SERIES C BOND GUARANTEE AGREEMENT dated as of September 19, 2008 between UNITED STATES OF AMERICA acting through the Rural Utilities Service as guarantor, and NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, as the Borrower.
SERIES C
BOND GUARANTEE AGREEMENT
dated as
of September 19, ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
acting
through the
Rural
Utilities Service
as
guarantor,
and
NATIONAL
RURAL UTILITIES
COOPERATIVE
FINANCE CORPORATION,
as the
Borrower.
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TABLE
OF CONTENTS
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Page
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RECITALS
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1
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ARTICLE
I
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DEFINITIONS
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Section
1.1.
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Definitions
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2
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Section
1.2.
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Principles
of Construction
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6
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ARTICLE
II
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THE
GUARANTEE
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Section
2.1.
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Execution
of Guarantee
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6
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Section
2.2.
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Coverage
of Guarantee
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6
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Section
2.3.
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Payment
on the Guarantee
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6
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ARTICLE
III
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CONDITIONS
PRECEDENT
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Section
3.1.
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Conditions
Precedent to Issuance of the Guarantee
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7
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Section
3.2.
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Conditions
Precedent to each Advance
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8
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ARTICLE
IV
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GUARANTEE
FEE
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Section
4.1.
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Guarantee
Fee
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9
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Section
4.2.
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Amount
of Gurantee Fee; Dates of Payment
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9
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Page
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ARTICLE
V
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SERVICING
OF THE GUARANTEE BOND
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Section
5.1.
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SERVICING
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9
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ARTICLE
VI
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REPORTING
REQUIREMENTS
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Section
6.1.
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Annual
Reporting Requirements
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10
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Section
6.2.
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Trigger
Event Notices
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10
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Section
6.3.
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Default
Notices
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11
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ARTICLE
VII
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LIMITATIONS
ON AMENDMENS TO THE GUARANTEED BOND
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Section
7.1.
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Limitations
on Amendments to the Guaranteed Bond
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11
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ARTICLE
VIII
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REPRESENTATIONS
OF THE PARTIES
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Section
8.1.
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Representation
of RUS
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11
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Section
8.2.
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Representations
of the Borrower
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11
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ARTICLE
IX
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AGREEMENTS
OF THE BORROWER
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Section
9.1.
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Patronage
Refunds
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13
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Section
9.2.
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Security
and Collateral
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13
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Section
9.3.
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Use
of Savings
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14
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Section
9.4.
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Subrogation
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14
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Section
9.5.
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Use
of Proceeds
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14
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ii
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Section
9.6.
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Compliance
with Covenants in Other Agreements
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14
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Section
9.7.
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Ratings
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15
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Section
9.8.
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Acknowledgement
of Borrower
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15
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Section
9.9.
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Financial
Expert
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15
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ARTICLE
X
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EVENTS
OF DEFAULT
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Section
10.1.
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Events
of Default
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15
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Section
10.2.
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Compulsory
Redemption
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16
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Section
10.3.
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Acceleration
by RUS’s Purchase of the Bond
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16
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Section
10.4.
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Effect
of Payments by RUS Pursuant to the RUS Guarantee
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16
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Section
10.5.
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Remedies
Not Exclusive
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16
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ARTICLE
XI
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MISCELLANEOUS
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Section
11.1
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GOVERNING
LAW
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16
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Section11.2.
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WAIVER
OF JURY TRIAL
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16
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Section11.3.
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Method
of Payment
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17
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Section
11.4
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Notices
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17
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Section
11.5
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Benefit
of Agreement
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17
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Section
11.6
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Entire
Agreement
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17
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Section
11.7
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Amendments
and Waivers
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17
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Section
11.8
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Counterparts
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18
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Section
11.9
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Termination
of Agreement
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18
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Section
11.10
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Survival
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18
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Section
11.11
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Severability
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18
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iii
Schedule
I – Addresses for Notices
Annex A –
Form of Bond Purchase Agreement
Annex B –
Form of Pledge Agreement
Annex C –
Form of Reimbursement Note
Annex D –
Opinion of Counsel to the Borrower
Annex E –
Officers’ Closing Certificate
Annex F –
Officers’ Advance Certificate
Annex G –
Auditors’ Letter
iv
Series
C Bond Guarantee Agreement
SERIES C
BOND GUARANTEE AGREEMENT dated as of September 19, 2008, between the UNITED
STATES OF AMERICA (the “Government”), acting
through the Rural Utilities Service, a Rural Development agency of the United
States Department of Agriculture, and its successors and assigns (“RUS”); and NATIONAL
RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, a cooperative association
existing under the laws of the District of Columbia (the “Borrower”).
RECITALS
1. On May
28, 2008, the Borrower applied to RUS (the “Application”), in
accordance with Section 313A of the Rural Electrification Act of 1936, as
amended (the “RE
Act”) and the regulations promulgated thereunder (as set forth in Section
1720 of Part 7 of the Code of Federal Regulations (the “Regulations”)), for
RUS to guarantee a third loan from the Federal Financing Bank, a body corporate
and instrumentality of the Government under the general supervision of the
Secretary of the Treasury, and its permitted successors and assigns, (“FFB”), to the
Borrower, the proceeds of which would be used by the Borrower to fund new
Eligible Loans (as defined herein) or to refinance existing debt instruments of
the Borrower used to fund Eligible Loans.
2. RUS has
determined that the Borrower is eligible for guarantees under Section 313A
of the RE Act.
3. FFB is
willing to make a loan to the Borrower in the aggregate principal amount of up
to $500,000,000 upon the terms and subject to the conditions set out in the
Series C Bond Purchase Agreement among FFB, the Borrower and the Government
dated as of the date hereof (such agreement being in the form of Annex A
attached hereto, as the same may be amended, supplemented, consolidated or
restated from time to time in accordance with the terms thereof and hereof being
hereinafter called the “Bond Purchase
Agreement”), and upon the terms and subject to the conditions set out in
the Series C Future Advance Bond issued by the Borrower to FFB and dated as of
the date hereof (such bond being in the form attached to the Bond Purchase
Agreement, as the same may be amended, supplemented, consolidated or restated
from time to time in accordance with the terms thereof and hereof being
hereinafter called the “Bond”).
4. RUS is
willing to issue its guarantee of the Bond, as contemplated by Section 313A
of the RE Act, upon the terms and subject to the conditions hereinafter
provided.
NOW,
THEREFORE, in consideration of the mutual agreements herein contained, RUS and
the Borrower agree as follows:
1
Series
C Bond Guarantee Agreement
ARTICLE
I
DEFINITIONS
SECTION
1.1. Definitions. As
used in this Agreement, the following terms shall have the following
meanings:
“91-day Treasury-▇▇▇▇
Rate” shall mean, for any date, the rate equal to the weighted average
per annum discount rate (expressed as a bond equivalent yield and applied on a
daily basis) for direct obligations of the United States with a maturity of
thirteen weeks ("91-day
Treasury-Bills") sold at the applicable 91-day Treasury-▇▇▇▇ auction on
or most recently prior to such date, as published on the website
▇▇▇▇://▇▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇▇▇.▇▇▇/▇▇/▇▇▇▇▇▇▇ or otherwise as reported by the U.S.
Department of the Treasury. In the event that the results of the auctions of
91-day Treasury Bills cease to be published or reported as provided above, or
that no 91-day Treasury ▇▇▇▇ auction is held in a particular week, then the
91-day Treasury-▇▇▇▇ Rate in effect as a result of the last such publication or
report will remain in effect until such time, if any, as the results of auctions
of 91-day Treasury-Bills will again be so published or reported or such auction
is held, as the case may be.
“Administrator” shall
mean the Administrator of RUS.
“Advance” shall have
the meaning given to that term in the Bond.
“Agreement” shall mean
this Series C Bond Guarantee Agreement, as the same may be amended,
supplemented, consolidated or restated from time to time.
“Application” shall
have the meaning given to that term in Recital 1.
“Bond” shall have the
meaning given to that term in Recital 3.
“Bond Fee” shall mean
the fee applicable to each Advance as calculated in accordance with paragraph
9(b) of the Bond.
“Bond Purchase
Agreement” shall have the meaning given to that term in Recital
3.
“Bond Documents” shall
mean the Bond, the Bond Purchase Agreement, the Guarantee, this Agreement, the
Pledge Agreement and the Reimbursement Note.
“Borrower” shall have
the meaning given to that term in the Preamble.
“Borrower Notice”
shall have the meaning given to that term in the Pledge Agreement.
“Business Day” shall
mean any day other than a Saturday, a Sunday, a legal public holiday under
5 U.S.C. §6103 for the purpose of statutes relating to pay and leave of
employees or any other day declared to be a legal holiday for the purpose
of
statutes
relating to pay and leave of employees by Federal statute or Federal Executive
Order.
“Certificate of Available
Securities” shall have the meaning given to that term in the Pledge
Agreement.
“Certificate of Pledged
Collateral” shall have the meaning given to that term in the Pledge
Agreement.
“Closing Date” shall
mean September 19, 2008.
“Concurrent Loan”
shall mean a Loan that the Borrower has extended or extends for the cost of an
eligible electrification or telephone purpose under the RE Act, concurrently
with an insured loan made by the Secretary, as provided in Section 307 of
the RE Act.
“Consolidated
Subsidiary” means at any date any Subsidiary and any other entity the
accounts of which would be combined or consolidated with those of the Borrower
in its combined or consolidated financial statements if such statements were
prepared as of such date.
“Eligible Loan” shall
mean all or part of any Loan that the Borrower has made for any electrification
or telephone purpose eligible under the RE Act, to the extent the Loan is not
used directly or indirectly to fund projects for the generation of
electricity.
“Event of Default”
shall have the meaning given to that term in Section 10.1.
“FFB” shall have the
meaning given to that term in Recital 1.
A “Financial Expert Trigger
Event” shall exist at any time when the Borrower has failed to comply
with the covenant contained in Section 9.9 hereof.
“Financial
Statements”, in respect of a Fiscal Year, shall mean the consolidated
financial statements (including footnotes) of the Borrower for that Fiscal Year
as audited by independent certified public accountants appointed by the
Borrower.
“Fiscal Year” shall
mean the fiscal year of the Borrower, as such may be changed from time to time,
which at the date hereof commences on June 1 of each calendar year and ends on
May 31 of the following calendar year.
“Government” shall
have the meaning given to that term in the Preamble.
“Guarantee” shall mean
the guarantee to be executed by the Secretary, in the form attached to the
Bond.
“Guarantee Fee” shall
have the meaning given to that term in Section 4.1.
“Guaranteed Bond”
shall mean the Bond with the executed Guarantee attached thereto.
“Indebtedness” with
respect to any Person shall mean without duplication:
(a) all
indebtedness which would appear as indebtedness on a balance sheet of such
Person prepared in accordance with generally accepted accounting principles (i)
for money borrowed, (ii) which is evidenced by securities sold for money or
(iii) which constitutes purchase money indebtedness;
(b) all
indebtedness of others guaranteed by such Person (not including endorsements for
collection or deposit in the ordinary course of business);
(c) all
indebtedness secured by any mortgage, lien, pledge, charge or encumbrance upon
property owned by such Person, even though such Person has not assumed or become
liable for the payment of such indebtedness; and
(d) all
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement (including any lease in the nature of a title
retention agreement) with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession of such property), but only if
such property is included as an asset on the balance sheet of such
Person,
provided that, in
computing the “Indebtedness” of such Person, there shall be excluded any
particular indebtedness if, upon or prior to the maturity thereof, there shall
have been deposited with the proper depositary in trust money (or evidences of
such indebtedness) in the amount necessary to pay, redeem or satisfy such
indebtedness; and provided further that
no provision of this definition shall be construed to include as “Indebtedness”
of the Borrower or its Consolidated Subsidiaries any indebtedness by virtue of
any agreement by the Borrower or its Consolidated Subsidiaries to advance or
supply funds to Members or Consolidated Subsidiary members.
“Investment Grade
Rating” shall mean, in respect of any ratable instrument, a rating for
that instrument in one of the four highest rating categories (within which there
may be subcategories or gradations which are to be ignored for the purposes of
this definition) of a Rating Agency. At the date hereof, this would
require the following: (i) a BBB- rating or higher from Standard
& Poor’s, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.; (ii) a Baa3 rating
or higher from ▇▇▇▇▇’▇ Investors Service, Inc.; or (iii) a BBB- rating or higher
from Fitch, Inc.
“Loan” shall mean a
loan that the Borrower has or will have outstanding to any of its Members or
associates.
“Member” shall mean
any Person who is member or patron of the Borrower, as the case may
be.
“Person” means an
individual, a corporation, a partnership, an association, a trust or any other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
“Pledge Agreement”
shall mean the Pledge Agreement dated as of September 19, 2008, entered into by
the Borrower, RUS and U.S. Bank Trust National Association, in the form of Annex
B attached hereto, as the same may be amended, supplemented, consolidated or
restated from time to time in accordance with the terms thereof and
hereof.
“Program” shall mean
the guarantee program for bonds and notes issued for electrification or
telephone purposes authorized by Section 313A of the RE Act.
“Rating Agency” shall
mean (i) Standard & Poor’s, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.,
▇▇▇▇▇’▇ Investors Service, Inc., or Fitch, Inc; and (ii) their respective
successor rating agencies.
A “Rating Trigger Event”
shall exist at any time when the Borrower has any Senior Secured Debt (without
regard to the Guarantee or any other third party credit support) that does not
have at least two of the following ratings: (i) A- or higher
from Standard & Poor’s, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.;
(ii) A3 or higher from ▇▇▇▇▇’▇ Investors Service, Inc.; (iii) A- or
higher from Fitch, Inc.; and (iv) an equivalent rating from a successor
rating agency to any of those Rating Agencies.
“RE Act” shall have
the meaning given to that term in Recital 1.
“Regulations” shall
have the meaning given to that term in Recital 1.
“Reimbursement Note”
shall mean the note issued by the Borrower to RUS, in the form of Annex C
attached hereto, as the same may be amended, supplemented, consolidated or
restated from time to time in accordance with the terms thereof and
hereof.
“Requested Advance
Date” shall have the meaning given to that term in the Bond.
“RUS” shall have the
meaning given to that term in the Preamble.
“Secretary” shall mean
the Secretary of Agriculture acting through the Administrator.
“Senior Secured Debt”
of the Borrower means non-subordinated secured bonds or notes of the Borrower
having an aggregate principal amount of at least $100,000,000 which, at the date
hereof, means the Borrower’s collateral trust bonds, provided, however, that “Senior
Secured Debt” shall not include (i) any bonds issued by the Borrower to FFB that
are guaranteed by RUS under the Program; (ii) up to $500,000,000 of debt
designated by the Borrower as not being “Senior Secured Debt”;
and
(iii) any other debt of the Borrower that RUS agrees shall not be “Senior
Secured Debt”.
“Subrogation Claim”
shall have the meaning given to that term in Section 9.4(a).
“Subsidiary” of any
Person means (i) any corporation more than 50% of whose stock of any class or
classes having by the terms thereof ordinary voting power to elect a majority of
the directors of such corporation (irrespective of whether or not at the time
stock of any class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time owned
by such Person directly or indirectly through its Subsidiaries; and (ii) any
other Person in which such Person directly or indirectly through Subsidiaries
has more than a 50% voting and equity interest; provided that no
Person shall be deemed a Subsidiary whose only assets are (A) loans guaranteed,
in whole or in part, as to principal and interest by the Government through RUS
pursuant to a guarantee; and (B) investments incidental thereto.
“Termination Date”
shall mean the date upon which this Agreement terminates in accordance with
Section 11.9.
SECTION
1.2. Principles of
Construction. Unless the context shall otherwise indicate, the
terms defined in Section 1.1 hereof include the plural as well as the
singular and the singular as well as the plural. The words
“hereafter”, “herein”, “hereof”, “hereto” and “hereunder”, and words of similar
import, refer to this Agreement as a whole. The descriptive headings
of the various articles and sections of this Agreement were formulated and
inserted for convenience only and shall not be deemed to affect the meaning or
construction of the provisions hereof.
ARTICLE
II
THE
GUARANTEE
SECTION
2.1. Execution of
Guarantee. Upon presentation to RUS of the Bond, and upon
satisfaction of the conditions set forth in Section 3.1 of this Agreement, and
subject to Section 2.2, the Secretary shall execute, pursuant to the RE Act, the
Guarantee.
SECTION
2.2. Coverage of
Guarantee. The Guarantee shall be an obligation supported by
the full faith and credit of the Government and incontestable except for fraud
or misrepresentation of which FFB had actual knowledge at the time it extended
the loan represented by the Guaranteed Bond.
SECTION
2.3. Payment on the
Guarantee. RUS guarantees the full repayment of the principal,
interest, late payment charges, Bond Fees and discount or prepayment premiums,
if any, when and as due on the Guaranteed Bond in accordance with the terms of
the Guarantee, provided, however, that any
payment by RUS under the
Guarantee
does not relieve the Borrower of any of its obligations or liabilities under or
in respect of this Agreement or any of the Bond Documents.
ARTICLE
III
CONDITIONS
PRECEDENT
SECTION
3.1. Conditions Precedent to
Issuance of the Guarantee. RUS shall be under no obligation to
execute and deliver the Guarantee unless and until the following conditions have
been satisfied or waived in writing:
(a) Bond
Documents. RUS shall have received originals of: (i) the Bond
(with an unexecuted Guarantee attached thereto) duly executed on behalf of the
Borrower, identical in all respects to the form of Bond attached to the Bond
Purchase Agreement except to the extent that RUS may have approved changes
therein, (ii) the Bond Purchase Agreement duly executed on behalf of the
Borrower and FFB, identical in all respects to the form of Bond Purchase
Agreement in Annex A attached hereto except to the extent that RUS may have
approved changes therein, (iii) the Pledge Agreement duly executed on behalf of
the Borrower and the Collateral Agent (as defined therein), identical in all
respects to the form of Pledge Agreement in Annex B attached hereto except to
the extent that RUS may have approved changes therein, and (iv) the
Reimbursement Note duly executed on behalf of the Borrower, identical in all
respects to the form of Reimbursement Note in Annex C attached hereto except to
the extent that RUS may have approved changes therein.
(b) Amount of RE Act
Loans. The Borrower shall have provided RUS a certification by its
Governor and its Chief Financial Officer (or other senior management acceptable
to the Secretary) certifying that as of the Closing Date the outstanding
principal amount of Loans made for electrification and telephone purposes
eligible under the RE Act is equal to or greater than the amount of the
Borrower’s guaranteed bonds under the Program, including the Bond.
(c) Opinion of
Counsel. Counsel to the Borrower shall have furnished an
opinion substantially as to each of the matters listed in Annex D attached
hereto.
(d) No material adverse
change. The Borrower shall have certified to the Secretary (in
the manner specified in paragraph (g) of this Section 3.1), and the Secretary
shall be satisfied, that no material adverse change shall have occurred in the
financial condition of the Borrower between the date of the Application and the
date of execution of the Guarantee.
(e) Investment Grade Rating of
Bond. The Borrower shall have provided evidence of an
Investment Grade Rating from a Rating Agency for the Bond, without regard to the
Guarantee.
7
Series
C Bond Guarantee Agreement
(f) Rating of Senior Secured
Debt. The Borrower shall have provided evidence satisfactory
to the Secretary of a credit rating on its Senior Secured Debt, without regard
to the Guarantee and without regard to any third party credit
support.
(g) Certification of Senior
Management. The Borrower shall have provided RUS a
certification by its Governor and its Chief Financial Officer (or other senior
management acceptable to the Secretary), substantially in the form attached of
Annex E attached hereto, of the following: (i) that the Borrower is a lending
institution organized as a private, not-for-profit, cooperative association with
the appropriate expertise, experience and qualifications to make loans for
electrification or telephone purposes; (ii) the matter to be certified under
paragraph (d) of this Section 3.1; (iii) acknowledgment of the Borrower’s
commitment to comply with the reporting requirements specified in
Article VI; and (iv) to the effect that no Rating Trigger Event or
Financial Expert Trigger Event exists.
(h) UCC
Filing. The Borrower shall have provided RUS with evidence
that the Borrower has filed the financing statement required pursuant to
Section 2.05(i) of the Pledge Agreement.
SECTION
3.2. Conditions Precedent to each
Advance. The following conditions shall be fulfilled to the
satisfaction of RUS or waived in writing by RUS prior to the drawdown of each
Advance under the Guaranteed Bond:
(a) Existing
Loans. The Borrower shall have certified to the Secretary (in
the manner specified in paragraph (d) of this Section 3.2): (i) the total
aggregate principal amount of outstanding Eligible Loans as at the Requested
Advance Date; (ii) the total aggregate principal amount of outstanding
Loans as at the Requested Advance Date; and (iii) the percentage the amount in
subparagraph (i) comprises of the amount in
subparagraph (ii).
(b) Use of
Proceeds. The Borrower shall have certified to the Secretary
(in the manner specified in paragraph (d) of this Section 3.2) that the Advance
will be applied: (i) to fund new Eligible Loans under the RE Act; and/or (ii) to
refinance existing debt instruments of the Borrower, in the case of each such
debt instrument up to the percentage certified by the Borrower in accordance
with Section 3.2(a)(iii) hereof of such debt instrument.
(c) No material adverse
change. The Borrower shall have certified to the Secretary (in
the manner specified in paragraph (d) of this Section 3.2), and the Secretary
shall be satisfied, that no material adverse change shall have occurred in the
financial condition of the Borrower between the Closing Date and the applicable
Requested Advance Date.
(d) Certification of Senior
Management. The Borrower shall have provided RUS a
certification by its Governor and its Chief Financial Officer (or other senior
management acceptable to the Secretary), substantially in the form
8
Series
C Bond Guarantee Agreement
attached
of Annex F attached hereto, of the matters to be certified under paragraphs (a),
(b) and (c) of this Section 3.2.
(e) Certificate of Available
Securities/Pledged Collateral. The Borrower shall have
provided RUS a copy of a Certificate of Available Securities or Certificate of
Pledged Collateral, as applicable, in accordance with the terms of the Pledge
Agreement.
ARTICLE
IV
GUARANTEE
FEE
SECTION
4.1. Guarantee
Fee. The Borrower shall pay a guarantee fee (the “Guarantee Fee”), to
the RUS for deposit into the Rural Economic Development Subaccount maintained
under Section 313(b)(2)(A) of the RE Act.
SECTION
4.2. Amount of Guarantee Fee;
Dates of Payment. (a) The Guarantee Fee will be in
the amount of 30 basis points (0.30 percent) of the unpaid principal amount of
the Bond, payable as provided in paragraph (b) of this Section 4.2.
(b) The
Guarantee Fee will be payable, in advance, on each January 15 and July 15 in the
amount of 15 basis points (0.15 percent) of the outstanding principal amount of
the Bond on that date. In addition, on the date of each Advance under
the Bond, the Borrower will pay to RUS the Guarantee Fee on the principal amount
of such advance in the amount of (i) 30 basis points (0.30 percent) of the
principal amount of such advance multiplied by (ii) the ratio of (x) the actual
amount of days from the date of such advance until the next January 15 or July
15, whichever comes first, to (y) 365 (except in calendar years including
February 29, when the number shall be 366).
(c) Payments
of the Guarantee Fee are non-refundable as of the date and in the amount
required to be paid hereunder, without regard to any reduction in the principal
amount of the Bond after that date.
ARTICLE
V
SERVICING
OF THE GUARANTEED BOND
SECTION
5.1. Servicing. The
Secretary, or other agent of the Secretary on his or her behalf, shall have the
right to service the Guaranteed Bond, and periodically inspect the books and
accounts of the Borrower to ascertain compliance with the provisions of the RE
Act with respect to the guarantees under Section 313A thereof and the Bond
Documents. The Secretary, or agent thereof, shall endeavor to give
the Borrower at least five Business Days’ notice of any intention to inspect the
Borrower’s books and accounts. Such inspection shall be made only
during regular office hours of the
9
Series
C Bond Guarantee Agreement
Borrower
or at any time the Borrower and Secretary, or agent thereof, find mutually
convenient.
ARTICLE
VI
REPORTING
REQUIREMENTS
SECTION
6.1. Annual Reporting
Requirements. Until the Termination Date, the Borrower shall
provide the Secretary with the following items within 90 days of the end of each
Fiscal Year, in each case, in form and substance satisfactory to the
Secretary:
(a) the
Financial Statements for such Fiscal Year;
(b) a
Certificate of Available Securities or Certificate of Pledged Collateral, as
applicable, as of the end of such Fiscal Year;
(c) a letter
substantially in the form of Annex G attached hereto, by Deloitte &
Touche LLP or by such other reputable, independent certified public accountants
proposed by the Borrower, who in the judgment of the Secretary have the
requisite skills, knowledge, reputation and experience to provide such letter,
such letter to be based upon Schedule A to the applicable certificate delivered
under paragraph (b) of this Section 6.1;
(d) a receipt
from the Collateral Agent (as defined in the Pledge Agreement), or such other
evidence as is satisfactory to the Secretary, as to the Available Securities or
Pledged Collateral, as applicable, held by the Collateral Agent at the end of
such Fiscal Year, such Available Securities or Pledged Collateral, as
applicable, to agree with Schedule A to the applicable certificate delivered
under paragraph (b) of this Section 6.1;
(e) a
projection of the Borrower’s balance sheet, income statement and statement of
cash flows over the ensuing five years, pro forma assuming the full principal
amount of the Bond is advanced;
(f) the most
recent credit assessment of the Borrower issued by a Rating Agency;
(g) a credit
rating, issued by a Rating Agency, of the Senior Secured Debt, without regard to
the Guarantee and without regard to third party credit support; and
(h) such
other information as is reasonably requested by the Secretary.
SECTION
6.2. Trigger Event
Notices. If the Borrower becomes aware that a Rating Trigger
Event or a Financial Expert Trigger Event has occurred, the Borrower shall
deliver a Borrower Notice of such event to RUS and to the Collateral
10
Series
C Bond Guarantee Agreement
Agent (as
defined in the Pledge Agreement) before 4:00 p.m. District of Columbia time on
the Business Day following the date the Borrower has become aware of such event,
specifying the existence of such event.
SECTION
6.3. Default
Notices. If an action, occurrence or event shall happen that
is, or with notice and the passage of time would become, an Event of Default,
the Borrower shall deliver a Borrower Notice of such action, occurrence or event
to RUS before 4:00 p.m. District of Columbia time on the Business Day
following the date the Borrower becomes aware of such action, occurrence or
event, and, if such Event of Default should occur, shall submit to RUS, as soon
as possible thereafter, a report setting forth its views as to the reasons for
the Event of Default, the anticipated duration of the Event of Default and what
corrective actions the Borrower is taking to cure such Event of
Default.
ARTICLE
VII
LIMITATIONS
ON AMENDMENTS TO THE GUARANTEED BOND
SECTION
7.1. Limitations on Amendments to
the Guaranteed Bond. No amendment or supplement to, and no
modification or rescission of, the Guaranteed Bond shall be effective unless
approved in writing by RUS, nor shall any waiver of any rights of RUS under the
Guaranteed Bond be effective against RUS unless such waiver has been approved in
writing by RUS. No amendment or supplement to, and no modification
of, any of the other Bond Documents, which materially adversely affects RUS,
shall be effective unless approved in writing by RUS, nor shall any waiver of
any rights of RUS under any of the Bond Documents be effective against RUS
unless such waiver has been approved in writing by RUS.
ARTICLE
VIII
REPRESENTATIONS
OF THE PARTIES
SECTION
8.1. Representation of
RUS. RUS represents that the Guarantee endorsed on the
original of the Guaranteed Bond constitutes a legal, valid and binding
obligation supported by the full faith and credit of the Government,
incontestable except for fraud or misrepresentation of which FFB had actual
knowledge at the time it extended the loan represented by the Guaranteed
Bond.
SECTION
8.2. Representations of the
Borrower. The Borrower hereby represents to RUS that on the
date hereof, the Closing Date, and each Requested Advance Date:
(a) the
Borrower has been duly organized and is validly existing and in good standing as
a cooperative association under the laws of the District of
Columbia;
11
Series
C Bond Guarantee Agreement
(b) the
Borrower has the corporate power and authority to execute and deliver this
Agreement and each of the other Bond Documents to which the Borrower is a party,
to consummate the transactions contemplated hereby and thereby and to perform
its obligations hereunder and thereunder;
(c) the
Borrower has taken all necessary corporate action to authorize the execution and
delivery of this Agreement and each of the other Bond Documents to which the
Borrower is a party, the consummation by the Borrower of the transactions
contemplated hereby and thereby and the performance by the Borrower of its
obligations hereunder and thereunder;
(d) this
Agreement and each of the other Bond Documents to which the Borrower is a party
have been duly authorized, executed and delivered by the Borrower and constitute
the legal, valid and binding obligations of the Borrower, enforceable against
the Borrower in accordance with their respective terms, subject to:
(i) applicable bankruptcy, reorganization, insolvency, moratorium and other
laws of general applicability relating to or affecting creditors’ rights
generally; and (ii) the application of general principles of equity
regardless of whether such enforceability is considered in a proceeding in
equity or at law;
(e) no
approval, consent, authorization, order, waiver, exemption, variance,
registration, filing, notification, qualification, license, permit or other
action is now, or under existing law in the future will be, required to be
obtained, given, made or taken, as the case may be, with, from or by any
regulatory body, administrative agency or governmental authority having
jurisdiction over the Borrower to authorize the execution and delivery by the
Borrower of this Agreement or any of the other Bond Documents to which the
Borrower is a party, or the consummation by the Borrower of the transactions
contemplated hereby or thereby or the performance by the Borrower of its
obligations hereunder or thereunder;
(f) neither
the execution or delivery by the Borrower of this Agreement or any of the other
Bond Documents to which the Borrower is a party nor the consummation by the
Borrower of any of the transactions contemplated hereby or thereby nor the
performance by the Borrower of its obligations hereunder or thereunder,
including, without limitation, the pledge of the Pledged Securities (as such
term is defined in the Pledge Agreement) to RUS if required, conflicts with or
will conflict with, violates or will violate, results in or will result in a
breach of, constitutes or will constitute a default under, or results in or will
result in the imposition of any lien or encumbrance pursuant to any term or
provision of the articles of incorporation or the bylaws of the Borrower or any
provision of any existing law or any rule or regulation currently applicable to
the Borrower or any judgment, order or decree of any court or any regulatory
body, administrative agency or governmental authority having jurisdiction over
the Borrower or the terms of any mortgage, indenture, contract or other
agreement to which the Borrower is a party or by which the Borrower or any of
its properties is bound;
12
(g) there is
no action, suit, proceeding or investigation before or by any court or any
regulatory body, administrative agency or governmental authority presently
pending or, to the knowledge of the Borrower, threatened with respect to the
Borrower, this Agreement or any of the other Bond Documents to which the
Borrower is a party challenging the validity or enforceability of this Agreement
or any of the other Bond Documents to which the Borrower is a party or seeking
to restrain, enjoin or otherwise prevent the consummation by the Borrower of the
transactions contemplated by this Agreement or any of the other Bond Documents
to which the Borrower is a party or which, if adversely determined, would have a
material adverse effect on the Borrower’s financial condition or its ability to
perform its obligations under this Agreement or any of the other Bond Documents
to which the Borrower is a party;
(h) the
Borrower is a lending institution organized as a private, not-for-profit,
cooperative association with the appropriate expertise, experience and
qualifications to make loans for electrification or telephone
purposes;
(i) the total
principal amount of the Guaranteed Bond plus the outstanding amount of any other
guaranteed bonds issued by the Borrower under the Program does not exceed the
total principal amount of outstanding Loans, made for electrification and
telephone purposes eligible under the RE Act, as of the Closing Date;
and
(j) no
material adverse change has occurred in the financial condition of the Borrower
between the date of the Application and the date this representation is
given.
ARTICLE
IX
AGREEMENTS
OF THE BORROWER
SECTION
9.1. Patronage
Refunds. During any portion of a Fiscal Year when a Rating
Trigger Event exists, the Borrower shall not make cash patronage refunds in
excess of five percent of its total patronage capital, as disclosed in its most
recent Financial Statements. While the Borrower is subject to such
restriction, equity securities issued as part of a patronage refund shall not be
redeemed in cash, and, if the Borrower shall have outstanding any common stock
or preferred stock, the Borrower shall not issue any dividends on any such
stock.
SECTION
9.2. Security and
Collateral. (a) If a Rating Trigger Event or
Financial Expert Trigger Event exists, the Pledged Securities (as such term is
defined in the Pledge Agreement) shall be pledged in accordance with the terms
and conditions of the Pledge Agreement to secure the payment obligations of the
Borrower under this Agreement and any other bond guarantee agreement under the
Program (in the case of a Financial Expert Trigger Event, if that bond guarantee
agreement has a covenant to the
13
Series
C Bond Guarantee Agreement
effect of
Section 9.9 hereof) and under the Reimbursement Note and any other reimbursement
note issued under the Program.
(b) Until the
Termination Date, the Borrower shall cause the Available Securities or Pledged
Collateral (as such terms are defined in the Pledge Agreement), as the case may
be, to be at all times not less than 100% of the aggregate principal amount of
the Guaranteed Bond and any other guaranteed bonds issued by the Borrower under
the Program and, except as provided for in paragraph (a) of this Section
9.2 or otherwise permitted by the Pledge Agreement, shall not create, or permit
to exist, any pledge, lien, charge, mortgage, encumbrance, debenture,
hypothecation or other similar security instrument that secures, or in any way
attaches to, such Available Securities or Pledged Collateral, as the case may
be, without the prior written consent of RUS.
SECTION
9.3. Use of
Savings. The Borrower will not use any amounts obtained from
the reduction in funding costs provided by the Program to reduce the interest
rates the Borrower’s Members or associates are paying on new or outstanding
Loans, other than new Concurrent Loans as provided for in Part 1710 of the
Regulations.
SECTION
9.4. Subrogation. (a) The
Borrower agrees that RUS shall be subrogated to the rights of FFB to the extent
of any and all payments made by RUS under the Guarantee (herein called the
“Subrogation
Claim”). The Borrower agrees to pay directly to RUS all
amounts due on the Guaranteed Bond as to which RUS is so subrogated, together
with interest thereon (to the extent permitted by applicable law) at a rate
determined by the following paragraph, and such payments shall satisfy the
obligations of the Borrower hereunder with respect to such amounts paid by
RUS.
(b) The
Subrogation Claim of RUS shall bear interest from the date of payment by RUS
under the Guarantee until the date such claim is satisfied. Interest
shall accrue at an annual rate of the greater of 1.5 times the 91-day
Treasury-▇▇▇▇ Rate or 200 basis points (2.00%) above the interest rate on the
Guaranteed Bond.
SECTION
9.5. Use of
Proceeds. (a) The Borrower shall only apply the
proceeds of the Guaranteed Bond to finance new Eligible Loans or, subject to
paragraph (b), to refinance existing debt instruments of the
Borrower.
(b) The
Borrower may only apply the proceeds of each Advance to refinance any of the
Borrower’s indebtedness up to the percentage certified by the Borrower under
Section 3.2(a)(iii) hereof of the amount of such indebtedness being
refinanced.
SECTION
9.6. Compliance with Covenants in
Other Agreements. The Borrower and each of its Subsidiaries
will observe and perform within any applicable grace period all covenants and
agreements (as the same may be from time to time amended or waived) contained in
any agreement or instrument relating to any Indebtedness of the Borrower or any
of its Subsidiaries, aggregating for the Borrower and its Subsidiaries in excess
of $50,000,000, if the effect of the failure to observe or perform
14
Series
C Bond Guarantee Agreement
such
covenant or agreement is to accelerate, or to permit the holder of such
Indebtedness or any other Person to accelerate, the maturity of such
Indebtedness.
SECTION
9.7. Ratings. For
the term of the Bond, the Borrower shall request, and do all things reasonably
within its power to obtain (including paying all fees incidental thereto),
credit ratings on its Senior Secured Debt from at least two Rating Agencies on
at least an annual basis.
SECTION
9.8. Acknowledgement of
Borrower. The Borrower acknowledges and agrees that failure by
the Borrower to receive any repayment under a Loan, does not affect the
Borrower’s obligations to make payments under this Agreement or any other Bond
Document.
SECTION
9.9. Financial
Expert. The Borrower will cause a financial expert (within the
meaning of Section 407 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002) to serve on the
audit committee of its board of directors until the Termination Date; and shall
not allow the financial expert position on the audit committee to remain vacant
for more than 90 consecutive days.
ARTICLE
X
EVENTS OF
DEFAULT
SECTION
10.1. Events of
Default. Each of the following actions, occurrences or events
shall, but only (except in the case of subsections (a), (c) and (e) below)
if the Borrower does not cure such action, occurrence or event within
30 days of notice from RUS requesting that it be cured, constitute an
“Event of
Default” under the terms of this Agreement:
(a) A failure
by the Borrower to make a payment of principal, interest or a Bond Fee when due
on the Guaranteed Bond;
(b) The
issuance of the Guaranteed Bond in violation of the terms and conditions of this
Agreement or any of the other Bond Documents;
(c) A failure
by the Borrower to make payment of the Guarantee Fee required by Article IV when
due;
(d) A
misrepresentation by the Borrower to the Secretary in any material respect in
connection with this Agreement, the Guaranteed Bond or the information reported
pursuant to Article VI;
(e) A failure
by the Borrower to comply with the covenant contained in Section 9.6
hereof; or
(f) A failure
by the Borrower to comply with any other material covenant or provision
contained in this Agreement or any of the other Bond Documents,
15
Series
C Bond Guarantee Agreement
except
that the failure of the Borrower to comply with Section 9.9 hereof shall not
constitute such an Event of Default.
SECTION
10.2. Compulsory
Redemption. If an Event of Default occurs, the Secretary may
demand that the Borrower redeem the Guaranteed Bond in accordance with its
terms.
SECTION
10.3. Acceleration by RUS’s
Purchase of the Bond. If an Event of Default occurs, and RUS
purchases from FFB the Bond in its entirety in the manner provided in Section
13.5 of the Bond Purchase Agreement, then the entire purchase price shall be
included in the Principal Amount of the Reimbursement Note as defined therein
and shall be immediately due and payable to RUS. Payment to RUS of
all amounts due under the Reimbursement Note after such an acceleration shall
satisfy in full all obligations of the Borrower under the Bond and Reimbursement
Note and all corresponding obligations under the other Bond Documents, including
any obligations to reimburse RUS for any payments thereafter made by RUS under
the RUS Guarantee.
SECTION
10.4. Effect of Payments by RUS
pursuant to the RUS Guarantee. No payment by RUS pursuant to
the RUS Guarantee shall (i) be considered a payment for purposes of determining
the existence of a failure of the Borrower to perform its obligations to RUS
under the Bond Documents, or (ii) relieve the Borrower of its obligations to
reimburse RUS for payments made by RUS pursuant to the RUS Guarantee. Payment by
the Borrower to RUS of amounts due under the Reimbursement Note shall satisfy
pro tonto the
corresponding obligations of the Borrower under the Bond.
SECTION
10.5. Remedies Not
Exclusive. Upon the occurrence of an Event of Default, the
Secretary shall be entitled to take such other action as is provided for by law,
in this Agreement, or in any of the other Bond Documents, including injunctive
or other equitable relief.
ARTICLE
XI
MISCELLANEOUS
SECTION
11.1. GOVERNING
LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE UNITED STATES OF AMERICA, TO THE
EXTENT APPLICABLE, AND OTHERWISE THE LAWS OF THE DISTRICT OF
COLUMBIA.
SECTION
11.2. WAIVER OF JURY
TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR
16
Series
C Bond Guarantee Agreement
ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 11.2.
SECTION
11.3. Method of
Payment. All payments to be made by the Borrower to RUS
hereunder, shall be made in the manner notified to the Borrower by RUS from time
to time in accordance with Section 11.4.
SECTION
11.4. Notices. All
notices and other communications hereunder to be made to any party shall be in
writing and shall be addressed as specified in Schedule I attached hereto
as appropriate. The address, telephone number, or facsimile number
for any party may be changed at any time and from time to time upon written
notice given by such changing party to the other parties hereto. A
properly addressed notice or other communication to the Borrower shall be deemed
to have been delivered at the time it is sent by facsimile (fax)
transmission. A properly addressed notice or other communication to
RUS shall be deemed to have been delivered at the time it is sent by facsimile
(fax) transmission, provided that the original of such faxed notice or other
communication shall have been received by RUS within five Business
Days.
SECTION
11.5. Benefit of
Agreement. This Agreement shall become effective when it shall
have been executed by RUS and the Borrower, and thereafter shall be binding upon
and inure to the respective benefit of the parties and their permitted
successors and assigns.
SECTION
11.6. Entire
Agreement. This Agreement, including Schedule I hereto
and Annexes A to G hereto, and the other Bond Documents, constitutes the
entire agreement between the parties hereto concerning the matters contained
herein and supersedes all prior oral and written agreements and understandings
between the parties.
SECTION
11.7. Amendments and
Waivers. (a) No failure or delay of RUS or the
Borrower in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No waiver of any provision of this Agreement or
consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be authorized as provided in paragraph (b)
of this Section 11.7, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No
notice or demand on the Borrower in any case shall entitle the Borrower to any
other or further notice or demand in similar or other
circumstances.
(b) No
provision of this Agreement may be amended or modified except pursuant to an
agreement in writing entered into by RUS and the
17
Series
C Bond Guarantee Agreement
Borrower. No
provision of this Agreement may be waived except in writing by the party or
parties receiving the benefit of and under such provision.
SECTION
11.8. Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be an
original, but all of which together shall constitute one and the same
instrument.
SECTION
11.9. Termination of
Agreement. This Agreement shall terminate upon the
indefeasible payment in full of all amounts payable hereunder, under the
Reimbursement Note and under the Guaranteed Bond.
SECTION
11.10. Survival. The
representations and warranties of each of the parties hereto contained in this
Agreement and contained in each of the other Bond Documents to which such party
hereto is a party thereto, 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 Guaranteed Bond and the
expiration or other termination of any of the other Bond Documents, but, in the
case of each Bond Document, shall not survive the expiration or the earlier
termination of such Bond Document, except to the extent expressly set forth in
such Bond Document.
SECTION
11.11. Severability. If
any term or provision of this Agreement or any Bond Document or the application
thereof to any circumstance shall, in any jurisdiction and to any extent, be
invalid or unenforceable, such term or such provision shall be ineffective as to
such jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable any remaining terms or provisions of
such Bond Document or the application of such term or provision to circumstances
other than those as to which it is held invalid or unenforceable.
18
IN
WITNESS WHEREOF, each party hereto has caused this Agreement to be executed by
an authorized officer as of the day and year first above written.
|
UNITED
STATES OF AMERICA,
acting
through the Administrator of the Rural
Utilities
Service
|
|
|
By:
|
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ |
|
Title:
|
Administrator
of the Rural Utilities Service
|
|
NATIONAL
RURAL UTILITIES
COOPERATIVE
FINANCE CORPORATION,
as
the Borrower
|
|
|
By:
|
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ |
|
Title:
|
Governor and CEO |
[Signature
Page to Series C Bond Guarantee Agreement]
SCHEDULE
I
TO
SERIES C
BOND GUARANTEE AGREEMENT
Addresses
for Notices
|
1.
|
The
addresses referred to in Section 11.4 hereof, for purposes of delivering
communications and notices, are as
follows:
|
If to
RUS:
Rural
Utilities Service
United
States Department of Agriculture
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention
of: The Administrator
Subject:
REDLG Program
If to the
Borrower:
National
Rural Utilities Cooperative Finance Corporation
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention
of: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Financial Officer
With a
copy to:
National
Rural Utilities Cooperative Finance Corporation
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention
of: ▇▇▇▇ ▇. List, Esq., General Counsel
1
ANNEX
A
Form of Bond Purchase
Agreement
A-1
·
ANNEX
B
Form of Pledge
Agreement
|
THE
UNITED STATES OF AMERICA
acting
through the Rural Utilities Service
NATIONAL
RURAL UTILITIES
COOPERATIVE
FINANCE CORPORATION
U.S.
BANK TRUST NATIONAL ASSOCIATION
_______________________________
PLEDGE
AGREEMENT
_______________________________
Dated
as of
September
19, 2008
|
B-1
|
TABLE
OF CONTENTS
|
||||
|
Page
|
||||
|
ARTICLE
I
|
||||
|
Definitions
and Other Provisions of General Application
|
||||
|
Section
1.01.
|
Definitions
|
2
|
||
|
ARTICLE
II
|
||||
|
Application
of this Pledge Agreement
|
||||
|
Section
2.01.
|
Application
of the Lien of this Pledge Agreement
|
5
|
||
|
Section
2.02.
|
Delivery
of Certificates of Available Securities
|
5
|
||
|
Section
2.03.
|
Maintenance
of Available Securities
|
6
|
||
|
Section
2.04.
|
Existence
of Trigger Event
|
6
|
||
|
Section
2.05.
|
UCC
Filings
|
6
|
||
|
Section
2.06.
|
APPLICATION
OF ARTICLES III, IV AND V OF THIS PLEDGE
|
|||
|
AGREEMENT
|
6
|
|||
|
ARTICLE
III
|
||||
|
Provisions
as to Pledged Collateral
|
||||
|
Section
3.01.
|
Pledged
Securities
|
7
|
||
|
Section
3.02.
|
Holding
of Pledged Securities
|
7
|
||
|
Section
3.03.
|
Withdrawal
and Substitution of Pledged Collateral
|
7
|
||
|
Section
3.04.
|
Reassignment
of Pledged Securities upon Payment
|
8
|
||
|
Section
3.05.
|
Addition
of Pledged Collateral
|
8
|
||
|
Section
3.06.
|
Accompanying
Documentation
|
8
|
||
|
Section
3.07.
|
Renewal;
Extension; Substitution
|
9
|
||
|
Section
3.08.
|
Voting
Rights; Interest and Principal
|
9
|
||
|
Section
3.09.
|
Protection
of Title; Payment of Taxes; Liens, etc
|
10
|
||
|
Section
3.10.
|
Maintenance
of Pledged Collateral
|
11
|
||
|
Section
3.11.
|
Representations,
Warranties and Covenants
|
11
|
||
|
Section
3.12.
|
Further
Assurances
|
12
|
||
|
ARTICLE
IV
|
||||
|
Application
of Moneys Included in Pledged Collateral
|
||||
|
Section
4.01.
|
Investment
of Moneys by Collateral Agent
|
12
|
||
|
Section
4.02.
|
Collateral
Agent To Retain Moneys during Event of Default
|
13
|
||
-i-
|
TABLE
OF CONTENTS
(continued)
|
|||
|
Page
|
|||
|
ARTICLE
V
|
|||
|
Remedies
|
|||
|
Section
5.01.
|
Events
of Default
|
14
|
|
|
Section
5.02.
|
Remedies
Upon Default
|
14
|
|
|
Section
5.03.
|
Application
of Proceeds
|
16
|
|
|
Section
5.04.
|
Securities
Act
|
16
|
|
|
ARTICLE
VI
|
|||
|
The
Collateral Agent
|
|||
|
Section
6.01.
|
Certain
Duties and Responsibilities
|
17
|
|
|
Section
6.02.
|
Certain
Rights of Collateral Agent
|
18
|
|
|
Section
6.03.
|
Money
Held by Collateral Agent
|
20
|
|
|
Section
6.04.
|
Compensation
and Reimbursement
|
20
|
|
|
Section
6.05.
|
Corporate
Collateral Agent Required; Eligibility
|
20
|
|
|
Section
6.06.
|
Resignation
and Removal; Appointment of Successor
|
21
|
|
|
Section
6.07.
|
Acceptance
of Appointment by Successor
|
21
|
|
|
Section
6.08.
|
Merger,
Conversion, Consolidation or Succession to Business
|
22
|
|
|
ARTICLE
VII
|
|||
|
Miscellaneous
|
|||
|
Section
7.01.
|
Notices
|
22
|
|
|
Section
7.02.
|
Waivers;
Amendment
|
23
|
|
|
Section
7.03.
|
Successors
and Assigns
|
23
|
|
|
Section
7.04.
|
Counterparts;
Effectiveness
|
23
|
|
|
Section
7.05.
|
Severability
|
23
|
|
|
Section
7.06.
|
GOVERNING
LAW
|
23
|
|
|
Section
7.07.
|
WAIVER
OF JURY TRIAL
|
24
|
|
|
Section
7.08.
|
Headings
|
24
|
|
|
Section
7.09
|
Security
Interest Absolute
|
24
|
|
|
Section
7.10
|
Termination
or Release
|
24
|
|
|
Section
7.11
|
Collateral
Agent Appointed Attorney-in-Fact
|
25
|
|
|
Schedule
I – Form of Certificate of Available Securities
|
|||
|
Schedule
II – Form of Certificate of Pledged Collateral
|
|||
|
Schedule
III – Addresses for Notices
|
|||
-ii-
PLEDGE
AGREEMENT, dated as of September 19, 2008, among NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION, a District of Columbia cooperative association
and its successors and assigns (hereinafter called the “Borrower”), having
its principal executive office and mailing address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, the UNITED STATES OF AMERICA, acting through the Rural
Utilities Service, a Rural Development agency of the United States Department of
Agriculture and its successors and assigns (“RUS”), and U.S. BANK
TRUST NATIONAL ASSOCIATION, a national association and its successors and
assigns (hereinafter called the “Collateral Agent”),
having its corporate office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇.
RECITALS
OF THE BORROWER
WHEREAS
the Borrower has issued a bond to the Federal Financing Bank to represent a loan
therefrom in the aggregate principal amount of up to $500,000,000, hereinafter
called the “Series C Bond”);
and the Series C Bond has been guaranteed by RUS pursuant to the
Series C Bond Guarantee Agreement dated as of September 19, 2008, between
the Borrower and RUS (the “Series C Bond Guarantee
Agreement”; and
WHEREAS,
the Borrower is required pursuant to the terms of the Series C Bond Guarantee
Agreement to pledge certain property to the Collateral Agent for the benefit of
RUS if a Rating Trigger Event or a Financial Expert Trigger Event
exists.
NOW,
THEREFORE, THIS PLEDGE AGREEMENT WITNESSETH that, to secure the performance of
the certain Obligations contained in the Series C Bond Guarantee Agreement, the
Reimbursement Note and herein, for the
duration of any Trigger Event, the Borrower assigns and pledges to the
Collateral Agent, its successors and assigns, for the benefit of RUS, and grants
to the Collateral Agent, its successors and assigns, for the benefit of RUS, a
security interest in the following (collectively referred to as the “Pledged Collateral”)
in each case with effect from and after the occurrence of a Trigger Event and as
otherwise provided in Article II: (a)(i) the Pledged Securities and the
certificates representing the Pledged Securities; (ii) subject to Section
3.08, all payments of principal or interest, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of, in exchange for, and all other Proceeds received in respect of, the
Pledged Securities pledged hereunder; (iii) subject to Section 3.08, all
rights and privileges of the Borrower with respect to the Pledged Securities
pledged hereunder; (iv) all Proceeds of any of the foregoing above; and
(b) any property, including cash and Permitted Investments, that may, on
the date hereof or from time to time hereafter, be subject to the Lien hereof by
the Borrower by delivery, assignment or pledge thereof to the Collateral Agent
hereunder and the Collateral Agent is authorized to receive the same as
additional security hereunder (subject to any
1
reservations,
limitations or conditions agreed to in writing by the Borrower and RUS
respecting the scope or priority of such security or the use and disposition of
such property or the Proceeds thereof).
TO HAVE
AND TO HOLD the Pledged Collateral, together with all right, title, interest,
powers, privileges and preferences pertaining or incidental thereto, unto the
Collateral Agent, its successors and assigns, for the benefit of RUS, forever;
subject, however, to the
terms, covenants and conditions hereinafter set forth.
ARTICLE
I
Definitions
and Other Provisions of General Application
SECTION
1.01. Definitions. For
all purposes of this Pledge Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(i) the
terms defined in this Article have the meanings assigned to them in this
Article, and include the plural as well as the singular;
(ii) all
accounting terms not otherwise defined herein have the meanings assigned to them
in accordance with generally accepted accounting principles;
(iii) all
reference in this instrument to designated “Articles”, “Sections” and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this instrument; and
(iv) the
words “herein”, “hereof” and “hereunder” and other words of similar import refer
to this Pledge Agreement as a whole and not to any particular Article, Section
or other subdivision.
“Allowable Amount” on
any date, means:
(a) with respect to
cash, 100% thereof;
(b) with respect to
Eligible Securities, the aggregate principal amount of such Eligible Securities
theretofore advanced thereon which remains unpaid on such date; and
(c) with respect to
Permitted Investments, the cost to the Borrower thereof (exclusive of accrued
interest or brokerage commissions) except that with respect to any Permitted
Investments which are traded on any national securities exchange or
over-the-counter market, Allowable Amount on any date shall mean the fair market
value thereof (as determined by the Borrower).
“Available Securities”
means the Eligible Securities specified in Schedule A of the Certificate of
Available Securities most recently delivered to the Collateral Agent and
RUS.
2
“Borrower” means the
Person named as the “Borrower” in the
first paragraph of this instrument.
“Borrower Notice” and
“Borrower
Order” mean, respectively, a written notice or order signed in the name
of the Borrower by either its Governor or its Chief Financial Officer, and by
any Vice President of the Borrower, and delivered to the Collateral Agent and
RUS.
“Certificate of Available
Securities” means a certificate delivered to the Collateral Agent and RUS
substantially in the form of Schedule I attached hereto.
“Certificate of Pledged
Collateral” means a certificate delivered to the Collateral Agent and RUS
substantially in the form of Schedule II attached hereto.
“Collateral Agent”
means the Person named as the “Collateral Agent” in
the first paragraph of this instrument.
“Eligible Security”
means a note or bond of any Person payable or registered to, or to the order of,
the Borrower, the Rural Telephone Finance Cooperative or the National
Cooperative Services Corporation, and in respect of which (i) no default
has occurred in the payment of principal or interest in accordance with the
terms of such note or bond that is continuing beyond the contractual grace
period (if any) provided in such note or bond for such payment; (ii) no
“event of default” as defined in such note or bond (or in any instrument
creating a security interest in favor of the Borrower, the Rural Telephone
Finance Cooperative or the National Cooperative Services Corporation in respect
of such note or bond), shall exist that has resulted in the exercise of any
right or remedy described in such note or bond (or in any such instrument);
(iii) such note or bond is not classified by the Borrower as a
non-performing loan under generally accepted accounting principles in the United
States; and (iv) such note or bond is free and clear of all liens other than the
Lien created by this Pledge Agreement.
“Event of Default” has
the meaning set forth in Section 5.01.
“Financial Expert Trigger
Event” has the meaning given to that term in the Series C Bond Guarantee
Agreement.
“Lien” means any lien,
pledge, charge, mortgage, encumbrance, debenture, hypothecation or other similar
security interest attaching to any part of the Pledged Collateral.
“Lien of this Pledge
Agreement” or “Lien hereof” means
the Lien created by these presents.
“Obligations” means
the due and punctual performance of the obligations of the Borrower to make
payment under Sections 4.1, 9.4 and 10.3 of the Series C Bond Guarantee
Agreement and, without duplication, under the Reimbursement Note.
3
“Officers’
Certificate” means a certificate signed by either the Governor or the
Chief Financial Officer of the Borrower, and by any Vice President of the
Borrower, and delivered to RUS and/or the Collateral Agent, as
applicable.
“Permitted Investment”
has the meaning given to that term in Section 4.01.
“Person” means any
individual, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
“Pledge Agreement”
means this Pledge Agreement, as originally executed and as it may from time to
time be supplemented, restated or amended entered into pursuant to the
applicable provisions hereof.
“Pledged Collateral”
has the meaning set forth in the Granting Clause.
“Pledged Securities”
means has the meaning set forth in Section 3.01.
“Proceeds” has the
meaning specified in Section 9-102 of the Uniform Commercial
Code.
“Rating Trigger Event”
has the meaning given to that term in the Series C Bond Guarantee
Agreement.
“Reimbursement Note”
has the meaning given to that term in the Series C Bond Guarantee
Agreement.
“RUS” means the Person
named as “RUS”
in the first paragraph of this instrument.
“RUS Notice” and
“RUS Order”
mean, respectively, a written notice or order signed by the Secretary and
delivered to the Collateral Agent and the Borrower.
“RUS Notice of
Default” has the meaning given to that term in Section 5.02.
“Secretary” shall mean
the Secretary of Agriculture acting through the Administrator of
RUS.
“Series C Bond” has
the meaning given to that term in the recitals.
“Series C Bond Guarantee
Agreement” has the meaning given that term in the recitals.
“Trigger Event” means
a Rating Trigger Event or a Financial Expert Trigger Event.
4
“Uniform Commercial
Code” means the Uniform Commercial Code as from time to time in effect in
the District of Columbia.
“United States” means
the United States of America, its territories, possessions and other areas
subject to its jurisdiction.
“Vice President” means
any vice president of the Borrower, whether or not designated by a number or a
word or words added before or after the title “vice president”.
ARTICLE
II
Application
of this Pledge Agreement
SECTION
2.01. Application of
the Lien of this Pledge Agreement. Notwithstanding any other
provision of this Pledge Agreement, and in accordance with the Granting Clause
hereof:
(a) no Lien shall
attach to the Available Securities in favor of the Collateral Agent, for the
benefit of RUS, prior to the occurrence of a Trigger Event;
(b) the Lien hereof
shall automatically, and without further act, attach and apply to the Available
Securities upon the occurrence of a Trigger Event subject to the terms,
covenants and conditions set forth in this Pledge Agreement; and
(c) upon cessation
of all the Trigger Events, the Lien hereof shall be automatically released and
the Collateral Agent shall execute and deliver to the Borrower, at the
Borrower’s expense, all documents that the Borrower shall reasonably request to
evidence such release. Any execution and delivery of documents
pursuant to this paragraph (c) shall be without recourse to or warranty by
the Collateral Agent.
SECTION
2.02. Delivery of
Certificates of Available Securities. Each
time money is advanced under the Series C Bond prior to the existence of a
Trigger Event, the Borrower shall deliver, and from time to time prior to the
existence of a Trigger Event the Borrower may deliver, a Certificate of
Available Securities to the Collateral Agent and RUS, showing that the aggregate
principal amount of Eligible Securities specified in Schedule A thereto that
have been delivered to the Collateral Agent as of the last day of the most
recent month ended more than 10 business days before the date thereof shall
at least equal the aggregate principal amount of the Series C Bond outstanding,
or to be outstanding after any such advance, at the date thereof. At
the time of delivery of a Certificate of Available Securities, the Borrower
shall deliver to the Collateral Agent all Available Securities specified in such
certificate that are not already deposited with the Collateral Agent accompanied
by the appropriate instruments of transfer executed in blank and in a form
satisfactory to the Collateral Agent and by such other instruments and documents
as the Collateral Agent may reasonably request. All
5
Eligible
Securities deposited with the Collateral Agent that were previously Available
Securities, but are no longer specified in the Certificate of Available
Securities most recently delivered, shall, at the Borrower’s expense and
pursuant to a Borrower Order, be returned by the Collateral Agent to the
Borrower.
SECTION
2.03. Maintenance of
Available Securities. Prior to
the occurrence of a Trigger Event:
(a) the Collateral
Agent shall hold and segregate the Available Securities in a separate
account;
(b) the Borrower
shall cause the aggregate principal amount of Available Securities at all times
to be not less than 100% of the aggregate principal amount of the Series C Bond
outstanding; and
(c) the Borrower
shall not create, or permit to exist, any Lien that is secured by, or in any way
attaches to, the Available Securities, without the prior written consent of
RUS.
SECTION
2.04. Existence Of
Trigger Event. For the
purposes of this Pledge Agreement (but without affecting whether or not the Lien
hereof applies):
(a) the Collateral
Agent shall not be required to recognize that a Trigger Event exists before such
time as the Collateral Agent receives an RUS Notice or Borrower Notice
stipulating the existence of such event; and
(b) the Collateral
Agent shall not be required to recognize that a Trigger Event has ceased to
exist until (i) such time as the Collateral Agent receives an RUS Notice
stipulating that such event has ceased to exist; or (ii) 30 days after
receipt by the Collateral Agent of a Borrower Notice stipulating that such event
has ceased, provided that the
Collateral Agent does not receive an RUS Notice within such timeframe disputing
the cessation of such Trigger Event. Upon receipt of any such
Borrower Notice under subparagraph (ii) of this Subsection, the Collateral
Agent shall provide a copy of such Borrower Notice to RUS.
SECTION
2.05. UCC
Filings. The
Borrower shall prepare and file in the proper Uniform Commercial Code filing
office in the District of Columbia (i) on or prior to the Closing Date, a
financing statement recording the Collateral Agent’s interest in the Pledged
Collateral; and (ii) from time to time thereafter, continuation statements
or such other filings as are necessary to maintain the perfection of the Lien
hereof on the Pledged Collateral.
SECTION
2.06. APPLICATION OF
ARTICLES III, IV AND V OF THIS PLEDGE AGREEMENT. THE PARTIES
SHALL HAVE NO RIGHTS OR OBLIGATIONS UNDER ARTICLES III, IV OR V HEREOF, AND THE
PROVISIONS OF SUCH ARTICLES SHALL NOT APPLY, EXCEPT DURING THE CONTINUANCE OF A
TRIGGER EVENT.
6
ARTICLE
III
Provisions
as to Pledged Collateral
SECTION
3.01. Pledged
Securities. The “Pledged Securities”
shall mean:
(a) upon and from
the occurrence of a Trigger Event until such time as the first Certificate of
Pledged Collateral is delivered hereunder, the Available Securities as specified
in the most recent Certificate of Available Securities delivered prior to the
occurrence of such Trigger Event; and
(b) upon and from
delivery of the first Certificate of Pledged Collateral until the cessation of
all Trigger Events, the Eligible Securities listed on Schedule A and Schedule B
of the Certificate of Pledged Collateral most recently delivered.
SECTION
3.02. Holding of
Pledged Securities. After the occurrence of a Trigger Event
and unless and until an Event of Default shall occur, the Collateral Agent, on
behalf of RUS, shall hold the Pledged Securities in the name of the Borrower (or
its nominee), endorsed or assigned in blank or in favor of the Collateral
Agent. Upon occurrence of an Event of Default, the Collateral Agent,
on behalf of RUS, shall have the right (in its sole and absolute discretion), to
the extent a register is maintained therefor, to register the Pledged Securities
in the Collateral Agent’s own name as pledgee, or in the name of the Collateral
Agent’s nominee (as pledgee or as sub-agent) or to continue to hold the Pledged
Securities in the name of the Borrower, endorsed or assigned in blank or in
favor of the Collateral Agent. Upon cessation of such Event of
Default, the Collateral Agent shall take such action as is necessary to again
cause the Pledged Securities to be registered in the name of the Borrower (or
its nominee).
SECTION
3.03. Withdrawal and
Substitution of Pledged Collateral.
(a) Any
part of the Pledged Collateral may be withdrawn by the Borrower or substituted
for cash or other Eligible Securities or Permitted Investments by the Borrower
and shall be delivered to the Borrower by the Collateral Agent upon Borrower
Order at any time and from time to time, together with any other documents or
instruments of transfer or assignment necessary to reassign to the Borrower said
Pledged Collateral and the interest of the Borrower, provided the
aggregate Allowable Amount of Pledged Collateral remaining after such withdrawal
or substitution shall at least equal the aggregate principal amount of the
Series C Bond outstanding after such withdrawal or substitution, as shown by the
Certificate of Pledged Collateral furnished to the Collateral Agent pursuant to
Subsection (b)(i) of this Section.
(b) Prior
to any such withdrawal or substitution, the Collateral Agent shall be furnished
with the following instruments:
(i) a Certificate
of Pledged Collateral, dated not more than 30 days prior to such withdrawal or
substitution, showing that immediately after such withdrawal or substitution the
requirements of Subsection (a) of this Section will be satisfied;
and
(ii) an Officers’
Certificate certifying that no Event of Default has occurred which has not been
remedied.
Upon any
such withdrawal or substitution, the Borrower shall deliver any cash or Eligible
Securities or Permitted Investments to be substituted and the Collateral Agent
shall execute any instruments of transfer or assignment specified in a Borrower
Order as necessary to vest in the Borrower any part of the Pledged Collateral
withdrawn.
In case
an Event of Default shall have occurred and be continuing, the Borrower shall
not withdraw or substitute any part of the Pledged Collateral, provided that any
Pledged Collateral may be withdrawn (a) as provided for in Section 3.04; or
(b) upon the deposit with the Collateral Agent of an amount of cash at
least equal to the Allowable Amount (at the time of such withdrawal) of the
Pledged Securities so withdrawn and the delivery to the Collateral Agent of the
instruments referred to in Subsection (b)(i) of this Section and a Borrower
Order.
SECTION
3.04. Reassignment of
Pledged Securities upon Payment. Upon receipt of:
(i) an Officers’
Certificate stating that all payments of principal, premium (if any) and
interest have been made upon any Pledged Securities held by the Collateral Agent
other than payment of an amount (if any) specified in said certificate required
fully to discharge all obligations on said Pledged Securities; and
7
(ii) cash in the
amount (if any) so specified fully to discharge said Pledged
Securities,
the
Collateral Agent shall deliver to the Borrower upon Borrower Order said Pledged
Securities, together with any other documents or instruments of transfer or
assignment necessary to reassign to the Borrower said Pledged Securities and the
interest of the Borrower specified in such Borrower Order.
SECTION
3.05. Addition of
Pledged Collateral. At any
time, the Borrower may pledge additional Eligible Securities, cash or Permitted
Investments under this Pledge Agreement by delivering such Pledged Collateral to
the Collateral Agent, accompanied by a Certificate of Pledged Collateral
specifying such additional collateral and dated not more than 30 days prior
thereto, provided that, in the
case of additional Permitted Investments, no such Permitted Investments shall be
subject to any reservations, limitations or conditions referred to in the
Granting Clause hereof.
SECTION
3.06. Accompanying
Documentation. Where
Eligible Securities are delivered to the Collateral Agent under Section 3.03 or
Section 3.05, such securities shall be accompanied by the appropriate
instruments of transfer executed in blank and in a form satisfactory to the
Collateral Agent and by such other instruments and documents as the Collateral
Agent may reasonably request. all other property delivered to the
Collateral Agent under Section 3.03 or Section 3.05 and comprising part of the
Pledged Collateral shall be accompanied by proper instruments of assignment duly
8
executed
by the Borrower and such other instruments or documents as the Collateral Agent
may reasonably request.
SECTION
3.07. Renewal;
Extension; Substitution. Unless
and until an Event of Default shall have occurred and be continuing, the
Borrower may at any time renew or extend, subject to the Lien of this Pledge
Agreement, any Pledged Security upon any terms or may accept in place of and in
substitution for any such Pledged Security, another Eligible Security
or Securities of the same issuer or of any successor thereto for at least the
same unpaid principal amount, all as evidenced by a Borrower Order delivered to
the Collateral Agent; provided, however, that in case
of any substitution, Eligible Securities substituted as aforesaid shall be
subject to the Lien of this Pledge Agreement as part of the Pledged Collateral
and be held in the same manner as those for which they shall be substituted, and
in the case of each substituted Eligible Security the Borrower shall provide an
Officers’ Certificate certifying to the Collateral Agent that such substituted
security satisfies the requirements of this Section. so long as no
Event of Default shall have occurred and be continuing, the Collateral Agent,
upon Borrower Order stating that no Event of Default shall have occurred and be
continuing, shall execute any consent to any such renewal, extension or
substitution as shall be specified in such Borrower Order.
SECTION
3.08. Voting Rights;
Interest and Principal. (A) Unless
and until an Event of Default has occurred and is continuing, and RUS delivers
to the Collateral Agent an RUS Notice of Default suspending the Borrower’s
rights under this clause:
(i) The Borrower
shall be entitled to exercise any and all voting and/or other consensual rights
and powers inuring to an owner of Pledged Securities or any part thereof provided that such
rights and powers shall not be exercised in any manner inconsistent with the
terms of the Series C Bond Guarantee Agreement or this Pledge
Agreement.
(ii) The Collateral
Agent shall execute and deliver to the Borrower, or cause to be executed and
delivered to the Borrower, all such proxies, powers of attorney and other
instruments as the Borrower may reasonably request for the purpose of enabling
the Borrower to exercise the voting and/or consensual rights and powers it is
entitled to exercise pursuant to subparagraph (i) above.
(iii) The Borrower
shall be entitled to receive and retain any and all interest, principal and
other distributions paid on or distributed in respect of the Pledged Securities;
provided that
any non-cash interest, principal or other distributions that would constitute
Pledged Securities if pledged hereunder, and received in exchange for Pledged
Securities or any part thereof pledged hereunder, or in redemption thereof, or
as a result of any merger, consolidation, acquisition or other exchange of
assets to which such issuer of Pledged Securities may be a party or otherwise,
shall be and become part of the Pledged Collateral, and, if received by the
Borrower, shall not be commingled by the Borrower with any of its other funds or
property but shall be held separate and
9
apart
therefrom, shall be held in trust for the benefit of the Collateral Agent and
shall be forthwith delivered to the Collateral Agent in the same form as so
received (with any necessary endorsement).
(b) If
an Event of Default shall have occurred and be continuing, then, to the extent
such rights are suspended by the applicable RUS Notice of Default, all rights of
the Borrower to interest, principal or other distributions that the Borrower is
authorized to receive pursuant to paragraph (a)(iii) of this Section 3.08
shall cease, and all such suspended rights shall thereupon become vested in the
Collateral Agent, which shall have the sole and exclusive right and authority to
receive and retain such interest, principal or other
distributions. All interest, principal or other distributions
received by the Borrower contrary to the provisions of this Section 3.08 shall
be held in trust for the benefit of the Collateral Agent, shall be segregated
from other property or funds of the Borrower and shall be forthwith delivered to
the Collateral Agent in the same form as so received (with any necessary
endorsement). Any and all money and other property paid over to or
received by the Collateral Agent pursuant to the provisions of this
paragraph (b) shall be retained by the Collateral Agent in an account to be
established by the Collateral Agent upon receipt of such money or other property
and shall be applied in accordance with the provisions of Section
5.03. After all Events of Default have ceased, the Collateral Agent
shall promptly repay to the Borrower (without interest) all interest, principal
or other distributions that the Borrower would otherwise be permitted to retain
pursuant to the terms of paragraph (a)(iii) of this Section 3.08 and that
remain in such account.
(c) If
an Event of Default shall have occurred and be continuing, then, to the extent
such rights are suspended by the applicable RUS Notice of Default, all rights of
the Borrower to exercise the voting and consensual rights and powers it is
entitled to exercise pursuant to paragraph (a)(i) of this Section 3.08, and
the obligations of the Collateral Agent under paragraph (a)(ii) of this
Section 3.08, shall cease, and all such rights shall thereupon become vested in
the Collateral Agent, which shall have the sole and exclusive right and
authority to exercise such voting and consensual rights and powers; provided that the
Collateral Agent shall have the right from time to time during the existence of
such Event of Default to permit the Borrower to exercise such rights and
powers.
SECTION
3.09. Protection of
Title; Payment of Taxes; Liens, etc. The
Borrower will:
(i) duly and
promptly pay and discharge, or cause to be paid and discharged, before they
become delinquent, all taxes, assessments, governmental and other charges
lawfully levied, assessed or imposed upon or against any of the Pledged
Collateral, including the income or profits therefrom and the interests of the
Collateral Agent in such Pledged Collateral;
(ii) duly observe
and conform to all valid requirements of any governmental authority imposed upon
the Borrower relative to any of the Pledged Collateral, and all covenants, terms
and conditions under or upon which any part thereof is held;
10
(iii) cause to be
paid and discharged all lawful claims (including, without limitation, income
taxes) which, if unpaid, might become a lien or charge upon Pledged Collateral;
and
(iv) do all things
and take all actions necessary to keep the Lien of this Pledge Agreement a first
and prior lien upon the Pledged Collateral and protect its title to the Pledged
Collateral against loss by reason of any foreclosure or other proceeding to
enforce any lien prior to or pari passu with the Lien
of this Pledge Agreement.
Nothing
contained in this Section shall require the payment of any such tax, assessment,
claim, lien or charge or the compliance with any such requirement so long as the
validity, application or amount thereof shall be contested in good faith; provided, however, that the
Borrower shall have set aside on its books such reserves (segregated to the
extent required by generally accepted accounting principles) as shall be deemed
adequate with respect thereto as determined by the Board of Directors of the
Borrower (or a committee thereof).
SECTION
3.10. Maintenance of
Pledged Collateral. The
Borrower shall cause the aggregate principal amount of Pledged Collateral held
by the Collateral Agent at all times to be not less than 100% of the aggregate
principal amount of the Series C Bond outstanding.
SECTION
3.11. Representations,
Warranties and Covenants. The
Borrower represents, warrants and covenants to the Collateral Agent, for the
benefit of RUS, that from the time that they are pledged hereunder, and for so
long as they are required to remain pledged:
(a) except for the
Lien hereof and any Lien consented to in writing by RUS, the Borrower or the
Rural Telephone Finance Cooperative or the National Cooperative Services
Corporation (i) is and will continue to be the direct owner, beneficially
and of record, of the Pledged Securities from time to time pledged hereunder,
(ii) holds and will continue to hold the same free and clear of all Liens,
other than Liens created by this Pledge Agreement, (iii) will make no
assignment, pledge, hypothecation or transfer of, or create or permit to exist
any security interest in or other Lien on, the Pledged Collateral, other than
Liens created by this Pledge Agreement and (iv) will defend its title or
interest thereto or therein against any and all Liens (other than the Lien
created by this Pledge Agreement), however arising, of all Persons
whomsoever;
(b) except for
restrictions and limitations imposed by the Series C Bond Guarantee Agreement or
securities laws generally, the Pledged Securities are and will continue to be
freely transferable and assignable, and none of the Pledged Securities are or
will be subject to any restriction of any nature that might prohibit, impair,
delay or otherwise affect the pledge of such Pledged Securities hereunder, the
sale or disposition thereof pursuant hereto or the exercise by the Collateral
Agent of rights and remedies hereunder;
11
(c) the Borrower
has the power and authority to pledge the Pledged Collateral pledged by it
hereunder in the manner hereby done or contemplated;
(d) no consent or
approval of any governmental authority, any securities exchange or any other
Person (with the exception RUS) was or is necessary to the validity of the
pledge effected hereby (other than such as have been obtained and are in full
force and effect); and
(e) by virtue of
the execution and delivery by the Borrower of this Pledge Agreement, when any
Pledged Securities are delivered to the Collateral Agent in accordance with this
Pledge Agreement, the Collateral Agent will obtain a legal and valid Lien upon
and security interest in such Pledged Securities as security for the payment and
performance of the Obligations.
SECTION
3.12. Further
Assurances. The
Borrower will execute and deliver, or cause to be executed and delivered, all
such additional instruments and do, or cause to be done, all such additional
acts as (a) may be necessary or proper, consistent with the Granting Clause
hereof, to carry out the purposes of this Pledge Agreement and to make subject
to the Lien hereof any property intended so to be subject or (b) may be
necessary or proper to transfer to any successor the estate, powers, instruments
and funds held hereunder and to confirm the Lien of this Pledge
Agreement. The Borrower will also cause to be filed, registered or
recorded any instruments of conveyance, transfer, assignment or further
assurance in all offices in which such filing, registering or recording is
necessary to the validity thereof or to give notice thereof.
ARTICLE
IV
Application of Moneys
Included in Pledged Collateral
SECTION
4.01. Investment of
Moneys by Collateral Agent. Any
moneys held by the Collateral Agent as part of the Pledged Collateral shall,
upon Borrower Order and as stated therein, be invested or reinvested by the
Collateral Agent until required to be paid out by the Collateral Agent as
provided in this Pledge Agreement, in any one or more of the following (herein
called “Permitted
Investments”):
(i) obligations of
or guaranteed by the United States of America or any agency thereof for which
the full faith and credit of the United States of America or such agency shall
be pledged;
(ii) obligations
of any state or municipality, or subdivision or agency of either thereof, which
are rated AA (or equivalent) or better by at least two nationally recognized
statistical rating organizations or having a comparable rating in the event of
any future change in the rating system of such agencies;
(iii) certificates
of deposit issued by, or time deposits of, any bank or trust company (including
the Collateral Agent) organized under the laws of the United States of America
or any State thereof having capital and surplus of not
12
less than
$500,000,000 (determined from its most recent report of condition, if it
publishes such reports at least annually pursuant to law or the requirements of
Federal or State examining or supervisory authority); and
(iv) commercial
paper of bank holding companies or of other issuers (excluding the Borrower)
generally rated in the highest category by at least two nationally recognized
statistical rating organizations and maturing not more than one year after the
purchase thereof.
Unless
and until an Event of Default shall have occurred and be continuing, any
interest received by the Collateral Agent on any such investments which shall
exceed the amount of accrued interest, if any, paid by the Collateral Agent on
the purchase thereof, and any profit which may be realized from any sale,
redemption or maturity of such investments, shall be paid to the
Borrower. Such investments shall be held by the Collateral Agent as a
part of the Pledged Collateral, but upon Borrower Order the Collateral Agent
shall sell all or any designated part of the same, and the proceeds of such sale
shall be held by the Collateral Agent subject to the same provisions hereof as
the cash used by it to purchase the investments so sold. In case the
net proceeds realized upon any sale, redemption or maturity shall amount to less
than the purchase price paid by the Collateral Agent for the purchase of the
investments so sold, the Collateral Agent shall notify the Borrower in writing
thereof, and the Borrower shall pay to the Collateral Agent the amount of the
difference between such purchase price and the amount so realized, and the
amount so paid shall be held by the Collateral Agent in like manner and subject
to the same conditions as the proceeds realized upon such sale. The
Borrower will reimburse the Collateral Agent for any brokerage
commissions or other expenses incurred by the Collateral Agent in connection
with the purchase or sale of such investments. The Collateral Agent may
aggregate such costs and expenses of and such receipts from such investments on
a monthly basis (or such other periodic basis as the Borrower and the Collateral
Agent may agree in writing from time to time) so as to net each against the
other during such period and pay to the Borrower amounts due to it or notify the
Borrower of amounts due from it on a net basis for such period.
SECTION
4.02. Collateral Agent
To Retain Moneys during Event of Default. If an
Event of Default shall have occurred and be continuing, moneys held by the
Collateral Agent as a part of the Pledged Collateral shall not be paid over to
the Borrower upon Borrower Order except pursuant to Section 5.03.
13
ARTICLE
V
Remedies
SECTION
5.01. Events of
Default. “Event of Default”,
wherever used herein, means any “Event of Default” as defined in
Sections 10.1(a) and 10.1(c) of the Series C Bond Guarantee Agreement,
provided that,
for the purposes of this Pledge Agreement:
(a) the Collateral
Agent shall not be required to recognize that an Event of Default exists before
such time as the Collateral Agent receives an RUS Notice or Borrower Notice
stating that an Event of Default exists and specifying the particulars of such
default in reasonable detail; and
(b) the Collateral
Agent shall not be required to recognize that an Event of Default has ceased
until (i) such time as the Collateral Agent receives an RUS Notice
stipulating that such event has ceased to exist; or (ii) 30 days after
receipt by the Collateral Agent of a Borrower Notice stipulating that such event
has ceased to exist, provided that the
Collateral Agent does not receive an RUS Notice within such timeframe disputing
the cessation of such Event of Default, and further provided that
no additional RUS Notice of Default shall have been received in respect of any
other subsisting Event(s) of Default. Upon receipt of any Borrower
Notice under subparagraph (ii) of this Subsection, the Collateral Agent
shall provide a copy of such Borrower Notice to RUS.
SECTION
5.02. Remedies Upon
Default. If an
Event of Default shall have occurred and be continuing, RUS may issue a notice
(an “RUS Notice of
Default”), which may be combined with the notice provided under Section
5.01(b), suspending the rights of the Borrower under Section 3.08 in part
without suspending all such rights (as specified by RUS in its sole and absolute
discretion) without waiving or otherwise affecting RUS’ rights to give
additional RUS Notices of Default from time to time suspending other rights
under Section 3.08 so long as an Event of
Default has occurred and is continuing. Subject to paragraph (b)
of this Section 5.02, upon cessation of an Event of Default, all rights of the
Borrower suspended under the applicable RUS Notice of Default shall revest in
the Borrower.
(a) Upon
the occurrence of an Event of Default, the Collateral Agent shall, for the
benefit and at the direction of RUS, have the right to exercise any and all
rights afforded to a secured party under the Uniform Commercial Code or other
applicable law. Without limiting the generality of the foregoing, the
Borrower agrees that the Collateral Agent shall have the right, but only if so
instructed by an RUS Order and subject to the requirements of applicable law and
the Collateral Agent’s right (in its sole and absolute discretion) to receive
indemnification or other reasonable assurances that its costs and expenses in
connection therewith will be paid, to sell or otherwise dispose of all or any
part of the Pledged Collateral at a public or private sale or at any broker’s
board or on any securities exchange, for cash, upon credit or for future
delivery as the Collateral Agent shall deem appropriate. The
Collateral Agent shall be authorized
14
at any
such sale of securities (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to Persons who will represent and agree that
they are purchasing the Pledged Collateral for their own account for investment
and not with a view to the distribution or sale thereof, and upon consummation
of any such sale the Collateral Agent shall have the right to assign, transfer
and deliver to the purchaser or purchasers thereof the Pledged Collateral so
sold. Each such purchaser at any sale of Pledged Collateral shall
hold the property sold absolutely, free from any claim or right on the part of
the Borrower, and the Borrower hereby waives (to the extent permitted by law)
all rights of redemption, stay and appraisal which the Borrower now has or may
at any time in the future have under any rule of law or statute now existing or
hereafter enacted.
(b) The
Collateral Agent shall give the Borrower 10 days’ written notice (which the
Borrower agrees is reasonable notice within the meaning of Section 9-611 of
the Uniform Commercial Code or its equivalent in other jurisdictions) of the
Collateral Agent’s intention to make any sale of Pledged
Collateral. Such notice, in the case of a public sale, shall state
the time and place for such sale and, in the case of a sale at a broker’s board
or on a securities exchange, shall state the board or exchange at which such
sale is to be made and the day on which the Collateral, or portion thereof, will
first be offered for sale at such board or exchange. Any such public
sale shall be held at such time or times within ordinary business hours and at
such place or places as the Collateral Agent may fix and state in the notice (if
any) of such sale. At any such sale, the Pledged Collateral, or
portion thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any
sale of any Pledged Collateral if it shall determine not to do so, regardless of
the fact that notice of sale of such Pledged Collateral shall have been
given. The Collateral Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Pledged
Collateral is made on credit or for future delivery, the Pledged Collateral so
sold may be retained by the Collateral Agent until the sale price is paid by the
purchaser or purchasers thereof, but the Collateral Agent shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and pay
for the Pledged Collateral so sold and, in case of any such failure, such
Pledged Collateral may be sold again upon like notice. At any public
(or, to the extent permitted by law, private) sale made pursuant to this Pledge
Agreement, RUS may bid for or purchase, free (to the extent permitted by law)
from any right of redemption, stay, valuation or appraisal on the part of the
Borrower (all said rights being also hereby waived and released to the extent
permitted by law), the Pledged Collateral or any part thereof offered for sale
and may make payment on account thereof by using any claim then due and payable
to RUS from the Borrower as a credit against the purchase price, and RUS may,
upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to Pledged Collateral
therefor. For purposes hereof, a written agreement to purchase the
Pledged Collateral or any portion thereof shall be treated as a sale thereof;
the Collateral Agent shall be free to carry out such sale pursuant to such
agreement and the Borrower shall not be entitled to the return of the Pledged
Collateral or any portion thereof subject thereto, notwithstanding the fact that
15
SECTION
5.03. Application of
Proceeds. The
Collateral Agent shall apply the proceeds of any collection or sale of Pledged
Collateral, including any Pledged Collateral consisting of cash, as
follows:
FIRST, to the
payment of all reasonable costs and expenses incurred by the Collateral Agent in
connection with or reasonably related or reasonably incidental to such
collection or sale or otherwise in connection with or related or incidental to
this Pledge Agreement or any of the Obligations, including all court costs and
the reasonable fees and expenses of its agents and legal counsel, the repayment
of all advances made by the Collateral Agent (in its sole discretion) hereunder
on behalf of the Borrower and any other reasonable costs or expenses incurred in
connection with the exercise of any right or remedy hereunder;
SECOND, to the
payment to RUS in full of the Obligations; such payment to be for an
amount certified in a RUS Notice delivered to the Collateral Agent as being the
amount due and owing to RUS under the Obligations; and
THIRD, to the
Borrower, its successors or assigns, or as a court of competent jurisdiction may
otherwise direct.
Upon any
sale of the Pledged Collateral by the Collateral Agent (including pursuant to a
power of sale granted by statute or under a judicial proceeding), the receipt of
the Collateral Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Pledged Collateral so sold and
such purchaser or purchasers shall not be obligated to see to the application of
any part of the purchase money paid over to the Collateral Agent or such officer
or be answerable in any way for the misapplication thereof.
SECTION
5.04. Securities
Act. In view
of the position of the Borrower in relation to the Pledged Collateral, or
because of other current or future circumstances, a question may arise under the
Securities Act of 1933, as now or hereafter in effect, or any similar statute
hereafter enacted analogous in purpose or effect (such Act and any such similar
statute as from time to time in effect being called the “Federal Securities
Laws”) with respect to any disposition of the Pledged Collateral
permitted hereunder. The Borrower understands that compliance with
the Federal Securities Laws might very strictly limit the course of conduct of
the Collateral Agent if the Collateral Agent were to attempt to dispose of all
or any part of the Pledged Collateral, and might also limit the
16
extent to
which or the manner in which any subsequent transferee of any Pledged Collateral
could dispose of the same. Similarly, there may be other legal
restrictions or limitations affecting the Collateral Agent in any attempt to
dispose of all or part of the Pledged Collateral under applicable Blue Sky or
other state securities laws or similar laws analogous in purpose or
effect. The Borrower recognizes that in light of such restrictions
and limitations the Collateral Agent may, with respect to any sale of the
Pledged Collateral, limit the purchasers to those who will agree, among other
things, to acquire such Pledged Collateral for their own account, for
investment, and not with a view to the distribution or resale
thereof. The Borrower acknowledges and agrees that in light of such
restrictions and limitations, the Collateral Agent, in its sole and absolute
discretion (a) may proceed to make such a sale whether or not a
registration statement for the purpose of registering such Pledged Collateral or
part thereof shall have been filed under the Federal Securities Laws and
(b) may approach and negotiate with a single potential purchaser to effect
such sale. The Borrower acknowledges and agrees that any such sale
might result in prices and other terms less favorable to the seller than if such
sale were a public sale without such restrictions. In the event of
any such sale, the Collateral Agent shall incur no responsibility or liability
for selling all or any part of the Pledged Collateral at a price that the
Collateral Agent, in its sole and absolute discretion, may in good ▇▇▇▇▇ ▇▇▇▇
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might have been realized if the sale were deferred
until after registration as aforesaid or if more than a single purchaser were
approached. The provisions of this Section 5.04 will apply
notwithstanding the existence of a public or private market upon which the
quotations or sales prices may exceed substantially the price at which the
Collateral Agent sells.
ARTICLE
VI
The
Collateral Agent
SECTION
6.01. Certain Duties
and Responsibilities. (a) At
all times under this Pledge Agreement:
(i) the Collateral
Agent undertakes to perform such duties and only such duties as are specifically
set forth in this Pledge Agreement, and no implied covenants or obligations
shall be read into this Pledge Agreement against the Collateral Agent;
and
(ii) in the absence
of bad faith on its part, the Collateral Agent may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to the Collateral Agent and
substantially conforming to the requirements of this Pledge Agreement; but in
the case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Collateral Agent the Collateral
Agent shall be under a duty to examine the same to determine whether or not they
substantially conform to the requirements of this Pledge Agreement.
17
(b) No
provision of this Pledge Agreement shall be construed to relieve the Collateral
Agent from liability for its own grossly negligent action, its own grossly
negligent failure to act, or its own willful misconduct, except
that:
(i) this Subsection
shall not be construed to limit the effect of Subsection (a) of this
Section;
(ii) the Collateral
Agent shall not be liable for any error of judgment made in good faith, unless
it shall be proved that the Collateral Agent was grossly negligent in
ascertaining the pertinent facts; and
(iii) no provision
of this Pledge Agreement shall require the Collateral Agent to expend or risk
its own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or powers,
if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably assured
to it.
(c) Whether
or not therein expressly so provided, every provision of this Pledge Agreement
relating to the conduct or affecting the liability of or affording protection to
the Collateral Agent shall be subject to the provisions of this
Section.
SECTION
6.02. Certain Rights
of Collateral Agent. Except
as otherwise provided in Section 6.01:
(a) the Collateral
Agent may rely and shall be protected in acting or refraining from acting upon
any resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture 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) any request or
direction of the Borrower mentioned herein shall be sufficiently evidenced by a
Borrower Notice or Borrower Order;
(c) any request or
direction of RUS mentioned herein shall be sufficiently evidenced by an RUS
Notice or RUS Order;
(d) whenever in the
administration of this Pledge Agreement the Collateral Agent shall deem it
desirable that a matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Collateral Agent (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers’ Certificate in the case of the Borrower, and a
certificate signed by the Secretary in the case of RUS;
(e) the Collateral
Agent may consult with counsel and the advice of such counsel shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
18
(f) the Collateral
Agent shall be under no obligation to exercise any of the rights or powers
vested in it by this Pledge Agreement at the request or direction of either the
Borrower or RUS pursuant to this Pledge Agreement, unless such party shall have
offered to the Collateral Agent reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(g) the Collateral
Agent shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture or other paper or
document, or to recompute, verify, reclassify or recalculate any information
contained therein, but the Collateral Agent, in its sole and absolute
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Collateral Agent shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Borrower, personally or by agent or
attorney;
(h) the Collateral
Agent may execute any of the powers hereunder or perform any duties hereunder
either directly or by or through agents or attorneys and the Collateral Agent
shall not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder;
(i) unless
explicitly stated herein to the contrary, the Collateral Agent shall have no
duty to inquire as to the performance of any Borrower’s covenants
herein. In addition, the Collateral Agent shall not be deemed to have
knowledge of any Trigger Event, or Event of Default, unless the Collateral Agent
has received an RUS Notice in accordance with Section 2.04(a) or Section 5.01(a)
(as applicable), and shall not be deemed to have knowledge of the cessation of
the same until such time as it receives a Borrower Notice in accordance with
Section 2.04(b) or Section 5.01(b) (as applicable); and
(j) unless
explicitly stated herein to the contrary, the Collateral Agent shall have no
obligation to take any action with respect to any Trigger Event or Event of
Default until it has received the an RUS Notice applicable to such event in
accordance with Section 2.04(a) or Section 5.01(a) (as applicable), and the
Collateral Agent shall have no liability for any action or inaction taken,
suffered or omitted in respect of any such event by it prior to such time as the
applicable RUS Notice is delivered. Similarly, the Collateral Agent
shall have no obligation to take any action with respect to the cessation of a
Trigger Event or Event of Default until it has received a Borrower Notice
applicable to such event in accordance in accordance with Section 2.04(b) or
Section 5.01(b) (as applicable), and the Collateral Agent shall have no
liability for any action or inaction taken, suffered or omitted in respect of
any such event by it prior to such time as the applicable Borrower Notice is
delivered.
19
SECTION
6.03. Money Held by
Collateral Agent. Money
held by the Collateral Agent hereunder need not be segregated from other funds
except to the extent required by law. The Collateral Agent shall have
no liability to pay interest on or (except as expressly provided herein) invest
any such moneys.
SECTION
6.04. Compensation and
Reimbursement. (a) The
Borrower agrees:
(i) to pay to the
Collateral Agent from time to time reasonable compensation for all services
rendered by it hereunder;
(ii) except as
otherwise expressly provided herein, to reimburse the Collateral Agent upon its
request for all reasonable expenses, out-of-pocket costs, disbursements and
advances incurred or made by the Collateral Agent in accordance with any
provision of this Pledge Agreement (including the reasonable compensation and
the expenses and disbursements of its agents and counsel), except to the extent
any such expense, disbursement or advance may be attributable to its gross
negligence or bad faith; and
(iii) to indemnify
the Collateral Agent for, and to defend and hold it harmless against, any loss,
liability or expense incurred without gross negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
Pledge Agreement or the performance of its duties hereunder, 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 duties hereunder,
except to the extent such loss, liability or expense may be attributable to its
gross negligence or bad faith; provided, however, that the
Borrower shall have no liability under this clause for any settlement of any
litigation or other dispute effected without the prior written consent of the
Borrower (such consent not to be unreasonably withheld).
(b) Any
such amounts payable as provided hereunder shall be additional Obligations
secured by the Lien hereof. The provisions of this Section 6.04 shall
remain operative and in full force and effect regardless of the termination of
this Pledge Agreement or the Series C Bond Guarantee Agreement, the consummation
of the transactions contemplated hereby, the repayment of any of the
Obligations, the invalidity or unenforceability of any term or provision of this
Pledge Agreement or the Series C Bond Guarantee Agreement, or any investigation
made by or on behalf of the Collateral Agent or RUS. All amounts due
under this Section 6.04 shall be payable on written demand
therefor.
SECTION
6.05. Corporate
Collateral Agent Required; Eligibility. There
shall at all times be a Collateral Agent hereunder which shall be a corporation
or association organized and doing business under the laws of the United States
of America or of any State, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State
authority. If such corporation publishes reports of
20
SECTION
6.06. Resignation and
Removal; Appointment of Successor. (a) No
resignation or removal of the Collateral Agent and no appointment of a successor
Collateral Agent pursuant to this Article shall become effective until the
acceptance of appointment by the successor Collateral Agent under Section
6.07.
(b) The
Collateral Agent may resign at any time by giving written notice thereof to the
Borrower. If an instrument of acceptance by a successor Collateral
Agent shall not have been delivered to the Collateral Agent within 30 days
after the giving of such notice of resignation, the resigning Collateral Agent
may petition any court of competent jurisdiction for the appointment of a
successor Collateral Agent.
(c) If
at any time:
(i) except if an
Event of Default has occurred and is continuing, the Borrower, in its sole and
absolute discretion, elects to remove the Collateral Agent; or
(ii) the Collateral
Agent shall cease to be eligible under Section 6.05 or shall become incapable of
acting or shall be adjudged a bankrupt or insolvent or a receiver of the
Collateral Agent or of its property shall be appointed or any public officer
shall take charge or control of the Collateral Agent or of its property or
affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in
any such case, the Borrower may remove the Collateral Agent by delivery of a
Borrower Order to that effect.
(d) If
the Collateral Agent shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the office of Collateral Agent for any cause, the
Borrower shall promptly appoint a successor Collateral Agent by delivering a
Borrower Notice to the retiring Collateral Agent, the successor Collateral Agent
and RUS to such effect.
SECTION
6.07. Acceptance of
Appointment by Successor. Every
successor Collateral Agent appointed hereunder shall execute, acknowledge and
deliver to the Borrower, RUS and to the retiring Collateral Agent an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Collateral Agent shall become effective and such successor Collateral
Agent, without any further act, deed or conveyance, shall become vested with all
the rights, powers, trusts and duties of the
21
retiring
Collateral Agent; but, on request of the Borrower, RUS or the successor
Collateral Agent, such retiring Collateral Agent shall, upon payment of its
charges, execute and deliver an instrument transferring to such successor
Collateral Agent all the rights, powers and trusts of the retiring Collateral
Agent, and shall duly assign, transfer and deliver to such successor Collateral
Agent all property and money held by such retiring Collateral Agent hereunder,
subject nevertheless to its Lien, if any, provided for in Section
6.04. Upon request of any such successor Collateral Agent, the
Borrower shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Collateral Agent all such rights,
powers and trusts.
No
successor Collateral Agent shall accept its appointment unless at the time of
such acceptance such successor Collateral Agent shall be eligible under Section
6.05 hereof.
SECTION
6.08. Merger,
Conversion, Consolidation or Succession to Business. Any
corporation into which the Collateral Agent 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 Collateral Agent shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Collateral Agent, shall be the successor of the Collateral Agent
hereunder, provided such corporation shall be eligible under Section 6.05 hereof
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
ARTICLE
VII
Miscellaneous
SECTION
7.01. Notices. All
notices and other communications hereunder to be made to any party shall be in
writing and shall be addressed as specified in Schedule III attached hereto
as appropriate. The address, telephone number, or facsimile number
for any party may be changed at any time and from time to time upon written
notice given by such changing party to the other parties hereto. A properly
addressed notice or other communication to the Borrower shall be deemed to have
been delivered at the time it is sent by facsimile (fax) transmission. A
properly addressed notice or other communication to the Collateral Agent shall
be deemed to have been delivered at the time it is sent by facsimile (fax)
transmission. A properly addressed notice or other communication to
RUS shall be deemed to have been delivered at the time it is sent by facsimile
(fax) transmission, provided that the original of such faxed notice or other
communication shall have been received by RUS within five Business
Days.
(a) All
Borrower Notices and Borrower Orders delivered to the Collateral Agent shall be
contemporaneously copied to RUS by the Borrower, and all RUS Notices and RUS
Orders delivered to the Collateral Agent shall be contemporaneously copied by
RUS to the Borrower, and all Collateral Agent notices delivered to either the
Borrower or RUS shall be contemporaneously copied to the other such party by the
Collateral Agent.
22
SECTION
7.02. Waivers;
Amendment. (a) No
failure or delay by a party in exercising any right or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of each
party hereunder are cumulative and are not exclusive of any rights or remedies
that such party would otherwise have. No waiver of any provision of
this Pledge Agreement or consent to any departure by any party therefrom shall
in any event be effective unless the same shall be permitted by
paragraph (b) of this Section 7.02, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which
given. No notice or demand on any party in any case shall entitle any
party to any other or further notice or demand in similar or other
circumstances.
(b) Neither
this Pledge Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Borrower, the Collateral Agent and RUS.
SECTION
7.03. Successors and
Assigns. Whenever
in this Pledge Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of the Borrower, the
Collateral Agent or RUS that are contained in this Pledge Agreement shall bind
and inure to the benefit of their respective successors and
assigns.
SECTION
7.04. Counterparts;
Effectiveness. This Pledge Agreement may be executed in
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute a single contract. Delivery of an
executed signature page to this Pledge Agreement by facsimile transmission shall
be as effective as delivery of a manually signed counterpart of this Pledge
Agreement.
SECTION
7.05. Severability. Any
provision of this Pledge Agreement held to be invalid, illegal or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such invalidity, illegality or unenforceability without affecting the
validity, legality and enforceability of the remaining provisions hereof; and
the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction. The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisionS.
SECTION
7.06. GOVERNING
LAW. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE UNITED STATES OF AMERICA, TO
THE EXTENT APPLICABLE, AND OTHERWISE THE LAWS OF THE STATE OF NEW
YORK.
23
SECTION
7.07. WAIVER OF JURY
TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS PLEDGE AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.07.
SECTION
7.08. Headings. Article
and Section headings and the Table of Contents used herein are for convenience
of reference only, are not part of this Pledge Agreement and are not to affect
the construction of, or to be taken into consideration in interpreting, this
Pledge Agreement.
SECTION
7.09. Security
Interest Absolute. All
rights of the Collateral Agent and/or RUS hereunder, the grant of a security
interest in the Pledged Collateral and all obligations of the Borrower hereunder
shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Series C Bond Guarantee Agreement, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Series C Bond Guarantee Agreement or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute
a defense available to, or a discharge of, the Borrower in respect of the
Obligations or this Pledge Agreement.
SECTION
7.10. Termination or
Release. (a) This
Pledge Agreement shall terminate on the date when the Collateral Agent receives
an RUS Notice to the effect that all of the Obligations have been indefeasibly
paid in full and the Federal Financing Bank has no further commitment to lend
under the Series C Bond, and if applicable at such time the Lien hereof shall be
released.
(b) Upon
any withdrawal, substitution or other disposal by the Borrower of any Pledged
Collateral that is permitted by the terms of this Pledge Agreement, or upon the
effectiveness of any written consent to the release of the security interest
granted hereby in any Pledged Collateral, the Lien hereof securing such Pledged
Collateral shall be automatically released.
24
(c) In
connection with any termination or release pursuant to paragraph (a) or (b)
the Collateral Agent shall deliver to the Borrower the Pledged Collateral and
shall execute and deliver to the Borrower, at the Borrower’s expense, all
documents that the Borrower shall reasonably request to evidence such
termination or release. Any execution and delivery of documents
pursuant to this Section 7.10 shall be without recourse to or warranty by the
Collateral Agent.
SECTION
7.11. Collateral Agent
Appointed Attorney-In-Fact. The
Borrower hereby appoints the Collateral Agent the attorney-in-fact of the
Borrower for the purpose of, upon the occurrence and during the continuance of
an Event of Default, carrying out the provisions of this Pledge Agreement with
respect to the Pledged Collateral and taking any action and executing any
instrument that the Collateral Agent may deem necessary or advisable to
accomplish the purposes hereof, which appointment is irrevocable and coupled
with an interest but is subject nevertheless to the terms and conditions of this
Pledge Agreement. Without limiting the generality of the foregoing,
the Collateral Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Collateral Agent’s name or in the name of the Borrower (a) to receive,
endorse, assign and/or deliver any and all notes, acceptances, checks, drafts,
money orders or other evidences of payment relating to the Pledged Collateral or
any part thereof; (b) to demand, collect, receive payment of, give receipt
for and give discharges and releases of all or any of the Pledged Collateral;
(c) to commence and prosecute any and all suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect or otherwise
realize on all or any of the Pledged Collateral or to enforce any rights in
respect of any Pledged Collateral; (d) to settle, compromise, compound,
adjust or defend any actions, suits or proceedings relating to all or any of the
Pledged Collateral; (e) to notify, or to require the Borrower to notify,
obligors under Pledged Securities to make payment directly to the Collateral
Agent; and (f) to use, sell, assign, transfer, pledge, make any agreement
with respect to or otherwise deal with all or any of the Pledged Collateral, and
to do all other acts and things necessary to carry out the purposes of this
Pledge Agreement, as fully and completely as though the Collateral Agent were
the absolute owner of the Pledged Collateral for all purposes; provided that nothing
herein contained shall be construed as requiring or obligating the Collateral
Agent to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Collateral Agent, or to present or
file any claim or notice, or to take any action with respect to the Pledged
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby. The Collateral Agent and RUS
shall be accountable only for amounts actually received as a result of the
exercise of the powers granted to them herein, and neither they nor their
officers, directors, employees or agents shall be responsible to the Borrower
for any act or failure to act hereunder, except for their own gross negligence
or willful misconduct.
25
Pledge
Agreement
IN
WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be duly
executed, all as of the day and year first above written.
|
NATIONAL
RURAL UTILITIES
COOPERATIVE
FINANCE CORPORATION,
|
|
|
by
|
|
|
Name:
|
|
|
Title:
|
|
|
UNITED
STATES OF AMERICA, acting
through
the Administrator of the Rural Utilities
Service,
|
|
|
by
|
|
|
Name:
|
|
|
Administrator
of the Rural Utilities Service
|
|
[Signature
Page to Pledge Agreement]
SCHEDULE I
TO
PLEDGE
AGREEMENT
NATIONAL
RURAL UTILITIES
COOPERATIVE
FINANCE CORPORATION
PLEDGE
AGREEMENT DATED AS OF SEPTEMBER 19, 2008
CERTIFICATE
OF AVAILABLE SECURITIES FILED WITH
U.S. BANK
TRUST NATIONAL ASSOCIATION, Collateral Agent
________________,
Governor (or Chief Financial Officer) and ____________________, Vice-President,
respectively, of National Rural Utilities Cooperative Finance Corporation,
hereby certify to RUS and the Collateral Agent under the above-mentioned Pledge
Agreement as amended to the date hereof (herein called the “Pledge Agreement”)
as follows:
|
1.
|
The
Allowable Amount of Available Securities certified
hereby,
all as shown on Schedule A hereto, is
|
$
|
| 2. |
The
aggregate principal amount of the Series C Bond
outstanding at the date hereof is
|
$ |
|
3.
|
The
aggregate amount, if any, of the Advance to be made
on
the basis of this Certificate is
|
$
|
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4.
|
The
sum of the amounts in items 2 and 3 is
|
$
|
|
5.
|
The
aggregate amount by which the Allowable Amount of
Available
Securities exceeds the aggregate principal
amount
of the Series C Bond outstanding plus the amount
of
any Advance in item 3 (item 1 minus item 4) is
|
$
|
|
6.
|
So
far as is known to the undersigned no Trigger Event
exists.
|
All terms
which are defined in the Pledge Agreement are used herein as so
defined.
Dated:
|
OF
NATIONAL RURAL UTILITIES
COOPERATIVE
FINANCE CORPORATION
|
SCHEDULE I
TO
PLEDGE
AGREEMENT
AVAILABLE
SECURITIES
SCHEDULE
A TO OFFICERS’ CERTIFICATE
DATED
|
Eligible
Securities
|
Name
of Issuer
|
Current
Allowable Amount (Item 1)
|
|
Available
Securities
(Here
List Securities)
|
2
SCHEDULE II
TO
PLEDGE
AGREEMENT
NATIONAL
RURAL UTILITIES
COOPERATIVE
FINANCE CORPORATION
PLEDGE
AGREEMENT DATED AS OF SEPTEMBER 19, 2008
CERTIFICATE
OF PLEDGED COLLATERAL FILED WITH
U.S. BANK
TRUST NATIONAL ASSOCIATION, COLLATERAL AGENT
________________,
Governor (or Chief Financial Officer) and ____________________, Vice-President,
respectively, of National Rural Utilities Cooperative Finance Corporation,
hereby certify to RUS and the Collateral Agent under the above-mentioned Pledge
Agreement as amended to the date hereof (herein called the “Pledge Agreement”)
as follows:
|
1.
|
The
Allowable Amount of Pledged Collateral shown in
item 8
in the most recent Certificate of Pledged Collateral
dated
______________ delivered to the Collateral Agent is
|
$
|
|
2.
|
The
increase (or decrease) in the Allowable Amount of
such
Pledged Collateral and the Allowable Amount of any
Eligible
Securities substituted for other Pledged Securities
pursuant
to Section 3.07 of the Pledge Agreement,
remaining
on deposit with the Collateral Agent, as shown
on
Schedule A hereto, is
|
$
|
|
3.
|
The
Allowable Amount, as at the date of such most recent
Certificate
of Pledged Collateral, of Pledged Collateral
which
has, since such date, been withdrawn or substituted
for
pursuant to Section 3.07 (including Pledged Securities
fully
paid) by the Borrower or ceased to be Pledged
Collateral,
as shown on Schedule A hereto, is
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$
|
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4.
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The
present Allowable Amount of Pledged Collateral
certified
to the Collateral Agent in the most recent
Certificate
of Pledged Collateral (item 1 plus (or minus, if
decrease)
item 2, and minus item 3) is
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$
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5.
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The
Allowable Amount of Pledged Collateral certified h
ereby,
including the Pledged Collateral deposited
herewith,
which were not certified in the most recent
Certificate
of Pledged Collateral, all as shown on
Schedule B
hereto, is
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$
|
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6.
|
The
Allowable Amount of Pledged Collateral held by the
Collateral
Agent on the date hereof and included in this
Certificate before any withdrawals (item 4 plus item 5) is |
$
|
|
7.
|
The
Allowable Amount of Pledged Collateral the
withdrawal
of which is hereby requested, if any, as shown
on
Schedule C hereto (the Pledged Collateral made the
basis
of such withdrawal being designated on Schedule A
and/or
Schedule B hereto) is
|
$
|
|
8.
|
The
Allowable Amount of Pledged Collateral held by the
Collateral
Agent on the date hereof and included in this
Certificate
after any withdrawals (item 6 minus item 7) is
|
$
|
|
9.
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The
aggregate principal amount of the Series C Bond
outstanding
at the date hereof is
|
$
|
|
10.
|
The
aggregate amount by which such Allowable Amount
of
Pledged Securities exceeds the aggregate principal
amount
of the Series C Bond outstanding (item 8 minus
item
9) is
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$
|
All terms
which are defined in the Pledge Agreement are used herein as so
defined.
Dated:
|
OF
NATIONAL RURAL UTILITIES
COOPERATIVE
FINANCE CORPORATION
|
2
SCHEDULE II
TO
PLEDGE
AGREEMENT
PLEDGED
COLLATERAL ON DEPOSIT
SCHEDULE
A TO OFFICERS’ CERTIFICATE
DATED
|
Pledged
Collateral
|
Name
of Issuer
|
Allowable
Amount
included
in
Certificate
last
previously
filed (Item 1)
|
Increase
(Decrease)
in
such
Allowable
Amount
(Items 2
and
3)
|
Current
Allowable
Amount
(Item 4)
|
|
Cash
|
||||
|
Permitted
Investments
(Here List)
|
||||
|
Pledged
Securities
(Here List Securities)
|
3
SCHEDULE II
TO
PLEDGE
AGREEMENT
PLEDGED
COLLATERAL BEING DEPOSITED
SCHEDULE B
TO OFFICERS’ CERTIFICATE
DATED
|
Pledged
Collateral
|
Name
of Issuer
|
Allowable
Amount
(Item
5)
|
|
Cash
|
||
|
Permitted
Investments
(Here List)
|
||
|
Pledged
Securities
(Here List Securities)
|
4
SCHEDULE II
TO
PLEDGE
AGREEMENT
PLEDGED
COLLATERAL BEING WITHDRAWN
SCHEDULE C
TO OFFICERS’ CERTIFICATE
DATED
|
Pledged
Collateral
|
Name
of Issuer
|
Allowable
Amount
(Item
7)
|
|
Cash
|
||
|
Permitted
Investments
(Here List)
|
||
|
Pledged
Securities
(Here List Securities)
|
5
SCHEDULE III
TO
PLEDGE
AGREEMENT
Addresses for
Notices
|
1.
|
The
addresses referred to in Section 7.01 hereof, for purposes of delivering
communications and notices, are as
follows:
|
If to
RUS:
Rural
Utilities Service
United
States Department of Agriculture
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention
of: The Administrator
Subject: REDLG
Program
If to the
Borrower:
National
Rural Utilities Cooperative Finance Corporation
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention
of: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Financial Officer
With a
copy to:
National
Rural Utilities Cooperative Finance Corporation
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention
of: ▇▇▇▇ ▇. List, Esq., General Counsel
If to the
Collateral Agent:
U.S. Bank
Trust National Association
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention
of: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ANNEX
C
Form of Reimbursement
Note
C-1
SERIES C REIMBURSEMENT NOTE
THIS
SERIES C REIMBURSEMENT NOTE (the "Note"), dated September 19, 2008, is made by
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION (the "Borrower"), a District of Columbia
cooperative association, and its successors and assigns, to the UNITED STATES OF AMERICA (the
"Government"), acting through the Rural Utilities Service ("RUS"), a Rural
Development agency of the United States Department of
Agriculture. For value received, the Borrower promises to pay on
demand to the order of the Government, at the United States Treasury,
Washington, D.C., pursuant to a certain Series C Bond Guarantee Agreement, dated
as of September 19, 2008 (the “Bond Guarantee Agreement"), made by and between
the Borrower and the Government, acting through RUS, and remaining unpaid from
time to time, in the time and manner herein provided:
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1.
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Amount.
(a) All amounts, including, without limitation, principal, interest, late
payment charges, Bond Fees (as defined in the Bond Guarantee Agreement)
less discount or plus prepayment premiums paid by RUS to the
Federal Financing Bank (the “FFB”) from time to time pursuant to the
Guarantee (as defined in the Bond Guarantee Agreement), pursuant to which
RUS has guaranteed the full repayment of the principal, interest, late
payment charges, Bond Fees and discount or prepayment premiums, if any,
when and as due on that certain Series C Future Advance Bond (the “Bond”)
issued by the Borrower to FFB pursuant to the Series C Bond Purchase
Agreement, dated as of September 19, 2008, by and among FFB, RUS and the
Borrower.
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(b) All
other obligations owed by the Borrower to RUS under the Bond Guarantee
Agreement.
(c) Less
all amounts (i) paid by the Borrower to FFB on the Bond, whether directly or to
RUS as servicer for the Bond, (ii) otherwise paid to RUS by the Borrower
pursuant to this Note, (iii) received by RUS as a result of its exercise of its
subrogation rights under the Bond and (iv) received by RUS under the Pledge
Agreement (as defined hereinafter) with respect to its payments under the
Guarantee.
(d) The
amounts referred to in subparagraph (a) and the other obligations referred to in
subparagraph (b) less the payments referred to in subparagraph (c) are
hereinafter collectively called the "Principal Amount".
|
2.
|
Interest
Rate. Interest on the Principal Amount shall accrue from
the date of payment by RUS under the Guarantee until the date such claim
is satisfied and in the case of other obligations owed to RUS under the
Bond Guarantee Agreement, from the date they are due to be paid thereunder
until payment as described in subparagraph (c) above. Interest shall
accrue at an annual rate equal to the greater of (i) 1.5 times the 91-day
Treasury-▇▇▇▇ Rate or (ii) 200 basis points (2.00%) above the interest
rate on the Bond.
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Page
1
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3.
|
Security. This
Note is secured by a security interest in the “Pledged Collateral” as
defined and described in the Pledge Agreement, dated as of September 19,
2008, made by and among the Borrower, the Government, acting through RUS,
and U.S. Bank Trust National Association, as it may be amended (the
"Pledge Agreement"). Rights and obligations with respect to the Pledged
Collateral are set forth in the Pledge
Agreement.
|
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4.
|
Default. If
an Event of Default (as defined in the Bond Guarantee Agreement) occurs,
the Government may (a) continue to make payments to FFB
pursuant to the RUS Guarantee; provided, however, that no
payment by RUS pursuant to the Guarantee shall (i) be considered a payment
for purposes of determining the existence of a failure of the Borrower to
perform its obligations to RUS under the Bond Documents (as defined in the
Bond Guarantee Agreement), or (ii) relieve the Borrower of its obligations
to reimburse RUS for payments made by RUS pursuant to the Guarantee; or
(b) accelerate the Bond in its entirety in the manner and with the effect
provided in Section 10.3 of the Bond Guarantee
Agreement.
|
|
5.
|
Costs. The
Borrower shall pay any and all costs and expenses incurred in connection
with the exercise of rights or the enforcement of remedies, as set forth
in the Bond Guarantee Agreement, including any administrative costs and
penalty charges assessed in accordance with 7 CFR
3.34.
|
|
6.
|
Demand
Waived. The Borrower waives demand, presentment for
payment, notice of non-payment, notice of dishonor, protest, and notice of
non-payment of this Note.
|
|
7.
|
Obligations. The
obligations of the Borrower hereunder are absolute and unconditional,
irrespective of any defense, other than payment, or any right to set-off,
recoupment, or counterclaim it might otherwise have against the Government
or FFB.
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8.
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Subrogation. The
Borrower agrees to pay all amounts due on this Note directly to
RUS. Nothing herein shall limit the Government’s rights of
subrogation which may arise as a result of payments made by RUS pursuant
to the RUS Guarantee; provided, however, that there shall be no
subrogation claim of RUS against the Borrower for any late charge under
the Bond paid by RUS to FFB under the Guarantee on account of a
payment not having been received by FFB when and as due under
the Bond if the Borrower paid to RUS, as servicer of
the Bond, the full amount of the payment when and as due under
the Bond, and the payment was received late by FFB through no
fault of the Borrower.
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9.
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Rights,
Privileges and Remedies Reserved. Neither the execution and
delivery of this Note by the Borrower to the Government nor the failure of
the Government to exercise any of its rights, powers, privileges or
remedies under the Bond Guarantee Agreement with respect to this Note,
shall be deemed to be a waiver of any right, power, privilege or remedy of
the Government under the Bond
Documents.
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Page
2
IN
WITNESS WHEREOF, the Borrower has caused this Note to be signed in its corporate
name by its officers thereunto duly authorized, all as of the day and year first
above written.
BORROWER:
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE
CORPORATION
By: __________________________________
Name:
________________________________
Title:
_________________________________
(SEAL)
Attested
to by:______________________
Secretary
Page
3
ANNEX
D
Opinion of Counsel to the
Borrower
(1) The
Borrower has been duly incorporated and is validly existing as a not-for-profit
corporation in good standing under the laws of the District of Columbia with
corporate power and authority to execute and perform its obligations under the
Bond Documents.
(2) The
Bond Documents have been duly authorized, executed and delivered by the
Borrower, and such documents constitute the legal, valid and binding agreements
of the Borrower, enforceable against the Borrower in accordance with their
respective terms subject to (a) applicable bankruptcy, reorganization,
insolvency, moratorium and other laws of general applicability relating to or
affecting creditors’ rights generally, and (b) the application of general
principles of equity regardless of whether such enforceability is considered in
a proceeding in equity or at law.
(3) Neither
the execution nor the delivery by the Borrower of any of the Bond Documents nor
the consummation by the Borrower of any of the transactions contemplated
therein, including, without limitation, the pledge of the Pledged Securities (as
such term is defined in the Pledge Agreement) to RUS if required, nor the
fulfillment by the Borrower of the terms of any of the Bond Documents will
conflict with or violate, result in a breach of or constitute a default under
any term or provision of the Articles of Incorporation or By-laws of the
Borrower or any law or any regulation or any order known to Counsel currently
applicable to the Borrower of any court, regulatory body, administrative agency
or governmental body having jurisdiction over the Borrower or the terms of any
indenture, deed of trust, note, note agreement or instrument to which the
Borrower is a party or by which the Borrower or any of its properties is
bound.
(4) No
approval, authorization, consent, order, registration, filing, qualification,
license or permit of or with any state or Federal court or governmental agency
or body including, without limitation, RUS, having jurisdiction over the
Borrower is required for any consummation by the Borrower of the transactions
contemplated by the Bond Documents except such as have been obtained from RUS;
provided, however, no opinion is expressed as to the applicability of any
Federal or state securities law to any sale, transfer or other disposition of
the Guaranteed Bond after the date hereof.
(5) There
is no pending or, to the best of Counsel’s knowledge, threatened action, suit or
proceeding before any court or governmental agency, authority or body or any
arbitrator with respect to the Borrower, or any of the Bond Documents, or which,
if adversely determined, would have a material adverse effect on the Borrower’s
financial condition or its ability to perform its obligations under any of the
Bond Documents.
D-1
ANNEX
E
Officers’ Closing
Certificate
TO: The
United States of America acting through the Rural Utilities
Service.
We,
[ ],
Governor, and
[ ],
Chief Financial Officer, of National Rural Utilities Cooperative Finance
Corporation (the “Borrower”), pursuant
to the Series C Bond Guarantee Agreement dated as of September 19, 2008,
between the Borrower and the United States of America acting through Rural
Utilities Service (the “Bond Guarantee
Agreement”), hereby certify on behalf of the Borrower that as at the date
hereof:
(1) the
Borrower is a lending institution organized as a private, not-for-profit,
cooperative association with the appropriate expertise, experience and
qualifications to make loans for electrification or telephone
purposes;
(2) no
material adverse change has occurred in the financial condition of the Borrower
between the date of the Application and the date hereof;
(3) we
acknowledge the commitment of the Borrower to submit to the Secretary the
documents required under Article VI of the Bond Guarantee Agreement in
accordance with the terms thereof;
(4) all
of the representations contained in Section 8.2 of the Bond Guarantee Agreement
remain true and correct in all respects; and
(5) no
Rating Trigger Event or Financial Expert Trigger Event exists.
Capitalized
terms used in this certificate shall have the meanings given to those terms in
the Bond Guarantee Agreement.
DATED as
of this 19th day of
September, 2008.
NATIONAL RURAL
UTILITIES
COOPERATIVE FINANCE
CORPORATION
______________________________
Governor
______________________________
Chief Financial
Officer
E-1
ANNEX
F
Officers’ Advance
Certificate
TO: The
United States of America acting through the Rural Utilities
Service.
We,
[ ],
Governor, and
[ ],
Chief Financial Officer, of National Rural Utilities Cooperative Finance
Corporation (the “Borrower”), pursuant
to the Series C Bond Guarantee Agreement dated as of September 19, 2008, between
the Borrower and the United States of America acting through Rural Utilities
Service (the “Bond
Guarantee Agreement”), hereby certify on behalf of the Borrower
that:
(1) (i) as
at the last day of the most recent month ended more than 10 business days
before the date hereof, the total aggregate principal amount of outstanding
Eligible Loans
is: $ ;
(ii) as at the last day of the most
recent month ended more than 10 business days before the date hereof, the total
aggregate principal amount of outstanding Loans is:
$ ;
(iii) the percentage the amount under
(i) comprises of the amount under (ii)
is: %;
(2) the
Advance will be applied to: (i) fund new Eligible Loans under the RE Act; or
(ii) to refinance existing debt instruments of the Borrower, in the case of each
such debt instrument up to the percentage set forth in clause (1)(iii)
above;
(3) as
at the date hereof, no material adverse change has occurred in the financial
condition of the Borrower between the Closing Date and the applicable Requested
Advance Date; and
(4) as
at the date hereof, all of the representations contained in Section 8.2 of the
Bond Guarantee Agreement remain true and correct in all respects.
F-1
Capitalized
terms used in this certificate shall have the meanings given to those terms in
the Bond Guarantee Agreement.
DATED as
of this day of
,
20 .
NATIONAL RURAL
UTILITIES
COOPERATIVE FINANCE
CORPORATION
______________________________
Governor
______________________________
Chief
Financial Officer
F-2
ANNEX
G
Auditors’
Letter
To the
Board of Directors of
National
Rural Utilities Cooperative Finance Corporation
Herndon,
Virginia
We have
performed the procedures enumerated below, which were agreed to by National
Rural Utilities Cooperative Finance Corporation (the “Company”) and the Rural
Utilities Service (the “RUS”), solely to assist in evaluating the Company’s
compliance with Section 6.1(b) of the Series C Bond Guarantee Agreement between
the Company and the United States of America, acting through the RUS, dated
September 19, 2008 (the “Bond Guarantee Agreement”), as of [last day of
preceding fiscal year]. The Company’s management is responsible for
the Company’s compliance with those requirements. This agreed-upon
procedures engagement was conducted in accordance with attestation standards
established by the American Institute of Certified Public
Accountants. The sufficiency of these procedures is solely the
responsibility of those parties specified in this
report. Consequently, we make no representation regarding the
sufficiency of the procedures described below either for the purpose for which
this report has been requested or for any other purpose.
The
procedures that we performed and our findings are as follows:
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1.
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We
obtained the attached schedule of the total aggregate unpaid principal
amount of the securities identified by the Company as comprising [the
Available Securities][the Pledged Securities], as defined in the Bond
Guarantee Agreement, as of [last day of preceding fiscal year] from
Company management and compared the total aggregate unpaid principal
amount shown on such schedule ($ ____) to the Company's underlying
accounting records as of the same date and found them to be in
agreement.
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2.
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We
obtained the attached schedule of the total aggregate amount of all
amounts outstanding under the Guaranteed Bond, as defined in the Bond
Guarantee Agreement, as of [last day of preceding fiscal year] from
Company management and compared the amount shown on such schedule ($_____)
to the Company's underlying accounting records as of the same date and
found them to be in agreement.
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We were
not engaged to, and did not, conduct an examination, the objective of which
would be the expression of an opinion on compliance. Accordingly, we
do not express such an opinion. Had we performed additional
procedures, other matters might have come to our attention that would have been
reported to you.
G-1
This
report is intended solely for the information and use of the Company and the RUS
and is not intended to be and should not be used by anyone other than these
specified parties.
July ,
20
Yours
truly,
_____________________________
DELOITTE
& TOUCHE LLP
G-2