hereby represents that such
representations and warranties (except for Section 10.2(d), (g) and (h) which
are modified by Subsection (c) of this Section and, as modified, are true and
correct as provided herein) are true and correct on the date hereof. As
incorporated by reference herein, the term "Agreement" shall be deemed to mean
the Original Loan Guarantee Agreement and this Agreement.
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(C) The representations contained in Subsections (d), (g) and (h) of
Section 10.2 of the Original Loan Guarantee Agreement are hereby modified to
read as follows and, as modified, are true and correct on the date hereof:
(d) This Agreement and each of the other Operative Agreements to which
the Cooperative is a party have been duly authorized, executed and delivered by
the Cooperative and constitute the legal, valid and binding agreements of the
Cooperative, enforceable against the Cooperative in accordance with their
respective terms, subject to (i) applicable bankruptcy, reorganization, and
insolvency, moratorium and other laws of general applicability relating to or
affecting creditors' rights, generally, (ii) the application of general
principles of equity regardless of whether such enforceability is considered in
a proceeding in equity or at law, and (iii) as to the RUS Mortgage, such other
exemptions as are set forth in the Opinion of ▇▇▇▇▇▇ ▇▇▇▇, Esq., Counsel to the
Cooperative;
(g) Except as set forth in the officer's certificate of the
Cooperative delivered in connection with the execution and delivery of the
Operative Agreements, there is no action, suit, proceeding or investigation
before or by any court or any regulatory body, administrative agency or
governmental authority presently pending or threatened with respect to the
Cooperative, this Agreement or any of the Operative Agreements to which the
Cooperative is a party challenging the validity or enforceability of this
Agreement or any of the other Operative Agreements to which the Cooperative is a
party or seeking to restrain, and join or otherwise prevent the consummation by
the Cooperative of the transactions contemplated by this Agreement or any of the
other Operative Agreements to which the Cooperative is a party or which, if
adversely determined, would have a material adverse effect on the Cooperative's
ability to perform its obligations under this Agreement or any of the other
Operative Agreements to which the Cooperative is a party;
(h) The most recent audited balance sheet and statement of operations
of the Cooperative fairly present the financial condition and results of
operation of the Cooperative as of the date and for the year indicated, and
there has been no material adverse change in such financial condition except
changes disclosed in writing in the officer's certificate of the Cooperative
delivered in connection with the execution and delivery of the Operative
Agreements;
SECTION 3.3 CONSENT AND APPROVAL OF THE LENDER; REPRESENTATIONS OF THE
LENDER.
(A) The Lender hereby consents to and approves of the amendments and
modifications made to the Lender Loan Agreement and the Original Loan Guarantee
Agreement and to the execution and delivery of the First Amendment to Loan
Agreement, 1997 Trust Agreement and this Agreement.
(B) The representations and warranties originally made by the Lender in
Section 10.3 of the Original Loan Guarantee Agreement are incorporated herein by
reference as if set forth in their
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entirety herein. The Lender hereby represents that such representations and
warranties (except for Sections 10.3(e), 10.3(h) and 10.3(i) which are modified
by subsection (c) of this Section and, as modified, are true and correct as
provided herein) are true and correct on the date hereof. As incorporated by
reference herein, the term "Agreement" shall be deemed to mean the Original Loan
Guarantee Agreement and this Agreement.
(C) The representations contained in subsections (e), (h) and (i) of
Section 10.3 of the Original Loan Guarantee Agreement are hereby modified to
read as follows and, as modified, are true and correct on the date hereof:
(e) No approval, consent, authorization, order, waiver, exemption,
variance, registration, filing, notification, qualification, license, permit or
other action is now, or under existing law in the future will be, required to be
obtained, given or taken, as the case may be, from any regulatory body,
administrative agency or governmental authority having jurisdiction over the
Lender to authorize the execution and delivery by the Lender of this Agreement
or any of the other Operative Agreements to which the Lender is a party as such,
or the consummation by the Lender of the transactions contemplated hereby or
thereby or the performance by the Lender of its obligations hereunder or
thereunder, other than, prior to the public offering, if any, by the Lender of
certificates under the Trust Agreements (i) the registration of such
certificates under the Securities Act of 1933, if necessary, (ii) the
qualification of an indenture under the Trust Indenture Act of 1939, if
necessary, (iii) the issuance of an exemptive order under the Investment Company
Act of 1940 or the availability of another exemption thereunder, (iv) the
registration, qualification, issuance of an exemptive order or any other
governmental action under any applicable state securities laws, if necessary,
(v) such as have been obtained prior to the date of this Agreement, and (vi) an
exemption from the Department of Labor with respect to the Employee Retirement
Income Security Act of 1974;
(h) The Lender meets the criteria of a "Financially Viable Lender," as
such term is defined in Section 1786.27(a) of the 306A Regulations; and
(i) The Lender meets the qualifications to be a "Lender," as such
qualifications are set forth in Section 1786.28(b) of the 306A Regulations.
SECTION 3.4 CONSENT AND APPROVAL OF THE SERVICER; REPRESENTATIONS OF THE
SERVICER.
(A) The Servicer hereby consents to and approves of the amendments and
modifications made to the Lender Loan Agreement and the Original Loan Guarantee
Agreement and to the execution and delivery of the First Amendment to Loan
Agreement, 1997 Trust Agreement and this Agreement.
(B) The representations and warranties originally made by the Servicer in
Section 10.4 of the Original Loan Guarantee Agreement are incorporated herein by
reference as if set forth in their entirety herein. The Servicer hereby
represents that such representations and warranties (except for
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Sections 10.4(e) and 10.4(h) which are modified by subsection (c) of this
Section and, as modified, are true and correct as provided herein) are true and
correct on the date hereof. As incorporated by reference herein, the term
"Agreement" shall be deemed to mean the Original Loan Guarantee Agreement and
this Agreement.
(C) The representation contained in subsections (e) and (h) of Section
10.4 of the Original Loan Guarantee Agreement are hereby modified to read as
follows and, as modified, are true and correct on the date hereof:
(e) No approval, consent, authorization, order, waiver, exemption,
variance, registration, filing, notification, qualification, license, permit or
other action is now, or under existing law in the future will be, required to be
obtained, given or taken, as the case may be, from any regulatory body,
administrative agency or governmental authority having jurisdiction over the
Servicer to authorize the execution and delivery by the Servicer of this
Agreement or any of the other Operative Agreements to which the Servicer is a
party as such, the consummation by the Servicer of the transactions contemplated
hereby or thereby or the performance by the Servicer of its obligations
hereunder or thereunder, other than, prior to the public offering, if any, by
the Lender of certificates under the Trust Agreements (i) the registration of
such certificates under the Securities Act of 1933, if necessary, (ii) the
qualification of an indenture under the Trust Indenture Act of 1939, if
necessary, (iii) the issuance of an exemptive order under the Investment Company
Act of 1940 or the availability of another exemption thereunder, (iv) the
registration, qualification, issuance of an exemptive order or any other
governmental action under any applicable state securities laws, if necessary,
(v) such as have been obtained prior to the date of this Agreement, and (vi) an
exemption from of Department of Labor with respect to the Employee Retirement
Income Security Act of 1974;
(h) The Servicer has the capability to adequately service the Lender
Loan in accordance with Section 1786.28(b)(3) of the 306A Regulations.
(D) Pursuant to Section 3.9 of the Lender Loan Agreement, the Servicer
hereby consents to the Purchase (as defined in the First Amendment to Loan
Agreement) of Lender Loan Note One and Lender Loan Note Two by the Lender on the
Refinancing Date.
SECTION 3.5 CONSENT AND APPROVAL OF THE TRUSTEE. The Trustee hereby
consents to the amendments and modifications made to the Lender Loan Agreement
and the Loan Guarantee Agreement and to the execution and deliver of the First
Amendment to Loan Agreement, 1997 Trust Agreement and this Agreement.
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ARTICLE 4
MISCELLANEOUS
-------------
SECTION 4.1 EFFECTIVE DATE. This Agreement shall be the valid and
binding obligation of the parties as of the date of its execution, but the
amendments to the Original Loan Guarantee Agreement set forth in Articles 1 and
2 shall become effective in accordance with the terms of such Articles.
SECTION 4.2 DEFINITIONS. As used in this Agreement, all terms which
are not otherwise defined herein but which are defined in the Original Loan
Guarantee Agreement as amended by this Agreement shall have the same meanings
herein, to the extent the context so permits.
SECTION 4.3 ASSIGNMENT BY COOPERATIVE OF RIGHTS UNDER SWAP AGREEMENT.
Effective as of the date this Agreement is executed, the Cooperative hereby
assigns to the RUS, on a non-exclusive basis, with the Cooperative (provided
that the Cooperative shall not be entitled to exercise such assigned rights if
the Cooperative is in default under either Lender Loan Note One or Lender
Loan Note Two) also having the rights assigned in this Section, the
right, in the event the RUS elects to prepay or purchase Lender Loan Note
One and Lender Loan Note Two in accordance with Section 6.1 of the Loan
Guarantee Agreement, to terminate the swap "Transaction" (as defined in the Swap
Agreement), dated of even date herewith, pursuant to Part 5, Section (9) of the
Schedule to the Swap Agreement.
SECTION 4.4 SUCCESSOR ENTITIES. Lender Loan Note One, Lender Loan Note
Two, the Lender Loan Agreement, Loan Guarantee Agreement, Trust Agreements,
Certificates and Guarantee and all other documents executed to carry out the
transactions contemplated herein and therein shall be amended, in all necessary
places to reflect that the Rural Utilities Service has succeeded the Rural
Electrification Administration of the United States Department of Agriculture
with respect to the administration of certain electric and telephone loan
programs by replacing the term "REA" with the term "RUS" everywhere such term
appears and by making such other changes as are necessary to effectuate such
succession. In addition, the reference in Lender Loan Note 1 and Lender Loan
Note 2 to the Trust Agreements shall be amended to mean the 1997 Trust
Agreement.
SECTION 4.5 GOVERNING LAW. This First Amendment to Loan Guarantee and
Servicing Agreement shall be governed, and construed and enforced in accordance
with, the laws of the State of New York, except that the obligations of the
Cooperative to RUS hereunder and under the Lender Loan Notes shall be governed
by, and construed and enforced in accordance with, the laws of the United States
of America, to the extent applicable and otherwise by the laws of the State of
New York.
Except as specifically amended hereby, the Original Loan Guarantee
Agreement shall remain in full force and effect and is ratified in all respects
by the parties thereto.
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed by an authorized officer as of the day and year first above written.
UNITED STATES OF AMERICA, acting through the
Administrator of the Rural Utilities Service
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------------
Title: Administrator of the Rural Utilities Service
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KANSAS ELECTRIC POWER COOPERATIVE, INC., as the
Cooperative
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Executive Vice President & Chief Executive
Officer
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NATIONAL RURAL UTILITIES COOPERATIVE FINANCE
COOPERATION, as the Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Assistant Secretary-Treasurer
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NATIONAL RURAL UTILITIES COOPERATIVE FINANCE
COOPERATION, as the Servicer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Assistant Secretary-Treasurer
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THE FIRST NATIONAL BANK OF CHICAGO,
as the Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Vice President
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