EXHIBIT 4.1
TRUST AGREEMENT
among
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
as Depositor of the Trust
and Servicer of the Notes,
KANSAS ELECTRIC POWER COOPERATIVE, INC.
and
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee of
RURAL ELECTRIC COOPERATIVE GRANTOR
TRUST (KEPCO) SERIES 1997
Entered into as of December 20, 1996
Effective as provided herein
CROSS REFERENCE TABLE
TIA Section Agreement Section
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310(a)(1) 10.7
(a)(2) 10.7
(a)(3) N.A.
(a)(4) 10.16
(b) 10.15, 12.6(b)
(c) N.A.
311(a) 10.17
(b) 10.17
(c) N.A.
312(a) 11.1
(b) 8.6
(c) 8.6
313(a) 5.1(d)
(b)(1) N.A.
(b)(2) 5.1(d)
(c) 12.6(b)
(d) 5.1(d)
314(a) 11.2, 12.6
(b) N.A.
(c)(1) 11.3
(c)(2) 11.3
(c)(3) N.A.
(d) N.A.
(e) 12.17
315(a) 10.1
(b) 10.18, 12.6(b)
(c) 10.1 (a)
(d) 10.1(c)
(e) N.A.
316(a)(last sentence) definition of
"Certificateholder" in 1.1
(a)(1) 10.5
(a)(2) N.A.
(b) 7.3(c)(G)
317(a) 10.16
(b) N.A.
318(a) 12.16
N.A. means not applicable.
Table of Contents
Page
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Parties........................................................................................ 1
Recitals....................................................................................... 1
ARTICLE I
Definitions
Section 1.1 Definitions............................................................. 2
Section 1.2 Terms Defined in the Loan Agreement..................................... 14
Section 1.3 References.............................................................. 14
Section 1.4 Interpretations......................................................... 15
ARTICLE II
Delivery of the Notes and the Swap Agreement
Section 2.1 Delivery of the Notes and Swap Agreement................................ 15
Section 2.2 Declaration of Trust.................................................... 16
Section 2.3 Conditions to Issuance of Certificates.................................. 17
Section 2.4 Issuance of the Certificates............................................ 18
Section 2.5 Transfer of the Notes, etc. by the Trustee.............................. 18
ARTICLE III
Representations and Warranties
Section 3.1 Representations and Warranties as to CFC................................ 18
Section 3.2 Representations and Warranties as to the Notes and the Guarantee........ 20
ARTICLE IV
Servicing of Notes and Swap Agreement and Maintenance of Accounts
Section 4.1 Notifications to the Cooperative, the Swap Provider and the Trustee..... 20
Section 4.2 Notifications to RUS.................................................... 21
Section 4.3 Appointment as Attorney................................................. 21
Section 4.4 Duties and Appointment of Servicer...................................... 21
Section 4.5 Standard of Care........................................................ 22
Section 4.6 Delivery of Amounts Received in Enforcing the Notes, the Guarantee
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and the Swap Agreement.................................................. 22
Section 4.7 Servicer's Indemnities.................................................. 22
Section 4.8 Maintenance of the Trust Account........................................ 23
Section 4.9 Eligible Investments.................................................... 24
Section 4.10 Merger or Consolidation of, or Assumption of the Obligations of,
the Servicer............................................................ 24
Section 4.11 Costs and Expenses...................................................... 24
Section 4.12 Provision of Forms of Certificates...................................... 25
ARTICLE V
Reports
Section 5.1 Reports to Certificateholders and Others................................ 25
Section 5.2 Tax Statements, Governmental Filings and Availability of Information.... 26
Section 5.3 Report of Accountants................................................... 26
ARTICLE VI
Service Transfers
Section 6.1 Events of Servicing Termination......................................... 26
Section 6.2 Service Transfer........................................................ 27
Section 6.3 Appointment of Successor Servicer....................................... 28
Section 6.4 Notification of Servicing Termination................................... 29
Section 6.5 Effect of Service Transfer.............................................. 29
ARTICLE VII
Payments; Swap Agreement
Section 7.1 Notice to the Cooperative, the Swap Provider and the Trustee;
Notice of Prepayment.................................................... 29
Section 7.2 Default Notice.......................................................... 30
Section 7.3 Payments with respect to the Certificates and Distributions to the
Servicer and Swap Provider; Remittance of Certain Earnings on Eligible
Investments; Notice of Principal Payments............................... 30
Section 7.5 Termination and Substitution of Swap Agreement.......................... 35
ARTICLE VIII
The Certificates of Beneficial Interest
Section 8.1 The Certificates........................................................ 39
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Section 8.2 Registration of Transfer and Exchange of Certificates................... 39
Section 8.3 No Charge; Disposition of Void Certificates............................. 40
Section 8.4 Mutilated, Destroyed, Lost or Stolen Certificates....................... 40
Section 8.5 Persons Deemed Owners................................................... 40
Section 8.6 Access to List of Certificateholders' Names and Addresses............... 41
Section 8.7 Provisions for Book-Entry System........................................ 41
ARTICLE IX
Further Provisions Relating to the Certificates of Beneficial Interest
Section 9.1 Interest Distributable with Respect to the Certificates................. 43
Section 9.2 Purchase of Certificates on Demand; Mandatory Purchase.................. 45
Section 9.3 Purchase and Remarketing of the Certificates............................ 47
Section 9.4 Liquidity Facility...................................................... 50
Section 9.5 Remarketing of Certificates............................................. 51
Section 9.6 Purchase and Remarketing Fund........................................... 52
Section 9.7 Redemption or Purchase of Certificate Upon Redemption or Purchase
of Notes by RUS or the Cooperative...................................... 53
Section 9.8 Tender Agent............................................................ 54
Section 9.9 Remarketing Agent....................................................... 55
ARTICLE X
The Trustee
Section 10.1 Duties of Trustee....................................................... 56
Section 10.2 Certain Matters Affecting the Trustee................................... 57
Section 10.3 Trustee Not Liable for Certificates, Notes or the Swap Agreement........ 59
Section 10.4 Trustee May Own Certificates............................................ 60
Section 10.5 Rights of Certificateholders To Direct Trustee and To Waive
Events of Termination................................................... 60
Section 10.6 Responsibility for the Trustee's Fee and Expenses....................... 60
Section 10.7 Eligibility Requirements for Trustee.................................... 61
Section 10.8 Resignation or Removal of Trustee....................................... 61
Section 10.9 Successor Trustee....................................................... 62
Section 10.10 Merger or Consolidation of Trustee...................................... 63
Section 10.11 Authenticating Agent.................................................... 63
Section 10.12 Trustee May Enforce Claims Without Possession of Certificates........... 64
Section 10.13 Suits for Enforcement................................................... 64
Section 10.14 Powers of Trustee When CFC Holds All Certificates....................... 64
Section 10.15 Disqualification of Trustee............................................. 65
Section 10.16 Powers of Trustee....................................................... 65
Section 10.17 Preferential Collection of Claims Against Cooperative................... 65
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Section 10.18 Notice of Defaults...................................................... 65
ARTICLE XI
Certain Obligations of the Cooperative
Section 11.1 Certificateholder Information...................................... 66
Section 11.2 Reports by the Cooperative 66
Section 11.3 Certificate and Opinion as to Conditions Precedent................. 67
ARTICLE XII
Miscellaneous
Section 12.1 Effective Dates.................................................... 67
Section 12.2 Resignation of Servicer............................................ 67
Section 12.3 Termination........................................................ 67
Section 12.4 Action by Certificateholders....................................... 68
Section 12.5 Assignment or Delegation by the Servicer........................... 69
Section 12.6 Amendment.......................................................... 69
Section 12.7 Notices............................................................ 71
Section 12.8 Notices to Rating Agencies and Remarketing Agent................... 73
Section 12.9 Limitation on Rights of Certificateholders......................... 74
Section 12.10 Merger and Integration............................................. 74
Section 12.11 Severability of Provisions......................................... 75
Section 12.12 Intention of Parties............................................... 75
Section 12.13 Headings........................................................... 75
Section 12.14 Governing Law...................................................... 75
Section 12.15 Death or Incapacity of Certificateholders.......................... 75
Section 12.16 Counterparts....................................................... 75
Section 12.17 Survival........................................................... 75
Section 12.18 Binding Effect..................................................... 76
Section 12.19 Trust Indenture Act Controls....................................... 76
Section 12.20 Statements Required in Certificate or Opinion...................... 76
Section 12.21 Third-Party Beneficiaries.......................................... 76
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Exhibit A Form of Certificate of Beneficial Interest
Exhibit B Form of Opinion of Xxxx X. List, General Counsel to CFC Required by
Section 2.3(1)
Exhibit C Form of Opinion of Milbank, Tweed, Xxxxxx & XxXxxx, Counsel to CFC
Required by Section 2.3(2)
Exhibit D Form of Officer's Certificate of the Cooperative Required by
Section 2.3(4)
Exhibit E Form of Opinion of Xxxxxx Xxxx, Esq., General Counsel to the
Cooperative Required by Section 2.3(5)
Exhibit F Form of Opinion of Xxxxxx & Xxxxxx L.L.P., Special Finance Counsel
to the Cooperative Required by Section 2.3(6)
Exhibit G Form of Opinion of Xxxxx Xxxx & Xxxxxxxx, Special Counsel to Xxxxxx
Required by Section 2.3(7)
Exhibit H Form of Opinion of In-House Counsel to Xxxxxx Required by Section
2.3(7)
Exhibit I Form of Opinion of Xxxxx, Xxxxx & Xxxxx, Counsel to the Underwriter
and Remarketing Agent Required by 2.3(8)
Exhibit J Form of Opinion of In-House Counsel to the Underwriter and
Remarketing Agent Required by Section 2.3(8)
Exhibit K Rule 144A Legend
Exhibit L Form of Certificate of RUS Required by Section 2.3(17)
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THIS TRUST AGREEMENT (as amended and supplemented from time to time, this
"Agreement"), is entered into as of December 20, 1996 and is effective as
provided herein, among the NATIONAL RURAL UTILITIES COOPERATIVE FINANCE
CORPORATION ("CFC"), a District of Columbia cooperative association, KANSAS
ELECTRIC POWER COOPERATIVE, INC. (the "Cooperative"), a Kansas nonprofit
cooperative corporation, and THE FIRST NATIONAL BANK OF CHICAGO, a national
banking association, as trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Cooperative prepaid certain of its loans from the Federal
Financing Bank (the "FFB Loans"), which were guaranteed by the Administrator
(the "Administrator") of the Rural Electrification Administration of the
Department of Agriculture ("REA") which has been succeeded with respect to the
administration of certain electric and telephone loan programs by the Rural
Utilities Service (the "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); and
WHEREAS, CFC loaned the Cooperative the amounts necessary to prepay the FFB
Loans on the terms and subject to the conditions set forth in a Loan Agreement
dated as of February 15, 1988, between CFC and the Cooperative (the "Loan
Agreement") (CFC in such capacity, the "Lender"); and
WHEREAS, CFC established the Rural Electric Cooperative Grantor Trusts
(KEPCO) Series 1988 K1-1988 K3 (the "Original Trusts") for the purpose of
holding the notes (the "Original Notes") evidencing the Cooperative's repayment
obligations under the loan (the "Loan") made by CFC to the Cooperative pursuant
to the Loan Agreement and guaranteed by the United States of America acting
through the Administrator of the RUS; and
WHEREAS, pursuant to Section 3.9 of the Loan Agreement, and with the
consent of CFC as Servicer of the Original Trusts (CFC in such capacity, the
"Servicer"), the Original Notes may be purchased prior to stated maturity; and
WHEREAS, Section 1786.28(c)(5) of the Regulations provides that guaranteed
notes evidencing a private loan shall not be transferable or assignable except
with the written approval of the Administrator; and
WHEREAS, Note One and Note Two, of the Original Notes, evidencing a portion
of the Loan in the original principal amount of $11,075,000 and $51,340,000,
respectively (herein defined as the "Notes"), will be 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 of the Original Trusts
that, with the approval of the Administrator, it desires that CFC purchase the
Notes and that the trustee of the Original Trusts redeem the related
certificates of beneficial interest therein (the "Series 1988
Certificates") and terminate the related trusts on the Refinancing Date (as
herein defined), for the purpose of amending certain terms of the Loan and the
Notes, creating a new trust and issuing new certificates of beneficial interest
(the "Certificates") therein; and
WHEREAS, CFC, as Lender, depositor of the Original Trusts and Servicer of
the Notes, has agreed to purchase the Notes (amended as provided above) and to
cause the Notes, with the Guarantee endorsed thereon, to be delivered to the
Trustee on the Refinancing Date to be deposited in the trust (the "Trust")
created pursuant to this Agreement; and
WHEREAS, the Cooperative has entered into a Swap Agreement (as hereinafter
defined) with the Swap Provider (as hereinafter defined) which will be assigned
to the Trust automatically on the Refinancing Date and pursuant to which the
Swap Provider will pay to the Trust a variable rate of interest and the Trust
will pay to the Swap Provider a fixed rate of interest; and
WHEREAS, the purchase of the Notes, the amendment of the Loan Agreement,
the redemption of the Series 1988 Certificates, the issuance of the
Certificates and the assignment of the Swap Agreement to the Trust 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 will benefit from such reduction in interest rate as the
guarantor of the Notes; and
WHEREAS, CFC, the Cooperative and the Trustee desire to set forth in this
Trust Agreement the interests that will be conveyed to the Trust for the benefit
of the Certificateholders (as herein defined), the rights of the
Certificateholders, the rights and obligations of CFC as depositor of the Trust
and Servicer of the Notes and the Swap Agreement, and the obligations of the
Trustee and the Cooperative.
WHEREAS, CFC, the Cooperative and the Trustee desire to have this Agreement
qualified under the Trust Indenture Act of 1939, if necessary, and desire to
have the Cooperative undertake certain obligations to permit this Agreement to
be so qualified; and
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
CFC, the Cooperative and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings (such definitions to be equally applicable to
both the singular and the plural forms of the terms used):
"Act" shall mean the Rural Electrification Act of 1931, as amended (7
U.S.C. (S)(S) 901 et seq.).
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"Administrator" shall have the meaning assigned to it in the Recitals.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" shall mean this Trust Agreement.
"Alternate Liquidity Facility" shall mean a standby certificate purchase
agreement, an irrevocable letter of credit, line of credit or similar agreement,
as amended, supplemented or extended from time to time, provided by Xxxxxx or by
another bank or financial institution selected by Xxxxxx to the Cooperative (or
by the Cooperative if Xxxxxx does not so provide), and which satisfies the
requirements for an Alternate Liquidity Facility set forth herein.
"Alternate Rate" shall mean on any date, the interest equivalent of the 30-
day rate on commercial paper placed on behalf of issuers whose corporate bonds
are rated "AA" by S&P or its successor, or the equivalent of such rating by
another rating agency, as made available on a discount basis or otherwise by the
Federal Reserve Bank of New York for the nearest Business Day prior to such
date; provided, however, that the Alternate Rate shall not exceed the Maximum
Certificate Rate.
"Alternate Swap Agreement" shall mean an interest rate swap agreement
containing the same material terms, amounts and duration as the Swap Agreement
entered into (following an amendment to this Agreement) by the Cooperative and
any qualified swap dealer in replacement of the Swap Agreement.
"Applicable Law" shall mean all applicable laws, including, without
limitation those pertaining to health, safety and the environment, federal and
state securities laws and the Act, ordinances, judgments, decrees, injunctions,
writs, decisions and orders of any governmental authority, rules and
regulations, including, without limitation, the Regulations and interpretations,
licenses and permits of any Governmental Authority.
"Authorized Denominations" with respect to the Certificate, shall have the
meaning assigned to it in Section 8.1.
"Available Funds" shall mean, (i) for any Certificate Interest Payment
Date, the Swap Payment on deposit in the Trust Account, or, in the event there
has occurred and is continuing a Swap Provider Default, Guaranteed Interest on
deposit in the Trust Account, less the Scheduled Servicing Fee, and the interest
and any other amounts earned on such funds and deposited in the Trust Account,
(ii) for any Certificate Principal Payment Date, the Note Payments, including
any payments received from the RUS pursuant to the Guarantee (less any
Guaranteed Interest) on deposit in the Trust Account, and the interest and any
other amounts earned on such funds and deposited in
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the Trust Account; provided, however, that Note Payments deposited with the
Trustee with respect to a prepayment or purchase of the Notes pursuant to
Section 3.9(a) of the Loan Agreement shall not be Available Funds until the day
of prepayment or purchase specified pursuant to Section 3.9(a)(i) of the Loan
Agreement, and (iii) for any Swap Provider Payment Date, the Guaranteed Interest
on deposit in the Trust Account and the interest and any other amounts earned on
such funds and deposited in the Trust Account, less the Scheduled Servicing Fee.
"Basic Documents" shall mean this Agreement, the Loan Agreement, the Loan
Guarantee Agreement, the Notes, the Swap Agreement, the Certificate Purchase
Agreement, the Remarketing Agreement, the Liquidity Protection Agreement, the
Liquidity Facility, the First Amendment to Loan Agreement, First Amendment to
Loan Guarantee Agreement and the Mortgage.
"Beneficial Owners" shall mean purchasers of the Certificates whose
ownership interest is evidenced only in the Book-Entry System maintained by the
Depository hereunder.
"Book-Entry System" shall mean a system for clearing and settlement of
securities transactions among participants of a Depository (and other parties
having custodial relationships with such participants) through book-entry
changes and accounts of such participants maintained by the Depository
hereunder, for recording ownership of the Certificates by Beneficial Owners and
transfers of ownership interests in the Certificates.
"Business Day" shall mean any day of the year other than (i) a Saturday or
Sunday, (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, (iii) any day on which
banks in the city in which the principal corporate trust office of the Trustee
is located are required or authorized by law to remain closed, (iv) any day on
which banks in the city or cities in which the principal office of the
Remarketing Agent, Liquidity Provider and Servicer is located are required or
authorized by law to remain closed, (v) any day which is not a Local Business
Day as defined in the Swap Agreement, and (vi) any day on which commercial banks
in New York City or the New York Stock Exchange is closed.
"Call Date," with respect to the Notes, shall mean the date on which the
Notes are being prepaid or purchased pursuant to the terms of Section 3.9(a) of
the Loan Agreement and Sections 5.5 and 6.1 of the Loan Guarantee Agreement.
"Certificate of Beneficial Interest" or "Certificate" shall mean a Rural
Electric Cooperative Grantor Trust Certificate (KEPCO) Series 1997 evidencing a
Fractional Interest executed by the Trustee and authenticated and delivered by
the Trustee or an authenticating agent and substantially in the form of Exhibit
A.
"Certificate of Beneficial Interest Rate" or "Certificate Rate" shall mean
(i) while the Swap Provider's obligations with respect to variable rate interest
payments under the Swap Agreement are in the Weekly Rate Mode, the "Weekly
Rate;" and (ii) while the Swap Provider's obligations with respect to variable
rate interest payments under the Swap Agreement are in the Flex Rate Mode, the
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"Flex Rate." Notwithstanding anything else in this Agreement to the contrary, if
at any time no Swap Agreement is in effect, or if on any Certificate Interest
Payment Date the Trustee has not received any Swap Payment, Certificateholders
shall be entitled to receive distributions of Interest from payments of
Guaranteed Interest on the Notes calculated at the Fixed Rate on the Notes less
the Servicer Spread, on each June 15 and December 15 (or if such day is not a
Business Day, the next succeeding Business Day).
"Certificate Interest Payment Date" shall mean, subject to the next
following sentence, (i) while Interest is distributable at the Weekly Rate, the
first Wednesday of each month or if Wednesday is not a Business Day, the next
succeeding Business Day; (ii) while Interest is distributable at the Flex Rate,
the day following the last day of each Flex Period or if such day is not a
Business Day, the next succeeding Business Day; and (iii) with respect to any
Certificate which is being redeemed any day on which such Certificate is
redeemed or the final maturity. If at any time no Swap Agreement is in effect,
or if on any Certificate Interest Payment Date the Trustee has not received any
Swap Payment, Certificateholders shall be entitled to receive distributions of
Interest from payments of Guaranteed Interest on the Notes calculated at the
Fixed Rate on the Notes less the Servicer Spread, on each June 15 and December
15 (or if such day is not a Business Day, the next succeeding Business Day).
"Certificate Payment Date" shall mean any Certificate Interest Payment Date
or Certificate Principal Payment Date and the final maturity date of the
Certificates.
"Certificate Principal Payment Date" shall mean each December 15 after the
Refinancing Date, any Call Date and the final maturity date of the Certificates.
"Certificate Register" shall mean the certificate register maintained
pursuant to Section 8.2.
"Certificate Registrar" shall mean the certificate registrar, if any,
appointed pursuant to Section 8.2.
"Certificateholder" shall mean the Person in whose name a Certificate is
registered on the Certificate Register, except that, solely for the purposes of
giving any approval, authorization, direction, notice, consent, waiver, request
or demand pursuant to this Agreement, unless the Cooperative or RUS shall hold
all the Certificates, any Certificate owned by the Cooperative or any of its
Affiliates or RUS shall be deemed not to be outstanding and the Fractional
Interest evidenced thereby shall not be taken into account in determining
whether the requisite Fractional Interest necessary to effect any such approval,
authorization, direction, notice, consent, waiver, request or demand has been
obtained. In determining whether the Trustee shall be protected in relying upon
any approval, authorization, direction, notice, consent, waiver, request or
demand of Certificateholders, only Certificates which are registered in the name
of the Cooperative or any of its Affiliates or which the Trustee knows are so
owned shall be deemed not outstanding.
"CFC" shall mean National Rural Utilities Cooperative Finance Corporation
or any Person succeeding to the business thereof which, in its capacity as
Servicer, is an Eligible Servicer pursuant to the Regulations.
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"Closing" shall have the meaning assigned to it in Section 2.4.
"Closing Date" shall have the meaning assigned to it in Section 2.4.
"Collateral Account" shall mean the account created in Section 4.8(c)
hereof.
"Conversion" shall mean any change from time to time, in accordance with
the terms of this Agreement, of the Swap Provider's obligations under the Swap
Agreement to pay a variable interest rate on the Certificates from one Interest
Rate Mode to another Interest Rate Mode or from one Flex Rate Period to another
Flex Rate Period of a different duration.
"Conversion Date" shall mean the date on which there is a Conversion.
"Cooperative Account" shall mean the account created in Section 4.8(d)
hereof.
"Default Notice" shall have the meaning assigned in Section 1.1 of the Loan
Guarantee Agreement.
"Deficiency" shall have the meaning assigned in Section 7.2(b).
"Delivery Office" shall mean the address at which the Tender Agent receives
deliveries of Certificates tendered for purchase as described in Article IX.
"Deposit Date" shall mean November 18, 1997.
"Depository" shall mean DTC, or any successor securities Depository
appointed under Section 8.7 hereof.
"DTC" shall mean the Depository Trust Company, New York, New York, and its
successors and assigns.
"DTC Participant" shall mean the securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations on whose
behalf DTC was created to hold securities to facilitate the clearance and
settlement of securities transactions among DTC participants.
"Eligible Investments" shall have the meaning assigned in Section 4.9.
"Eligible Servicer" shall mean either (a) any Person that is (i) not an
Affiliate of the Cooperative, (ii) a Financially Viable Lender (as defined in
the Regulations), (iii) legally qualified to service the Notes and (iv) approved
in writing by RUS to act as Servicer or (b) CFC.
"Event of Servicing Termination" shall have the meaning assigned in Section
6.1 hereof.
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"Fixed Rate," with respect to the Notes, shall have the meaning assigned in
Section 1.1 of the Loan Agreement.
"Flex Rate" shall have the meaning assigned in Section 9.1 hereof.
"Flex Rate Mode" shall mean the Interest Rate Mode in which the variable
interest rate payable to the Trust under the Swap Agreement by the Swap
Provider and distributable as Interest with respect to the Certificates is
determined in accordance with Section 9.1(b)(ii) and (e).
"Flex Rate Period" shall mean any period beginning on and including the
relevant Conversion Date to the Flex Rate Mode or beginning on and including the
first day of a new Flex Rate Period and ending on, and including, the day
preceding the day selected by the Remarketing Agent with the consent of the Swap
Provider to be the end of such Flex Rate Period for the Certificates, and each
period of the same duration (or as close as possible) ending on a Business Day
thereafter until the earliest of the day preceding the change to (i) the Weekly
Rate Mode, (ii) a Flex Rate Period of a different duration or (iii) the maturity
of the Certificates.
"Fractional Interest" shall mean an undivided fractional interest in the
Trust and, as to a particular Certificate, shall mean the undivided fractional
interest in the Trust represented by that Certificate and equal to the
percentage obtained by dividing the denomination representing the Principal
Amount of such Certificate by the Principal Balance of the Certificates.
"Governmental Action" shall mean all authorizations, consents, approvals,
waivers, exceptions, variances, orders, licenses, exemptions, publications,
filings and declarations of or with, any Governmental Authority (other than
routine reporting requirements the failure to comply with which will not affect
the validity or enforceability of any of the Basic Documents or have a material
adverse effect on the transactions contemplated by this Agreement ), the giving
of notice to any Governmental Authority or any other action in respect of any
Governmental Authority.
"Governmental Authority" shall mean any federal, state, county, municipal,
regional or other governmental authority, agency, board, body, instrumentality
or court, including, without limitation, RUS.
"Guarantee" shall mean the Guarantee endorsed on the Notes by the
Administrator.
"Guaranteed Interest" shall have the meaning assigned in Section 1.1 of
the Loan Agreement.
"Guaranteed Interest Rate" shall have the meaning assigned in Section 1.1
of the Loan Agreement.
"Immediate Notice" shall mean notice transmitted by facsimile to the
telecopy number specified in Section 12.7 of the intended recipient which is
immediately confirmed by telephone with the intended recipient.
"Initial Principal Amount" shall mean $57,390,000.
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"Interest" shall mean, with respect to any Certificate for any Certificate
Interest Payment Date (or any other date that is treated as if it were a
Certificate Interest Payment Date) when the variable rate of interest payable by
the Swap Provider under the Swap Agreement is in the Weekly Rate Mode or Flex
Rate Mode, interest calculated on the basis of the actual number of days elapsed
over a year of 360 days at the Weekly Rate or Flex Rate, respectively, on the
aggregate Principal Balance of the Certificates and computed over a period of
time ending on, but not including, the associated Certificate Interest Payment
Date (or such other date) and beginning on the next preceding Certificate
Interest Payment Date (or the Refinancing Date if there is no next preceding
Certificate Interest Payment Date). If at any time there is no Swap Agreement in
effect or the Trustee has not received a Swap Payment which is due, Interest is
distributable at an amount equal to interest calculated on the basis of a year
of 360 days consisting of twelve 30-day months at the Fixed Rate (less the
Servicer Spread) on the Principal Balance of the Notes and computed over a
period of time ending on, but not including, the most recent Note Payment Date
and beginning on the next preceding Note Payment Date or for the period of such
delinquency.
"Interest Period" with respect to the Certificates, shall mean the period
from and including each Certificate Interest Payment Date to and including the
day next preceding the next Certificate Interest Payment Date. The first
Interest Period shall begin on (and include) the Refinancing Date. The final
Interest Period shall end on the maturity date for each Certificate.
"Interest Rate" shall mean the Weekly Rate or the Flex Rate.
"Interest Rate Mode" shall mean the Weekly Rate Mode or the Flex Rate Mode.
"Interest Rate Period" shall mean, with respect to the Certificates, while
the Certificates are in the Weekly Rate Mode, the period from and beginning on a
Rate Setting Date to, but not including, the next succeeding Rate Setting Date,
and, while the Certificates are in the Flex Rate Mode, the period from and
beginning on the first day of such Flex Rate Period to, and including, the last
day of such Flex Rate Period.
"Liquidity Facility" shall mean initially an agreement substantially in the
form of the Standby Certificate Purchase Agreement attached as Exhibit A to the
Liquidity Protection Agreement between the Cooperative and a Liquidity Provider
selected pursuant to the Liquidity Protection Agreement and subsequently, any
Alternate Liquidity Facility.
"Liquidity Protection Agreement" shall mean that certain Liquidity
Protection Agreement, dated as of December 20, 1996, by, and between the
Cooperative and Xxxxxx, or any similar, successor agreement between the
Cooperative and the Swap Provider.
"Liquidity Provider" shall mean the provider from time to time of the
Liquidity Facility or any Alternate Liquidity Facility.
"Loan" shall have the meaning assigned to it in the Recitals.
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"Loan Agreement" shall mean the Loan Agreement, dated as of February 15,
1988, between CFC, the Cooperative and the Trustee as amended by a First
Amendment to Loan Agreement entered into as of December 20, 1996 and effective
as provided therein ("First Amendment to Loan Agreement").
"Loan Guarantee Agreement" shall mean the Loan Guarantee and Servicing
Agreement, dated as of February 18, 1988, among CFC, the Trustee, the
Cooperative and REA, as amended by the First Amendment to Loan Guarantee and
Servicing Agreement entered into as of December 20, 1996 and effective as
provided therein ("First Amendment to Loan Guarantee Agreement").
"Maximum Certificate Rate" shall mean, with respect to the Certificates,
18% per annum or such higher rate as the Swap Agreement may be amended (pursuant
to Section 7.4 hereof) to permit or provide.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
"Xxxxxx" shall mean Xxxxxx Guaranty Trust Company of New York.
"Mortgage" shall mean that certain Supplemental Mortgage and Security
Agreement, dated as of November 15, 1985, made by and among the Cooperative, the
United States of America, and CFC, as amended by that certain Amendment dated as
of February 15, 1988 to Supplemental Mortgage and Security Agreement made by and
among the Cooperative, the United States of America and CFC.
"Note Payments" shall mean (i) the payments of Principal, if any, and
Guaranteed Interest due on the Notes on the Note Payment Dates (whether paid or
not), and, (ii) in the event the Notes are prepaid or purchased pursuant to
Section 3.9(a) of the Loan Agreement or Section 6.1 of the Loan Guarantee
Agreement, the amount deposited with the Trustee with respect to such prepayment
or purchase specified in Section 3.9(a)(iii) of the Loan Agreement.
"Note Payment Date" shall mean the dates on which Principal, if any, or
Guaranteed Interest is payable on the Notes as set forth in the Loan Agreement,
and, in the event the Notes are prepaid or purchased pursuant to Section 3.9 of
the Loan Agreement, the Call Date.
"Noteholder" shall have the meaning assigned in Section 1.1 of the Loan
Agreement.
"Notes" shall mean, collectively, Note One and Note Two from the
Cooperative in the original principal amounts of $11,075,000 and $51,340,000,
respectively, issued in connection with the Loan and to be purchased by CFC and
delivered to the Trust, outstanding as of the date hereof, in the principal
amounts of $6,950,000 and $51,340,000, respectively, and to be outstanding as of
the Refinancing Date, in the principal amounts of $6,050,000 and $51,340,000,
respectively.
"Officer's Certificate" shall mean a certificate signed by a Responsible
Officer.
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"Opinion of Counsel" shall mean a written opinion of counsel for the
Servicer or counsel for the Cooperative or other counsel reasonably acceptable
to the Trustee.
"Original Principal Amount" shall mean, with respect to any Certificate,
the denomination thereof at the time of original issuance on the Refinancing
Date.
"Original Trusts" shall mean the Rural Electric Cooperative Grantor Trust
(KEPCO) 1988 K1-1988 K3.
"Original Trust Agreements" shall mean those certain Trust Agreements among
CFC, the Cooperative, and the Trustee, dated as of February 15, 1988.
"Pass-Through Organization" shall mean an organization that, for federal
income tax purposes, is not treated as a corporation or an association taxable
as a corporation but is, for federal income tax purposes, either (i) not a
separate entity, (ii) a grantor trust, or (iii) a partnership.
"Payment Location" shall mean, with respect to the Swap Provider, Xxxxxx
Guaranty Trust Company of New York, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
Attention: Xxxxxx Guaranty Trust Company of New York - London Office, Account
No. 00000000.
"Person" shall mean any legal person, including any individual,
corporation, partnership, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Posted Collateral" shall mean amounts deposited in the Collateral Account
pursuant to the Swap Agreement.
"Principal" shall mean, with respect to the Notes or the Certificates as
the context may require, for any Certificate Payment Date and the next preceding
Note Payment Date, as applicable, the sum of (i) the regularly scheduled payment
of principal due on the Notes on that Note Payment Date; (ii) in respect of any
date on which the Notes are accelerated, the amount of principal so accelerated
and (iii) in respect of any Call Date, the amount of the Notes prepaid or
purchased; and in each case whether paid by the Cooperative or the RUS.
"Principal Amount" shall mean, with respect to any Certificate, the
Original Principal Amount minus all payments of Principal (including payments
made by reason of prepayment or purchase) made with respect to such Certificate.
"Principal Balance" shall mean for any date, (i) with respect to the Notes,
the Initial Principal Amount minus all payments of Principal made in respect of
the Notes on or prior to that date and (ii) with respect to the Certificates,
the Initial Principal Amount minus all payments of Principal made in respect of
the Certificates on or prior to that date.
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"Principal Corporate Trust Office" shall mean the office of the Trustee at
which its corporate trust business is principally administered at any particular
time, which office, at the date of the execution of this Agreement, is located
at the address set forth in Section 12.7.
"Purchase Date" shall mean any Business Day on which the Certificates are
subject to optional or mandatory purchase pursuant to Section 9.2.
"Purchase Fund" shall mean the fund (comprising a portion of the Purchase
and Remarketing Fund) designated as such and established with the Tender Agent
pursuant to Section 9.6.
"Purchase and Remarketing Fund" shall mean the fund established pursuant to
Section 9.6.
"Purchase Price" of a Certificate shall mean the Principal Amount of such
Certificate plus the amount of Interest, if any, which would be distributable
with respect to such Certificate in the current Interest Rate Mode if the date
of purchase of the Certificate were a Certificate Interest Payment Date.
"Purchased Certificate" shall mean any Certificate which has been purchased
by the Liquidity Provider pursuant to the terms of the Liquidity Facility.
"Rate Setting Date" shall mean (i) while the Certificates are in the Weekly
Mode, Wednesday of each week, or if Wednesday is not a Business Day, the next
succeeding Business Day; and (ii) while the Certificates are in the Flex Rate
Mode, not later than the Business Day preceding the first day of the next
succeeding Flex Rate Period.
"Rating Agency" shall mean Moody's or S&P, or any other national service
assigning ratings to the Certificates at the request of the Cooperative or the
Swap Provider.
"Rating Confirmation Notice" shall mean notices from all Rating Agencies
confirming that the rating on the Certificates will not be withdrawn or lowered
as a result of the contemplated action.
"Record Date" shall mean for any Certificate Payment Date, the Business Day
next preceding that Certificate Payment Date, or, if there is no Swap Agreement
in effect or the Trustee has not received a Swap Payment when due, the 15th day
prior to the Certificate Payment Date (whether or not a Business Day).
"Refinancing Date" shall mean December 18, 1997.
"Regulations" shall mean the regulations promulgated by 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)
relating to Section 306A of the Rural Electrification Act of 1936 (7 U.S.C.
(S)(S) 901, et seq.), as amended.
"Remarketing Agent" shall mean Alex. Xxxxx & Sons Incorporated or any other
Person succeeding to the duties of the Remarketing Agent as set forth herein.
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"Remarketing Agreement" shall mean that certain Remarketing Agreement dated
as of December 20, 1996, between the Remarketing Agent and the Cooperative and
any similar agreement with a successor Remarketing Agent.
"Remarketing Proceeds Fund" shall mean the fund (comprising a portion of
the Purchase and Remarketing Fund) designated as such and established pursuant
to Section 9.6 with the Tender Agent.
"Responsible Officer" shall mean the Chairman of the Board, the President,
the Governor, any Vice Chairman, the Finance Officer or any Vice President of
CFC or the equivalent officers of any Affiliate or any Servicer or the
Cooperative, as appropriate, or, with respect to the Trustee, any officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.
"RUS" shall mean the Rural Utilities Service, an agency of the United
States of America or any successor to its authority under the Rural
Electrification Act of 1936, as amended (7 U.S.C. (S)(S) 901 et seq.).
"RUS Account" shall mean the account established in Section 4.8(d) hereof.
"S&P" shall mean Standard & Poor's, a division of The McGraw Hill
Companies, Inc.
"Scheduled Servicing Fee" shall mean (i) for any Swap Provider Payment Date
and the corresponding Note Payment Date, an amount equal to the Servicer Spread
applied to the principal amount of the Notes outstanding for the period to, but
not including, such Note Payment Date from and including the next preceding Note
Payment Date or, if none, from and including the Refinancing Date and (ii) for
any other date when distributions are being made pursuant to Section 7.3(F), if
any payment of principal or premium on the Notes is delinquent, an amount equal
to the Servicer Spread on the date such payment became delinquent applied to
such delinquent principal or premium over the period of such delinquency. The
Scheduled Servicing Fee shall be calculated on the basis of a year of 360 days
consisting of twelve 30-day months for any date on which the Interest on the
Certificates is so calculated and, for any other date, shall be calculated on
the basis of the actual number of days elapsed over a year of 365 or 366 days,
as the case may be.
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended (15
U.S.C. (S)(S) 77a et seq.).
"Semiannual Report" shall have the meaning assigned in Section 5.1.
"Series 1988 Certificates" shall mean the Certificates (as such term is
defined in the Original Trust Agreements) issued pursuant to the Original Trust
Agreements.
"Service Transfer" shall mean any transfer of servicing authority and
responsibility to a successor Servicer pursuant to Article VI.
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"Servicer" shall mean CFC until any Service Transfer under this Agreement
and thereafter shall mean the Servicer appointed pursuant to Article VI.
"Servicer Spread" shall mean 9.30 basis points (.093%) per annum.
"Servicing Functions" shall have the meaning assigned in Section 6.2.
"Servicing Officer" shall mean any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Notes and the
Guarantee.
"Swap Agreement" shall mean the International Swap Dealers Association
Master Agreement, including the schedules thereto and confirmation thereof,
dated as of December 20, 1996 and effective as set forth therein, between the
Cooperative and the Swap Provider, or any Alternate Swap Agreement.
"Swap Payments" shall mean the variable rate payments of Interest required
to be made by the Swap Provider under the Swap Agreement pursuant to the terms
thereof.
"Swap Provider" shall mean Xxxxxx, as a party to the Swap Agreement, or the
qualified swap dealer party to any Alternate Swap Agreement.
"Swap Provider Account" shall mean the account established in Section
4.8(d) hereof.
"Swap Provider Default" shall mean any failure of the Swap Provider to make
Swap Payments or any other payments (including delivery of collateral) when due
under the Swap Agreement.
"Swap Provider Payment Dates" shall mean each Call Date and each June 4 and
December 4, commencing June 4, 1998, or such later date on which payment of
Guaranteed Interest is received and if such day is not a Business Day, the next
succeeding Business Day.
"Swap Provider Payments" shall mean, at any time, the amount due and
payable by the Trust as the counterparty under the Swap Agreement (determined
without regard to the amount of Available Funds on deposit in the Trust
Account).
"Tender Agent" shall mean the Trustee or any other Person appointed
pursuant to Section 9.8 of this Agreement.
"Termination Amount" shall have the meaning assigned to it in the Swap
Agreement.
"TIA" or "Trust Indenture Act" shall mean the Trust Indenture Act of 1939
(15 U.S.C. (S)(S) 77aaa-77bbbb) as in effect on the date hereof.
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"Trust" shall mean the Rural Electric Cooperative Grantor Trust (KEPCO)
Series 1997 established pursuant to this Agreement.
"Trust Account" shall mean a segregated trust account or accounts
maintained by the Trustee in its trust capacity in the name of the Trust for the
benefit of the Certificateholders in accordance with Section 4.8.
"Trustee" shall mean The First National Bank of Chicago, a national
banking association, organized under the laws of the United States of America
and authorized to do a banking business and qualified to exercise trust powers,
in its capacity as trustee hereunder until the appointment of any successor
trustee pursuant to Section 10.8 or any succession described in Section 10.10
and thereafter shall mean the Trustee appointed pursuant to such Section 10.8 or
the successor to the former Trustee pursuant to Section 10.10, respectively.
"Underwriter" shall mean Alex. Xxxxx & Sons Incorporated or, if the
original Underwriting Agreement shall terminate on or prior to the Refinancing
Date, such other investment banker selected pursuant to the terms of the Loan
Agreement to purchase the Certificates from CFC (or place such Certificates with
qualified investors), on the Refinancing Date.
"Underwriting Agreement" shall mean the Forward Certificate Purchase
Agreement dated as of December 20, 1996, between Alex. Xxxxx & Sons
Incorporated, the Cooperative and CFC pursuant to which the Cooperative and CFC
agree to sell the Certificates and Alex. Xxxxx & Sons Incorporated agrees to
purchase or place the Certificates on the Refinancing Date or any agreement
serving the same purpose with a successor Underwriter.
"Weekly Rate" shall have the meaning assigned to it is Section 9.1.
"Weekly Rate Mode" shall mean the Interest Rate Mode in which the variable
interest rate payable to the Trust under the Swap Agreement by the Swap Provider
and distributable as Interest with respect to the Certificates is determined in
accordance with Section 9.1(b)(i) and Section 9.1(d).
"Weekly Rate Period" shall mean the period beginning on, and including, the
Refinancing Date, and ending on, and including, the next Tuesday, or if the
immediately succeeding Wednesday is not a Business Day, then the day preceding
the next succeeding Business Day, and thereafter the period beginning on, and
including, any Wednesday or if Wednesday is not a Business Day, then the next
succeeding Business Day and ending on, and including, the next Tuesday, or if
the immediately succeeding Wednesday is not a Business Day, then the day
preceding the next succeeding Business Day.
SECTION 1.2 TERMS DEFINED IN THE LOAN AGREEMENT. All capitalized terms not
defined herein shall have the respective meanings specified in Section 1.1 of
the Loan Agreement.
SECTION 1.3 REFERENCES. All the agreements or instruments defined in
Section 1.1 of this Agreement shall mean such agreements or instruments as the
same may have been or may from time to time be amended, supplemented or
restated, or terms thereof waived or modified to the extent
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permitted by, and in accordance with the terms hereof and thereof. Anything in
the preceding sentence to the contrary notwithstanding, RUS shall not be deemed
to have agreed to or approved any such amendment, supplement, restatement,
waiver or modification unless RUS shall have consented thereto or approved it in
writing. References in this Agreement to Articles, Sections, Subsections and
Exhibits are to Articles, Sections, Subsections and Exhibits in this Agreement,
unless otherwise indicated. References to Sections, Articles or Exhibits
"hereof" or "hereto" shall refer to Sections or Articles in, or Exhibits
incorporated in, this Agreement.
SECTION 1.4 INTERPRETATIONS. References herein to any document or agreement
shall mean that document or agreement as it has been or may be amended from time
to time. References herein to any Person shall mean that Person, its successors
and permitted assigns.
ARTICLE II
DELIVERY OF THE NOTES AND THE SWAP AGREEMENT
SECTION 2.1 DELIVERY OF THE NOTES AND SWAP AGREEMENT. On the Refinancing
Date, assuming the conditions in Section 1.3(c) of the First Amendment to Loan
Agreement have been satisfied, CFC, as depositor of the Trust and Servicer of
the Notes, shall cause the Notes with the Guarantee endorsed thereon to be
delivered to the Trustee for deposit in the Trust. Except as expressly set forth
in this Agreement or the Loan Guarantee Agreement, the acceptance by the Trustee
of delivery of the Notes, the Swap Agreement and the Guarantee, and the
declaration by the Trustee of the Trust under this Agreement, shall not
constitute and is not intended to result in an assumption by the Trustee or any
Certificateholder of any obligation of (i) CFC to the Cooperative, (ii) RUS or
(iii) any other Person in connection with the Loan Agreement, the Notes, the
Swap Agreement or the Guarantee or under any agreements or instruments relating
to any of them.
(b) On December 20, 1996, the Cooperative entered into the Swap Agreement.
On the Refinancing Date, the Cooperative, by the provisions of Section 2.1(c),
shall deliver and irrevocably assign the Swap Agreement, including the
Cooperative's rights to receive the Swap Payments and obligations to pay the
Swap Provider Payments under the Swap Agreement, to the Trustee, as more fully
provided in Section 2.1(c), and such Swap Agreement shall on the Refinancing
Date become an asset of the Trust; provided, however, that the Cooperative
retains certain rights and obligations in connection with a termination under
the Swap Agreement, as more fully provided in Section 2.1(c).
(c) Effective automatically on the Refinancing Date, the Cooperative hereby
assigns and transfers its rights, titles and interests under the Swap Agreement
to the Trustee, including but not limited to (except as provided in clause (3)
below), the following:
(1) the right to receive and enforce payment of the Swap Payments; and
(2) the right to receive and enforce the attachment, perfection and priority of
security interests in the "Posted Collateral" under the Credit Support
Annex to the Swap Agreement, and to administer and control the Collateral
Account in respect thereof (such collateral to
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secure the Swap Payments and other obligations of the Swap Provider, as
provided in the Swap Agreement, but not to secure the Notes, the Guarantee
or other obligations);
(3) provided, however, that the Cooperative reserves the rights and obligations
to make and, through the Trustee and subject to Section 7.5 hereof,
receive payment of amounts in respect of an "Early Termination Date"
determined pursuant to Section 6(e) of the Swap Agreement and the right to
terminate the swap "Transaction" dated of even date herewith, pursuant to
Part 5, Section (9) of the Schedule to the Swap Agreement, subject to and
as more fully provided in Section 7.5 hereof.
Effective automatically on the Refinancing Date and the above assignment
and transfer to the Trust, the Trustee hereby assumes (without personal
liability and subject to the provisions of Article X), all obligations of the
Cooperative under the Swap Agreement that accrue or are incurred after the
Refinancing Date, including but not limited to (except as provided in clause
(iii) below), the following:
(i) the obligation, subject to Section 7.6 hereof, to make payments to the
Swap Provider under the Swap Agreement, only from Available Funds, in the
amount of Guaranteed Interest, less the Scheduled Servicing Fee, pursuant
to Section 7.3(c) hereof; and
(ii) the obligation to release, transfer and return Posted Collateral to the
Swap Provider as provided in the Credit Support Annex to the Swap
Agreement;
(iii) provided, however, that the Trustee does not assume any obligations to
make payments due to early termination of the Swap Agreement or to pay
liabilities in respect of "Taxes" or to pay interest at the "Default
Rate" or expenses or indemnities thereunder.
Effective automatically on the Refinancing Date and the above assignment
and transfer to the Trust, the Trustee hereby makes with respect to itself or
the Trust, as applicable (without personal liability and subject to the
provisions of Article X), the representations, agreements, submissions to
jurisdiction, and waivers of the "Counterparty" under the Swap Agreement;
provided, however, that the Trustee does not assume any obligations to make
payments due to early termination of the Swap Agreement or to pay liabilities in
respect of "Taxes" or to pay interest at the "Default Rate" or to pay expenses
or indemnities thereunder.
For federal income tax purposes it is intended that, while held by the
Trust and the Certificateholders, the Notes and the Swap Agreement be an
"integrated transaction" giving rise to a "synthetic debt instrument" within the
meaning of those terms as used in Treasury Regulation (S) 1.1275-6, (26 C.F.R.
(S) 1275-6); accordingly the Trustee will enter, and retain, as part of the
books and records of the Trust the information required by the identification
requirements of paragraph (e) of Treasury Regulation (S) 1.1275-6 concerning
integrated transactions.
SECTION 2.2 DECLARATION OF TRUST. The Trustee, for itself and its
successors and assigns, declares that it shall hold all the estate, right, title
and interest in any property received by it under this Agreement (except
property received pursuant to Section 10.6 and any other provision of this
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Agreement pursuant to which the Trustee is to be paid, reimbursed or indemnified
for any fees, expenses or liability) in trust for the benefit of all present and
future Certificateholders, subject to the terms and provisions set forth in this
Agreement.
SECTION 2.3 CONDITIONS TO ISSUANCE OF CERTIFICATES. As a condition to the
issuance of the Certificates to CFC, the Trustee or its designee shall have
received all of the following on or before the Deposit Date:
(1) an Opinion of Xxxx X. List, General Counsel for CFC, substantially in the
form of Exhibit B, certifying that the Basic Documents to which CFC is a party
and the transactions contemplated under all of such documents, are authorized
and enforceable against CFC in accordance with their terms;
(2) an Opinion of Milbank, Tweed, Xxxxxx & XxXxxx, Counsel to CFC
substantially in the form of Exhibit C;
(3) resolutions of the Board of Directors of the Cooperative authorizing the
execution, delivery and performance by the Cooperative of the Basic Documents to
which the Cooperative is a party and the transactions contemplated under all
such documents, certified by the secretary or an assistant secretary of the
Cooperative as in full force and effect on and as of the Deposit Date;
(4) an Officer's Certificate of the Cooperative substantially in the form of
Exhibit D;
(5) an opinion of Xxxxxx Xxxx, Esq., General Counsel to the Cooperative
substantially in the form of Exhibit E;
(6) an opinion of Xxxxxx & Xxxxxx L.L.P., Special Finance Counsel to the
Cooperative substantially in the form of Exhibit F;
(7) Opinions of Xxxxx Xxxx & Xxxxxxxx, Special Counsel to Xxxxxx and In-House
Counsel to Xxxxxx substantially in the forms of Exhibits G and H;
(8) Opinions of Xxxxx, Xxxxx & Xxxxx, Counsel to the Underwriter and
Remarketing Agent and In-House Counsel to the Underwriter and Remarketing Agent
substantially in the forms of Exhibits I and J;
(9) a fully executed Trust Agreement;
(10) a fully executed First Amendment to Loan Agreement;
(11) a fully executed First Amendment to Loan Guarantee and Servicing
Agreement;
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(12) a fully executed Swap Agreement;
(13) a fully executed Remarketing Agreement;
(14) a fully executed Liquidity Protection Agreement;
(15) a fully executed Underwriting Agreement;
(16) provisional or final letters from each of the Rating Agencies showing
that the Certificates will be rated A-1 or higher by S&P and P-1 or higher by
Xxxxx'x; and
(17) a certificate of the RUS in the form of Exhibit L.
If such opinions or certificates are dated as of the date of this
Agreement, the Trustee shall be entitled to receive bring-down opinions or
certifications as of the Deposit Date.
Subject to the foregoing conditions, on the Refinancing Date, the Trustee
shall cause to be authenticated and delivered to CFC (or upon the written order
of CFC signed by a Responsible Officer of CFC, to CFC's designee), Certificates
of Beneficial Interest in Authorized Denominations equal in the aggregate to the
Initial Principal Amount.
SECTION 2.4 ISSUANCE OF THE CERTIFICATES. The closing ("Closing") of the
deposit of the Notes (with the Guarantee attached thereto) and the Swap
Agreement and the issuance of the Certificates of Beneficial Interest under this
Agreement to CFC shall occur at 9:00 a.m. on the Refinancing Date (the "Closing
Date") at the offices of Xxxxxx & Xxxxxx L.L.P., The Xxxxxxx Office Building,
0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000-0000, or at such other
time and place as the parties may agree. All of the actions or events scheduled
in this Agreement, and in the other agreements or documents delivered
concurrently with the execution of this Agreement, to take place on the
Refinancing Date, and taken or occurring on such date, shall be deemed to occur
simultaneously. Should the conditions to issuance of the Certificates specified
in Section 2.3 hereof not be satisfied on the Refinancing Date, this Agreement
and the Trust created hereby shall not terminate until the parties hereto
mutually agree to terminate the Trust. Neither CFC nor the Cooperative nor the
Trustee shall be liable to any other party for failure to issue the Certificates
because of the failure of the trustee of the Original Trusts to deliver the
Notes to CFC or the Trustee on the Refinancing Date.
SECTION 2.5 TRANSFER OF THE NOTES, ETC. BY THE TRUSTEE. Without the prior
written approval of the Administrator and satisfaction of the other conditions
precedent to the Trustee's power to do so set forth in this Agreement, the
Trustee will not sell, assign, pledge or otherwise transfer the Notes, the
Trustee's interest in the Swap Agreement or the Guarantee to any Person or
Persons, notwithstanding any default under the Notes, the Swap Agreement or the
Guarantee. This Section shall not be construed to prohibit transfers of the
Certificates.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES AS TO CFC. CFC represents and
warrants to the Trustee that, as of the date hereof and the Refinancing Date:
(a) Organization and Good Standing. CFC has been duly organized, and is
validly existing and in good standing as a cooperative association under the
laws of the District of Columbia, and has the corporate power and authority to
own its assets and to conduct its business as presently conducted.
(b) Binding Obligations. CFC has the corporate power and authority to
make, execute, deliver and perform this Agreement and all the transactions
contemplated by this Agreement. CFC has taken all necessary corporate action to
authorize the execution, delivery and performance by it of this Agreement, the
Loan Agreement and the Loan Guarantee Agreement and all the documents required
pursuant to such agreements and documents. This Agreement, the Loan Agreement
and the Loan Guarantee Agreement constitute the legal, valid and binding
obligations of CFC enforceable against it in accordance with their respective
terms (subject to applicable bankruptcy and insolvency laws and other similar
laws affecting the enforcement of the rights of creditors generally and the
availability of equitable remedies).
(c) No Consent Required. CFC is not required to obtain any consent,
license or approval of, or to register with any other party or any Governmental
Authority in connection with, the execution, delivery or performance of this
Agreement, the Loan Agreement or the Loan Guarantee Agreement other than, prior
to the public offering of the Certificates of Beneficial Interests by CFC, if
any, (i) the registration of the Certificates of Beneficial Interests under the
Securities Act of 1933, if necessary, (ii) the qualification of an indenture
under the TIA, if necessary, (iii) the issuance of an order of exception under
Section 6(c) of the Investment Company Act of 1940 or the availability of
another exemption thereunder, if necessary, (iv) the registration,
qualification, issuance of an order of exemption or any other governmental
action under any applicable state securities laws, and (v) any necessary
exemption of the Department of Labor under the Employee Retirement Income
Security Act of 1974, as amended.
(d) No Violations. Its execution, delivery and performance of this
Agreement, the Loan Agreement and the Loan Guarantee Agreement do not violate
the Articles of Incorporation or the By-laws of CFC or any provision of any
exiting law or regulation applicable to CFC or any order or decree of any court
or any mortgage, indenture, contract or other agreement to which CFC is a party
or by which it, the Notes, the Guarantee or any portion of CFC's properties is
bound.
(e) Litigation. There is no litigation or administrative proceeding before
any Governmental Authority presently pending or, to the knowledge of CFC,
threatened, with respect to CFC, the Original Trusts, the Trust, the Notes, the
Guarantee, the Certificates, the Series 1988 Certificates, this Agreement, or,
to CFC's knowledge, the Swap Agreement, challenging the validity or
enforceability of this Agreement, the Loan Agreement, the Loan Guarantee
Agreement, the
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Certificates, the Series 1988 Certificates, or the Swap Agreement, nor has any
order, judgment or decree been issued or proposed to be issued by any
Governmental Authority which would set aside, restrain, enjoin or prevent the
execution and the delivery of this Agreement, the Notes, the Guarantee, the Loan
Guarantee Agreement, the Trust, the Certificates, or, to CFC's knowledge, the
Swap Agreement, or which, if adversely determined to the interests of CFC, could
have a material adverse effect on CFC's ability to perform its obligations under
this Agreement, the Loan Agreement, Series 1988 Certificates, the Certificates
the Swap Agreement, or the Loan Guarantee Agreement.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES AS TO THE NOTES AND THE
GUARANTEE. CFC further represents and warrants to the Trustee that, as of the
date hereof and the Refinancing Date:
(a) Binding Obligation. To the best knowledge of CFC, each of the Notes
is the legal, valid and binding obligation of the Cooperative and is enforceable
in accordance with its terms, except as such enforceability may be limited by
laws affecting creditors' rights generally.
(b) No Defenses. To the best knowledge of CFC, the Notes are not subject
to any right of rescission, set off, counterclaim or defense, including the
defense of usury, and the operation of any of the terms of the Notes or the
exercise of any right thereunder will not render the Notes unenforceable in
whole or in part or subject to a right of rescission, setoff, counterclaim or
defense, including the defense of usury, and no such right of rescission,
setoff, counterclaim or defense has been asserted with respect thereto.
(c) Special Warranty. CFC has placed no liens on the Notes while they
were held in the Original Trusts.
(d) Obligations; No Impairment. CFC has duly fulfilled all material
obligations on its part to be fulfilled under or in connection with the Loan
Guarantee Agreement, the Loan Agreement, the Notes or the Guarantee and has not
assigned, amended, waived or encumbered the rights of the Trust and the
Certificateholders in the Notes and the Guarantee or proceeds thereof with
respect thereto other than as contemplated hereby.
(e) Absence of Fraud or Misrepresentation. CFC has neither taken any
action nor omitted to take any action nor made any statement nor omitted to
make any statement that constitutes either a fraud or a misrepresentation (as
such terms are used in 7 U.S.C. (S) 938) in respect of the authorization,
execution or delivery of the Guarantee. In addition to the foregoing, to the
best of CFC's knowledge, there has been no fraud or misrepresentation (as such
terms are used in 7 U.S.C. 938) by any Person in connection with the
authorization, execution or delivery of the Guarantee.
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ARTICLE IV
SERVICING OF NOTES AND SWAP AGREEMENT AND MAINTENANCE OF ACCOUNTS
SECTION 4.1 NOTIFICATIONS TO THE COOPERATIVE, THE SWAP PROVIDER AND THE
TRUSTEE. The Servicer will deliver the notices and schedules to the Cooperative,
the Swap Provider and the Trustee provided for in Section 7.1.
SECTION 4.2 NOTIFICATIONS TO RUS.
(a) The Servicer will provide RUS and the Administrator the notices and
schedules in accordance with Article V of the Loan Guarantee Agreement and
paragraph 16 of Schedule I thereto. The Servicer will provide a copy of any
such notice or schedule to the Cooperative, the Swap Provider and the Trustee.
(b) The Trustee will notify the Servicer, the Remarketing Agent, the
Liquidity Provider, and the Swap Provider by 12:00 p.m. (New York, New York
time) on any Note Payment Date of any default in the payment on such date of
Principal and/or Guaranteed Interest on the Notes, and will notify the
Cooperative, the Remarketing Agent, and the Servicer of any default under the
Swap Agreement known by a Responsible Officer of the Trustee and will cooperate
with the Servicer in the performance of the Servicer's duties under Section
4.2(a).
SECTION 4.3 APPOINTMENT AS ATTORNEY. The Trustee hereby constitutes and
appoints the Servicer as its true and lawful attorney-in-fact, in the Trustee's
name, place and stead, to commence and prosecute any claims to enforce or
collect on the Notes or the Guarantee; provided, however, the Servicer shall not
(in part or in full) rescind, cancel, release, waive, modify or reschedule the
right to collect the unpaid balance on the Notes or the Guarantee from the
Cooperative or RUS. If, however, in any suit or legal proceeding for
enforcement, it is held that the Servicer may not enforce or collect on the
Notes or the Guarantee on the ground that it is not a real party in interest or
a holder entitled to enforce the Notes or the Guarantee, as the case may be, the
Trustee on behalf of the Trust shall take such steps as may be necessary to
enforce the Notes or the Guarantee, as the case may be, including bringing suit
in its name. The Servicer will promptly provide the Trustee notice of any
material actions by the Servicer under this Section and notice of all material
developments related to the Servicer's performance in its capacity as attorney-
in-fact of the Trustee.
SECTION 4.4 DUTIES AND APPOINTMENT OF SERVICER.
(a) The Servicer shall administer and service the Notes and the Guarantee
and enforce the Trustee's rights under the Notes and the Guarantee; provided,
however, (i) payments on the Notes shall be made by the Cooperative or by RUS as
guarantor directly to the Noteholder, (ii) if Swap Payments are due to the
Trustee on any Certificate Interest Payment Date, distributions of such amounts
actually received shall be made directly by the Trustee to each
Certificateholder in an amount equal to such Certificateholder's Fractional
Interest in such Swap Payments on such Certificate Interest Payment Date, and
(iii) payments of Guaranteed Interest on the Notes less the
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Servicer Spread received by the Trustee shall be made directly by the Trustee to
the Swap Provider on each Swap Provider Payment Date.
(b) The Servicer shall make the calculations as to (i) the aggregate
amount of each distribution to Certificateholders; and (ii) the Swap Payment due
and payable on any Certificate Payment Date, and shall provide the Trustee, the
Swap Provider and the Cooperative notice of such amounts in writing on the
second Business Day prior to any Certificate Payment Date.
(c) Except as expressly provided herein, none of the provisions contained
in this Agreement shall in any event require the Servicer to perform any of the
obligations of the Trustee under this Agreement.
SECTION 4.5 STANDARD OF CARE.
(a) In administering, servicing and enforcing the Notes or the Guarantee,
the Servicer, after a default in payment on the Notes, shall exercise such of
the rights and powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs. Prior to a
default in payment on the Notes, the Servicer need perform only those duties
that are specifically set forth in this Agreement, and no others. The Servicer
shall not be liable (i) for any error of judgment made in good faith by it,
unless it is proved that the Servicer was negligent in ascertaining the
pertinent facts, or (ii) with respect to any action it takes or omits to take in
good faith in accordance with a direction received by it from the Trustee or the
Certificateholders.
(b) Subject to the provisions of this Section, (i) the Servicer may rely
on any document believed by it to be genuine and to have been signed or
presented by the proper person, and the Servicer need not investigate any fact
or matter stated in the document; and (ii) the Servicer shall not be liable for
any action it takes or omits to take in good faith in reliance on an Opinion of
Counsel.
(c) The Servicer in its individual or any other capacity may become the
owner or pledgee of securities issued by the Cooperative and may otherwise deal
with the Cooperative or an Affiliate with the same rights it would have if it
were not the Servicer.
(d) The Servicer has certain relationships with Xxxxxx and the Servicer
may make deposits with, borrow money from, employ Xxxxxx to act as trustee under
indentures of, and generally engage in any kind of business with, Xxxxxx and any
Person who may do business with or own securities of Xxxxxx without any duty to
account therefor and with the same rights it would have if it were not the
Servicer.
SECTION 4.6 DELIVERY OF AMOUNTS RECEIVED IN ENFORCING THE NOTES, THE
GUARANTEE AND THE SWAP AGREEMENT. The Servicer shall use its best efforts to
cause any amounts to be received pursuant to its enforcement of the Notes or the
Guarantee to be delivered directly to the Trustee. Any monies which are
nevertheless delivered to the Servicer in respect of its enforcement of the
Notes or the Guarantee shall be delivered to the Trustee on the same day they
are received by the Servicer.
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SECTION 4.7 SERVICER'S INDEMNITIES.
(a) The Servicer will defend and indemnify the Trust, the Trustee and the
Certificateholders against any and all costs, expenses, losses, damages, claims
and liabilities, including reasonable fees and expenses of counsel and expenses
of litigation, arising in respect of any gross negligence or willful misconduct
by the Servicer with respect to the Notes or the Guarantee, except to the extent
that any such costs, expenses, losses, damages, claims and liabilities (as and
when incurred) may be attributable to the Trustee's negligence or bad faith.
(b) If the Servicer has made any indemnity payments to the
Certificateholders, the Trust or the Trustee on behalf of Certificateholders
pursuant to this Section, and the Trustee thereafter collects any of the amounts
which gave rise to such indemnity payment from the Cooperative or other Persons
or any such amounts are received by the Trust, the Trustee shall repay such
amounts collected to the Servicer.
(c) These indemnities will survive any Service Transfer but will not cover
actions or omissions of any successor Servicer after a Service Transfer.
SECTION 4.8 MAINTENANCE OF THE TRUST ACCOUNT.
(a) The Trustee shall establish and maintain the Trust Account as a
segregated, non-interest-bearing trust account in its trust capacity for the
benefit of the Certificateholders. The Trustee shall immediately deposit in the
appropriate subaccount within the Trust Account, as provided in Section
4.8(d)(i) all payments it receives with respect to the Notes or the Guarantee
(except for any amounts required by Section 7.3(c)(B) to be paid by the Trustee
to RUS or the Cooperative and except for property received pursuant to Section
10.6 and any other provision of this Agreement pursuant to which the Trustee is
to be paid, reimbursed or indemnified for any fees, expenses or liability) or
the Swap Agreement and any investment earnings on, returns of principal of and
any other amounts received in respect of investments of such funds and (ii)
moneys transferred from the Collateral Account pursuant to Section 4.8(c)
hereof. The Trustee, at the direction of the Servicer, shall invest amounts in
the Trust Account prior to the associated Certificate Payment Date in Eligible
Investments that mature not later than the Business Day next preceding the
associated Certificate Payment Date. The Trustee shall maintain, for the
benefit of the Certificateholders, possession of the Eligible Investments
evidenced by an instrument from the time of purchase until maturity. The
Trustee shall not sell, assign or otherwise transfer any Eligible Investment
prior to its maturity except, at the direction of the Servicer, to preserve the
value of the corpus of the Trust. The Trustee, promptly upon receipt of
earnings on Eligible Investments, shall deliver to the Servicer a schedule
setting forth such amounts and the source of such amounts, including the
securities on which any such amounts were earned.
(b) Neither the Trustee nor the Servicer shall have any liability to the
Trust or the Certificateholders with respect to losses on investments of amounts
from the Trust Account in Eligible Investments that have been made in compliance
with this Section. In no event shall the Cooperative or RUS have any liability
to the Trust or the Certificateholders with respect to losses on investments of
amounts from the Trust Account.
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(c) The Trustee shall establish, as an account separate from the Trust
Account, a Collateral Account into which shall be deposited any Posted
Collateral received by it pursuant to the Credit Support Annex attached to the
Swap Agreement. The Collateral Account shall (i) secure the Swap Provider's
obligation to make Swap Payments and the other rights of the Trustee and
Cooperative under the Swap Agreement, (ii) shall be applied only in accordance
herewith and with the Swap Agreement, and (iii) shall not be available for any
other purpose, including, but not limited to, the obligations of the Cooperative
or RUS under the Notes or Guarantee. Proceeds of the Posted Collateral received
by the Trustee from the exercise of its remedies pursuant to Paragraph 8 of the
Credit Support Annex to the Swap Agreement shall be applied, to the extent
permitted by such Credit Support Annex, in accordance with Section 7.5 hereof.
(d) The Trustee shall establish, as subaccounts within the Trust Account,
a "Cooperative Account," a "RUS Account" and a "Swap Provider Account" which
shall be maintained for the purpose of holding funds received from the
Cooperative, the RUS and the Swap Provider, respectively.
SECTION 4.9 ELIGIBLE INVESTMENTS. "Eligible Investments" are any of the
following:
(a) bonds, notes, bills or other similar obligations issued by the United
States of America that are backed by the full faith and credit of the United
States; and
(b) repurchase agreements (i) secured by securities of the type listed
under Section 4.9(a) not subject to a perfected lien of any third party and
valued at no less than 102% of the repurchase obligation (including accrued
interest) if such securities have a remaining maturity of less than one year, or
otherwise over-collateralized to an extent acceptable to each Rating Agency
without causing a reduction in their ratings of the Certificates, (ii) with
entities such that the automatic stay provision of 11 U.S.C. (S) 362 would not
be applicable to the repurchase agreement in the event of bankruptcy of such
entity (or, if there are no such entities as a result of an amendment to 11
U.S.C. (S) 362, such entities acceptable to each Rating Agency without causing a
reduction in the ratings on the Certificates) and (iii) pursuant to
documentation that provides for the securities to be valued ("marked to market")
daily and kept in the possession of the Trustee or in its control through book
entry (or, in both cases, that have such other provisions acceptable to each
Rating Agency without causing a reduction in its rating on the Certificates
provided the Servicer has determined that the SEC or its staff will not object
to such other provisions).
SECTION 4.10 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, THE SERVICER. Any corporation into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any corporation
succeeding to the business of the Servicer shall be the successor of the
Servicer under this Agreement (without relieving the Servicer of its
responsibilities under this Agreement if it survives such merger, conversion or
consolidation), without the execution or filing of any paper or any further act
on the part of any of the parties hereto.
SECTION 4.11 COSTS AND EXPENSES. All costs and expenses incurred by the
Servicer in carrying out its duties under this Agreement (including fees and
expenses of accountants and all
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other fees, the exercise of remedies following a default under the Notes or the
Guarantee and expenses not expressly stated in this Agreement to be for the
account of the Trust) shall be paid by the Servicer and the Servicer shall not
be entitled to any reimbursement of such costs and expenses under this
Agreement. Nothing in this Section shall be construed to limit the compensation
to be paid to the Servicer pursuant to Section 7.3.
SECTION 4.12 PROVISION OF FORMS OF CERTIFICATES. The Servicer agrees
promptly to provide the Trustee with blank forms of Certificates in amounts
reasonably requested by the Trustee.
ARTICLE V
REPORTS
SECTION 5.1 REPORTS TO CERTIFICATEHOLDERS AND OTHERS.
(a) On or before ten Business Days after each June 15 and December 15 (or
the next Business Day if such day is not a Business Day), the Servicer shall
supply to the Trustee, the Swap Provider and the Liquidity Provider a
"Semiannual Report" which shall include the following information (stated on the
basis of $100,000 of principal amount) as of the last Certificate Payment Date
occurring since the last Semiannual Report:
(1) the amount of any distribution allocable to Principal;
(2) the amount of any distributions allocable to Interest; and
(3) the amount of fees distributed to the Servicer.
The Semiannual Report shall also state the Principal Balance with
respect to the Certificates outstanding after the last distribution of Principal
and that, to the best of the Servicer's knowledge, as of the related June 15 and
December 15 (or the next Business Day if such day is not a Business Day), no
delinquency in payment under any of the Notes, the Guarantee or the Swap
Agreement has occurred and no Event of Servicing Termination, or event that with
notice or lapse of time or both would become an Event of Servicing Termination,
has occurred and is continuing or, if such event has occurred and is continuing,
shall specify the event and, in any event, shall specify its status and the
amount, if any, paid under the Guarantee. Each Semiannual Report shall include
a certification from a Responsible Officer of the Servicer to the effect that,
to the best of such officer's knowledge and belief, the Semiannual Report is
complete and accurate. The Trustee shall promptly mail a copy of the Semiannual
Report to each Certificateholder.
(b) The fiscal year of the Trust shall be a calendar year. Within the
prescribed period of time for tax reporting purposes after the end of each
calendar year during the term of this Agreement, the Trustee shall prepare and
mail to each Certificateholder of record at any time during such year a report
setting forth the aggregate of amounts reported pursuant to Section 5.1(a), any
original issue discount and such other information as is reasonably necessary
for the preparation of such
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Certificateholder's federal income tax returns, each for such calendar year or,
in the event such person was a Certificateholder for only a portion of such
calendar year, for the applicable portion of the year.
(c) The Trustee will deliver, without charge, to any Certificateholder,
the Swap Provider and the Liquidity Provider copies of all statements and
reports furnished to the Trustee upon written request delivered to the Trustee
at Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000-0000,
Attention: Corporate Trust Administration.
(d) Within 60 days of May 15 in every year beginning with May 15, 1998,
the Trustee shall mail to the Certificateholders a brief report that complies
with TIA (S) 313(a). The Trustee shall also comply with TIA (S) 313(b)(2). A
copy of each report at the time of its mailing to Certificateholders shall be
filed with the SEC and each stock exchange on which Certificates are listed. The
Servicer shall notify the Trustee when the Certificates are listed on any stock
exchange.
SECTION 5.2 TAX STATEMENTS, GOVERNMENTAL FILINGS AND AVAILABILITY OF
INFORMATION. The Servicer shall promptly prepare and deliver to the Trustee
copies of any tax filings for the Trust and prepare, deliver and file all
necessary reports and filings under the Securities Act of 1933, the Securities
Exchange Act of 1934, the TIA or the Investment Company Act of 1940 for the
Trust. If the Certificates are issued and sold pursuant to Section 4(2) of the
Securities Act and resold pursuant to Rule 144A or another exemption under the
Securities Act, the Servicer will (and the Trustee shall cooperate with the
Servicer to) make available to any prospective purchaser of the Certificates or
beneficial owner of the Certificates in connection with any sale thereof
pursuant to Rule 144A under the Securities Act the information required by Rule
144A(d)(4) under the Securities Act.
SECTION 5.3 REPORT OF ACCOUNTANTS. At its own expense, the Servicer shall
cause an independent certified public accountant to audit the books and records
of the Trust no less often than annually, and, upon completion of such report,
shall provide a copy of the auditor's report to the Trustee and the Cooperative.
ARTICLE VI
SERVICE TRANSFERS
SECTION 6.1 EVENTS OF SERVICING TERMINATION. "Event of Servicing
Termination" means the occurrence of any of the following:
(a) any failure by the Servicer to make any payment or any deposit
required to be made by the Servicer under this Agreement and the continuance of
such failure for a period of two Business Days;
(b) failure by the Servicer to provide any report or filing in accordance
with Section 5.1 or Section 5.2, any notice with respect to a Note Payment Date
in accordance with Section 7.1 or any notice with respect to any deficiencies in
accordance with Section 7.2 that continues unremedied for
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three Business Days after notice from the Trustee or Certificateholders with
aggregate Fractional Interests representing 25% or more of the Trust, which
notice shall specify such failure, require it to be remedied and state that such
notice is a "Notice of Servicing Termination";
(c) any failure on the part of the Servicer to enforce the Notes or the
Guarantee in accordance with Section 4.5 that continues unremedied for 30 days
after notice from the Trustee, the Swap Provider or Certificateholders with
aggregate Fractional Interests representing 25% or more of the Trust, which
notice shall specify such failure, require it to be remedied and state that such
notice is a "Notice of Servicing Termination";
(d) any failure on the part of the Servicer to observe or perform in any
material respect any material covenant or agreement to be observed or performed
by the Servicer under this Agreement that continues unremedied for 30 days after
notice from the Trustee, the Swap Provider or Certificateholders with aggregate
Fractional Interests representing 25% or more of the Trust, which notice shall
specify such failure, require it to be remedied and state that such notice is a
"Notice of Servicing Termination";
(e) any assignment or delegation by the Servicer of its duties or rights
under this Agreement except as specifically permitted by this Agreement;
(f) the entry of a decree or order by a court having jurisdiction in the
premises adjudging the Servicer a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Servicer under Title 11 of the United States
Code or any other applicable Federal or state law or law of the District of
Columbia, or appointing a receiver (or other similar official) of the Servicer
or of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days;
(g) the institution by the Servicer of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a request for relief
under the Title 11 of the United States Code or any other applicable Federal or
state law or law of the District of Columbia, or the consent by it to the
filing of any such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Servicer or
of any substantial part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in writing of its inability
to pay its debts generally as they become due, or the taking of corporate action
by the Servicer in furtherance of any such action; or
(h) the failure of the Servicer to be an Eligible Servicer.
SECTION 6.2 SERVICE TRANSFER.
(a) If an Event of Servicing Termination has occurred and is continuing,
either the Trustee or Certificateholders holding aggregate Fractional Interests
representing 51% or more of the Trust, by notice in writing to the Servicer,
and, if no Swap Provider Default has occurred and is
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continuing, with the consent of the Swap Provider, may terminate all (but not
less than all) the Servicer's rights, powers, duties and obligations in such
capacity as Servicer the Basic Documents(such functions being hereafter referred
to as "Servicing Functions"). On receipt by the outgoing Servicer of such notice
(or on such later date as may be designated therein), all authority and power of
such outgoing Servicer to conduct Servicing Functions shall pass to and be
vested in, without further action and pursuant to and under this Section, the
successor Servicer as determined in Section 6.3.
(b) The outgoing Servicer agrees to cooperate with the Trustee and the
successor Servicer in effecting the termination of the responsibilities and
rights of the outgoing Servicer to conduct Servicing Functions under this
Agreement and to assist the successor Servicer in enforcing all rights
under the Notes or the Guarantee. All reasonable costs and expenses incurred by
the successor Servicer in connection with the Service Transfer shall be paid by
the outgoing Servicer upon presentation of reasonable documentation of such
costs and expenses (but the outgoing Servicer shall not be responsible for any
costs or expenses of any subsequent Service Transfers).
SECTION 6.3 APPOINTMENT OF SUCCESSOR SERVICER.
(a) On and after the receipt by the outgoing Servicer of a notice of
termination pursuant to Section 6.2 or the receipt by the Trustee of a notice of
the resignation of a Servicer as permitted under this Agreement, the outgoing
Servicer shall continue to perform Servicing Functions only until the date
specified in such notice or, if no such date is specified in a notice of
termination, until receipt of such notice. The Trustee, with the consent of the
Swap Provider (unless a Swap Provider Default has occurred and is continuing),
shall appoint an Eligible Servicer as successor Servicer and such successor
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Trustee and shall agree in writing to be the Servicer under
the Notes and the Guarantee and to enforce the Trustee's rights thereunder. In
the event that a successor Servicer has not been appointed at the time the
outgoing Servicer ceases to act as Servicer, the Trustee without further action
shall automatically be appointed the successor Servicer.
(b) Upon appointment, the successor Servicer shall be the successor in all
respects to the outgoing Servicer and shall be subject to all the
responsibilities, duties and liabilities (and shall benefit from all rights and
shall have all powers) arising thereafter relating to the Servicing Functions.
(c) The outgoing Servicer and any successor Servicer shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
succession. The successor Servicer shall be entitled to servicing compensation
with respect to the Notes and the Guarantee sufficient to pay the successor
Servicer a reasonable fee (including the estimated costs of such servicing and a
reasonable profit). Such servicing compensation shall be a fee determined in
the following manner: (i) if it is commercially reasonable to obtain estimates
or bids of five or more Eligible Servicers prepared to service the Notes and the
Guarantee, a reasonable fee shall not exceed 115% of the average of such bids
or estimates; (ii) if it is commercially reasonable to obtain estimates or bids
of only three or four Eligible Servicers prepared to service the Notes and the
Guarantee, a reasonable fee shall not exceed 110% of the average of such bids or
estimates; and (iii) if estimates or bids are
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obtained from only two or fewer Eligible Servicers prepared to service the Notes
and the Guarantee, a reasonable fee shall not exceed the Scheduled Servicing
Fee. The outgoing Servicer shall pay or cause to be paid any portion of such
reasonable fee to the successor Servicer which is in excess of the sum of the
Servicing Fee and other amounts payable to the Servicer out of the Trust Account
pursuant to this Agreement. The Trustee shall promptly deliver to CFC a copy of
any agreement appointing a successor Servicer.
SECTION 6.4 NOTIFICATION OF SERVICING TERMINATION. The Trustee shall give
prompt written notice of any Event of Servicing Termination that has occurred
and is continuing or the appointment of a successor Servicer to RUS, the
Cooperative, CFC, the outgoing Servicer, the Swap Provider, the Liquidity
Provider and the Certificateholders at their respective addresses appearing on
the Certificate Register. The Trustee may withhold notice of an Event of
Servicing Termination from the Certificateholders so long as it in good faith
determines that withholding such a notice from the Certificateholders is in the
best interests of the Certificateholders.
SECTION 6.5 EFFECT OF SERVICE TRANSFER.
(a) After a Service Transfer, the outgoing Servicer shall have no further
rights or obligations with respect to the Servicing Functions and the successor
Servicer shall have all such rights and obligations, except as provided in
subsection (b) of this Section.
(b) A Service Transfer shall not affect the rights and duties of the
parties under this Agreement, the Loan Agreement, the Swap Agreement, and the
Loan Guarantee Agreement other than the Servicing Functions and the unaffected
rights and duties under this Agreement, including, without limitation, the
outgoing Servicer's right to receive payment of amounts payable to it for
services rendered prior to such Service Transfer. The successor Servicer shall
promptly pay CFC or any other outgoing Servicer all amounts either of them is
entitled to receive under this Agreement on each Certificate Payment Date
subsequent to the Service Transfer and upon termination of this Agreement. The
successor Servicer shall also provide CFC and any other outgoing Servicer with a
copy of the Semiannual Report sent to the Certificateholders with respect to
each Certificate Payment Date subsequent to the date of the Service Transfer and
with such other information as CFC may reasonably request to enable CFC or any
other outgoing Servicer to verify the amount, if any, required to be paid by CFC
or any other outgoing Servicer to the successor Servicer as compensation as
provided in Section 6.3 or to the outgoing Servicer pursuant to the first
sentence of this subsection.
ARTICLE VII
PAYMENTS; SWAP AGREEMENT
SECTION 7.1 NOTICE TO THE COOPERATIVE, THE SWAP PROVIDER AND THE TRUSTEE;
NOTICE OF PREPAYMENT.
(a) No more than 45 days and no less than 35 days before each Note Payment
Date (other than a Call Date, as provided in Section 9.7), the Servicer will
deliver a notice to the Cooperative
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and the Trustee specifying the date such payment is due and the amount of such
payment. No more than five Business Days and no less than two Business Days
before each Certificate Payment Date, the Servicer will deliver a notice to the
Cooperative, the Swap Provider and the Trustee. Such notice shall specify in
reasonable detail the method of calculation of the Interest payable to the
Certificateholders, if any, and the amount of Principal, if any, payable to the
Certificateholders, the Scheduled Servicing Fee payable to the Servicer, in each
case on the associated Certificate Payment Date.
(b) On written request of the Cooperative or RUS, the Servicer shall
promptly deliver to the Cooperative or RUS a schedule setting forth the amount
which would be payable on the Notes if the Notes were to be prepaid or purchased
on a date set forth in such written request. The Servicer will deliver a copy of
any such schedule to the Trustee and the Swap Provider simultaneously with its
delivery to the Cooperative or RUS.
SECTION 7.2 DEFAULT NOTICE.
(a) By 12:00 p.m. (New York, New York time) on each Note Payment Date, the
Trustee will notify the Servicer whether there is a Deficiency (as defined
below) with respect to that Note Payment Date and the amount of the Deficiency,
if any, and, if there is a Deficiency, the Servicer shall deliver to RUS a
Default Notice pursuant to Section 5.2(a) of the Loan Guarantee Agreement.
(b) "Deficiency" means, in respect of any Note Payment Date, the amount,
if any, by which the amount received by the Trustee from the Cooperative (and
from RUS) in respect of that Note Payment Date is less than the amount of
Principal, if any, and Guaranteed Interest due under any Note on that Note
Payment Date.
(c) By 3:30 p.m. (New York, New York time) on each Certificate Interest
Payment Date, the Trustee will notify the Servicer, the Cooperative, the
Remarketing Agent, the Swap Provider and the Liquidity Provider as to whether
there has been a default in the payment of any Swap Payment.
SECTION 7.3 PAYMENTS WITH RESPECT TO THE CERTIFICATES AND DISTRIBUTIONS TO
THE SERVICER AND SWAP PROVIDER; REMITTANCE OF CERTAIN EARNINGS ON ELIGIBLE
INVESTMENTS; NOTICE OF PRINCIPAL PAYMENTS.
(a) Except as provided below, on each Certificate Interest Payment Date,
the Trustee shall apply or cause to be applied all Available Funds in the Trust
Account to make the payments of Interest due to the Certificateholders on such
date.
(b) Except as provided below, on each Certificate Principal Payment Date,
the Trustee shall apply or cause to be applied all Available Funds in the Trust
Account to make the payment of Principal due to the Certificateholders on such
date.
(c) On each Swap Provider Payment Date, the Trustee shall apply or cause
to be applied Available Funds in the Trust Account to pay the amount of
Guaranteed Interest received by the Trustee on or in respect of the
corresponding Swap Provider Payment Date by 1:00 p.m. (New York,
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New York time), in immediately available funds, first to the Servicer in an
amount equal to the Scheduled Servicing Fee due on such date and then (unless a
Swap Provider Default has occurred and is continuing) to the Swap Provider at
its Payment Location. On each June 15 and December 15 (or if such day is not a
Business Day, the next succeeding Business Day), the Trustee shall apply or
cause to be applied all Available Funds in the Trust Account to make the
following payments in the following order of priority:
(i) Interest, if any, due to the Certificateholders on such date; and
(ii) Principal, if any, due to the Certificateholders on such date.
If the Available Funds associated with any June 15 or December 15 or
Call Date (or if such day is not a Business Day, the next succeeding Business
Day) are greater than the amounts required to be distributed above under this
Section 7.3(c), the excess shall be distributed as follows:
(A) If there has been no acceleration of the Notes (1) to RUS, to the
extent that RUS has paid any amount under the Guarantee and the Cooperative has
not paid to RUS all amounts due on the Notes as a result of such payment by RUS,
and (2) otherwise, to the Cooperative; provided, however, that no amounts shall
be distributed to RUS or the Cooperative until the Trustee has paid (x) to the
Servicer all delinquent Scheduled Servicing Fees and (to the extent permitted by
Applicable Law) all interest thereon, (y) unless a Swap Provider Default has
occurred and is continuing, to the Swap Provider the amount of any delinquent
Swap Provider Payments, and (z) to the Certificateholders all amounts of
Interest then accrued for their benefit under Section 7.3(c)(E), all delinquent
Principal, and all delinquent Interest (to the extent permitted by Applicable
Law) with respect to the Certificates of Beneficial Interests.
If there has been an acceleration of the Notes, (1) the amount of the
accrued and unpaid Scheduled Servicing Fee shall become distributable to the
Servicer, (2) unless a Swap Provider Default has occurred and is continuing, the
amount of the accrued and unpaid Swap Provider Payments, if any, shall become
distributable to the Swap Provider, and (3) the entire outstanding Principal
Balance with respect to the Certificates of Beneficial Interests, together with
all accrued Interest thereon, shall become distributable to the
Certificateholders, it being understood that Interest and the Scheduled
Servicing Fee, shall accrue for this purpose as if the date of such acceleration
were a Note Payment Date. Upon an Event of Default described in paragraph (a)
of Article VI of the Loan Agreement, the Trustee may, and upon the written
request of Certificateholders holding aggregate Fractional Interests
representing 51% or more of the Trust, shall, by written notice to the Servicer,
the RUS and the Cooperative (if such notice may lawfully be given) and, unless a
Swap Provider Default has occurred and is continuing, with the consent of the
Swap Provider, direct the Servicer to declare the Notes to be due and payable.
Upon any acceleration of the Notes pursuant to the Loan Agreement, all accrued
Scheduled Servicing Fees shall become payable to the Servicer; the amount of
unpaid Swap
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Provider Payments shall, unless a Swap Provider Default has occurred and is
continuing, become payable to the Swap Provider, and the entire outstanding
Principal Balance with respect to the Certificates of Beneficial Interests,
together with all accrued Interest thereon, shall become distributable to the
Certificateholders; it being understood that Interest and the Scheduled
Servicing Fee shall accrue for this purpose as if the date of such acceleration
were a Note Payment Date.
(B) Anything contained in this Agreement to the contrary notwithstanding,
(i) if RUS is not in default under the Guarantee and has made a payment under
the Guarantee and the Trustee thereafter receives from the Cooperative any
payment on the Notes, then, to the extent that the sum of such payments by RUS
and such payments by the Cooperative exceed the amounts then due on the Notes,
the Trustee shall promptly pay the amount of such excess directly to RUS and
shall in no event deposit the amount of such excess in the Trust Account and
(ii) if RUS is not in default under the Guarantee and makes a payment under the
Guarantee that, together with any payments made by the Cooperative, is in excess
of the amounts then due on the Notes, then the Trustee shall promptly pay the
amount of such excess to RUS and shall in no event deposit the amount of such
excess in the Trust Account. All such payments to RUS must be made by electronic
funds transfer to RUS through the Department of Treasury account at the Federal
Reserve Bank of New York. The following wire information shall be included in
the funds transfer message in the precise language as stated: 021030004 10 TREAS
NYC/(12310100) USDA RUS. Following this information, the wire should state that
the payment is for the credit of the Cooperative and provide the name of the
institution forwarding the wire. Subject to the first sentence of this Section
7.3(c)(B), to the extent the Trustee receives payments on any Note Payment Date
from the Cooperative on or with respect to the Notes in excess of the amounts
due on that Note Payment Date on or with respect to the Notes, the Trustee shall
promptly repay the amount of such excess directly to the Cooperative and shall
in no event deposit the amount of such excess in the Trust Account.
(C) All payments to Certificateholders shall be made by check mailed to
each Certificateholder of record on the associated Record Date at the address
appearing on the Certificate Register, except that with respect to Certificates
registered in the name of the Liquidity Provider or CFC or in the name of Cede &
Co., the nominee registrant for the DTC, payments will be made in the form of
immediately available funds. Notwithstanding the foregoing, if CFC, the
Servicer or the Trustee so notifies Certificateholders at least 25 days prior
thereto, the final payment on each Certificate (other than Certificates held by
the Liquidity Provider) shall be made only upon presentation and surrender of
the Certificate of Beneficial Interests at the office or agency then maintained
by the Trustee in accordance with Section 8.2.
(D) The Trustee shall pay to the Servicer upon request any money held by
the Trustee for the payment of Principal or Interest that remains unclaimed by
any
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Certificateholder for two years; provided, however, that the Trustee before
making any such repayment shall, at the expense of the Servicer, cause to be
published once in a newspaper of general circulation in the City of New York, or
mail to each such holder, notice that such money remains unclaimed and that
after a date specified therein, which shall not be less than 10 days from the
date of such publication or mailing, any unclaimed balance of such money then
remaining will be paid to the Servicer. After payment to the Servicer,
Certificateholders entitled to the money must look to the Servicer for payment
as general creditors unless an applicable abandoned property law designates
another person.
(E) In the event the Trustee distributes to the Certificateholders on any
date an amount less than the sum of the Principal and the Interest distributable
to the Certificateholders on such date pursuant to this Section, then, in such
event, (i) if delinquent payments of Interest on the Notes may lawfully bear
interest, the amount of any undistributed Scheduled Servicing Fee for such date
shall bear interest at the Certificate of Beneficial Interest Rate for such date
from such date until the date such amount of the undistributed Scheduled
Servicing Fee (together with interest accrued thereon) is paid to the Servicer,
and (ii) the amount of any undistributed Principal and, if delinquent payments
of Interest on the Notes may lawfully bear interest, Interest with respect to
the Certificates of Beneficial Interest shall bear interest at the Certificate
of Beneficial Interest Rate from such date until the date such amount of
undistributed Principal and Interest (together with interest accrued thereon) is
paid to the Certificateholders.
(F) The Trustee will distribute (i) to the Servicer any delinquent
Scheduled Servicing Fee, (ii) unless a Swap Provider Default has occurred and is
continuing, to the Swap Provider, any delinquent Swap Provider Payments or,
(iii) if applicable, to the Certificateholders any delinquent Principal and any
delinquent Interest and any amounts of interest referred to in Section
7.3(c)(E), on any Certificate Payment Date and promptly after it receives either
delinquent payments on the Notes, the Guarantee or the Swap Agreement. The
Trustee will distribute such payments and amounts first to the Servicer up to
the amount of the Scheduled Servicing Fee then due and payable and the interest,
if any, then accrued for the benefit of the Servicer pursuant to Section
7.3(c)(E), second, unless a Swap Provider Default has occurred and is
continuing, to the Swap Provider, in an amount up to the Swap Provider Payments
then due and payable, and third to the Certificateholders up to the amount of
Principal and Interest then due and payable to the Certificateholders and the
interest then accrued for the benefit of the Certificateholders pursuant to
Section 7.3(c)(E). Such payments to the Servicer will be applied first to
interest on the delinquent Scheduled Servicing Fee, then to pay any delinquent
Scheduled Servicing Fee and then to any Scheduled Servicing Fee due on such
date. Such payments to the Certificateholders will be applied first to
delinquent Interest, then to Interest due on such date, then to interest payable
pursuant to clause (ii) of Section 7.3(c)(E), then to delinquent Principal, then
to Principal due on such date.
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(G) Notwithstanding any other provision of this Agreement, the right of
any Certificateholder to receive distributions of payments on a Certificate of
Beneficial Interests pursuant to this Agreement when due or to bring suit for
the enforcement of any such payment on or after the date when due shall not be
impaired or affected without the consent of such Certificateholder.
(H) Except as provided in Section 7.3(d), all distributions to
Certificateholders under this Agreement shall be distributed pro rata to each
Certificateholder based on such Certificateholder's Fractional Interest.
(d) On any Certificate Principal Payment Date on which distributions of
Principal are to be made, the Trustee shall select, by lot, Certificates to be
redeemed in an amount equal to such Principal distribution. In case any
Certificate selected by lot is outstanding in a Principal Amount exceeding
$100,000, a portion of such Certificate may be redeemed provided that the amount
remaining after such redemption shall be an Authorized Denomination. The
Trustee shall give notice of such redemption in accordance with Section 7.3(e)
hereof.
(e) Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 days prior to the Certificate Principal Payment
Date, to each Certificateholder holding a Certificate selected for redemption,
at his last address appearing in the Certificate Register. In addition, notice
of redemption shall be sent by certified or registered mail, return receipt
requested, or by overnight delivery service contemporaneously with such mailing
to any Holder of $1,000,000 or more in principal amount of Certificates and to
any Depository registered as such pursuant to the Securities Exchange Act of
1934, as amended, that is a holder of Certificates to be redeemed. An additional
notice of redemption shall be mailed not less than 60 nor more than 90 days
after the Certificate Principal Payment Date, by the same means as the first
such notice, to any Certificateholder selected for redemption that has not
surrendered the Certificates called for redemption, at his last address
appearing in the Certificate Register.
All notices of redemption shall state:
(1) the Certificate Principal Payment Date,
(2) the total amount of such Principal distribution and the Principal
Amount with respect to such Certificateholder that is being redeemed,
(3) the identification, including complete official name, series
designation and issue date of the Certificates and the CUSIP number, interest
rates and maturity dates of the Certificates to be redeemed,
(4) that on the Certificate Principal Payment Date, the Principal
Amount of such Certificateholder's Certificate being redeemed will become due
and payable, and that interest distributable with respect thereto shall cease to
accrue from and after said date, and
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(5) the name and address of the Trustee for such Certificates,
including the name and telephone number of a contact person and the place where
such Certificates are to be surrendered for payment of the Principal Amount
being redeemed.
Notice of redemption of Certificates to be redeemed shall be given by the
Trustee. Any failure to give a notice of redemption (or any defect therein)
shall not affect the proceedings for redemption of Certificates.
SECTION 7.4 SWAP AGREEMENT. The Trustee shall have no power to vary the
terms of the Swap Agreement; provided, however, that this Agreement shall be
considered to have been amended to grant such power to the Trustee if it
receives (a) the consent of Certificateholders with aggregate Fractional
Interests representing 51% or more of the Trust, (b) the consent of the Servicer
if the Servicer would be adversely affected thereby, (c) Rating Confirmation
Notices, (d) an Opinion of Counsel that such amendment shall not cause the Trust
not to be treated as a Pass-Through Organization for federal income tax purposes
and (e) the prior written consent of the Cooperative, if such action would
affect, in any material respect, the Cooperative's rights and obligations under
the Swap Agreement that have not been assigned to the Trustee; provided,
further, the Trustee shall have the power to liquidate the Swap Agreement and to
liquidate any collateral therefor in accordance with Section 7.5(e) hereof if
the Swap Agreement terminates or the Trust terminates or if an "event of
default" or "illegality" with respect to the Swap Provider has occurred and is
continuing under the Swap Agreement and the Credit Support Annex permits the
Trustee as secured party to liquidate collateral thereunder. The Swap Agreement
provides that (i) the Trust will, on each Certificate Interest Payment Date, be
entitled to a Swap Payment, and (ii) the Trust will on the Swap Provider Payment
Date coinciding with each Note Payment Date, be required to pay the Swap
Provider Payment to the Swap Provider. The Trustee agrees to distribute to the
Swap Provider by wire transfer of immediately available funds such payment as
set forth in the Swap Agreement. In connection with carrying out of the
transactions contemplated by the Swap Agreement, the Trustee will be entitled to
the same rights, immunities, exculpations and other protections as provided in
this Agreement.
SECTION 7.5 TERMINATION AND SUBSTITUTION OF SWAP AGREEMENT.
(a) The Swap Agreement may not be terminated by the Swap Provider
except as provided in the Swap Agreement. If the Swap Agreement terminates
(other than through an Elective Termination as provided in Section 7.5(b)) or if
a Swap Provider Default has occurred and is continuing, the Cooperative shall
use all reasonable efforts to (i) secure an Alternate Swap Agreement and (ii)
amend this Agreement, in accordance with Section 7.5(c), to permit the delivery
and assignment to the Trust of an Alternate Swap Agreement; provided, however,
that the Servicer, the Trustee, and the Cooperative shall not be liable to the
Certificateholders if the Cooperative is unable to secure an Alternate Swap
Agreement or to effect any amendment to this Agreement necessary to permit
delivery and assignment thereof to the Trustee. If the Swap Agreement
terminates (other than through an Elective Termination as provided in Section
7.5(b)) or if a Swap Provider Default has occurred and is continuing, and the
Cooperative has not provided an Alternate Swap Agreement as provided herein,
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(i) the obligation of the Trust to make Swap Provider Payments to the Swap
Provider shall terminate or be suspended, respectively, in accordance with
the Swap Agreement, and subsequent payments of Principal and Guaranteed
Interest (less the Servicer Spread) shall thereafter (or until the
obligation of the Trust to make Swap Provider Payments to the Swap Provider
is no longer suspended) be payable to the Certificateholders, as and to the
extent provided in this Agreement, on each June 15 and December 15 (or if
such day is not a Business Day, the next succeeding Business Day)
corresponding with such subsequent payments, and all other rights hereunder
granted to the Swap Provider shall terminate or be suspended, respectively;
(ii) any right of the Certificateholders to tender Certificates pursuant to
Section 9.2(a) shall terminate or be suspended, respectively;
(iii) the Trustee shall give notice, in accordance with Section 10.18, of
the termination or suspension, respectively, of the Swap Agreement, the
suspension of any right to tender Certificates pursuant to Section 9.2(a)
(or of the reinstatement of such right upon receipt of an Alternate Swap
Agreement), and of the next Swap Provider Payment Date; and
(iv) any Termination Amount and any proceeds of Posted Collateral shall be
applied as provided in Section 7.5(e).
(b) The Cooperative (with the consent of the RUS and, if the Servicer
would be adversely affected thereby, the Servicer) or RUS may terminate the Swap
Agreement as provided in Part 5, Sections (9) and (10) of the Schedule to the
Swap Agreement (an "Elective Termination"). If the Cooperative or the RUS
terminates the Swap Agreement, the Trust created hereby shall terminate as
provided in Section 12.3 unless there is an Alternate Swap Agreement placed in
effect pursuant to an amendment to this Agreement in accordance with Section
7.5(c); provided, however, that neither the Cooperative nor the RUS shall
terminate the Swap Agreement unless (i) the Swap Provider certifies that it has
received the amount due as the Termination Amount, if any, (ii) the Liquidity
Provider certifies that it has received all amounts payable to it under the
Liquidity Facility, (iii) either (x) all outstanding Certificates are purchased
or redeemed in accordance with Section 9.7 or (y) the Cooperative has, in
accordance with Section 7.5(c), amended this Agreement to permit the delivery
and assignment to the Trust, concurrently with the termination of the then
effective Swap Agreement, of an Alternate Swap Agreement and (iv) if the
Cooperative terminates the Swap Agreement, the RUS has given its prior written
consent thereto. Upon compliance with this Section 7.5(b), the Cooperative (or
the RUS to the extent that the RUS has been making payments under the Guarantee)
shall be entitled to retain any Termination Amount owing to the Cooperative
from the Swap Provider in respect of such Elective Termination.
(c) This Agreement may be amended by the Servicer, the Cooperative and
the Trustee, without the consent of any of the Certificateholders, in accordance
with Section 12.6(b), to permit the Cooperative to acquire and deposit with the
Trust (and to permit the Trust to accept on behalf of the Certificateholders) an
Alternate Swap Agreement; provided, however, that amendment of this Agreement
and the Cooperative's delivery and assignment of an Alternate Swap Agreement (or
any power of the Trust to receive an assignment thereof) shall not be effective
(or exist) unless
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accompanied by (i) Rating Confirmation Notices, (ii) an Opinion of Counsel that
the continuation of the Trust by reason of the amendment of this Agreement
permitting the Alternate Swap Agreement will not cause the Trust to not be
treated as a Pass-Through Organization for federal income tax purposes, and
(iii) written confirmation from the Liquidity Provider that the Liquidity
Facility or Alternate Liquidity Facility remains in effect.
(d) The Trustee shall notify the Liquidity Provider and the
Certificateholders of the Cooperative's intent to replace the Swap Agreement
with an Alternate Swap Agreement by first class mail delivered to each
Certificateholder's registered address at least 30 days (or as soon as
practicable if less than 30 days in the case of action pursuant to Section
7.5(a)) but not more than 60 days prior to the effective date of such
replacement.
(e) If either the Swap Agreement terminates (other than through an
Elective Termination as provided in Section 7.5(b)) or a Swap Provider Default
has occurred and is continuing, the Trustee shall, in the event of a
termination, apply any Termination Amount received by the Trustee from the Swap
Provider and, in the event of a termination or a Swap Provider Default, apply
any proceeds of the Posted Collateral received by the Trustee from the exercise
of its remedies pursuant to Paragraph 8 of the Credit Support Annex to the Swap
Agreement, both to the extent permitted by such Credit Support Annex and in the
following order of priority:
(i) to expenses of the Trustee, including attorneys' fees, related to
its exercise of remedies in respect of the Posted Collateral;
(ii) in the case of proceeds of Posted Collateral, ratably (as
determined by the Trustee by any reasonable method selected by it in its
discretion), to all obligations secured by the Posted Collateral, including
payment of the Termination Amount;
(iii) as to proceeds of Posted Collateral allocated to the
Termination Amount in accordance with clause (ii) above, and in the case of the
Swap Provider's payment of the Termination Amount, in the following order of
priority:
(1) at the written request of the Cooperative, to the Cooperative or
to the swap counterparty under an Alternate Swap Agreement, to provide for the
delivery and assignment to the Trust of an Alternate Swap Agreement in
accordance with Section 7.5(c);
(2) to the RUS, to the extent that the RUS has paid any amount under
the Guarantee and the Cooperative has not paid to the RUS all amounts due on the
Notes as a result of such payment by the RUS; provided, however, that no amounts
shall be distributed to the RUS until the Trustee has paid (from the proceeds
being distributed under this Section 7.5(e) if other funds for such purpose are
not available) (x) to the Servicer all delinquent Scheduled Servicing Fees and
(to the extent permitted by Applicable Law) all interest thereon and (y) to the
Certificateholders all amounts of Interest then accrued for their benefit under
Section 7.3(c)(E), all delinquent
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Principal, and all delinquent Interest (to the extent permitted by Applicable
Law) with respect to the Certificates of Beneficial Interest;
(3) if (x) the Liquidity Facility has been terminated and there is no
Alternate Liquidity Facility, and (y) interest is distributable under Sections
7.5(a)(i) and 9.1(h), to the Certificateholders pro rata, based upon the
Principal Amount of Certificates held by each Certificateholder, in an amount
calculated by the Trustee (by any reasonable method selected by it in its
discretion) to compensate Certificateholders for any loss in market value of
their Certificates attributable to the termination of the Swap Agreement, based
upon the difference between (A) the interest rate distributable to
Certificateholders under Sections 7.5(a)(i) and 9.1(h) immediately after the
Swap Agreement termination, and (B) the minimum rate of interest necessary, in
the judgment of the Remarketing Agent (unless the Swap Provider is then serving
as the Remarketing Agent, then a Remarketing Agent selected by the Trustee with
the consent of the Cooperative), to have enabled the Remarketing Agent to have
sold the Certificates immediately after the Swap Agreement termination at a
price equal to par (provided that such rate in clause (B) hereof may not exceed
the Maximum Certificate Rate);
(iv) to the Cooperative;
provided, however, that the Trustee shall pay or deliver to the Swap Provider
any Posted Collateral or proceeds in excess of the obligations secured thereby,
to the extent that such excess amount is to be returned to the Swap Provider
under the Credit Support Annex to the Swap Agreement or under applicable law.
SECTION 7.6 PAYMENTS FOLLOWING FAILED UNDERWRITING. Anything in this
Agreement to the contrary notwithstanding, if CFC or its Affiliate retains the
Certificates following a failure by the Underwriter to purchase them on the
Refinancing Date (or otherwise place them with qualified holders), the holders
of the Certificates shall be entitled to receive on each December 15 (or if such
day is not a Business Day, the next succeeding Business Day) an amount of
principal equal to the scheduled payment of principal on the Note on the next
preceding Note Payment Date. The holders of the Certificates shall also be
entitled to receive on the Business Day next following any other payment of
principal (including amounts due as a result of acceleration) of or the purchase
of a Note the amount of principal so paid or the principal balance thereof.
Interest distributable with respect to the Certificates (including any overdue
interest thereon) shall be distributable at the weighted average interest rate
on the Notes less the Servicer Spread. Such interest shall be payable on June
15 and December 15 ( or if such day is not a Business Day, the next succeeding
Business Day) and on each date when principal is paid on the Certificates as
aforesaid. Such payments will be made out of funds in the Trust Account. If
the funds on deposit in the Trust Account are not sufficient to pay the
foregoing amounts and the Scheduled Servicing Fee as of such date, such funds
shall be distributed first to the Scheduled Servicing Fee (including any
delinquent Scheduled Servicing Fee), next to the holders of Certificates and
thereafter to RUS or the Cooperative as provided elsewhere in this Agreement.
No payment from the Trust Account shall be made to the Swap Provider, and
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any rights of the Swap Provider hereunder shall be suspended, while CFC or its
Affiliate retains the Certificates in the circumstance described above.
ARTICLE VIII
THE CERTIFICATES OF BENEFICIAL INTEREST
SECTION 8.1 THE CERTIFICATES. The Certificates shall be issued in fully
registered form, substantially in the form of Exhibit A with such additions,
deletions and modifications as are necessary or convenient, in the opinion of
the Servicer, to effectuate the efficient and timely issuance of the
Certificates. The Certificates shall be issued in minimum denominations
representing $100,000 of Original Principal Amount and in integral multiples of
$5,000 in excess thereof ("Authorized Denominations") and each Certificate will
evidence an undivided fractional interest in the Trust equal to the percentage
obtained by dividing the Principal Amount of such Certificate by the Principal
Balance; provided that one Certificate may be issued in an odd denomination from
time to time to the extent mathematically necessary. The Certificates shall
contain CUSIP numbers. The Certificates shall be executed on behalf of the
Trustee by manual or facsimile signature of a duly authorized officer and
attested by a trust officer (by manual or facsimile signature). Each Certificate
shall be authenticated by the Trustee on behalf of the Trust by the manual
signature of a duly authorized officer. The Trustee shall deliver the
Certificates that are issued on the original issuance to CFC or upon the order
of CFC to the Underwriter pursuant to the Underwriting Agreement. Certificates
bearing the signatures of individuals who were the proper officers or authorized
signatories of the Trustee at the time of execution of those Certificates shall
bind the Trustee, notwithstanding that such individuals or any of them have
ceased to hold such offices or positions prior to the delivery of such
Certificates. If the Certificates are issued and sold pursuant to Section 4(2)
of the Securities Act of 1933 and resold pursuant to Rule 144A or another
exemption under the Securities Act, they shall contain a legend regarding
transfer of the Certificates substantially in the form of Exhibit K hereto.
SECTION 8.2 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee shall maintain, or cause a designee to maintain, in the
Borough of Manhattan, City of New York, and, at its discretion, at any other
location, an office or agency for the registration of Certificates and of
transfers and exchanges of Certificates in a Certificate Register as herein
provided. Any such designee is referred to in this Agreement as the Certificate
Registrar; provided, however, the Trustee shall not be relieved of any of its
duties under this Agreement by reason of such designation. Initially, the
Trustee, The First National Bank of Chicago, c/o First Chicago Trust Company of
New York, 14 Wall Street, 8th Floor-Window 0, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Corporate Trust Administration, shall maintain the Certificate
Register and register Certificates and transfers and exchanges of Certificates
as provided in this Agreement. The Trustee shall give prompt written notice to
CFC, the Cooperative, the Certificateholders and the Servicer of any change in
the location of the Certificate Register or the appointment of any Certificate
Registrar. No transfer of any Certificate of Beneficial Interests shall be
valid unless and until registered on the Certificate Register.
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(b) Subject to Section 8.3, upon surrender of any Certificate for
registration of transfer at such office, the Certificate Registrar, if any,
shall promptly notify the Trustee to execute, authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of a like aggregate Fractional Interest in an Authorized Denomination and dated
the date of authentication by the Trustee.
(c) At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of Authorized Denominations of a like aggregate
Fractional Interest, upon surrender of the Certificates to be exchanged at the
offices or agency maintained therefor. Whenever any Certificates are so
surrendered for exchange, the Certificate Registrar, if any, shall promptly
notify the Trustee, which shall execute, authenticate and deliver the
Certificates which the Certificateholder making the exchange is entitled to
receive.
(d) Every Certificate presented or surrendered for transfer or exchange
shall be duly endorsed by, or be accompanied by a written instrument of transfer
in form satisfactory to the Trustee or any Certificate Registrar duly executed
by the holder thereof or his or her attorney duly authorized in writing.
SECTION 8.3 NO CHARGE; DISPOSITION OF VOID CERTIFICATES. No service charge
shall be made for any registration of transfer or exchange of Certificates, but
the Trustee or the Certificate Registrar, if any, may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates of
Beneficial Interest surrendered to the Trustee or the Certificate Registrar for
payment in full or transfer or exchange shall be canceled and destroyed by the
Trustee.
SECTION 8.4 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a) any
mutilated Certificate is surrendered to the Trustee, any authenticating agent
or the Certificate Registrar, if any, or if any of them receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (b) there
is delivered to each such party such security or indemnity as may be reasonably
required by each such party and the Servicer to save each of them harmless
(provided, however, that if CFC is giving the aforesaid indemnity, the unsecured
written undertaking of CFC delivered to the Trustee shall be sufficient
indemnity for purposes of this Section), then, in the absence of notice to any
of them that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall authenticate and deliver in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Fractional Interest in an Authorized Denomination. Upon the issuance
of any new Certificate under this Section, the Certificate Registrar, if any,
the Trustee and any authenticating agent may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses connected therewith. Any duplicate Certificate
issued pursuant to this Section shall constitute complete and indefeasible
evidence of ownership of the Fractional Interest, as if originally issued,
whether or not the mutilated, destroyed, lost or stolen Certificate shall be
found at any time.
SECTION 8.5 PERSONS DEEMED OWNERS. The Servicer, the Certificate Registrar,
if any, the Trustee and any authenticating agent may conclusively treat the
person in whose name any Certificate of Beneficial Interest is registered as the
owner of such Certificate of Beneficial Interest
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for the purpose of receiving remittances pursuant to Section 7.3 and for all
other purposes whatsoever, and, to the extent permitted by Applicable Law, none
of the Servicer, the Certificate Registrar, if any, the Trustee, any
authenticating agent or any agent of any of them shall be affected by any notice
to the contrary. The Certificateholder of record shall be entitled to the
Principal and Interest distributable with respect to the Certificates of
Beneficial Interest registered in its name, free from all equities, rights of
set-off or counterclaims of the Trustee, the Certificate Registrar or prior
Certificateholders, and all Persons may act accordingly.
SECTION 8.6 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES. The
Trustee will furnish or cause to be furnished to CFC, the Servicer, the
Remarketing Agent, the Cooperative or RUS, within five Business Days after
receipt of a written request therefor from any of them, a list of the names and
addresses of the Certificateholders as of the most recent Record Date.
Certificateholders may communicate pursuant to TIA (S) 312(b) with other
Certificateholders with respect to their rights under this Agreement or the
Certificates. Each Certificateholder, by receiving and holding a Certificate,
agrees with the Servicer, the Certificate Registrar, if any, the Trustee and any
authenticating agent that none of them shall be held accountable by reason of
the disclosure of any information as to the names and addresses of the
Certificateholders.
SECTION 8.7 PROVISIONS FOR BOOK-ENTRY SYSTEM. The Certificates will be
subject to a book-entry system of ownership and transfer, except as provided in
paragraph (c) of this Section. The provisions for effecting such book-entry
system are as follows:
(a) The Depository Trust Company, New York, New York is hereby designated
as the initial Depository hereunder.
(b) Notwithstanding the other provisions regarding exchange and transfer
of Certificates in this Article VIII, the Certificates shall initially be
evidenced by one Certificate, in a denomination equal to the Initial Principal
Amount. Such certificate shall be initially delivered to and shall be
registered in the name of "Cede & Co." as partnership nominee for DTC. Such
Certificate may not thereafter be transferred or exchanged on the registration
books held by the Trustee except:
(1) to any successor Depository designated pursuant to paragraph (c) of
this Section;
(2) to any successor Depository or its nominee designated by a Depository;
or
(3) if the Cooperative elects or is required to discontinue the Book-Entry
System pursuant to paragraph (c) of this Section, the Cooperative will cause the
Trustee to authenticate and deliver replacement Certificates (upon receipt of
the outstanding Certificates and written instructions for transfer satisfactory
to the Trustee) in fully registered form in Authorized Denominations in the
names of the Beneficial Owners or their nominees; thereafter the provisions of
Section 8.2 hereof regarding registration, transfer and exchange of Certificates
shall apply to each Certificate.
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(c) Any institution acting as Depository hereunder may resign as
Depository by giving notice to the Trustee, the Servicer and the Cooperative and
discharging its responsibilities with respect thereto under applicable law. In
addition, the Cooperative may determine that: (1) any institution acting as
Depository is unable to discharge its responsibilities with respect to the
Certificates or (2) continuation of the Book-Entry System is not in the best
interests of the Beneficial Owners of the Certificates. In the event of
resignation or disability of an institution acting as Depository, the
Cooperative will attempt to identify another institution qualified to act as
Depository hereunder. An institution may be designated as a Depository
hereunder only if such institution: (i) is a "clearing corporation" as defined
in the New York Uniform Commercial Code; and (ii) is a qualified and registered
"clearing agency" under Section 17A of the Securities Exchange Act of 1934, as
amended. If the Cooperative is unable to identify such a successor Depository
prior to the effective date of the resignation or in the event that the
Cooperative determines that discontinuance of the Book-Entry System is in the
best interests of the Beneficial Owners or of the Cooperative, the Trustee shall
discontinue the Book-Entry system as provided in paragraph (b)(3) of this
Section. If at any time following the Refinancing Date CFC (or an Affiliate of
CFC) holds 100% of the Certificates, it may elect to discontinue the Book-Entry
System.
(d) The Cooperative, the Servicer, and the Trustee shall treat the
Depository (or its nominee) as the sole and exclusive owner of the Certificates
registered in its name for the purpose of payment of Principal of and Interest,
if any, distributable with respect to such Certificates, selecting Certificates
and portions thereof to be redeemed, giving any notice permitted or required to
be given to the Certificateholders, including any notice of redemption,
registering the transfer of the Certificate, obtaining any consent or other
action to be taken by the Certificateholders and for all other purposes
whatsoever, and shall not be affected by any notice to the contrary. As long as
the Book-Entry System is used for the Certificates, the Cooperative, the
Servicer and the Trustee will give any notice of redemption or any other notices
required to be given to Certificateholders only to the Depository or its nominee
registered as the owner thereof. Any failure of the Depository to advise any of
its participants or of any participant to notify any Beneficial Owner, of any
such notice and its content or effect will not affect the validity of the
redemption of the Certificates called for redemption or of any other action
premised on such notice. Neither the Cooperative, the Servicer nor the Trustee
is responsible or liable for the failure of the Depository or any participant
thereof to make any payment or give any notice to a Beneficial Owner of a
Certificate in respect to the Certificates or any error or delay relating
thereto.
(e) Upon receipt of payments of principal in respect of any Certificate,
the Depository in its discretion may request the Trustee to deliver a new
Certificate in a principal amount equal to the amount of the Principal Balance
or shall make an appropriate notation on the Certificate indicating the date and
amount of such Principal payment, except in the case of payment of the entire
outstanding Principal Amount of such Certificate, in which case the Certificate
must be presented to the Trustee prior to payment.
(f) The Cooperative, the Servicer and the Trustee shall endeavor to
cooperate with DTC or any successor or new Depository in effectuating
distributions of principal and interest with respect to the Certificate by
arranging for payment in such a manner that funds representing such payments are
available to the Depository on the date they are due. The Cooperative, the
Servicer and the
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Trustee shall have no responsibility for transmitting payments to the Beneficial
Owners of the Certificates, notwithstanding any notice to the contrary received
by any of them.
ARTICLE IX
FURTHER PROVISIONS RELATING TO THE
CERTIFICATES OF BENEFICIAL INTEREST
SECTION 9.1 INTEREST DISTRIBUTABLE WITH RESPECT TO THE CERTIFICATES.
Subject to Section 7.6 hereof:
(a) General. The Swap Provider shall pay Interest under the terms of the
Swap Agreement in the Weekly Rate Mode for the period from the Refinancing Date
until the Interest Rate Mode is converted to a different Interest Rate Mode. The
first Certificate Interest Payment Date shall be the Certificate Interest
Payment Date occurring on the first Wednesday in January, 1998 (unless such day
is not a Business Day, then on the next succeeding Business Day). During each
Interest Period for each Interest Rate Mode, the Interest distributable with
respect to the Certificates shall be determined in accordance with Section
9.1(b) and shall be payable on the Certificate Interest Payment Date for such
Interest Period.
(b) Interest Rate Modes. Interest Rates with respect to the Swap Payments
and distributions of Interest to Certificateholders shall be determined as
follows:
(i) If the Interest Rate Mode is the Weekly Rate Mode, the interest rate
payable under the Swap Agreement and distributable with respect to the
Certificates for a particular Weekly Rate Period shall be the rate established
by the Remarketing Agent no later than 3:00 p.m. (New York, New York time) on
the Wednesday on which such Weekly Rate Period commences (or the day preceding
the Refinancing Date or the Conversion of the Interest Rate Mode to the Weekly
Rate Mode, as the case may be), or, if such day is not a Business Day, on the
next succeeding Business Day, as the minimum rate of interest necessary, in the
judgment of the Remarketing Agent, to enable the Remarketing Agent to sell the
Certificates on such Business Day at a price equal to par provided that such
rate shall not exceed the Maximum Certificate Rate (the "Weekly Rate").
(ii) If the Interest Rate Mode is the Flex Rate Mode, the interest rate
payable under the Swap Agreement and distributable with respect to the
Certificates for a particular Flex Rate Period shall be the rate established by
the Remarketing Agent not later than 3:00 p.m. (New York, New York time) on the
last Business Day next preceding the first day of such Flex Rate Period as the
minimum rate of interest necessary, in the judgment of the Remarketing Agent, to
enable the Remarketing Agent to sell the Certificates on such day at a price
equal to par provided that such rate shall not exceed the Maximum Certificate
Rate (the "Flex Rate").
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(c) Notice of Interest Rates; Effectiveness. The Remarketing Agent shall
provide the Servicer, the Swap Provider, the Cooperative, the Trustee, the
Liquidity Provider and the Tender Agent with Immediate Notice of all Interest
Rates set pursuant to Section 9.1(b). The determination of each Interest Rate
in accordance with the terms of this Agreement shall be conclusive and binding
upon the owners of the Certificates, the Cooperative, the Swap Provider, the
Trustee, the Tender Agent, the Remarketing Agent and the Liquidity Provider.
(d) Failure of Remarketing Agent to Set interest Rates. If for any reason
the interest rate payable under the Swap Agreement and distributable with
respect to the Certificates is not determined pursuant to Section 9.1(b) (i) or
(ii) above, (i) if the Certificates were in the Weekly Rate Mode during the
preceding Interest Period, the interest rate payable under the Swap Agreement
and distributable to the Certificateholders for the next succeeding Interest
Period shall be the Interest Rate in effect for such preceding Interest Period
and (ii) if the Certificates were in a Flex Rate Mode during the preceding
interest period, a Conversion to the Weekly Rate Mode shall be deemed to occur
on the Certificate Interest Payment Date for such Flex Rate Period, and the
interest rate payable under the Swap Agreement and distributable to the
Certificateholders for the first such Weekly Rate Period shall be the Alternate
Rate.
(e) Conversion of Interest Rate Mode; Conversion Directed by the Swap
Provider. The Interest Rate Mode is subject to Conversion to a different
Interest Rate Mode from time to time in whole (but not in part), at the written
direction of the Remarketing Agent (with the consent of the Swap Provider unless
a Swap Provider Default has occurred and is continuing), such right to be
exercised by notifying the Trustee, the Liquidity Provider, the Tender Agent,
the Servicer, and the Cooperative in writing at least 20 Business Days prior to
the effective date of such proposed Conversion. Such notice shall specify (A)
the effective date, (B) the proposed Interest Rate Mode, and (C) if the
Conversion is to the Flex Rate Mode, the end of the first Flex Rate Period.
Each Flex Rate Period shall be no less than seven days and no more than 365 days
(or 366 days in a leap year) in duration and shall end on the day next preceding
a Certificate Interest Payment Date. The notice must be accompanied by an
Opinion of Counsel stating that the Conversion is authorized by this Agreement
and that such conversion will not adversely affect the treatment of the Trust as
a Pass-Through Organization for federal income tax purposes.
(f) Limitations. Any Conversion of the Interest Rate Mode for the
Certificates pursuant to the paragraph above must comply with the following:
(A) the Conversion Date must be a Certificate Interest Payment Date;
(B) the Conversion Date must be a Business Day; and
(C) the Liquidity Facility must cover accrued interest calculated at least
18% per annum (or such higher rate as is set forth in the Liquidity Facility)
for the Certificates for 40 days if the Conversion is to the Weekly Rate, or for
the number of days in any Flex Rate Period then selected plus 10 days if the
Conversion is to the Flex Rate Mode (or such other amounts as may be necessary
to obtain a Rating Confirmation Notice).
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(g) Notice to Certificateholders of Conversion of Interest Rate. The
Trustee shall notify the Certificateholders of each Conversion by first class
mail, postage prepaid, at least 15 days but not less than 10 days before the
Conversion Date. The notice will state:
(A) that the Interest Rate Mode will be converted, what the new Interest
Rate Mode will be and, if the Conversion is to the Flex Rate Mode, the end of
the Flex Rate Period;
(B) the Conversion Date;
(C) the Certificate Interest Payment Date and Record Date;
(D) the maximum rate of interest available under the Liquidity Facility;
and
(E) that the Certificates will be subject to mandatory purchase on the
Conversion Date in accordance with Section 9.2(b).
(h) During the continuance of a Swap Provider Default or if the Swap
Agreement is not in effect, the Certificateholders shall be entitled to
distributions of Interest from payments of Guaranteed Interest less the
Servicing Fee in accordance with their Fractional Interest computed upon the
basis of a 360-day year, consisting of twelve 30-day months on each December 15
and June 15 (or if such day is not a Business Day, the next succeeding Business
Day) or until the maturity date.
SECTION 9.2 PURCHASE OF CERTIFICATES ON DEMAND; MANDATORY PURCHASE.
(a) Purchase of Certificates on Demand of Certificateholder.
While in the Weekly Rate Mode, any Certificate shall be purchased on
the demand of the Certificateholder, on any Business Day at the Purchase Price,
upon written notice to the Tender Agent, at its Principal Office on or before
5:00 p.m. (New York, New York time) on a Business Day not later than the 7th
calendar day prior to the Purchase Date. Such notice shall (A) state the number
and principal amount (or portion thereof in an Authorized Denomination) of such
Certificate to be purchased, (B) state the Purchase Date on which such
Certificate shall be purchased and (C) irrevocably request such purchase and
state an agreement to deliver such Certificate, duly endorsed in blank for
transfer, with all signatures guaranteed, to the Tender Agent at or prior to
10:00 a.m. (New York, New York time) on such Purchase Date.
The Tender Agent shall promptly, but in no event later than 11:00 a.m.
(New York, New York time) on the next succeeding Business Day, provide the
Remarketing Agent and the Trustee with Immediate Notice of the receipt of the
notice referred to in the preceding paragraph. Upon its receipt of such
Immediate Notice from the Tender Agent, the Remarketing Agent shall promptly
provide the Liquidity Provider with Immediate Notice of the receipt of the
notice referred to in the preceding paragraph.
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Notwithstanding any other provision of this Section, the owner of a
Certificate may demand purchase of a portion of such Certificate only if the
portion to be purchased and the portion to be retained by the owner will be in
Authorized Denominations.
(b) Mandatory Purchases of Certificates.
(i) Mandatory Purchase on Conversion Date. On each Conversion Date, the
Certificates shall be subject to mandatory purchase at a purchase price equal to
the Principal Amount of each Certificate.
(ii) Mandatory Purchase in connection with Swap Provider Default or
Expiration or Termination of Swap Agreement. The Certificates shall be subject
to mandatory purchase at the Purchase Price, upon Swap Provider Default (but
only if the Liquidity Facility is in effect in accordance with its terms) or
upon replacement of the Swap Agreement with an Alternate Swap Agreement.
(iii) Mandatory Purchase on termination of Liquidity Facility without
replacement with Alternate Liquidity Facility. If at any time the Tender Agent
shall give notice that any Certificates then subject to purchase under the
Liquidity Facility as then in effect shall on the date specified in such notice
cease to be subject to purchase under the Liquidity Facility as a result of the
termination or expiration of the term of the Liquidity Facility (other than any
termination resulting from suspension of the obligation of the Liquidity
Provider to purchase tendered Certificates or any termination occurring
immediately without notice or upon receipt by the Trustee of notice of such
termination) and, if the Liquidity Facility shall not have been renewed or
replaced by an Alternate Liquidity Facility at least ten Business Days prior to
such termination or expiration, or if the Trustee has not received the Rating
Confirmation Notice required by Section 9.4(b) hereof on the fifth Business Day
next preceding any such termination or expiration of the Liquidity Facility,
each Certificate shall be purchased or deemed purchased at the purchase price
equal to the Principal Amount thereof plus Interest, if any, which would have
been distributable thereon to the Purchase Date if such date were a Certificate
Interest Payment Date.
(iv) Mandatory Purchase at End of each Flex Rate Period. The Certificates
shall be subject to mandatory purchase at a price equal to the Principal Amount
of each Certificate on the last day of each Flex Rate Period.
(c) Notice of Mandatory Purchase to Certificateholders. The Trustee
shall, not less than (i) in the event of a mandatory purchase under Section
9.2(b)(i), 15 days prior to the Conversion Date, (ii) in the event of a
mandatory purchase under Section 9.2(b)(ii), 15 days prior to the termination of
the Swap Agreement, or as soon as practicable, (iii) in the event of a mandatory
purchase under Section 9.2(b)(iii), five Business Days prior to the termination
of the Liquidity Facility or (iv) in the event of a mandatory purchase under
Section 9.2(b)(iv), 15 days prior to the end of the Flex Rate Period (unless the
Flex Rate Period is less than 30 days, in which case no notice is required),
provide each Certificateholder with a notice, by first-class mail, postage
prepaid, of the
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applicable Purchase Date and provide the Remarketing Agent with Immediate Notice
of the applicable Purchase Date.
SECTION 9.3 PURCHASE AND REMARKETING OF THE CERTIFICATES.
(a) The Tender Agent shall purchase, but only from the sources listed
below, Certificates or portions thereof which are then required to be purchased
in accordance with Section 9.2(a) or 9.2(b) hereof from the registered owners
thereof with immediately available funds by 2:30 p.m. New York, New York time on
the date such Certificates are required to be purchased at the Purchase Price.
Funds for the payment of such Purchase Price shall be derived from the following
sources in the order of priority indicated:
(i) proceeds of the sale of such Certificates (but only such remarketing
proceeds received from purchasers of the Certificates furnished to the Tender
Agent by the Remarketing Agent for deposit into the Remarketing Proceeds Fund);
(ii) moneys furnished to the Tender Agent by the Liquidity Provider for the
purchase of Certificates pursuant to the terms of the Liquidity Facility.
The Tender Agent shall segregate amounts derived from the sources
described above by (x) depositing monies derived from the source described in
(i) above into the Remarketing Proceeds Fund; and (y) by depositing proceeds
derived from the sources described in (ii) above into the Purchase Fund.
(b) With respect to any Certificates or portions thereof required to be
purchased pursuant to Section 9.2(a) hereof and any Certificates or portions
thereof required to be tendered for purchase in accordance with Section 9.2(b)
as to which sufficient funds to accomplish such purchase are available to the
Tender Agent at the respective times at which payment of the purchase price is
to be made as provided herein:
(i) Such Certificates or portions thereof shall be deemed to have been
purchased, for all purposes of this Agreement, irrespective of whether such
Certificates shall have been presented to the Tender Agent, and the former
registered owner or owners of such Certificates shall have no claim thereon,
under this Agreement or otherwise, for any amount other than the Purchase Price
thereof which would have been paid on the date set for purchase, and such
Certificates or portions thereof shall no longer be deemed to be outstanding for
purposes of this Agreement.
(ii) In the event that any such Certificates or portions thereof shall not
be presented to the Tender Agent, the Tender Agent shall segregate and hold the
moneys for the Purchase Price of such Certificates in trust, uninvested and
without liability for interest thereon, for the benefit of the former owners of
such Certificates, who shall thereafter be restricted exclusively to such moneys
for the satisfaction of any claim for the Purchase Price of such Certificates.
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(iii) In the event that any such Certificates shall not be presented to the
Tender Agent at the time specified herein, then the Tender Agent shall request,
and thereupon the Trustee shall execute and deliver, or cause to be executed and
delivered, and the Certificate Registrar shall immediately authenticate a new
Certificate or Certificates in an aggregate principal amount equal to the
principal amount of the Certificates or portions thereof so purchased but not
presented bearing a number or numbers not contemporaneously outstanding in
Authorized Denominations. Every Certificate authenticated and delivered as
provided in the preceding sentence shall be entitled to all the benefits of this
Agreement equally and proportionately with any and all other Certificates duly
issued under this Agreement. The Tender Agent shall maintain a record of the
Certificates or portions thereof not tendered for purchase pursuant to Section
9.2 (a) or (b) hereof together with the names and addresses of the former owners
thereof.
(iv) In case any Certificates or portions thereof that have been deemed
purchased as provided in Section 9.3(b) hereof are delivered to the Tender Agent
subsequent to the date and time specified for such delivery for payment of the
Purchase Price thereof at its Delivery Office, accompanied by an instrument of
transfer thereof, in form satisfactory to the Tender Agent, executed in blank by
the owner thereof with the signature of such owner guaranteed by a bank, trust
company or member firm of the New York Stock Exchange, on any Business Day, the
Tender Agent shall, subject to the provisions of paragraph (ii) of this Section
9.3(b), pay the Purchase Price of such Certificate or portion thereof to the
owner (A) no later than 2:30 p.m. New York, New York time on such Business Day,
if such Certificate is presented by 10:00 a.m. New York, New York time on such
Business Day, and (B) no later than 12:00 noon New York, New York time on the
next succeeding Business Day, if such Certificate is presented after 10:00 a.m.
New York, New York time on such Business Day and, if appropriate, shall also
deliver to such owner a new Certificate in an aggregate principal amount equal
to the portion of any Certificate not so purchased; provided, however, while the
Certificates are in the Book-Entry System, the Certificates shall be presented
to the Tender Agent according to the normal and customary practices between DTC
and the Tender Agent. Any such Certificates so delivered to the Tender Agent
shall be canceled by it.
(c) The Certificates shall be remarketed in accordance with Section 9.5(a)
hereof.
(d) By 10:30 a.m. New York, New York time on the Business Day on which any
Certificates are to be purchased pursuant to Section 9.2 (a) or (b) hereof and
which are to be remarketed in accordance with Section 9.5, the Remarketing Agent
shall give written notice or telephonic notice to the Liquidity Provider and the
Tender Agent, specifying the principal amount of such Certificates, if any, sold
by it and remaining unsold, respectively; such notice to the Tender Agent shall
also specify the name, address and taxpayer identification number of each such
purchaser (or, in the case of the Book-Entry System, the DTC Participant) and
the principal amount of such Certificates being purchased by each such
purchaser.
(e) The Remarketing Agent shall not invest any proceeds received from
purchasers of Certificates prior to the delivery thereof by the Remarketing
Agent to the Tender Agent for deposit in the Remarketing Proceeds Fund.
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(f) Any Certificates purchased with moneys described in Section 9.3 (a)(i)
hereof shall be registered by the Tender Agent in accordance with the
instructions provided by the Remarketing Agent and made available to the
Remarketing Agent against payment therefor in immediately available funds by
11:30 a.m. New York, New York time. Certificates which have been remarketed and
for which the Remarketing Agent has made funds available to the Tender Agent for
deposit to the credit of the Remarketing Proceeds Fund by 11:30 a.m. New York,
New York time shall be made available to the Remarketing Agent by 3:00 p.m. New
York, New York time, registered in accordance with instructions provided by the
Remarketing Agent. Simultaneously with the receipt of the funds supplied by the
Remarketing Agent to the Tender Agent, as described in the preceding sentence,
the Tender Agent shall while the Book-Entry System is not in effect, cancel the
Purchased Certificates (or portions thereof for which remarketing proceeds have
been made available) then outstanding by reason of the prior purchase and
delivery.
(g) Any Certificates purchased with moneys described in Section 9.3(a)(ii)
hereof shall constitute Purchased Certificates and (1) while the Book-Entry
System is not in effect, shall be registered upon receipt of funds from the
Liquidity Provider for the purchase of such Purchased Certificates in the name
of the Liquidity Provider, or any nominee of the Liquidity Provider, and such
Purchased Certificates shall be held by the Tender Agent, as agent of the
Liquidity Provider, on the date of such purchase, and (2) while such Book-Entry
System is in effect, the ownership interest in such Purchased Certificates shall
be transferred only as provided in the Liquidity Facility. The Tender Agent
shall not release such Purchased Certificates, or such ownership interest
therein, and the Tender Agent shall not authenticate any other Certificates in
lieu thereof, until the Tender Agent receives written notification from the
Liquidity Provider that it has received payment of the Purchase Price of such
Purchased Certificates.
(h) In the event that the Remarketing Agent is able to remarket any
Certificates required to be purchased pursuant to Section 9.2 (a) or (b) hereof
after the time in which the Remarketing Agent is required to provide notice to
the Tender Agent, the Remarketing Agent shall give notice in the manner and
containing the details set forth in Section 9.3(d) hereof, as appropriate, as
soon as practicable after such remarketing, but in no event later than 11:30
a.m. New York, New York time on the date such Certificates are required to be
purchased and the Certificates shall be registered in the name of the purchasers
thereof and made available to the Remarketing Agent as soon as practicable
thereafter on such date.
(i) If the Tender Agent receives a demand for the purchase of Certificates
or portions thereof (other than Purchased Certificate) in accordance with
Section 9.2 (a) hereof or Certificates are required to be tendered for purchase
in accordance with Section 9.2 (b) hereof and the Remarketing Agent shall not
then have provided the Tender Agent with sufficient funds to make such purchase
by depositing in the Remarketing Proceeds Fund immediately available funds by no
later than one hour before the time provided in the Liquidity Facility for
presentation of notices in order to receive payment in immediately available
funds by 2:30 p.m. New York, New York time on the date such Certificates are
required to be purchased, then the Tender Agent shall notify the Liquidity
Provider that it should purchase such unremarketed Certificates by no later than
the time provided in the Liquidity Facility for presentation of notices in order
to receive payment in immediately available funds by 2:30 p.m. New York, New
York time on such day, the amount
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sufficient to pay the portion of the Purchase Price of such Certificates which
exceeds the amount provided by the Remarketing Agent for deposit in the
Remarketing Proceeds Fund. The Tender Agent shall deposit the proceeds of such
drawing in respect of such Certificates in accordance with the provisions of
Section 9.3(a). The Tender Agent shall notify the Swap Provider by telephone,
promptly confirmed in writing, of the amounts to be drawn, as soon as
practicable and, when possible, at least one day prior to such draw on the
Liquidity Facility.
(j) The proceeds of the sale by the Remarketing Agent of any Certificates
or portions thereof shall be turned over to the Tender Agent and, except for
Certificates not tendered, immediately applied by the Tender Agent to the
payment of the Purchase Price of Certificates or portions thereof or, in the
case of the sale of Purchased Certificate, to the payment of the Purchase Price
of such Purchased Certificates. In making such payments to the Liquidity
Provider, the Tender Agent may conclusively assume that the Liquidity Provider
has not been paid from any other sources. To the extent that the Liquidity
Provider is so paid with proceeds of the sale of Certificates by the Remarketing
Agent, any Purchased Certificates or ownership interest in such Purchased
Certificates shall be immediately returned to or released by the Tender Agent
and new Certificates representing such sale proceeds shall be registered and
delivered.
(k) The Tender Agent shall, at the end of the tenth Business Day after the
date on which Certificates are to be purchased, set aside on its books all funds
then held in the Remarketing Proceeds Fund and the Purchase Fund by virtue of
the fact that Certificates deemed purchased on such date were not presented for
purchase to the Tender Agent and shall hold the same in trust for the payment to
the owners of such Certificates of the Purchase Price thereof. The Tender Agent
shall pay such Purchase Price from such amounts by check or draft of the Tender
Agent made payable to the party entitled to such payment as soon as practicable
after such party surrenders the Certificates so deemed purchased to the Tender
Agent.
SECTION 9.4 LIQUIDITY FACILITY.
(a) Pursuant to the Liquidity Protection Agreement, Xxxxxx has agreed with
the Cooperative to provide, or cause another qualified financial institution to
provide, a Liquidity Facility to be available for the purchase of Certificates
tendered pursuant to Section 9.2(a) or (b). The Tender Agent and the
Cooperative shall take such actions as may be necessary to obtain funds under
the Liquidity Facility to pay the Purchase Price of Certificates then subject to
purchase under the Liquidity Facility tendered for purchase or required to be
purchased pursuant to the provisions of this Agreement at the times, on the
dates, to the extent, and in the manner, provided by Section 9.2 and 9.3 and
deposit the proceeds of such drawing in the Purchase Fund pending application of
such moneys to the payment of the Purchase Price of such Certificates.
(b) Alternate Liquidity Facility.
(1) At least 60 days prior to the expiration or termination of any
Liquidity Facility, Xxxxxx may provide for the delivery to the Tender Agent of
an Alternate Liquidity Facility. Any such Alternate Liquidity Facility may be
for a term of years which is more or less than the Liquidity Facility which is
being replaced (but in no event less than the lesser
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of (a) 364 days or (b) five (5) days plus the number of days then remaining
until the final maturity of the Certificates). On or prior to the date of the
delivery of such Alternate Liquidity Facility to the Tender Agent, the
Cooperative or Xxxxxx on behalf of the Cooperative shall furnish to the Tender
Agent Rating Confirmation Notices. Upon receipt of the documents described in
clause (2) below, the Tender Agent shall accept such Alternate Liquidity
Facility and promptly surrender the Liquidity Facility then in effect to the
Liquidity Provider which issued such Liquidity Facility in accordance with its
terms for cancellation or deliver any document necessary to reduce the coverage
of such Liquidity Facility.
(2) Notwithstanding anything contained herein to the contrary, no
Alternate Liquidity Facility shall be accepted by the Tender Agent hereunder
unless such Alternate Liquidity Facility is accompanied by (i) Opinions of
Counsel reasonably satisfactory to the Trustee to the effect that (x) the
Liquidity Provider is duly organized and existing, under the laws of the
jurisdiction of its organization, and, if applicable, is duly qualified to do
business in the United States of America; and (y) the Alternate Liquidity
Facility is a legal, valid and binding obligation of the Liquidity Provider,
enforceable in accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization, moratorium and other laws relating to, or affecting
generally the enforcement of, creditors' rights and remedies, and by the
availability of equitable remedies, including specific performance and
injunctive relief; (ii) a Rating Confirmation Notice; (iii) an Opinion of
Counsel that the acceptance by the Tender Agent of such Alternate Liquidity
Facility will not adversely affect the treatment of the Trust as a Pass-Through
Organization for federal income tax purposes and (iv) if the Alternate Liquidity
Facility differs from the initial Liquidity Facility, a certificate of the
Cooperative that any differences in the Alternate Liquidity Facility which
affect the rights and obligations of the Cooperative are acceptable to the
Cooperative.
(c) Should Xxxxxx fail to provide a Liquidity Facility, the Tender Agent
shall accept an Alternate Liquidity Facility provided by the Cooperative, if
any, which otherwise meets the requirements of this Agreement.
(d) Xxxxxx and the Cooperative have agreed upon and are responsible for
fees and expenses of the Liquidity Provider, and neither the Trustee or any
Certificateholder shall have any liability or responsibility therefor.
SECTION 9.5 REMARKETING OF CERTIFICATES.
(a) Upon the receipt by the Remarketing Agent of any notice pursuant to
Section 9.2(a) or 9.2(c), the Remarketing Agent, subject to the terms of the
Remarketing Agreement, shall offer for sale, and shall use its best efforts to
sell (other than to the Cooperative, the Servicer, or their respective
affiliates), the Certificates in respect of which such notice has been given.
Unless otherwise instructed by the Cooperative or the Servicer, the Remarketing
Agent will offer for sale and use its best efforts to sell any Certificates to
be purchased pursuant to Section 9.2(a) or 9.2(b)(i) or 9.2(b)(iv). The
Remarketing Agent shall have no obligation to remarket Certificates to be
purchased pursuant to Section 9.2(b)(ii) or Section 9.2(b)(iii). Any such
Certificates shall be offered: (i) at 100% of the Principal Amount thereof,
plus Interest distributable, if any, to the Purchase Date
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as if such Purchase Date were a Certificate Payment Date, and (ii) pursuant to
terms calling for payment of the Purchase Price on such Purchase Date, and
delivery of such Certificates; provided that the Remarketing Agent shall not
sell any Certificate if the amount to be received from the sale of such
Certificate or portion thereof (including accrued interest, if any) plus the
amount available under the Liquidity Facility to pay the portion (if any) of
such Certificate not remarketed is less than such Purchase Price to be paid for
such Certificate. The Remarketing Agent shall direct any person to whom such
Certificates (or authorized portions thereof) are remarketed pursuant to this
Section to deliver the Purchase Price thereof in immediately available funds to
the Remarketing Agent on or before 10:00 a.m. (New York, New York time) on the
Purchase Date. The Remarketing Agent shall promptly deliver such proceeds to the
Tender Agent. Upon receipt and pending disbursement thereof, the Tender Agent
shall deposit such moneys in the Remarketing Proceeds Fund. The Trustee, the
Tender Agent or the Liquidity Provider may purchase any Certificates offered
pursuant to this Section 9.5(a) for its own account. Each of the Cooperative and
the Servicer acknowledges that it shall have no interest in any proceeds of the
remarketing of Certificates, all of which shall be held in trust by the Trustee
or the Tender Agent for the sole benefit of the holders of the Certificates and,
to the extent that the Certificates have been purchased with funds provided by
the Liquidity Provider, for the benefit of the Liquidity Provider. The
Remarketing Agent shall comply with the provisions of Section 9.3 which are
applicable to the Remarketing Agent.
(b) The Remarketing Agent shall, subject to the terms of the Remarketing
Agreement, offer for sale, and use its best efforts to sell, on behalf of the
Liquidity Provider, Purchased Certificates held pursuant to Section 9.3;
provided that the Remarketing Agent shall have no obligation to remarket
Certificates purchased pursuant to Section 9.2(b)(ii) or Section 9.2(b)(iii).
Any such Certificates shall be offered at 100% of the Principal Amount thereof,
plus distributions of Interest due on the date of sale thereof calculated as if
such date were a Certificate Interest Payment Date.
SECTION 9.6 PURCHASE AND REMARKETING FUND.
(a) There is hereby created a fund to be held by the Tender Agent and
designated as the "Purchase and Remarketing Fund." The following separate funds
shall be established within the Purchase and Remarketing Fund: (i) the Purchase
Fund; and (ii) the Remarketing Proceeds Fund. The Purchase and Remarketing Fund
shall not be part of the Trust Account and shall not be commingled with the
amounts held in the Trust Account.
(b) All amounts advanced pursuant to the Liquidity Facility to pay the
Purchase Price of the Certificates shall be deposited in the Purchase Fund, and
used only for the payment of the Purchase Price of outstanding Certificates in
the manner and at the times specified in Sections 9.2 and 9.3 hereof.
(c) All amounts received by the Tender Agent from the Remarketing Agent
representing the Purchase Price of Certificates remarketed by the Remarketing
Agent shall be deposited in the Remarketing Proceeds Fund and shall be used only
for payments of the Purchase Price of the Certificates so remarketed as provided
in Sections 9.2 and 9.3 hereof or to the payment of the
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Liquidity Provider for the Purchase Price of Purchased Certificates so
remarketed as provided in Section 9.3(j) hereof.
SECTION 9.7 REDEMPTION OR PURCHASE OF CERTIFICATE UPON REDEMPTION OR
PURCHASE OF NOTES BY RUS OR THE COOPERATIVE.
(a) Should the RUS exercise its right to prepay or purchase the Notes
pursuant to the Loan Agreement and the Loan Guarantee Agreement, the RUS shall
give the Trustee and the Servicer 30 days' notice of its intent to so prepay or
purchase the Notes. The Servicer will deliver to the Swap Provider notice of
the Servicer's receipt of such notice from the RUS on the second Business Day
following the Servicer's receipt of the RUS's notice of prepayment or purchase
of the Notes. No more than five days after receipt of notice of the exercise by
the RUS of the prepayment or purchase right with respect to the Notes, the
Trustee shall, in accordance with Subsection (c) of this Section, deliver notice
of the Call Date by first class mail, postage prepaid, to all registered owners
of Certificates to be redeemed at their addresses shown on the Certificate
Register.
(b) Should the Cooperative exercise its right to prepay or purchase the
Notes pursuant to the Loan Agreement and the Loan Guarantee Agreement, the
Cooperative shall give the Trustee and the Servicer 45 days' notice of its
intent to so prepay or purchase the Notes. The Servicer will deliver to the
Swap Provider notice of the Servicer's receipt of such notice from the
Cooperative on the second Business Day following the Servicer's receipt of the
Cooperative's notice of prepayment or purchase of the Notes. No less than 30
days prior to the proposed Call Date, the Trustee shall, in accordance with
Subsection (c) of this Section, deliver notice of the Call Date by first class
mail, postage prepaid, to all registered owners of Certificates to be redeemed
at their addresses shown on the Certificate Register.
(c) Failure to mail the notice required by Subsection (a) or (b) or defect
in the mailing thereof in respect of any Certificate shall not affect the
validity of the redemption of any other Certificate. Notices of such prepayment
or purchase shall also be mailed to the Servicer, the Remarketing Agent, the
Tender Agent, the Swap Provider, the Liquidity Provider and the Trustee. Any
such notice shall (i) identify the Certificates to be redeemed, (ii) specify the
Call Date and the Purchase Price of such Certificates, (iii) state that, on the
Call Date, the Purchase Price of the Certificates called for prepayment or
purchase will be payable at the principal corporate trust office of the Trustee
and from that date interest will cease to accrue and (iv) if, at the time of
mailing of such notice, moneys sufficient to prepay or purchase all the
Certificates shall not have been deposited with the Trustee, such notice may
state that it is conditional in that it is subject to the deposit, not later
than the Call Date, of moneys sufficient to prepay or purchase all the
Certificates, and such notice shall be of no effect unless such moneys are so
deposited.
(d) No termination of the Swap Agreement shall occur and no redemption of
the Certificates shall take place until the Swap Provider certifies that it has
received any amount due as the Termination Amount, if any, and the Liquidity
Provider receives all amounts payable to it under the Liquidity Facility.
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SECTION 9.8 TENDER AGENT.
(a) Tender Agent; Appointment of; Acceptance of Duties.
(1) The First National Bank of Chicago is appointed as Tender Agent
hereunder, and The First National Bank of Chicago hereby accepts the duties and
obligations imposed upon it by this Agreement.
(2) Unless otherwise provided in a separate agreement, the principal
corporate trust office of the Tender Agent is designated as the Delivery Office
for such Tender Agent. The Delivery Office for The First National Bank of
Chicago, as initial Tender Agent hereunder, shall be the office specified in
Section 12.7 hereof.
(3) The Tender Agent shall perform the duties and obligations set forth in
this Agreement, and, in the event of a successor Tender Agent, in any tender
agent agreement entered into by and among the Cooperative, the Trustee and such
successor Tender Agent.
(4) The Tender Agent shall keep such books and records relating to the
performance of its duties hereunder as shall be consistent with prudent industry
practice and will make such records available for inspection by the Cooperative,
the Trustee, the Liquidity Provider and the Remarketing Agent.
(5) The Cooperative shall indemnify the Tender Agent and its officers and
employees against and save them harmless from any and all losses, including
reasonable fees and expenses of counsel, incurred, arising out of or based upon
their acting in good faith to carry out the transactions contemplated by this
Agreement, except only to the extent that they are caused by the negligent
action, negligent failure to act or willful misconduct of the Tender Agent.
(6) No provision of this Agreement shall be construed to relieve the
Tender Agent from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct or that of its officers or
employees, except that the duties and obligations of the Tender Agent shall be
determined solely by the provisions of this Agreement, and the Tender Agent
shall not be liable except for the performance of such duties and obligations as
are specifically set forth in this Agreement, and, in the absence of bad faith
on the part of the Tender Agent, the Tender Agent may conclusively rely, as to
the truth of the statements expressed therein, upon any document furnished to
the Tender Agent and conforming to the requirements of this Agreement, and the
Tender Agent may rely and shall be protected in acting upon any document
believed by it to be genuine and to have been signed or presented by the proper
party or parties, provided that, in the case of any such document which by any
provision of this Agreement is specifically required to be furnished to the
Tender Agent, the Tender Agent shall be under a duty to examine the same to
determine whether or not it conforms to the requirements of this Agreement. The
Tender Agent shall not be liable for good faith error or judgment of its
officers unless the Tender Agent was negligent in ascertaining the pertinent
facts. The Tender Agent shall not be liable at any time for interest
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on any money received by it pursuant to the terms of this Agreement. The Tender
Agent shall be entitled to the benefits of all protective provisions and
limitations accorded the Trustee in this Agreement.
(7) Any provisions of this Agreement or any statute to the contrary
notwithstanding, the Tender Agent hereby waives any rights to, or liens for, its
fees, charges and expenses for services hereunder from funds or Certificates
delivered to the Tender Agent pursuant to this Agreement. The Tender Agent will
be reimbursed and compensated for its fees, charges and expenses for acting
under and pursuant to this Agreement only from moneys provided by the Servicer.
(b) Resignation or Removal of Tender Agent and Appointment of Successor.
(1) Any Tender Agent may at any time resign and be discharged of the
duties and obligations created by this Agreement by giving at least 60 days
written notice to the Servicer, the Cooperative, the Liquidity Provider, the
Remarketing Agent and, unless a Swap Provider Default has occurred and is
continuing, the Swap Provider. Any Tender Agent may be removed at any time by
an instrument filed with such Tender Agent and signed by an authorized officer
of the Trustee. Any such resignation or removal shall take effect only upon the
appointment of, and acceptance of such appointment by, a successor Tender Agent.
Any successor Tender Agent shall be appointed by the Servicer or some party
other than the Cooperative, with the consent of the Liquidity Provider and,
unless a Swap Provider Default has occurred and is continuing, the Swap
Provider, and shall be a commercial bank with trust powers or a trust company
organized under the laws of any state of the United States, having capital stock
and surplus aggregating at least $50,000,000, and willing and able to accept the
office on reasonable and customary terms and authorized by law to perform all
the duties imposed upon it by this Agreement. Any successor Tender Agent shall
signify its acceptance of the duties and obligations imposed upon it by this
Agreement by executing and delivering to the Cooperative, the Swap Provider, the
Liquidity Provider and the Remarketing Agent a written acceptance thereof. In
the event of the resignation or removal of the Tender Agent, the Tender Agent
shall deliver any Certificates and moneys held by it in such capacity to its
successors.
(2) In the event of the resignation or removal of any Tender Agent, such
Tender Agent shall pay over, assign and deliver any moneys and Certificates,
including authenticated Certificates and Purchased Certificates, held by it to
its successor.
SECTION 9.9 REMARKETING AGENT.
(a) The initial Remarketing Agent shall be Alex. Xxxxx & Sons
Incorporated.
(b) In addition to the other obligations imposed on the Remarketing Agent
hereunder and under the Remarketing Agreement, the Remarketing Agent shall agree
to keep such books and records as shall be consistent with prudent industry
practice and make such books and records
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available for inspection by the Cooperative, the Servicer, the Swap Provider,
the Liquidity Provider and the Trustee at all reasonable times.
(c) If at any time the Remarketing Agent is unable or unwilling to act as
the Remarketing Agent, such Remarketing Agent, upon 30 days' prior written
notice to the Cooperative, the Servicer, the Swap Provider, the Liquidity
Provider, the Trustee and the Tender Agent, may resign. The Remarketing Agent
may be removed at any time by the Swap Provider (unless a Swap Provider Default
has occurred and is continuing), subject to the terms and conditions of the
Remarketing Agreement. Upon resignation or removal of the Remarketing Agent or
upon termination of the Remarketing Agreement (other than termination of the
Remarketing Agreement due to termination of the Swap Agreement), the
Cooperative, with the advice and consent of the Swap Provider (unless a Swap
Provider Default has occurred and is continuing), shall appoint a successor
Remarketing Agent. The successor Remarketing Agent, by written instrument
delivered to the Trustee, the Cooperative, the Swap Provider, the Liquidity
Provider and the Servicer shall accept the duties and obligations imposed on it
under this Agreement and shall become a party to the Remarketing Agreement.
(d) In the event that the Cooperative shall fail to appoint a successor
Remarketing Agent, upon the resignation or removal of the Remarketing Agent, the
Swap Provider may appoint a Remarketing Agent until the appointment of a
successor Remarketing Agent in accordance with this Section.
(e) The Remarketing Agent shall give the Servicer Immediate Notice of the
listing of the Certificates on any stock exchange or of the discontinuance of
such listing upon the Remarketing Agent's receipt of written notice of same.
(f) Xxxxxx and the Cooperative have agreed upon and are responsible for
fees and expenses of the Remarketing Agent, and neither the Trustee or any
Certificateholder shall have any liability or responsibility therefor.
ARTICLE X
THE TRUSTEE
SECTION 10.1 DUTIES OF TRUSTEE.
(a) The Trustee, prior to the occurrence of an Event of Servicing
Termination or Swap Provider Default, and after the curing of all Events of
Servicing Termination or Swap Provider Default, which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If an Event of Servicing Termination or Swap Provider
Default, has occurred (which has not been cured), the Trustee shall exercise
such of the rights and powers vested in it by this Agreement, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of such persons's own affairs.
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(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform as to form to the requirements of this Agreement.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Servicing Termination or Swap
Provider Default, and after the curing of all such Events of Servicing
Termination or Swap Provider Default, which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith, negligence, or willful misconduct on
the part of the Trustee, the Trustee (subject to Section 10.1(b)) may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of the Certificateholders with aggregate Fractional Interests
representing 51% or more of the Trust relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Agreement.
(d) The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its rights or
powers, if there is reasonable ground for believing that the repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it; provided, however, that except in the case of action required
upon a Swap Provider Default, if CFC is giving the aforesaid indemnity, the
unsecured written undertaking of CFC delivered to the Trustee shall be
sufficient indemnity for purposes of this Section.
(e) Whether or not herein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 10.2 CERTAIN MATTERS AFFECTING THE TRUSTEE. Subject to Section
10.1, in its capacity as Trustee:
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(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officer's Certificate, certificate of a
Servicing Officer, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) the Trustee may consult with counsel and any opinion of any counsel
for the Servicer or the Trustee (which counsel may be an employee of the
Servicer or the Trustee) shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by it hereunder in good
faith and in accordance with such opinion of counsel;
(c) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement, or to institute, conduct or defend any
litigation hereunder or in relation hereto, at the request, order or direction
of any of the Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby; provided, however, that nothing contained in this
Agreement shall relieve the Trustee of the obligations, upon the occurrence of
an Event of Servicing Termination or Swap Provider Default, (which has not been
cured), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs;
(d) subject to Section 10.3, the Trustee shall not be personally liable
for any action taken, suffered or omitted by it in good faith and believed by it
to be authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(e) prior to the occurrence of an Event of Servicing Termination or Swap
Provider Default, and after the curing of all Events of Servicing Termination or
Swap Provider Default, which may have occurred, the Trustee shall not be bound
to make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in writing so
to do by Certificateholders with aggregate Fractional Interests representing
25% or more of the Trust (with the consent of the Swap Provider unless a Swap
Provider Default has occurred and is continuing); provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the reasonable opinion of the Trustee, not reasonably assured to the Trustee
by the security afforded to it by the terms of this Agreement, the Trustee may
require reasonable indemnity against such cost, expense or liability as a
condition to so proceeding;
(f) the Trustee may exercise any of the trusts or powers under this
Agreement or perform any duties under this Agreement either directly or by or
through agents or attorneys or a custodian;
(g) the Trustee shall not be charged with knowledge of any event referred
to in clauses (a), (b) and (c) of Section 6.1 unless a Responsible Officer of
the Trustee at the Principal Corporate Trust Office obtains actual knowledge of
such failure or the Trustee receives written
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notice of such failure from CFC, the Cooperative, the Servicer, the Swap
Provider or Certificateholders with aggregate Fractional Interests representing
25% or more of the Trust; and
(h) none of the provisions contained in this Agreement shall in any event
require the Trustee to perform any of the obligations of the Servicer under this
Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement.
SECTION 10.3 TRUSTEE NOT LIABLE FOR CERTIFICATES, NOTES OR THE SWAP
AGREEMENT.
(a) The Trustee assumes no responsibility or liability for the correctness
of the recitals contained in this Agreement or in the Certificates of Beneficial
Interests (other than the Trustee's execution and authentication thereof). The
Trustee makes no representations as to the validity or sufficiency of this
Agreement, the Certificates of Beneficial Interests (other than its execution
and authentication thereof), the Notes, the Guarantee, the Swap Agreement or the
related documents; except that the Trustee hereby represents, warrants and
covenants to the Servicer and the Cooperative that this Agreement has been and
(assuming the due authorization, execution and delivery of the Trust Agreement
by the Servicer) each of such other agreements or documents which contemplates
execution thereof by the Trustee has been or will be executed and delivered by a
Responsible Officer of the Trustee who is or will be duly authorized to execute
and deliver such agreement or document on the Trustee's behalf and that, when so
duly authorized, executed and delivered by the Trustee (assuming the due
authorization, execution and delivery of this Agreement and such other documents
by the other parties thereto), this Agreement will constitute a valid and
binding agreement of the Trustee and enforceable against the Trustee in
accordance with its terms, and the Trustee has no reason to believe that the
other agreements or documents to which it is a party will not constitute valid
and binding agreements of the Trustee enforceable against it in accordance with
their respective terms.
(b) If no Event of Servicing Termination or Swap Provider Default has
occurred, the Trustee shall have no responsibility or liability for or with
respect to the performance or enforcement of the Notes or the Guarantee (unless
the Trustee is acting as Servicer or unless it is held that the Servicer may not
enforce the Notes, or the Guarantee as contemplated in Section 4.4), the
compliance by CFC or the Servicer with any covenant or the breach by CFC or the
Servicer of any warranty or representation made under this Agreement or in any
related document or the accuracy of any such warranty or representation, the
validity of the Guarantee, the acts or omissions of CFC or the Cooperative, any
action of CFC taken in the name of the Trustee, any action of the Trustee taken
at the instruction of CFC or the preparation of tax returns for the Trust. As
assignee of the Cooperative's rights under the Swap Agreement, the Trustee shall
enforce the Swap Provider's obligations under the Swap Agreement pursuant to
Section 10.16 of this Agreement for the benefit of the Certificateholders.
Except for such liability as is finally determined to have resulted from
Trustee's gross negligence or willful misconduct, (i) no recourse shall be had
for any claim based on any provision of this Agreement, the Certificates or the
Notes against the Trustee in its individual capacity, and (ii) the Trustee shall
not have any personal obligation, liability or duty whatsoever to any holder of
a Certificate or any other person with respect to any such claim, and (iii) any
such
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claim shall be asserted solely against the Trustee or any indemnitor who shall
furnish indemnity as provided herein.
SECTION 10.4 TRUSTEE MAY OWN CERTIFICATES. The Trustee in its individual or
any other capacity (other than as Trustee) may become the owner or pledgee of
Certificates with the same rights as it would have if it were not the Trustee.
SECTION 10.5 RIGHTS OF CERTIFICATEHOLDERS TO DIRECT TRUSTEE AND TO WAIVE
EVENTS OF TERMINATION. Certificateholders with aggregate Fractional Interests
representing 51% or more of the Trust (with the consent of the Swap Provider
unless a Swap Provider Default has occurred and is continuing) shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee (or the Servicer as the Trustee's attorney-in-
fact pursuant to Section 4.3), or exercising any trust or power conferred on the
Trustee (or the Servicer as such attorney-in-fact); provided, however, that,
subject to Section 10.1, the Trustee (or the Servicer as such attorney-in-fact)
shall have the right to decline to follow any such direction if the Trustee (or
the Servicer as such attorney-in-fact), being advised by counsel, determines
that the action so directed may not lawfully be taken, or if the Trustee (or the
Servicer as such attorney-in-fact) in good faith determines that the action so
directed would be illegal or would be unduly prejudicial to the rights of
Certificateholders not parties to such direction, or if the Trustee (but not the
Servicer) in good faith determines that the action would involve it in personal
liability and provided further that nothing in this Agreement shall impair the
right of the Trustee (or the Servicer as such attorney-in-fact) to take any
action deemed proper by the Trustee and which is not inconsistent with such
direction by the Certificateholders. Certificateholders with aggregate
Fractional Interests representing 51% or more of the Trust (with the consent of
the Swap Provider unless a Swap Provider Default has occurred and is continuing
) may on behalf of Certificateholders waive any past Event of Servicing
Termination or Swap Provider Default hereunder and its consequences; but no such
waiver shall extend to any subsequent or other Event of Servicing Termination or
Swap Provider Default or impair any right consequent thereof.
SECTION 10.6 RESPONSIBILITY FOR THE TRUSTEE'S FEE AND EXPENSES. The
Servicer here by agrees:
(a) to pay to the Trustee from time to time such compensation for all
services rendered by it under this Agreement in its capacity as Trustee as shall
be agreed to by the Servicer and the Trustee, or in the absence of such
agreement, reasonable compensation for such services (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) except as otherwise expressly provided in this Agreement, to reimburse
the Trustee and any predecessor Trustee upon its written request for all
reasonable expenses, disbursements and advances incurred or made by each of the
Trustee and any predecessor Trustee in its capacity as Trustee in accordance
with any provision of this Agreement (including the reasonable expenses and
disbursements of its agents (excluding the Servicer) and counsel), except to the
extent such expenses, disbursement or advance may be attributable to its own
negligence or willful misconduct;
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(c) to indemnify each of the Trustee and any predecessor Trustee for, and
to hold it harmless against, any loss, liability or expense arising out of or in
connection with the acceptance or administration of this trust and its duties as
Trustee, including the costs and expenses of defending itself against any claim
or liability in connection with the exercise or performance of any of its powers
or said duties except to the extent attributable to negligence or willful
misconduct on its part; and
(d) the Cooperative shall pay the Trustee or reimburse the Servicer for
any Trustee's fees and expenses (including reasonable attorney's fees) arising
out of a Swap Provider Default.
The parties hereto agree, and each Certificateholder by its acceptance
of its Certificate agrees, that in the event that the Trustee becomes the
successor Servicer in accordance with this Agreement, it shall be entitled to
all compensation provided for under Section 7.3 for its own account (not for the
benefit of Certificateholders) and in such event the Trustee shall look to such
servicing compensation for payment of its fees and expenses as the successor
Servicer.
SECTION 10.7 ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee hereunder
shall (a) at all times be a corporation which is a bank (as such term is defined
in the Investment Company Act of 1940), having a corporate trust office in the
United States and organized and doing business under the laws of any state or
the United States, authorized under Applicable Law to exercise corporate trust
powers, and having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authorities, (b) at
all times not be an Affiliate of CFC, the Cooperative or the Swap Provider or
any Person involved in the organization or operation of CFC, the Cooperative or
the Swap Provider, and (c) at all times be an Eligible Servicer (or affiliated
with an Eligible Servicer who agrees to act as Servicer in the event that the
Trustee is appointed Servicer upon a Service Transfer). If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 10.8.
SECTION 10.8 RESIGNATION OR REMOVAL OF TRUSTEE.
(a) The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Servicer, RUS, the Swap
Provider and the Certificate Registrar, if any. Upon receiving such notice of
resignation, the Servicer shall promptly appoint a successor Trustee by written
instrument, one copy of which instrument shall be delivered to each of the
Servicer, the Certificate Registrar, if any, RUS, the Swap Provider and the
successor Trustee. If no successor Trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee. The successor Trustee
appointed by such court shall immediately and without further act be superseded
by any successor Trustee appointed by the Servicer within one year from the date
of the appointment by such court; provided,
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however, that such successor Trustee must meet the eligibility requirements
under Section 10.7 of this Agreement.
(b) Subject to Section 10.15, if at any time the Trustee shall cease to be
eligible in accordance with the provisions of Section 10.7 and shall fail to
resign after written request therefor by the Servicer (or, with the consent of
the Servicer and, unless a Swap Provider Default has occurred and is continuing,
the Swap Provider, Certificateholders with aggregate Fractional Interests
representing 25% or more of the Trust) or if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Servicer (or, with the consent of the Servicer and, unless a Swap Provider
Default has occurred and is continuing, the Swap Provider, Certificateholders
with aggregate Fractional Interests representing 25% or more of the Trust) may
remove the Trustee. The Trustee may be removed without cause by the Servicer or,
with the consent of the Servicer and, unless a Swap Provider Default has
occurred and is continuing, the Swap Provider, Certificateholders with aggregate
Fractional Interests of 51% or more of the Trust. If the Trustee is removed
under the authority of the immediately preceding two sentences, the Servicer
shall promptly appoint a successor Trustee (other than the outgoing Trustee)
that has been approved in writing by RUS by written instrument, one copy of
which instrument shall be delivered to the Trustee so removed, one copy to the
successor Trustee, one copy to the Certificate Registrar, if any, one copy to
the Swap Provider and one copy to RUS.
(c) No resignation or removal of any Trustee pursuant to any of the
provisions of this Agreement shall become effective until either (i) the assets
of the trust hereby created have been completely liquidated and the proceeds of
the liquidation distributed to the Certificateholders, or (ii) acceptance of
appointment by the successor Trustee as provided in Section 10.9.
SECTION 10.9 SUCCESSOR TRUSTEE.
(a) Any successor Trustee appointed as provided in Section 10.8 or Section
10.15 shall execute, acknowledge and deliver to CFC, the Servicer, RUS, the Swap
Provider and its predecessor Trustee an instrument accepting such appointment
under this Agreement in form and substance acceptable to the Servicer, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor under this Agreement and shall appoint the
Servicer as its attorney-in-fact pursuant to Section 4.3, without any further
act or instrument and with like effect as if originally named as Trustee. The
predecessor Trustee shall deliver or cause to be delivered to the successor
Trustee or its designee the Notes, the Guarantee, the Swap Agreement and any
related documents and statements, and all moneys and other properties held by it
under this Agreement; and CFC, the Servicer and the predecessor Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Trustee all such rights, power, duties and obligations.
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(b) No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee is eligible
under the provisions of Section 10.7.
(c) Upon acceptance of appointment by a successor Trustee as provided in
this Section 10.9, the Servicer shall cause notice of the succession of such
Trustee to be mailed to each Certificateholder at its address as shown in the
Certificate Register. If the Servicer fails to mail such notice within ten days
after acceptance of appointment by the successor Trustee, the successor Trustee
shall cause such notice to be mailed at the expense of the Servicer but the
failure of the Servicer or the Trustee to give such notice shall not impair or
affect the appointment of such successor Trustee.
SECTION 10.10 MERGER OR CONSOLIDATION OF TRUSTEE. Without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
any corporation into which the Trustee may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, if and only if such corporation shall be
eligible under the provisions of Section 10.7.
SECTION 10.11 AUTHENTICATING AGENT.
(a) From time to time, the Trustee, with the consent of the Servicer, may
appoint one or more authenticating agents with respect to the Certificates which
shall be authorized to act on behalf of the Trustee in authenticating
Certificates in connection with the issuance, delivery, registration or transfer
or exchange, or repayment of the Certificates. Wherever reference is made in
this Agreement to the authentication of Certificates by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication on behalf of the Trustee by an authenticating agent and a
certificate of authentication executed on behalf of the Trustee by an
authenticating agent. Each authenticating agent must be acceptable to the
Servicer and must be an institution meeting the requirements of Section 10.7(a).
(b) Any institution meeting the requirements of Section 10.7(a) succeeding
to the corporate agency business of an authenticating agent shall continue to be
an authenticating agent without the execution or filing of any paper or any
further act on the part of the Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Servicer. The Trustee may at
any time terminate the agency of an authenticating agent by giving notice of
termination to such authenticating agent and to the Servicer.
(d) The Trustee agrees to pay to each authenticating agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 10.6.
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(e) The provisions of Section 10.1, 10.2, 10.3 and 10.4 shall be
applicable to any authenticating agent (other than for its authentication of the
Certificates).
(f) Pursuant to an appointment made under this Section, the Certificates
may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the Certificates described in the within-
mentioned Trust Agreement.
_____________________________
as Authenticating Agent
for the Trustee,
by___________________________
Authorized Officer
SECTION 10.12 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES. All rights of action and claims under this Agreement or the
Certificates or the Swap Agreement may be prosecuted and enforced by the Trustee
(or the Servicer as the Trustee's attorney-in-fact pursuant to Section 4.3)
without the possession of any of the Certificates or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Trustee (or the Servicer as such attorney-in-fact) shall be brought in the name
of the Trustee or in its capacity as Trustee (or on behalf of the Trustee in
that capacity). Any recovery of judgment shall, after provision for the payment
of the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel in connection with such recovery, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been recovered, with any amount available after distribution in full has been
made to the Certificateholders to be distributed in accordance with the
priorities set forth in Section 7.3.
SECTION 10.13 SUITS FOR ENFORCEMENT. In case an Event of Servicing
Termination by the Servicer or Swap Provider Default under this Agreement shall
occur and be continuing, the Trustee, in its discretion may, subject to the
provisions of Section 10.5, proceed to protect and enforce its rights and the
rights of the Certificateholders under this Agreement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy, as the Trustee, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee or the Certificateholders.
SECTION 10.14 POWERS OF TRUSTEE WHEN CFC HOLDS ALL CERTIFICATES. At any
time that CFC holds all of the Certificates, the Trustee shall not exercise the
rights and powers granted to it
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in this Agreement except upon the express written directions of CFC. The
Certificateholders and the Trustee agree that at any time that CFC holds all the
Certificates, the Trustee shall have no fiduciary duties towards the
Certificateholders and shall act as a mere custodian of the Notes on behalf of
the Certificateholders. CFC agrees to reimburse the Trustee for any loss, cost,
claim or expense incurred by the Trustee arising out of or in connection with
its compliance with this Section.
SECTION 10.15 DISQUALIFICATION OF TRUSTEE. The Trustee is subject to TIA
(S) 310(b), including the optional provision permitted by the second sentence of
TIA (S) 310(b) (9). In determining whether the Trustee has a conflicting
interest as defined in TIA (S) 310(b) (1), there shall be excluded any Trust
Agreement (other than this Agreement) dated as of the date hereof among CFC, the
Cooperative and the Trustee pursuant to which Rural Electric Cooperative Grantor
Trusts are formed. If the Trustee resigns pursuant to this Section, the
Cooperative shall promptly appoint a successor Trustee. If the Trustee fails to
comply with the provisions of this Section, any Certificateholder may petition
any court of competent jurisdiction for a removal of the Trustee and the
appointment of a successor Trustee.
SECTION 10.16 POWERS OF TRUSTEE. Anything in this Agreement to the contrary
notwithstanding, (i) the Trustee shall have the legal power to exercise all the
rights, powers and privileges (A) of a holder of the Notes as provided in the
Loan Agreement and the Loan Guarantee Agreement, and (B) to the extent of the
Trustee's interest therein, under the Swap Agreement, (ii) in the case of a
default in payment of the Principal or Guaranteed Interest on the Notes when due
and payable or of a default under the Swap Agreement, the Trustee may recover
judgment in its own name and as trustee of an express trust against the
Cooperative or the Swap Provider, as the case may be, for the whole amount of
such principal and interest remaining unpaid or other amount for which the Swap
Provider may be liable to the Trustee under or in respect of the Swap Agreement,
as the case may be, (iii) the Trustee may file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee and the Certificateholders allowed in any judicial proceedings
relative to the Cooperative or the Swap Provider, as the case may be, its
creditors or its property, and (iv) prior to publication of final Treasury
Regulations (or such other legal authority on which an Opinion of Counsel may be
based) that permit an Opinion of Counsel to reach the conclusion that the Trust
will be treated as a partnership for federal income tax purposes if it is not
treated as a trust for federal income tax purposes under Treasury Regulation (S)
301.7701-4, nothing in this Agreement shall be interpreted, nor shall any
amendment to this Agreement be adopted, to grant to the Trustee, the
Cooperative, the Swap Provider, the Servicer, or any other relevant party, any
powers that would be considered a power to vary the investment of the
Certificateholders in the Trust within the meaning of the proscription against
the grant of such a power in Treasury Regulation (S) 301-7701-4(c).
SECTION 10.17 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COOPERATIVE. The
Trustee is subject to TIA (S) 311(a), excluding any creditor relationship in TIA
(S) 311(b). A Trustee who has resigned or been removed is subject to TIA (S)
311(a) to the extent indicated.
SECTION 10.18 NOTICE OF DEFAULTS. If any default under the Notes, the
Certificates or the Swap Agreement known to the Trustee occurs and is
continuing, the Trustee shall mail to Certificateholders, the Liquidity Provider
and (in the case of any default under the Notes or the
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Certificates) the Swap Provider a notice thereof within 90 days after it occurs.
If an event requiring notice under Section 7.5(a)(ii) hereof occurs, the Trustee
shall provide Immediate Notice, in accordance with Section 7.5(a)(ii), to the
Remarketing Agent, the Tender Agent, and all Certificateholders of the
occurrence of such event; provided, however, that if the Book-Entry System is
not then in effect, the notice to Certificateholders shall be mailed, pursuant
to the terms hereof, to Certificateholders within five (5) days of receipt
thereof by the Trustee. Except in the case of a default in payment on the Notes,
the Certificates or the Swap Agreement, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of Certificateholders.
ARTICLE XI
CERTAIN OBLIGATIONS OF THE COOPERATIVE
SECTION 11.1 CERTIFICATEHOLDER INFORMATION. If the Trustee is not the
Certificate Registrar, the Cooperative shall furnish to the Trustee on or before
each Certificate Payment Date and at such other times as the Trustee may request
in writing all information in the possession or control of the Cooperative as to
the names and addresses of the Certificateholders.
SECTION 11.2 REPORTS BY THE COOPERATIVE. The Cooperative shall:
(a) file with the Trustee, within 30 days after the Cooperative is required
to file the same with the SEC if the Certificates are sold by CFC in a
registered public offering, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may from time to time by rules and regulations prescribe) which the
Cooperative may be required to file with the SEC pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, if any; or, if the
Cooperative is not required to file information, documents or reports pursuant
to either of said Sections, then it will file with the Trustee and the SEC, in
accordance with rules and regulations prescribed from time to time by the SEC,
such of the supplementary and periodic information, documents and reports which
may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a national securities exchange as
may be prescribed from time to time in such rules and regulations;
(b) file with the Trustee and the SEC if the Certificates are so registered
with the SEC, in accordance with rules and regulations prescribed from time to
time by the SEC, such additional information, documents and reports with respect
to compliance by the Cooperative with the conditions and covenants of this
Agreement as may be required from time to time by such rules and regulations;
and
(c) transmit by mail to all Certificateholders, as their names and
addresses appear in the Certificate Register, within 30 days after the filing
thereof with the Trustee, such summaries of any information, documents and
reports required to be filed by the Cooperative pursuant to paragraphs (a) and
(b) of this Section as may be required by rules and regulations prescribed from
time to time by the SEC if the Certificates are so registered with the SEC.
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SECTION 11.3 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any
request or application by the Cooperative to the Trustee to take any action
under this Agreement, the Cooperative shall furnish to the Trustee:
(a) an Officer's Certificate stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 EFFECTIVE DATES. This Agreement shall be the valid and binding
obligation of the parties hereto as of the date of its execution.
SECTION 12.2 RESIGNATION OF SERVICER. The Servicer may not resign from the
obligations and duties hereby imposed on it except (i) upon determination that
the performance of its duties hereunder is no longer permissible under
Applicable Law, or (ii) if the Servicer is not paid any amount due to it as
compensation under this Agreement within five Business Days of when such payment
becomes due and payable. Any determination permitting the resignation of the
Servicer under clause (i) above shall be evidenced by an Opinion of Counsel for
the Servicer to such effect delivered to the Trustee. Unless otherwise required
by Applicable Law, (i) no such resignation shall specify a date for resignation
earlier than 90 days after notice thereof is delivered to the Trustee and (ii)
no such resignation shall become effective until the earlier of such 90 days or
the Trustee or a successor Servicer shall have assumed the responsibilities and
obligations of the Servicer in accordance with Article VI.
SECTION 12.3 TERMINATION.
(a) This Agreement and the Trust created hereby shall terminate (after
distribution of all Principal and Interest due to Certificateholders pursuant to
Section 7.3) on the Certificate Payment Date on which the Principal Balance on
the Certificates of Beneficial Interest is reduced to zero; provided, however,
CFC's representations and warranties and indemnities and obligations to pay any
fees and expenses then owed by CFC to the Trustee or any successor Servicer
shall survive termination.
(b) In the event that the Cooperative or the RUS shall surrender to the
Trustee all outstanding Certificates, together with an Officer's Certificate
from CFC that all past due and accrued Servicer Spread have been duly provided
for, then this Agreement shall terminate, provided, however, CFC's
representations and warranties and indemnities and obligations to pay any fees
and expenses then owed by CFC to the Trustee or any successor Servicer shall
survive termination.
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(c) In no event shall the Trust created hereby continue beyond the
expiration of 21 years less one day from the death of the last survivor of all
of the descendants of Xxxxxx X. Xxxxxxx, the late ambassador of the United
States to the Court of St. Xxxxx, living on the date of this Agreement; provided
further, however, that if any such rights, privileges or options shall be or
become valid under Applicable Law for a period subsequent to the twenty-first
anniversary less one day of the death of such last survivor (or, without
limiting the generality of the foregoing, if legislation shall become effective
providing for the validity or permitting the effective grant of such rights,
privileges and options for a period in gross exceeding the period for which such
rights, privileges and options are hereinabove stated to extend and be valid),
then such rights, privileges or options shall not terminate as aforesaid but
shall extend to and continue in effect, but only if such nontermination and
extension shall then be valid under Applicable Law, until such time as the same
shall, under Applicable Law, cease to be valid.
(d) In the event that any of the payments made to the Certificateholders
are rescinded, invalidated, or otherwise required to be restored or returned
upon the insolvency, bankruptcy or reorganization of the Cooperative, the
Servicer shall promptly so notify the RUS and the Trust (and the obligations of
the Trustee and the Servicer in connection therewith including, but not limited
to, the obligation of (i) the Servicer to deliver notices of default under
Article V of the Loan Guarantee Agreement and (ii) the Trustee to deliver notice
of a Deficiency pursuant hereto) shall continue to be effective or be reinstated
in full force and effect, as applicable, as though such payments had not been
made, and shall not be diminished or impaired in any respect.
(e) Any remaining assets after the Trust has met all obligations hereunder
will be distributed to the Cooperative in accordance with Section 7.5 hereof.
SECTION 12.4 ACTION BY CERTIFICATEHOLDERS.
(a) Except as otherwise specifically provided in this Agreement, whenever
Certificateholder approval, authorization, direction, notice, consent, waiver,
or other action is required under this Agreement, such approval, authorization,
direction, notice, consent, waiver or other action shall be deemed to have been
given or taken on behalf of, and shall be binding upon, all Certificateholders
if agreed to by Certificateholders with aggregate Fractional Interests
representing 51% or more of the Trust.
(b) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by an instrument in writing
executed in one or more counterparts signed by such Certificateholders in person
or by an agent or attorney-in-fact duly appointed and authorized in writing, and
except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where required, to the Servicer. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and (subject to Section 10.1) conclusive in favor of the Trustee, the
Servicer, the Swap Provider and CFC, if made in the manner provided in this
Section.
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(c) The fact and date of the execution by any Certificateholder of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder shall bind every holder of Certificates
issued upon the registration of transfer thereof or an exchange therefor or in
lieu thereof, whether or not notation of such act is made upon such Certificate.
SECTION 12.5 ASSIGNMENT OR DELEGATION BY THE SERVICER. Except as
specifically authorized hereunder, the Servicer may not assign or delegate any
of its power, rights or obligations under this Agreement absent the prior
written consent of Certificateholders with aggregate Fractional Interests
representing 51% or more of the Trust and the prior written consent of RUS and,
unless a Swap Provider Default has occurred and is continuing, the Swap Provider
and any attempt to do so without such consent shall be void. With prior written
approval of RUS, CFC as Servicer may delegate Servicing Functions to an
Affiliate of CFC provided that no such delegation shall relieve CFC of its duty
to perform such Servicing Functions under this Agreement.
SECTION 12.6 AMENDMENT.
(a) Prior to the sale of Certificates by CFC to a party other than an
Affiliate of CFC, this Agreement may be amended with the consent of the parties
hereto, the Swap Provider and, should the amendment materially affect their
obligations hereunder, the Tender Agent and the Liquidity Provider; provided,
however, that before such amendments become effective, the Trustee must receive
an Opinion of Counsel that such amendments will not cause the Trust not to be
treated as a Pass-Through Organization for federal income tax purposes.
(b) After the sale of Certificates by CFC to a party other than an
Affiliate of CFC, this Agreement may be amended from time to time (subject to
Section 12.4(b) hereof) by the Servicer, the Cooperative and the Trustee,
without the consent of any of the Certificateholders, (i) to cure any ambiguity,
to correct or supplement any provisions herein which may be inconsistent with
any other provisions herein or to add any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement; (ii) to make mechanical
changes necessary in the opinion of the Swap Provider (so long as no Swap
Provider Default has occurred and is continuing) to substitute an Alternate
Liquidity Facility meeting the requirements set forth herein or (iii) to achieve
or preserve the status of the Trust as a Pass-Through Organization; provided,
however, that before such amendments become effective, the Trustee must receive
(i) an Opinion of Counsel, that such amendments will not cause the Trust not to
be treated as a Pass-Through Organization for federal income tax purposes and
(ii) Rating Confirmations.
(c) After the sale of Certificates by CFC to a party other than an
Affiliate of CFC, this Agreement may also be amended from time to time (subject
to this Section) by the Servicer, the Cooperative and the Trustee, with the
consent of Certificateholders with aggregate Fractional Interests representing
51% or more of the Trust, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Certificateholders; provided,
however, that without the unanimous
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consent of the Certificateholders affected hereby and the Liquidity Provider, no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, collections of payments on the Notes, the Swap Agreement or the Guarantee or
distributions which are required to be made on any Certificate of Beneficial
Interests or (ii) reduce the aforesaid percentage required to consent to any
such amendment; provided, further, that before such amendments become effective,
the Trustee must receive an Opinion of Counsel that such amendments will not
cause the Trust not to be treated as a Pass-Through Organization for federal
income tax purposes. Neither the Trustee, the Cooperative nor the Servicer will,
without the unanimous consent of all the Certificateholders affected, take or
consent to any action that would reduce the principal amount or interest rate
(or change the manner of computing interest or determining the interest rate) on
the Notes or the Swap Agreement or delay the dates on which any payments are due
under the Notes or the Swap Agreement.
(d) After the Refinancing Date, in addition to Sections 12.6(b) and (c), at
any time that CFC holds all the Certificates of Beneficial Interests, the
Certificateholders, acting unanimously, may by instrument signed, acknowledged
and delivered to the Trustee modify, amend or revoke in whole or in part this
Agreement or the Trust. To the extent thus revoked, the Trustee shall deliver
the corpus of the trust estate to the Certificateholders, upon receiving a
proper receipt, and shall execute and deliver any instruments required to
release all interest of the Trustee in such property.
(e) Promptly after the execution of an amendment or consent pursuant to
Sections 12.6(b) and (c), the Trustee shall furnish or cause to be furnished
written notification of the substance of such amendment to each
Certificateholder and the Swap Provider.
(f) It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Trustee may prescribe.
(g) The Trustee and the Servicer may, but shall not be obligated to, enter
into any amendment under this Section which affects its own respective rights,
duties or immunities under this Agreement or otherwise.
(h) In connection with any amendment pursuant to this Section, the Trustee
shall be entitled to receive an Opinion of Counsel to the effect that such
amendment is authorized or permitted by the Agreement.
(i) No amendment, modification or supplement to or of this Agreement that
materially adversely affects the Cooperative or RUS shall be effective unless
approved in writing by the Cooperative or RUS, respectively, nor shall any
waiver of rights under this Agreement by any party preclude RUS from asserting
its rights unless such a waiver has been approved in writing by RUS.
(j) Anything in this Section to the contrary notwithstanding, without the
unanimous consent of the Certificateholders, no such amendment, modification,
supplement, rescission, waiver
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or other action shall permit the creation of any lien on the property of the
Trust or any portion thereof.
(k) Every amendment pursuant to this Agreement shall conform to the
requirements of the Trust Indenture Act as then in effect as applicable hereto.
(l) No amendment, modification or supplement of this Agreement that
adversely affects the Swap Provider shall be effective unless (i) approved in
writing by it or (ii) the Swap Agreement is terminated and any and all amounts
owing to it are fully paid; provided, however, that if a Swap Provider Default
has occurred and is continuing, the right of the Swap Provider to consent to any
amendment, modification or supplement of this Agreement shall be suspended.
SECTION 12.7 NOTICES.
(a) All communication and notices required or provided for by this
Agreement to CFC, the Servicer, RUS, the Swap Provider, the Trustee, the
Remarketing Agent, the Liquidity Provider, the Cooperative, the Tender Agent or
the Rating Agencies (other than Immediate Notice and telecopy notice to the RUS
as provided below) shall be in writing and shall be deemed to have been duly
given if delivered by hand or mailed, postage prepaid, by registered or
certified mail, return receipt requested, or by overnight delivery, return
receipt requested, or received by telex, telecopy, facsimile or other wire
transmission (with request for assurance of receipt in a manner customary for
communications of such respective type) to the appropriate following addresses:
If to CFC:
National Rural Utilities Cooperative
Finance Corporation
0000 Xxxxxxxxxxx Xxx - Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Telecopy: 000-000-0000
Attention of Finance Officer
If to the Cooperative:
Kansas Electric Power Cooperative, Inc.
P. X. Xxx 0000
Xxxxxx, Xxxxxx 00000
Telecopy: 000-000-0000
Attention of Executive Vice President
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If to the Trustee:
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Telecopy: 000-000-0000
Attention: Corporate Trust Administration
If to RUS:
Rural Utilities Service
United States Department of Agriculture
Washington, D.C. 20250-1535
Telecopy: 000-000-0000
Attention: Director, Financial Operations
Division
Subject: KEPCO - Kansas 54
with a copy addressed to:
Rural Utilities Service
United States Department of Agriculture
Washington, D.C. 20250-1510
Telecopy: 000-000-0000
Attention: Administrator
Subject: KEPCO - Kansas 54
If to the Swap Provider:
Xxxxxx Guaranty Trust Company of New York
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 000-000-0000
Attention: Global Swaps Unit
If to each Rating Agency:
Standard & Poor's Rating Services
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 000-000-0000
Attention: Finance Ratings
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Xxxxx'x Investors Service
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 000-000-0000
Attention: Structured Finance
If to the Remarketing Agent:
Alex. Xxxxx & Sons Incorporated
1290 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 000-000-0000
Attention: Variable Rates Department
If to the Tender Agent:
The First National Bank of Chicago
c/o First Chicago Trust Company of New York
00 Xxxx Xxxxxx
0xx Xxxxx - Window 0
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 212/240-8938
Attention: Corporate Trust Administration
or at such other address as the party may designate by notice to the other
parties hereto in accordance with this Section. Notices given under Section 7.2
are deemed given when received. All notices by telecopy to the RUS, including
any Immediate Notices, shall be followed by other written notice permitted
hereby and shall not be deemed received unless the Sender receives confirmation
of receipt at the telecopy number listed above.
(b) All communications and notices pursuant to this Agreement to a
Certificateholder shall be in writing and delivered at or mailed to the address
shown in the Certificate Register.
(c) Any notice address provided herein 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 pursuant to this Section.
SECTION 12.8 NOTICES TO RATING AGENCIES AND REMARKETING AGENT. The Servicer
shall provide each Rating Agency and the Remarketing Agent with Immediate Notice
of any of the following events known to it:
(1) The appointment of a successor Trustee as provided in Section 10.8,
10.9 or 10.15;
(2) The appointment of a successor Servicer pursuant to Section 6.3;
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(3) The amendment, in any respect, of this Agreement (pursuant to Section
12.6(a) or otherwise), the Loan Agreement, the Loan Guarantee Agreement, the
Standby Certificate Purchase Agreement, the Swap Agreement or the Guarantee;
(4) The expiration, termination or extension of the Swap Agreement or the
Liquidity Facility;
(5) The prepayment or purchase of the Notes by the RUS or the Cooperative
pursuant to the Loan Agreement and the payment in full of all outstanding
Certificates; and
(6) Any time that Interest on the Certificates is computed at the
Guaranteed Interest Rate.
SECTION 12.9 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. No
Certificateholder shall have any right to institute any suit, action or
proceeding in equity or at law on any Certificate or the Swap Agreement or for
the execution of any trust hereunder or for any other remedy hereunder unless
such Certificateholder previously shall have given to the Trustee and Servicer
written notice of the basis for such suit, action or proceeding and shall have
made a written request of the Trustee and Servicer, and unless also
Certificateholders with aggregate Fractional Interests representing 51% or more
of the Trust shall have made a written request of the Trustee and Servicer,
after the right to exercise such powers or right of action as the case may be,
shall have accrued, to exercise the powers herein granted or to institute such
suit, action or proceeding, and shall have afforded the Trustee and Servicer a
reasonable opportunity either to proceed to exercise the powers herein granted
or to institute such action, suit or proceeding in its or their name, and
unless, also, there shall have been offered to the Trustee and Servicer
reasonable security and indemnity against the costs, expenses and liabilities to
be incurred therein or thereby, and the Trustee and Servicer shall have refused
or neglected to comply with such request within a reasonable time. Such
notification, request and offer of indemnity are hereby declared in every such
case, at the option of the Trustee and Servicer, to be conditions precedent to
the Trustee's and Servicer's execution of the powers and trusts of this
Agreement or to any other remedy hereunder. Notwithstanding the foregoing
provisions of this Section and whether or not such provisions shall have been
complied with, (i) Certificateholders with aggregate Fractional Interests
representing 51% or more of the Trust may institute any (except as provided in
clause (ii) below) such suit, action or proceeding in their own names for the
benefit of all Certificateholders hereunder and (ii) no Certificateholder or
Certificateholders shall under any circumstances have any right to institute any
suit, action or proceeding in equity or law under the Mortgage, but have only a
right to collect amounts due and owing under this Agreement or the Notes
pursuant to the Guarantee. It is understood and intended that, except as
otherwise above provided, no one or more Certificateholders shall have any right
in any manner whatsoever by his or their action to affect, disturb or prejudice
the security of this Agreement, or to enforce any right hereunder except in the
manner provided, that all proceedings at law or in equity shall be instituted,
had and maintained in the manner herein provided and that any individual rights
of action or other right given to one or more of such Certificateholders by law
are restricted by this Agreement to the rights and remedies herein provided.
SECTION 12.10 MERGER AND INTEGRATION. Except as specifically stated
otherwise in this Agreement, this Agreement sets forth the entire understanding
of the parties relating to the subject
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matter hereof, and all prior understandings, written or oral, are superseded by
this Agreement. This Agreement may not be modified, amended, waived, or
supplemented except as provided herein.
SECTION 12.11 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof. To the extent permitted by Applicable Law,
the parties hereto waive any provision of law that renders any term or provision
of any Basic Document invalid or unenforceable in any respect.
SECTION 12.12 INTENTION OF PARTIES. The execution and delivery of this
Agreement shall constitute an acknowledgment by the Cooperative, CFC and the
Trustee on behalf of the Certificateholders that they intend hereby to establish
(for federal income tax purposes), a Pass-Through Organization and not an
association taxable as a corporation. The powers granted and obligations
undertaken in this Agreement shall be construed so as to further such intents.
SECTION 12.13 HEADINGS. The headings of the Sections and paragraphs in this
Agreement have inserted for convenience of reference only and shall in no way
restrict or otherwise modify any of the terms or the meaning or interpretation
of any provisions hereof.
SECTTION 12.14 GOVERNING LAW. This Agreement and the Certificates issued
pursuant to this Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York.
SECTION 12.15 DEATH OR INCAPACITY OF CERTIFICATEHOLDERS. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement nor entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding-up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
SECTION 12.16 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, and by the different parties hereto in separate counterparts, each
of which, when so executed and delivered, shall be an original, but all of which
together shall constitute one and the same instrument.
SECTION 12.17 SURVIVAL. The representations and warranties of the parties
provided for in each of the Basic Documents to which it is a party and the
parties' obligations under any and all thereof shall survive, and shall continue
in effect following, the execution and delivery of this Agreement, any
disposition of the Notes and Certificates of Beneficial Interest or other
termination of any of the other Basic Documents and shall be and continue in
effect notwithstanding any investigation made by any party or the fact that any
party may waive compliance with any of the other terms, provisions or conditions
of such Basic Document.
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SECTION 12.18 BINDING EFFECT. All agreements, representations, warranties
and indemnities in this Agreement and the Basic Documents and in any agreement,
document or certificate delivered concurrently with the execution of this
Agreement or the other Basic Documents or from time to time hereafter shall bind
the Person making the same and its successors and assigns and shall inure to the
benefit of each Person for whom made and its permitted successors and assigns.
SECTION 12.19 TRUST INDENTURE ACT CONTROLS. If any provision of this
Agreement limits, qualifies or conflicts with another provision which is
required to be included in this Agreement by the Trust Indenture Act, the
required provisions shall control. For purposes of construction of this
Agreement, the term "obligor" as used in the Trust Indenture Act shall be
construed to mean only the Cooperative.
SECTION 12.20 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Agreement shall include:
(a) a statement that the person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such person, such
condition or covenant has been complied with.
SECTION 12.21 THIRD-PARTY BENEFICIARIES. This Agreement will inure to the
benefit of and be binding upon the parties hereto and the Certificateholders and
their respective successors and permitted assigns. The Swap Provider shall be a
third party beneficiary of this Agreement to the extent that the Swap Provider's
rights or interests under the Swap Agreement are affected hereby. RUS shall be a
third party beneficiary to the extent that its rights or interests under the
Guarantee or the Loan Guarantee Agreement are affected hereby. No other Person
shall be a third party beneficiary hereof.
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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.
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION,
as Depositor of the Trust and Servicer
of the Notes,
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Xxxxxx X. Xxxxxxx
Assistant Secretary/Treasurer
KANSAS ELECTRIC POWER
COOPERATIVE, INC.,
By: /s/ Xxxxxxx X. Xxxx
-----------------------------
Xxxxxxx X. Xxxx
Executive Vice President
and Chief Executive Officer
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee,
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxx
Vice President
AGREED TO AND ACCEPTED
(pursuant to Section 9.8(a)(1) hereof)
THE FIRST NATIONAL BANK
OF CHICAGO, as Tender Agent
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------
Xxxxxxx X. Xxxxxxx
Vice President
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EXHIBIT A
FORM OF CERTIFICATE OF
BENEFICIAL INTERESTS
*[Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC). ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]
To be printed on the Certificate(s) unless CFC is the holder of all the
Certificates.
No. __________ _____________________________
ORIGINAL PRINCIPAL AMOUNT
RURAL ELECTRIC COOPERATIVE GRANTOR
TRUST CERTIFICATE OF BENEFICIAL INTERESTS
SERIES 1997
RURAL ELECTRIC COOPERATIVE GRANTOR
TRUST (KEPCO) SERIES 1997
Evidencing an undivided fractional interest
in a trust, the property of which is two notes
issued by Kansas Electric Power Cooperative, Inc.
payment on which is guaranteed
by the United States of America acting through
the Administrator of the Rural Utilities Service
(as successor to the Rural Electrification Administration)
and a Forward Interest Rate Swap Agreement
as to which Xxxxxx Guaranty Trust Company
of New York is the counterparty
which trust was created by
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
(This Certificate does not represent an
-----------------
*To be printed on the Certificate(s) unless CFC is the holder of all the
Certificates.
Page 1 of 15
interest in or an obligation of
Kansas Electric Power Cooperative, Inc. or
National Rural Utilities Cooperative Finance Corporation
or any affiliate thereof, or
The First National Bank of Chicago or an obligation
of the United States of America or any governmental agency.)
THIS CERTIFICATE IS SUBJECT TO MANDATORY TENDER
FOR PURCHASE UPON THE OCCURRENCE
OF THE EVENTS AND IN THE MANNER
HEREINAFTER DESCRIBED, AND MUST BE
SO TENDERED OR WILL BE DEEMED
TO HAVE BEEN SO TENDERED AS DESCRIBED HEREIN.
page 2 of 15
This certifies that [___________________] is the registered owner of a
Fractional Interest equal to $_______________ DOLLARS out of $__________________
aggregate Original Principal Amount of the Rural Electric Cooperative Grantor
Trust (KEPCO) Series 1997 (the "Trust"). The Trust has been created pursuant to
a Trust Agreement (as amended from time to time, the "Trust Agreement"), entered
into on December 20, 1996 and effective as provided therein, among National
Rural Utilities Cooperative Finance Corporation ("CFC"), Kansas Electric Power
Cooperative, Inc. (the "Cooperative") and The First National Bank of Chicago, as
trustee of the Trust (the "Trustee"). The assets of the Trust include two notes
of the Cooperative (the "Notes"), the Guarantee of the United States of America
acting through the Administrator of the Rural Utilities Service (as successor to
the Rural Electrification Administration) ("RUS") (the "Guarantee") contained or
endorsed on the reverse of such Notes, and a Forward Interest Rate Swap
Agreement to which Xxxxxx Guaranty Trust Company of New York is the
counterparty.
Definitions. To the extent not defined herein, all capitalized terms shall
have the meanings assigned to such terms in the Trust Agreement. This
Certificate is one of the Certificates described in the Trust Agreement and is
issued under and subject to the terms, provisions and conditions of the Trust
Agreement. By acceptance of this Certificate, the holder assents to and becomes
bound by the Trust Agreement.
Certificate Rate. Subject to the terms of the Trust Agreement (including
the availability of funds after payment of the Scheduled Servicing Fee), and
until the Notes have been paid in full, interest shall be paid with respect to
this Certificate at a variable per annum rate equal to the Certificate Rate for
such day. The Certificate Rate shall be (i) while the Swap Provider's
obligations with respect to variable rate interest payments under the Swap
Agreement are in the Weekly Rate Mode, the "Weekly Rate"; and (ii) while the
Swap Provider's obligations with respect to variable rate
Page 3 of 15
interest payments under the Swap Agreement are in the Flex Rate Mode, the "Flex
Rate." If at any time there shall be no Swap Agreement in effect, or if on any
Certificate Interest Payment Date the Trustee has not received any Swap Payment,
Certificateholders shall, pursuant to the terms of the Trust Agreement, become
entitled to receive distributions of Guaranteed Interest on the Notes calculated
at the Fixed Rate on the Notes less the Servicer Spread.
Interest Rate Modes. Interest Rates with respect to distributions of
Interest to Certificateholders shall be determined as follows: (a) If the
Interest Rate Mode is the Weekly Rate Mode, the interest rate payable under the
Swap Agreement and distributable with respect to the Certificates for a
particular Weekly Rate Period shall be the rate established by the Remarketing
Agent no later than 3:00 p.m. (New York, New York time) on the Wednesday on
which such Weekly Rate Period commences (or the day preceding the Refinancing
Date or the Conversion of the Interest Rate Mode to the Weekly Rate Mode, as the
case may be), or, if such day is not a Business Day, on the next succeeding
Business Day, as the minimum rate of interest necessary, in the judgment of the
Remarketing Agent, to enable the Remarketing Agent to sell the Certificates on
such Business Day at a price equal to par, provided that such rate shall not
exceed the Maximum Rate (the "Weekly Rate"); (b) If the Interest Rate Mode is
the Flex Rate Mode, the interest rate payable under the Swap Agreement and
distributable with respect to the Certificate for a particular Flex Rate Period
shall be the rate established by the Remarketing Agent not later than 3:00 p.m.
(New York, New York time) on the last Business Day next preceding the first day
of such Flex Rate Period as the minimum rate of interest necessary, in the
judgment of the Remarketing Agent, to enable the Remarketing Agent to sell the
Certificate on such day at a price equal to par provided that such rate shall
not exceed the Maximum Rate (the "Flex Rate").
Page 4 of 15
Calculation of Interest Payments. Interest on this Certificate, for any
Certificate Interest Payment Date (or any other date that is treated as if it
were a Certificate Interest Payment Date) when the variable rate of interest
payable by the Swap Provider under the Swap Agreement is in the Weekly Rate Mode
or Flex Rate Mode, shall be calculated on the basis of the actual number of days
elapsed over a year of 360 days at the Weekly Rate or Flex Rate, respectively,
on the aggregate Principal Balance of the Certificates and computed over a
period of time ending on, but not including, the associated Certificate Interest
Payment Date (or such other date) and beginning on the next preceding
Certificate Interest Payment Date (or the Refinancing Date if there is no next
preceding Certificate Interest Payment Date). If at any time there is no Swap
Agreement in effect or the Trustee has not received a Swap Payment which is due,
Interest shall, pursuant to the terms of the Trust Agreement, become
distributable at an amount equal to interest calculated on the basis of a year
of 360 days consisting of twelve 30-day months at the Fixed Rate (less the
Servicer Spread) on the Principal Balance of the Notes and computed over a
period of time ending on, but not including, the most recent Note Payment Date
and beginning on the next preceding Note Payment Date.
Principal Payments on Notes. Principal amortization payments on the Notes
will be due in the following installments and dates (or the next following
Business Day if such day is not a Business Day):
Page 5 of 15
Date Amount
---- ------
December 4, 1998 $1,000,000
December 4, 1999 $1,100,000
December 4, 2000 $1,200,000
December 4, 2001 $1,400,000
December 4, 2002 $1,350,000
December 4, 2003 $1,700,000
December 4, 2004 $1,900,000
December 4, 2005 $2,100,000
December 4, 2006 $2,300,000
December 4, 2007 $2,500,000
December 4, 2008 $2,800,000
December 4, 2009 $3,100,000
December 4, 2010 $3,500,000
December 4, 2011 $3,900,000
December 4, 2012 $4,300,000
December 4, 2013 $4,800,000
December 4, 2014 $5,300,000
December 4, 2015 $5,900,000
December 4, 2016 $4,000,000
December 4, 2017 $3,240,000
Principal Payments on Certificates. Commencing December 15, 1998, on each
December 15 (or the next succeeding Business Day if such December 15 is not a
Business Day) corresponding with each principal amortization payment, the
Trustee shall select, by lot, Certificates to be redeemed in an amount equal to
such principal distribution. The last payment of principal and interest shall
be distributable to the Certificateholders on December 4, 2017. In case any
Certificate selected by lot is outstanding in a Principal Amount exceeding
$100,000, a portion of such Certificate may be redeemed provided that the amount
remaining after such redemption shall be an Authorized Denomination.
Accordingly, the unpaid Principal Amount of this Certificate may be less than
the Original Principal Amount set forth above.
Distributions of Principal and Interest. All payments to
Certificateholders will be made by check mailed to Certificateholders of record
on the associated Record Date at the address for such
Page 6 of 15
Certificateholder appearing on the Certificate Register without the presentation
or surrender of the Certificate or the making of any notation hereon, except
that with respect to Certificates registered in the name of the Liquidity
Provider or CFC or in the name of Cede & Co., the nominee registrant for DTC,
payments will be made in the form of immediately available funds. Except as
otherwise provided in the Trust Agreement and notwithstanding the above, if CFC,
the Servicer or the Trustee so notifies the Certificateholder at least 25 days
prior thereto, the final distribution on this Certificate will be made only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Trustee in the Borough of Manhattan, the City
of New York.
*[Notwithstanding anything else in this Certificate to the contrary, if
CFC or any Affiliate of CFC retains the Certificates following a failure by the
Underwriter to purchase them on the Refinancing Date (or otherwise place them
with qualified holders) payments to Certificateholders shall be made in
accordance with Section 7.6 of the Trust Agreement.]
Prepayment of Certificate. This Certificate is subject to prepayment, as
provided in the Trust Agreement, upon exercise by either the Cooperative or the
RUS of its rights to prepay or purchase the Notes. This Certificate is also
subject to prepayment upon an acceleration of the Notes by the Trustee.
Additional Provisions. Reference is hereby made to the further provisions
of this Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
This Certificate does not purport to summarize all provisions of the Trust
Agreement and reference is made to the Trust Agreement for information with
respect to the interest, rights, benefits,
---------------------
* To be printed on the Certificate(s) only if CFC is the holder of all the
Certificates.
Page 7 of 15
obligations, proceeds and duties evidenced hereby and the rights, duties and
immunities of the Trustee and the Servicer. Copies of the Trust Agreement and
all amendments thereto will be provided to any Certificateholder free of charge
upon a written request to the Trustee at Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000, Attention of Corporate Trust Administration.
Unless this Certificate has been executed by the Trustee, by manual or
facsimile signature of a duly authorized signatory under the facsimile of its
corporate seal, attested to by the manual or facsimile signature of a Trust
Officer of the Trustee, and the certificate of authentication hereon has been
manually executed by or on behalf of the Trustee, this Certificate shall not be
entitled to any benefit under the Trust Agreement or be valid for any purpose.
Page 8 of 15
IN WITNESS WHEREOF, the Trustee has caused this instrument to be duly
executed under its corporate seal.
Dated __________________.
THE FIRST NATIONAL BANK OF
CHICAGO, as Trustee,
by
____________________________________
[Title]
[Seal]
Attest:
____________________________________
[Title]
Trustee's Certificate of
Authentication
This is one of the Certificates
described in the within-
mentioned Trust Agreement
THE FIRST NATIONAL BANK OF CHICAGO, as Trustee,
by
__________________________________
Authorized Officer
Page 9 of 15
[Form of Reverse of Certificate]
Limited Obligation. This Certificate does not represent an obligation of
or an interest in the Cooperative, CFC or the Trustee, nor is this Certificate
an obligation of or guaranteed by the United States of America or any
governmental agency. This Certificate is limited in right of payment to
collections on the Notes, the Guarantee and the Swap Agreement, all as more
specifically set forth herein and in the Trust Agreement.
Pursuant to the terms of the Guarantee, the RUS is required, within five
Business Days of receipt of notice from the Servicer, to make payment for
deposit into the Trust Account of the deficiency of any annual payments of
principal or semiannual payments of Guaranteed Interest by the Cooperative under
either of the Notes.
Amendments to Trust Agreement. The Trust Agreement permits, with certain
exceptions therein provided, the amendment thereof and the modification of the
rights and obligations of the Certificateholders under the Trust Agreement at
any time by the Servicer, the Cooperative and the Trustee, with the consent of
Certificateholders with Fractional Interests representing 51% or more of the
Trust, the Liquidity Provider. Any such amendment and any such consent by the
holder of this Certificate shall be conclusive and binding on such holder and
upon all future holders of this Certificate and of any Certificate issued in
exchange hereof or in lieu hereof whether or not notation thereof is made upon
this Certificate. The Trust Agreement also permits, under certain
circumstances, the amendment thereof by the Servicer, the Cooperative, the
Trustee and the Swap Provider without the consent of any of the
Certificateholders.
Waiver of Events of Servicing Termination. Certificateholders with
Fractional Interests representing 51% or more of the Trust and the Swap Provider
may waive any past Event of Servicing Termination.
Page 10 of 15
Denominations of Certificates. The Certificates are issuable only as
registered Certificates without coupons in minimum denominations of $100,000 in
Principal Amount and integral multiples of $5,000 in excess thereof; provided
that one Certificate may be issued in an odd denomination from time to time to
the extent mathematically necessary. As provided in the Trust Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates evidencing the same aggregate Fractional Interest in the
Trust as requested by the Certificateholder surrendering the same.
Transfer Registrable. As provided in the Trust Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registrable in the Certificate Register of the Trustee upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee, accompanied by a written instrument of transfer in form
satisfactory to the Trustee or any Certificate Registrar duly executed by the
Certificateholder or such Certificateholder's attorney duly authorized in
writing. Thereupon one or more new Certificates of Authorized Denominations and
for the same aggregate Fractional Interest in the Trust will be issued to the
designated transferee or transferees. No transfer of any Certificate shall be
valid unless and until registered on the Certificate Register.
No service charge may be imposed for any such registration of transfer or
exchange but the Trustee or any Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith.
Mandatory Purchase. This Certificate (i) shall be subject to mandatory
purchase on each Conversion Date, at a purchase price equal to the Principal
Amount of the Certificate on the Purchase Date; (ii) shall be subject to
mandatory purchase upon Swap Provider Default (but only if the Liquidity
Facility is in effect in accordance with its terms), upon replacement of the
Swap
Page 11 of 15
Agreement with an Alternate Swap Agreement, at a purchase price equal to the
Purchase Price (as defined in the Trust Agreement); (iii) shall be purchased or
deemed purchased upon termination or expiration of the term of the Liquidity
Facility, as provided in the Trust Agreement, if the Liquidity Facility shall
not have been renewed or replaced by an Alternate Liquidity Facility at least
ten Business Days prior to such termination or expiration, or if the Trustee has
not received the Rating Confirmation Notice (as defined in the Trust Agreement)
required by Section 9.4(b) of the Trust Agreement on the fifth Business Day next
preceding any such termination or expiration of the Liquidity Facility, at a
purchase price equal to the Principal Amount hereof plus Interest, if any, which
would have been distributable hereon to the Purchase Date if such date were a
Certificate Interest Payment Date; and (iv) shall be subject to mandatory
purchase at a price equal to the Principal Amount of this Certificate on the
last day of each Flex Rate Period.
Notice of Conversion Dates. A Notice of Conversion of Interest Rate Mode
will be sent by the Trustee to the Certificateholder by first-class mail,
postage prepaid, at least 15 days but not less than 10 days prior to the
Conversion Date, stating that the Interest Rate Mode will be converted and what
the new Interest Rate Mode will be and, if the Conversion is to the Flex Rate
Mode, the end of the Flex Rate period; the Conversion Date; the Certificate
Interest Payment Date and Record Date; the maximum rate of interest available
under the Liquidity Facility; and that the Certificate will be subject to
mandatory purchase on the Conversion Date in accordance with the Trust
Agreement.
Notice of Mandatory Purchase. Notice of mandatory purchase as set forth
above will be given to the Certificateholder by first-class mail, postage
prepaid, by the Trustee not less than (i) in the event of a mandatory purchase
due to a Conversion of Interest Rate Mode, 15 days prior to the Conversion Date;
(ii) in the event of a mandatory purchase due to Swap Provider Default or
termination or expiration of the Swap Agreement, 15 days prior to the
termination of the Swap
Page 12 of 15
Agreement, or as soon as practicable; (iii) in the event of a mandatory purchase
due to termination or expiration of the Liquidity Facility, five Business Days
prior to the termination or expiration of the Liquidity Facility; and (iv) in
the event of a mandatory purchase at the end of a Flex Rate Period, 15 days
prior to the end of the Flex Rate Period (or if the Flex Rate Period is less
than 30 days, no notice is required).
Purchase of Certificate Upon Demand of Certificateholder. Except as
otherwise provided in the Trust Agreement, while in the Weekly Rate Mode, this
Certificate (or a portion hereof, provided that the portion to be purchased and
the portion to be retained by the Certificateholder will be in Authorized
Denominations) shall be purchased on the demand of the Certificateholder, on any
Business Day at a purchase price equal to the Principal Amount, plus, if such
date is not a Certificate Interest Payment Date, the amount of Interest, if any,
which would have been distributable with respect to this Certificate in the
current Interest Rate Mode if the date of purchase of the Certificate had been a
Certificate Interest Payment Date, upon written notice to the Tender Agent, at
its Principal Office on or before 5:00 p.m. (New York, New York time) on a
Business Day not later than the 7th calendar day prior to the Purchase Date.
Such notice shall (A) state the number and principal amount (or portion thereof
in an Authorized Denomination) of the Certificate to be purchased, (B) state the
Purchase Date on which the Certificate shall be purchased and (C) irrevocably
request such purchase and state an agreement to deliver the Certificate, duly
endorsed in blank for transfer, with all signatures guaranteed, to the Tender
Agent at or prior to 10:00 a.m. (New York, New York time) on such Purchase Date.
Owner of Certificate. The Servicer, the Trustee, the Certificate
Registrar, if any, and any authenticating agent and any agent of any of them may
treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Servicer, the Trustee,
Page 13 of 15
the Certificate Registrar, if any, any authenticating agent, or any such agent
of any of them shall be affected by notice to the contrary.
Termination of Obligations. The obligations created by the Trust
Agreement shall terminate after distribution of all principal and interest and
premium due to Certificateholders pursuant to the Trust Agreement, with certain
exceptions set forth in Section 12.3 of the Trust Agreement.
Page 14 of 15
ASSIGNMENT
For value received the undersigned, subject to the provisions of
Section 8.2 of the Trust Agreement, sells, assigns and transfers unto (name,
address including zip code and taxpayer I.D. or Social Security number of
assignee) _____________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
the within Certificate and does hereby irrevocably constitute and
appoint _______________________________________________ attorney to transfer the
said Certificate on the books kept for registration thereof with full power of
substitution on the premises.
Dated: _____________________.
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature guaranteed
Page 15 of 15
EXHIBIT K
RULE 144A LEGEND
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) PROMULGATED UNDER THE SECURITIES ACT)
(AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE TRUSTEE, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A PROMULGATED UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHED (OR HAS FURNISHED ON ITS BEHALF
BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
SECURITY, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 PROMULGATED UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 PROMULGATED UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE
IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE SUCH CERTIFICATIONS, WRITTEN LEGAL OPINION OR
OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
K-1
EXHIBIT L
CERTIFICATE OF RURAL UTILITIES SERVICE
[November 18, 1997] [December 18, 1997]
National Rural Utilities Cooperative Finance Corporation
0000 Xxxxxxxxxxx Xxx - Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Kansas Electric Power Cooperative, Inc.
P. X. Xxx 0000
Xxxxxx, Xxxxxx 00000
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Re: Loan Guarantee and Servicing Agreement, dated as of February 18,
1988, as amended by that certain First Amendment to Loan
Guarantee and Servicing Agreement, dated as of November ___,
1996, among Kansas Electric Power Cooperative, Inc., National
Rural Utilities Cooperative Finance Corporation, The First
National Bank of Chicago, and the United States of America,
acting by and through the Administrator of the Rural Utilities
Service (formerly the Rural Electrification Administration)
The RUS represents that the Guarantee (as defined in the Trust
Agreement) endorsed on the original of each Note (as defined in the Trust
Agreement) constitutes a legal, valid and binding obligation supported by the
full faith and credit of the United States of America, incontestable except for
fraud or misrepresentation of which the holder had actual knowledge at the time
it became a holder.
RURAL UTILITIES SERVICE
_____________________________________
Xxxxxxxxxxxxx
X-0
