EXHIBIT 4.2
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FIRST AMENDMENT TO 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
Dated as of July 1, 1997
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Table of Contents
Page
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Parties..................................................................... 1
Recitals.................................................................... 1
ARTICLE I
Amendments to Trust Agreement
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Section 1.1 Amendment to Article I....................................... 2
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Section 1.2 Amendment to Article IX...................................... 3
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Section 1.3 Amendment to Article X....................................... 3
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ARTICLE II
Miscellaneous
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Section 2.1 Effective Dates.............................................. 4
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Section 2.2 Definitions.................................................. 4
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Section 2.3 Ratification of Trust Agreement.............................. 4
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Section 2.4 Merger and Integration....................................... 4
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Section 2.5 Severability of Provisions................................... 4
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Section 2.6 Headings..................................................... 4
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Section 2.7 Governing Law................................................ 4
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Section 2.8 Counterparts................................................. 4
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THIS FIRST AMENDMENT TO TRUST AGREEMENT (this "Agreement"), dated as of
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July 1, 1997, is among NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
("CFC"), a District of Columbia cooperative association, KANSAS ELECTRIC POWER
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COOPERATIVE, INC. (the "Cooperative"), a Kansas nonprofit cooperative
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corporation, and THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association, as trustee (the "Trustee").
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W I T N E S S E T H:
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WHEREAS, on December 20, 1996, the parties to this Agreement, among others,
entered into a series of agreements (the "Transaction Documents") pursuant to
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which two United States Government guaranteed notes of the Cooperative (the
"Notes") will be refinanced, on December 18, 1997, through (i) the purchase of
such Notes by CFC from the holder thereof, (ii) the redemption of certain
certificates of beneficial interest relating to such Notes, (iii) the deposit of
the Notes, along with a Swap Agreement (the "Swap Agreement") between the
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Cooperative and ▇▇▇▇▇▇ Guaranty Trust Company of New York (the "Swap Provider"),
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into a trust (the "Trust"), (iv) the issuance by the Trust of certificates of
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beneficial interest in such Trust to CFC (the "Certificates"), and (v) the sale
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by CFC of the Certificates pursuant to a registered public offering or a private
placement; and
WHEREAS, in order to set forth the interests to be conveyed to the Trust
for the benefit of the holders of Certificates ("Certificateholders"), the
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rights of the Certificateholders, the rights and obligations of CFC as depositor
of the Trust and Servicer of the Notes, and the obligations of the Trustee and
the Cooperative, the parties to this Agreement entered into that certain Trust
Agreement among the Cooperative, CFC, and the Trustee, entered into as of
December 20, 1996 and effective as provided therein (the "Trust Agreement"); and
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WHEREAS, to improve the marketability of the Certificates, the parties
hereto desire to amend the Trust Agreement to clarify that, while the
Certificates are in the Flex Rate Mode, the Certificates shall pay interest on
the same day such Certificates are subject to mandatory purchase from the
holders thereof pursuant to Section 9.2(b)(iv) of the Trust Agreement; and
WHEREAS, under Illinois law, classification of the Trust as a partnership
for federal income tax purpose could have adverse tax consequences to
Certificateholders, and the parties to the Trust Agreement desire to amend the
Trust Agreement to eliminate the possibility that permissible actions could be
taken that would result in the Trust being so treated; and
WHEREAS, Section 12.6 of the Trust Agreement provides that, prior to the
sale of the Certificates by CFC to a party other than an Affiliate of CFC, the
Trust Agreement may be amended (i) with the consent of the parties to the Trust
Agreement, the Swap Provider and, should such amendment materially affect their
obligations under the Trust Agreement, The First National Bank of Chicago, as
Tender Agent (in such capacity, the "Tender Agent") and the Liquidity Provider,
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and (ii) upon receipt by the Trustee of 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
WHEREAS, Section 4 of the Remarketing Agreement requires the consent of,
and notice to, the Remarketing Agent of any amendment to the Trust Agreement;
and
WHEREAS, Section 3.3 of the Liquidity Protection Agreement provides that
the Cooperative will provide ▇▇▇▇▇▇ (in its capacity as a party to the Liquidity
Protection Agreement) with any amendments or supplements to the Trust Agreement
as soon as practicable following the execution thereof, and that the Cooperative
will not enter into or consent to any amendment of the Trust Agreement without
▇▇▇▇▇▇'▇ prior consent if such amendment might, in any way, adversely affect the
rights or interests of any provider of any Liquidity Facility (as defined in the
Liquidity Protection Agreement) or of ▇▇▇▇▇▇; and
WHEREAS, Section 9(a)(ii)(C)(i)(a) and Section 9(a)(iii)(G) of the
Underwriting Agreement require the consent of Alex. ▇▇▇▇▇ & Sons Incorporated
(the "Underwriter") to any amendments to the Trust Agreement; and
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WHEREAS, Section 8.1 of the Loan Guarantee Agreement and Section 12.6(i) of
the Trust Agreement provides, in effect, that no amendment, modification, or
supplement to or of the Trust Agreement that materially adversely affects the
Rural Utilities Service (the "RUS") shall be effective unless approved in
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writing by the RUS; and
WHEREAS, by their execution of this Agreement and the execution of the
consents appended hereto, the Cooperative, CFC, the Trustee, the Tender Agent,
the Remarketing Agent, the Underwriter, the Swap Provider, and ▇▇▇▇▇▇ (in its
capacity as signatory to the Liquidity Protection Agreement desire to consent to
and approve the amendments to the Trust Agreement effectuated hereby and to
approve and ratify, in all other respects, the Trust Agreement, and the RUS has
certified that the amendments to the Trust Agreement effectuated hereby do not
materially adversely affect the RUS; and
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
CFC, the Cooperative and the Trustee agree as follows:
ARTICLE I
AMENDMENTS TO TRUST AGREEMENT
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Effective upon the execution of this Agreement by the parties hereto and
the execution of the consents appended hereto, the Trust Agreement shall be
amended as follows:
SECTION 1.1 AMENDMENT TO ARTICLE I. Article I shall be amended as
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follows:
(a) The definition of "Pass-Through Organization" shall be deleted in its
entirety, and the following shall be substituted in lieu thereof:
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"Pass-Through Organization" shall mean an organization that, for
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federal income tax purposes, is not treated as a corporation or
an association taxable as a corporation but is, for federal
income tax purposes, a grantor trust.
(b) The definition of "Flex Rate Period" shall be deleted in its entirety,
and the following shall be inserted in lieu thereof:
"Flex Rate Period" shall mean any period beginning on and including the
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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 selected by the Remarketing Agent, with the consent of
the Swap Provider, to be the last day 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.
SECTION 1.2 AMENDMENT TO ARTICLE IX. Article IX shall be amended as
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follows:
(a) Section 9.2(b)(iv) shall be deleted in its entirety, and the following
shall be substituted in lieu thereof:
(iv) Mandatory Purchase at End of Each Flex Rate Period. The
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Certificates shall be subject to mandatory purchase at a price
equal to the Principal Amount of each Certificate on the
Certificate Interest Payment Date immediately following the last
day of the Flex Rate Period then ending.
SECTION 1.3 AMENDMENT TO ARTICLE X. Article X shall be amended as
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follows:
Section 10.16 Powers of Trustee. Anything in this Agreement
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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) 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
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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).
ARTICLE II
MISCELLANEOUS
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SECTION 2.1 EFFECTIVE DATES. This Agreement shall be the valid and
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binding obligation of the parties hereto as of the date of its execution, and
the amendments effectuated hereby will be effective as provided in Article I
hereof.
SECTION 2.2 DEFINITIONS. Capitalized terms used herein but not defined
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shall have the meaning set forth in the Trust Agreement, to the extent that the
context so permits.
SECTION 2.3 RATIFICATION OF TRUST AGREEMENT. Except as specifically
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amended hereby, the Trust Agreement shall remain in full force and effect and is
ratified in all respects by the parties hereto and the parties granting their
consent hereto.
SECTION 2.4 MERGER AND INTEGRATION. Except as specifically stated
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otherwise in this Agreement, this Agreement sets forth the entire understanding
of the parties relating to the subject 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 2.5 SEVERABILITY OF PROVISIONS. If any one or more of the
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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 2.6 HEADINGS. The headings of the Sections and paragraphs in
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this Agreement have been 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.
SECTION 2.7 GOVERNING LAW. This Agreement shall be governed by, and
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construed and enforced in accordance with, the laws of the State of New York.
SECTION 2.8 COUNTERPARTS. This Agreement may be executed in two or more
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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.
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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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
and Chief Financial Officer
KANSAS ELECTRIC POWER
COOPERATIVE, INC.,
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Executive Vice President
and Chief Executive Officer
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee,
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
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Each of the undersigned parties hereby consents to the amendments to the
Trust Agreement effectuated hereby and ratifies, in all other respects, the
Trust Agreement, each as of the day and year first written above.
THE FIRST NATIONAL BANK OF CHICAGO,
as Tender Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
ALEX. ▇▇▇▇▇ & SONS INCORPORATED,
as Remarketing Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Managing Director
ALEX. ▇▇▇▇▇ & SONS INCORPORATED,
as Underwriter
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Managing Director
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF
NEW YORK, as Swap Provider
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
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▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF
NEW YORK, as signatory to the
Liquidity Protection Agreement
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
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