FARMER MAC MORTGAGE SECURITIES CORPORATION, As Note Purchaser NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, As Borrower As Collateral Agent FEDERAL AGRICULTURAL MORTGAGE CORPORATION, As Guarantor
EXHIBIT
10.35
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▇▇▇▇▇▇
MAC MORTGAGE
SECURITIES
CORPORATION,
As
Note Purchaser
NATIONAL
RURAL UTILITIES
COOPERATIVE
FINANCE CORPORATION,
As
Borrower
U.S.
BANK NATIONAL ASSOCIATION,
As
Collateral Agent
FEDERAL
AGRICULTURAL
MORTGAGE
CORPORATION,
As
Guarantor
Dated
as of May 22, 2009
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ARTICLE
I
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Definitions
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Section
1.01.
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Definitions
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3
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Section
1.02.
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Principles
of Construction
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7
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ARTICLE
II
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Provisions
as to Pledged Collateral
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Section
2.01.
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Holding
of Pledged Securities
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7
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Section
2.02.
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UCC
Filings
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8
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Section
2.03.
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Withdrawal
and Substitution of Pledged Collateral
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8
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Section
2.04.
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[Reserved]
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9
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Section
2.05.
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Addition
of Pledged Collateral
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9
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Section
2.06.
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Accompanying
Documentation
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9
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Section
2.07.
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Renewal;
Extension; Substitution
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9
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Section
2.08.
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Voting
Rights; Interest and Principal
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9
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Section
2.09.
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Protection
of Title; Payment of Taxes; Liens, etc
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11
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Section
2.10.
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Maintenance
of Pledged Collateral
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11
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Section
2.11.
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Representations,
Warranties and Covenants
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11
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Section
2.12.
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Further
Assurances
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13
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i
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ARTICLE
III
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[Reserved]
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ARTICLE
IV
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Remedies
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Section
4.01.
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Events
of Default
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13
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Section
4.02.
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Remedies
upon Default
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13
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Section
4.03.
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Application
of Proceeds
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15
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Section
4.04.
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Securities
Act
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16
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ARTICLE
V
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The
Collateral Agent
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Section
5.01.
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Certain
Duties and Responsibilities
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17
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Section
5.02.
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Certain
Rights of Collateral Agent
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18
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Section
5.03.
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Money
Held by Collateral Agent
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19
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Section
5.04.
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Compensation
and Reimbursement
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19
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Section
5.05.
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Corporate
Collateral Agent Required; Eligibility
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20
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Section
5.06.
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Resignation
and Removal; Appointment of Successor
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20
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Section
5.07.
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Acceptance
of Appointment by Successor
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21
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Section
5.08.
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Merger,
Conversion, Consolidation or Succession to Business
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21
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ii
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ARTICLE
VI
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Miscellaneous
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Section
6.01.
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Notices
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22
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Section
6.02.
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Waivers;
Amendment
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22
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Section
6.03.
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Successors
and Assigns
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22
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Section
6.04.
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Counterparts;
Effectiveness
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23
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Section
6.05.
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Severability
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23
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Section
6.06.
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GOVERNING
LAW
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23
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Section
6.07.
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WAIVER
OF JURY TRIAL
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23
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Section
6.08.
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Headings
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23
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Section
6.09.
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Security
Interest Absolute
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24
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Section
6.10.
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Termination
or Release
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24
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Section
6.11.
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Collateral
Agent Appointed Attorney-in-Fact
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24
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Schedule
I – Additional Criteria for Eligible Securities
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Schedule
II – Addresses for Notices
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Annex
A – Form of Certificate of Pledged Collateral
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iii
PLEDGE
AGREEMENT, dated as of May 22, 2009, among NATIONAL RURAL UTILITIES COOPERATIVE
FINANCE CORPORATION, a District of Columbia cooperative association and its
successors and assigns (hereinafter called “National Rural”),
▇▇▇▇▇▇ MAC MORTGAGE SECURITIES CORPORATION, (the “Purchaser”), a wholly owned
subsidiary of FEDERAL AGRICULTURAL MORTGAGE CORPORATION, a federally-chartered
instrumentality of the United States and an institution of the Farm Credit
System and its successors and assigns (“▇▇▇▇▇▇ Mac”), U.S.
BANK NATIONAL ASSOCIATION, a national banking association and its successors and
assigns (hereinafter called the “Collateral Agent”),
and ▇▇▇▇▇▇ Mac, as Guarantor.
RECITALS
OF NATIONAL RURAL
WHEREAS,
National Rural may from time to time issue one or more Notes to the Purchaser,
and the Purchaser may purchase such Notes, all upon the terms and subject to the
conditions set forth in the Note Purchase Agreement; and
WHEREAS,
National Rural is required pursuant to the terms of the Note Purchase Agreement
to pledge certain property to the Collateral Agent for the benefit of the
Control Party to secure National Rural’s obligations on the Notes;
NOW,
THEREFORE, THIS PLEDGE AGREEMENT WITNESSETH that, to secure the performance of
the certain Obligations contained in the Notes, the Note Purchase Agreement and
herein, National Rural hereby assigns and pledges to the Collateral Agent, its
successors and assigns, for the benefit of the Control Party, and grants to the
Collateral Agent, its successors and assigns, for the benefit of the Control
Party, a security interest in the following (collectively referred to as the
“Pledged
Collateral”) as provided in Article II: (a)(i) the Pledged
Securities and the certificates representing the Pledged Securities;
(ii) subject to Section 2.08, 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 2.08, all rights and privileges of National
Rural with respect to the Pledged Securities; (iv) all Proceeds of any of
the foregoing above; that may, on the date hereof or from time to time
hereafter, be subjected to the Lien hereof by National Rural 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 reservations, limitations or conditions agreed to in
writing by National Rural and the Control Party 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 the Control
Party, forever; subject, however, to the
terms, covenants and conditions hereinafter set forth.
ARTICLE
I
Definitions
SECTION
1.01. Definitions. As
used in this Pledge Agreement, the following terms shall have the following
meanings:
“Accounting
Requirements” shall mean any system of accounts prescribed by a federal
regulatory authority having jurisdiction over the Member or, in the absence
thereof, the requirements of GAAP applicable to businesses similar to that of
the Member.
“Allowable Amount” on
any date, means with respect to Eligible Securities, the aggregate principal
amount of such Eligible Securities theretofore advanced thereon which remains
unpaid on such date, subject to any limitation on the Allowable Amount
applicable through the definition of “Eligible Security”.
“Certificate of Pledged
Collateral” means a certificate delivered to the Collateral Agent and the
Control Party substantially in the form of Annex A attached
hereto.
“Class A Member” means
any Class A Member of National Rural as described in National Rural’s Bylaws
currently in effect.
“Class B Member” means
any Class B Member of National Rural as described in National Rural’s Bylaws
currently in effect.
“Collateral Agent”
means the Person named as the “Collateral Agent” in
the first paragraph of this instrument.
“Control Party” means
(i) the Guarantor, so long as no Guarantor Default has occurred and is
continuing, or (ii) the holders of the Notes for so long as a Guarantor Default
has occurred and is continuing.
“Control Party Notice”
and “Control Party
Order” mean, respectively, a written notice or order signed by any Vice
President of the Control Party and delivered to the Collateral Agent and
National Rural.
“Control Party Notice of
Default” has the meaning given to that term in
Section 4.02.
3
“Depreciation and
Amortization Expense” shall mean an amount
constituting the depreciation and amortization of the Member computed pursuant
to Accounting Requirements.
“Eligible Member”
means any Class A Member or Class B Member of National Rural as described in
National Rural’s Bylaws currently in effect.
“Eligible Security”
means a note or bond of any Eligible Member payable or registered to, or to the
order of, National Rural, (A) in respect of which (i) the outstanding
principal amount under such note or bond, together with the outstanding
principal amount of any other notes or bonds of such Eligible Member pledged
hereunder or pledged to secure any other notes or bonds issued by National Rural
to ▇▇▇▇▇▇ Mac or any affiliate or sold by National Rural or any affiliate to any
trust whose beneficial ownership is owned or controlled by ▇▇▇▇▇▇ Mac, does not
aggregate more than $35 million; provided, however, that a note or bond in
excess of $35 million (considered together with any other note or bond of such
Eligible Member pledged hereunder or pledged to secure any other notes or bonds
issued by National Rural to ▇▇▇▇▇▇ Mac or any affiliate or sold by National
Rural or any affiliate to ▇▇▇▇▇▇ Mac, any affiliate or any trust whose
beneficial ownership is owned or controlled by ▇▇▇▇▇▇ Mac) may be pledged
hereunder but only $35 million principal amount of such note or bond shall be
counted in the Allowable Amount of such Eligible Security (with the amount of
any such excess recorded in Item 7 of the Certificate of Pledged Collateral in
the form of Annex
A attached hereto), (ii) 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 and (iii) no “event of default” as defined in such
note or bond (or in any instrument creating a security interest in favor of
National Rural 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); (B) which is not classified by National Rural as a
non-performing loan under generally accepted accounting principles in the United
States; and (C) which otherwise satisfies the criteria set forth on Schedule I
hereto, as such Schedule I may be amended from time to time as mutually agreed
upon in writing by ▇▇▇▇▇▇ Mac and National Rural, with notice of any such
amendment to the Collateral Agent prior to the pledge of such Eligible
Security.
“Equity” means the
aggregate of the Member's equities and margins computed pursuant to Accounting
Requirements.
“Event of Default” has
the meaning set forth in Section 4.01.
“Facility Rating”
means the facility rating assigned by National Rural to an Eligible Security
from time to time in accordance with National Rural's internal risk rating
system.
“GAAP” means generally
accepted accounting principles in the United States as in effect from time to
time.
4
“Guarantor Default”
means a default by the Guarantor under its obligations pursuant to Article IX of
the Note Purchase Agreement which is existing and continuing.
“Interest Expense”
means an amount constituting the interest expense with respect to Long-Term Debt
of the Member computed pursuant to Accounting Requirements.
“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.
“Long-Term Debt” is
determined in accordance with the Uniform System of Accounts prescribed at the
time by RUS or, if such Member is not required to maintain its accounts in
accordance with said Uniform System of Accounts, otherwise determined in
accordance with GAAP.
“Member” shall mean
any Person who is member of National Rural.
“Modified Debt Service
Coverage Ratio—Distribution” shall mean the definition of Coverage Ratio
as defined in the Indenture dated October 25, 2007 by and between National Rural
Utilities Cooperative Finance Corporation and U.S. Bank National Association for
the Collateral Trust Bonds.
“Modified Debt Service
Coverage Ratio—G&T” shall mean the ratio determined as follows: for
any calendar year add (i) Operating Margins, (ii) Non-Operating
Margins—Interest, (iii) Interest Expense, (iv) Depreciation and Amortization
Expense, and (v) cash received in respect of generation and transmission and
other capital credits, and divide the sum so obtained by the sum of all payments
of Principal and Interest Expense required to be made during such calendar year;
provided, however, that in the
event that any amount of Long-Term Debt has been refinanced during such year,
the payments of Principal and Interest Expense required to be made during such
year on account of such refinanced amount of Long-Term Debt shall be based (in
lieu of actual payments required to be made on such refinanced amount of
Long-Term Debt) upon the larger of (i) an annualization of the payments required
to be made with respect to the refinancing debt during the portion of such year
such refinancing debt is outstanding or (ii) the payment of Principal and
Interest Expense required to be made during the following year on account of
such refinancing debt.
“National Rural
Notice” and “National Rural Order”
mean, respectively, a written notice or order signed in the name of National
Rural by either its Chief Executive Officer or its Chief Financial Officer, and
by any Vice President of National Rural, and delivered to the Collateral Agent
and the Control Party.
5
“Non-Operating
Margins—Interest” means the amount representing the interest component of
non-operating margins of the Member computed pursuant to Accounting
Requirements.
“Note Purchase
Agreement” means the Note Purchase Agreement dated the date hereof
between National Rural, the Purchaser and ▇▇▇▇▇▇ Mac, as the same may be amended
from time to time in accordance with the terms thereof.
“Notes” means the note
or notes issued by National Rural to the Purchaser under the Note Purchase
Agreement.
“Obligations” means
the due and punctual performance of the obligations of National Rural to make
payments of principal, and interest on the Notes.
“Officers’
Certificate” means a certificate signed by any Vice President of National
Rural, and delivered to the Control Party and/or the Collateral Agent, as
applicable.
“Operating Margins”
means the amount of patronage capital and operating margins of the Member
computed pursuant to Accounting Requirements.
“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 amended pursuant to the applicable provisions hereof.
“Pledged Collateral”
has the meaning set forth in the Granting Clause.
“Pledged Securities”
means at any time the Eligible Securities listed on Schedule A and/or
Schedule B to the Certificate of Pledged Collateral most recently
delivered.
“Principal” means the
amount of principal billed on account of Long-Term Debt of the Member computed
pursuant to Accounting Requirements.
“Proceeds” has the
meaning specified in Section 9-102 of the Uniform Commercial
Code.
“RUS” mean the Rural
Utilities Service of the United States Department of Agriculture, acting by and
through the Administrator of the Rural Utilities Service, and including any
successor agencies or departments.
“Total Assets Ratio”
means an amount constituting the total assets of the Member computed pursuant to
Accounting Requirements.
6
“Total Capitalization
Ratio” means the Total Margins and Equity as a percentage of the sum of
(1) Total Margins and Equity plus (2) Long-Term Debt.
“Total Margins and
Equity” means the Member’s total margins and equity computed pursuant to
Accounting Requirements.
“Uniform Commercial
Code” means the Uniform Commercial Code as from time to time in effect in
the District of Columbia.
“Vice President” means
any vice president of National Rural or ▇▇▇▇▇▇ Mac or the Purchaser, as
applicable, whether or not designated by a number or a word or words added
before or after the title “vice president”.
SECTION
1.02. Other
Defined Terms; Principles of Construction. Capitalized terms used
but not defined in this Pledge Agreement shall have the meanings given to them
in the Note Purchase Agreement. Unless the context shall otherwise
indicate, the terms defined in Section 1.01 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
Provisions as to Pledged
Collateral
SECTION
2.01. Holding of
Pledged Securities.
(a)
National Rural shall make available to the Control Party, within forty-five (45)
days of a pledge of the Pledged Securities in connection with an advance (or for
a longer period as National Rural and the Control Party agree), such back-up
information as is reasonably necessary in order to allow the Control Party to
confirm compliance of such Pledged Securities to the requisite criteria as
outlined herein. Upon receipt of the back-up information, the Control
Party shall have ninety (90) days to object in writing to the inclusion of any
item of the Pledged Securities as part of the Pledged Collateral. If the
Control Party reasonably determines that any of the Pledged Securities do not
meet the criteria for Eligible Securities, then National Rural shall have
forty-five (45) days in which to provide substitute collateral, and the timeline
specified above for National Rural to make available back-up material and
confirmation shall also apply as to the substituted collateral.
7
(b)
The Collateral Agent, on behalf of the Control Party, shall hold the Pledged
Securities in the name of National Rural (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 the Control Party, 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 National Rural, 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 National Rural (or its
nominee).
SECTION
2.02. UCC
Filings. National Rural shall prepare and file in the proper
Uniform Commercial Code filing office in the District of Columbia (i) on or
prior to the date of the first purchase of a Note under the Note Purchaser
Agreement, 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
2.03. Withdrawal
and Substitution of Pledged Collateral. (a)
Any part of the Pledged Collateral may be withdrawn by National Rural or
substituted for other Eligible Securities by National Rural and shall be
delivered to National Rural by the Collateral Agent upon National Rural Order at
any time and from time to time, together with any other documents or instruments
of transfer or assignment necessary to reassign to National Rural said Pledged
Collateral and the interest of National Rural, provided the
aggregate Allowable Amount of Pledged Collateral remaining after such withdrawal
or substitution shall at least equal the aggregate principal amount of the Notes
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 as of the last day of the calendar
month most recently ended at least 10 Business Days prior to such withdrawal or
substitution (or a more recent date, at National Rural’s option), 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, National Rural shall deliver any Eligible
Securities to be substituted and the Collateral Agent shall execute any
instruments of transfer or assignment specified in a National Rural Order as
necessary to vest in National Rural any part of the Pledged Collateral
withdrawn.
In case
an Event of Default shall have occurred and be continuing, National Rural shall
not withdraw or substitute any part of the Pledged Collateral.
8
SECTION
2.04. [Reserved.]
SECTION
2.05. Addition
of Pledged Collateral. At any time, National Rural may pledge
additional Eligible Securities 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 as of the
last day of the calendar month most recently ended at least 10 Business Days
prior thereto (or a more recent date at National Rural’s option).
SECTION
2.06. Accompanying
Documentation. Where Eligible Securities are delivered to the
Collateral Agent under Section 2.01, 2.03 or Section 2.05, 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 2.01, 2.03 or
Section 2.05 and comprising part of the Pledged Collateral shall be
accompanied by proper instruments of assignment duly executed by National Rural
and such other instruments or documents as the Collateral Agent may reasonably
request.
SECTION
2.07. Renewal;
Extension; Substitution. Unless and until an Event of Default shall
have occurred and be continuing, National Rural 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 National Rural 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 National Rural 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 National Rural 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 National Rural
Order.
SECTION
2.08. Voting
Rights; Interest and Principal.
(a) Unless and until an Event of Default has occurred and is continuing,
and the Control Party delivers to the Collateral Agent a Control Party Notice of
Default suspending National Rural’s rights under this clause:
(i)
National Rural 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 Note Purchase Agreement or this Pledge Agreement.
9
(ii) The
Collateral Agent shall execute and deliver to National Rural, or cause to be
executed and delivered to National Rural, all such proxies, powers of attorney
and other instruments as National Rural may reasonably request for the purpose
of enabling National Rural to exercise the voting and/or consensual rights and
powers it is entitled to exercise pursuant to subparagraph (i)
above.
(iii)
National Rural 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 National
Rural, shall not be commingled by National Rural with any of its other funds or
property but shall be held separate and 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 Control Party Notice of
Default, all rights of National Rural to interest, principal or other
distributions that National Rural is authorized to receive pursuant to
paragraph (a)(iii) of this Section 2.08 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 National Rural contrary to the provisions of
this Section 2.08 shall be held in trust for the benefit of the Collateral
Agent, shall be segregated from other property or funds of National Rural 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 4.03 to the fullest extent permitted by applicable law. After
all Events of Default have ceased, the Collateral Agent shall promptly repay to
National Rural (without interest) all interest, principal or other distributions
that National Rural would otherwise be permitted to retain pursuant to the terms
of paragraph (a)(iii) of this Section 2.08 and that remain in such
account.
10
(c)
If an Event of Default shall have occurred and be continuing, then, to the
extent such rights are suspended by the applicable Control Party Notice of
Default, all rights of National Rural to exercise the voting and consensual
rights and powers it is entitled to exercise pursuant to paragraph (a)(i)
of this Section 2.08, and the obligations of the Collateral Agent under
paragraph (a)(ii) of this Section 2.08, 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 National Rural to exercise such rights and
powers.
SECTION
2.09. Protection
of Title; Payment of Taxes; Liens, etc. National Rural
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 National Rural relative to any of the Pledged Collateral, and all
covenants, terms and conditions under or upon which any part thereof is
held;
(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
National Rural 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
National Rural (or a committee thereof).
SECTION
2.10. Maintenance of Pledged
Collateral. National Rural shall cause the Allowable 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 Notes outstanding.
SECTION
2.11. Representations, Warranties
and Covenants. National Rural represents, warrants and covenants to
the Collateral Agent, for the benefit of the Control Party, that from the time
that Pledged Collateral is pledged hereunder, and for so long as such Pledged
Collateral is required to remain pledged:
11
(a)
except for the Lien hereof and any Lien consented to in writing by ▇▇▇▇▇▇ Mac or
the Control Party, National Rural (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 Note Purchase 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;
(c)
National Rural 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 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).
(e) by
virtue of the execution and delivery by National Rural 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; and
(f) the
Allowable Amount of Pledged Collateral from Class B Members does not constitute
more than 20% of the aggregate amount of any notes or bonds: (1) pledged
hereunder; (2) pledged to secure any other notes or bonds issued by National
Rural or any affiliate to ▇▇▇▇▇▇ Mac or any affiliate; (3) sold by National
Rural or any affiliate to ▇▇▇▇▇▇ Mac or any affiliate; or (4) sold to any trust
whose beneficial ownership is owned or controlled by ▇▇▇▇▇▇ Mac or an
affiliate.
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SECTION
2.12. Further
Assurances. National Rural 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. National Rural 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
III
[Reserved]
ARTICLE
IV
Remedies
SECTION
4.01. Events of
Default. “Event of Default”,
wherever used herein, means any “Event of Default” as defined in
Section 7.01(a) of the Note Purchase 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 a Control Party Notice
or National Rural 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 a Control Party
Notice stipulating that such event has ceased to exist; or (ii) 30 days after
receipt by the Collateral Agent of a National Rural Notice stipulating that such
event has ceased to exist, provided that the
Collateral Agent does not receive a Control Party Notice within such timeframe
disputing the cessation of such Event of Default, and further provided that
no additional Control Party Notice of Default shall have been received in
respect of any other subsisting Event(s) of Default. Upon receipt of any
National Rural Notice under subparagraph (ii) of this Subsection, the Collateral
Agent shall provide a copy of such National Rural Notice to the Control
Party.
SECTION
4.02. Remedies
upon Default. If an Event of Default shall have occurred and be
continuing, the Control Party may issue a notice (a “Control Party Notice of
Default”), which may be combined with the notice provided under
Section 4.01(b), suspending the rights of National Rural under
Section 2.08 in part without suspending all such rights (as specified by
the Control Party in its sole and absolute discretion) without waiving or
otherwise affecting the Control Party’s rights to give additional Control Party
Notices of Default from time to time suspending other rights under
Section 2.08 so long as an Event of
Default has occurred and is continuing. Subject to paragraph (b) of this
Section 4.02, upon cessation of an Event of Default, all rights of National
Rural suspended under the applicable Control Party Notice of Default shall
revest in National Rural.
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(a)
Upon the occurrence of an Event of Default, the Collateral Agent shall, for the
benefit and at the direction of the Control Party, 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,
National Rural agrees that the Collateral Agent shall have the right, but only
if so instructed by a the Control Party 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 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 National Rural, and
National Rural hereby waives (to the extent permitted by law) all rights of
redemption, stay and appraisal which National Rural 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 National Rural 10 days’ written notice
(which National Rural 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, the Control Party 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 National Rural (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 the Control Party
from National Rural as a credit against the purchase price, and the Control
Party 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 National Rural shall not be entitled to the return of the Pledged Collateral
or any portion thereof subject thereto, notwithstanding the fact that after the
Collateral Agent shall have entered into such an agreement all Events of Default
shall have been remedied and the Obligations paid in full. As an
alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to foreclose
this Pledge Agreement and to sell the Collateral or any portion thereof pursuant
to a judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver. Any sale pursuant
to the provisions of this Section 4.02 shall be deemed to conform to the
commercially reasonable standards as provided in Section 9-610(b) of the
Uniform Commercial Code or its equivalent in other
jurisdictions.
14
SECTION
4.03. 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 to the fullest extent permitted by applicable
law:
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 National Rural and any other reasonable costs or expenses incurred
in connection with the exercise of any right or remedy hereunder;
SECOND,
to the payment to the Control Party
in full of the Obligations; such payment to be for an amount certified in a
Control Party
Notice delivered to the Collateral Agent as being the amount due and owing to
the Control
Party under the Obligations; and
THIRD, to
National Rural, its successors or assigns, or as a court of competent
jurisdiction may otherwise direct.
15
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
4.04. Securities
Act.
In view of the position of National Rural 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. National Rural 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 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. National
Rural 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. National Rural 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. National Rural 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 4.04 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.
16
ARTICLE
V
The Collateral
Agent
SECTION
5.01. 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.
(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.
17
SECTION
5.02. Certain
Rights of Collateral Agent. Except as otherwise provided in
Section 5.01:
(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 National Rural mentioned herein shall be sufficiently
evidenced by a National Rural Notice or National Rural Order;
(c) any
request or direction of the Control Party mentioned herein shall be sufficiently
evidenced by a Control Party Notice or Control Party 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 National Rural, and
a certificate signed by any Vice President of the Control Party in the case of
the Control Party;
(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;
(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 National Rural or the Control Party 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 National Rural, personally or by agent or
attorney;
18
(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 National Rural’s covenants
herein. In addition, the Collateral Agent shall not be deemed to have
knowledge of any Event of Default unless the Collateral Agent has received a
Control Party Notice in accordance with Section 4.01(a), and shall not be
deemed to have knowledge of the cessation of the same until such time as it
receives a National Rural Notice in accordance with Section 4.01(b);
and
(j)
unless explicitly stated herein to the contrary, the Collateral Agent shall have
no obligation to take any action with respect to any Event of Default until it
has received a Control Party Notice applicable to such event in accordance with
Section 4.01(a), 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 Control Party Notice is delivered.
Similarly, the Collateral Agent shall have no obligation to take any action with
respect to the cessation of an Event of Default until it has received a National
Rural Notice applicable to such event in accordance in accordance with
Section 4.01(b), 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 National Rural Notice is
delivered.
SECTION
5.03. 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
5.04. Compensation and
Reimbursement. (a) National Rural agrees:
(i) to
pay to the Collateral Agent from time to time such reasonable compensation for
all services rendered by it hereunder as shall have been set forth in an
agreement signed by National Rural;
(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
19
(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
National Rural shall have no liability under this clause for any settlement of
any litigation or other dispute effected without the prior written consent of
National Rural (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 5.04 shall
remain operative and in full force and effect regardless of the termination of
this Pledge Agreement or the Note Purchase 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 Note Purchase Agreement, or any investigation made by or on behalf of the
Collateral Agent or the Control Party. All amounts due under this
Section 5.04 shall be payable on written demand therefor.
SECTION
5.05. 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 condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. Neither National
Rural nor any Person directly or indirectly controlling, controlled by or under
common control with National Rural shall serve as Collateral Agent
hereunder. If at any time the Collateral Agent shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this
Article.
SECTION
5.06. 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 5.07.
(b)
The Collateral Agent may resign at any time by giving written notice thereof to
National Rural. 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.
20
(c)
If at any time:
(i)
except if an Event of Default has occurred and is continuing, National Rural, in
its sole and absolute discretion, elects to remove the Collateral Agent;
or
(ii) the
Collateral Agent shall cease to be eligible under Section 5.05 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, National Rural may remove the Collateral Agent by delivery of a
National Rural 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,
National Rural shall promptly appoint a successor Collateral Agent by delivering
a National Rural Notice to the retiring Collateral Agent, the successor
Collateral Agent and the Control Party to such effect.
SECTION
5.07. Acceptance
of Appointment by Successor. Every successor Collateral Agent
appointed hereunder shall execute, acknowledge and deliver to National Rural,
the Control Party 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 retiring Collateral Agent; but, on
request of National Rural, the Control Party 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 5.04. Upon request of any
such successor Collateral Agent, National Rural 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 5.05 hereof.
SECTION
5.08. 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 5.05
hereof without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
21
ARTICLE
VI
Miscellaneous
SECTION
6.01. 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 II 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 shall be deemed to have been delivered at the time it is
sent by facsimile (fax) transmission to the party or parties to which it is
given.
(a)
All National Rural Notices and National Rural Orders delivered to the Collateral
Agent shall be contemporaneously copied to the Control Party by National Rural;
all Control Party Notices and Control Party Orders delivered to the Collateral
Agent shall be contemporaneously copied by ▇▇▇▇▇▇ Mac to National Rural; and all
Collateral Agent notices delivered to either National Rural or ▇▇▇▇▇▇ Mac shall
be contemporaneously copied to the other such party by the Collateral
Agent.
SECTION
6.02. 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 6.02, 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 National Rural, the Collateral Agent, the Purchaser and ▇▇▇▇▇▇
Mac.
SECTION
6.03. 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 National Rural, the Collateral Agent, the Purchaser, the Control Party
or ▇▇▇▇▇▇ Mac that are contained in this Pledge Agreement shall bind and inure
to the benefit of their respective successors and assigns.
22
SECTION
6.04. 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
6.05. 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
6.06. 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.
SECTION
6.07. 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 6.07.
SECTION
6.08. 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.
23
SECTION
6.09. Security
Interest Absolute. All rights of the Collateral Agent and/or the
Control Party hereunder, the grant of a security interest in the Pledged
Collateral and all obligations of National Rural hereunder shall be absolute and
unconditional irrespective of (a) any lack of validity or enforceability of
the Note Purchase Agreement, any Note, 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 Note Purchase Agreement, any
Note 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,
National Rural in respect of the Obligations or this Pledge
Agreement.
SECTION
6.10. Termination or
Release. (a) This Pledge Agreement shall terminate on the
date when the Obligations have been indefeasibly paid in full, and at such time
the Lien hereof shall be released.
(b)
Upon any withdrawal, substitution or other disposal by National Rural 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.
(c)
In connection with any termination or release pursuant to paragraph (a) or
(b) the Collateral Agent shall deliver to National Rural the Pledged Collateral
and shall execute and deliver to National Rural, at National Rural’s expense,
all documents that National Rural shall reasonably request to evidence such
termination or release. Any execution and delivery of documents pursuant
to this Section 6.10 shall be without recourse to or warranty by the
Collateral Agent.
SECTION
6.11. Collateral
Agent Appointed Attorney-in-Fact. National Rural hereby appoints
the Collateral Agent the attorney-in-fact of National Rural 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 National Rural (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 National Rural to notify, obligors
under Pledged Securities to make payment directly to the Collateral Agent; and
(f) subject to the second sentence of Section 4.02(a), 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 the
Control Party 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
National Rural for any act or failure to act hereunder, except for their own
gross negligence or willful misconduct.
[SIGNATURE
PAGE FOLLOWS]
24
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.
|
▇▇▇▇▇▇
MAC MORTGAGE
SECURITIES
CORPORATION,
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By
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||
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Name:
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||
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Title:
|
||
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FEDERAL
AGRICULTURAL
MORTGAGE
CORPORATION,
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By
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Name:
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||
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Title:
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||
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NATIONAL
RURAL UTILITIES
COOPERATIVE
FINANCE CORPORATION,
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By
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Name:
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||
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Title:Title:
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U.S.
BANK NATIONAL ASSOCIATION,
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By
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Name:
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Title:Title:
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SCHEDULE I
TO
PLEDGE
AGREEMENT
ADDITIONAL
CRITERIA FOR ELIGIBLE SECURITIES1
Criteria for Eligible
Security of Class A Eligible Member: Each Class A Eligible Member
must satisfy the following criteria only on the date of the pledge of such
Eligible Security:
|
|
·
|
Long-Term
Debt to Net Utility Plant Ratio, as the average ratio of the most recent
three full calendar years for which financial information is available,
does not exceed 90%.
|
|
|
·
|
Modified
Debt Service Coverage Ratio—Distribution, as the average ratio of the most
recent three full calendar years for which financial information is
available, is greater than or equal to
1.35.
|
|
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·
|
Equity
to Total Assets Ratio, as the average ratio of the most recent three full
calendar years for which financial information is available, is greater
than or equal to 20%.
|
|
|
·
|
The
Eligible Security has a Facility Rating by National Rural of “4.9” or
lower.
|
Criteria for Eligible
Security of Class B Eligible Member: Each Class B Eligible Member
must satisfy the following criteria only on the date of the pledge of such
Eligible Security:
|
|
·
|
Equity
to Total Capitalization Ratio, as the average ratio of the most recent
three full calendar years for which financial information is available, is
greater than or equal to 25%.
|
|
|
·
|
Modified
Debt Service Coverage Ratio—G&T, as the average ratio of the most
recent three full calendar years for which financial information is
available, is greater than or equal to
1.10.
|
|
|
·
|
Equity
to Total Assets Ratio, as the average ratio of the most recent three full
calendar years for which financial information is available, is greater
than or equal to 10%.
|
|
|
·
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The
Eligible Security has a Facility Rating by National Rural of “4.9” or
lower.
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1Upon
notice to the Collateral Agent, the criteria set forth on this Schedule 1 may be
modified as mutually agreed upon in writing by ▇▇▇▇▇▇ Mac and National
Rural. The criteria set forth on this Schedule I shall be required to be
satisfied only as of the date of pledge of (1) any Pledged Securities that is
being pledged for a new advance or (2) any Pledged Securities that is being
pledged for an existing advance which is in substitution of, or in addition to,
existing collateral, and such criteria shall not be required to be satisfied
with respect to Eligible Securities after such date.
SCHEDULE II
TO
PLEDGE
AGREEMENT
Addresses for
Notices
|
|
The
addresses referred to in Section 6.01 hereof, for purposes of
delivering communications and notices, are as
follows:
|
If to the
Purchaser:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice
President
If to
▇▇▇▇▇▇ Mac:
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
Attention
of: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President – CFO
With a
copy to:
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
Attention
of: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Assistant General Counsel
If to
National Rural:
National
Rural Utilities Cooperative Finance Corporation
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone:
▇▇▇-▇▇▇-▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
Attention
of: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President &
Chief
Financial Officer
SCHEDULE II
TO
PLEDGE
AGREEMENT
With a
copy to:
National
Rural Utilities Cooperative Finance Corporation
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone:
▇▇▇-▇▇▇-▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
Attention
of: ▇▇▇▇ ▇. List, Esq., Senior Vice President &
General Counsel
If to the
Collateral Agent:
U.S. Bank
National Association
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention
of: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ANNEX
A
TO
PLEDGE
AGREEMENT
NATIONAL
RURAL UTILITIES
COOPERATIVE
FINANCE CORPORATION
PLEDGE
AGREEMENT DATED AS OF MAY 22, 2009
CERTIFICATE
OF PLEDGED COLLATERAL FILED WITH
U.S. BANK
NATIONAL ASSOCIATION, Collateral Agent
________________,
Chief Executive Officer (or Chief Financial Officer or Controller) and
____________________, Vice-President, respectively, of National Rural Utilities
Cooperative Finance Corporation, hereby certify to the Control Party 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 certified hereby, remaining on
deposit with the Collateral Agent, as shown on Schedule A
hereto, is
|
$ | |||
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2.
|
The
Allowable Amount of Pledged Collateral certified hereby, being deposited
as shown on Schedule B
hereto, is
|
$ | |||
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3.
|
The
aggregate principal amount of the Note(s) outstanding at the date hereof
is
|
$ | |||
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4.
|
The
aggregate amount, if any, of the Note(s) to be issued on the basis of this
Certificate is
|
$ | |||
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5.
|
The
sum of amounts in items 3 and 4 is
|
$ | |||
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6.
|
The
aggregate amount by which the Allowable Amount of Pledged Collateral
exceeds the aggregate principal amount of the Note(s) outstanding (the sum
of items 1 and 2 minus item 5) is
|
$ |
ANNEX
A
TO
PLEDGE
AGREEMENT
|
7.
|
The
cumulative amount by which each Eligible Security listed on
Schedule A or Schedule B exceeds $35 million is
|
$ | |||
|
8.
|
The
Allowable Amount of Pledged Collateral which is included in items 1 and 2
above from Class B Eligible Members does not constitute more than 20% of
the aggregate amount of any notes or bonds: (1) pledged hereunder; (2)
pledged to secure any other notes or bonds issued by National Rural or any
affiliate to ▇▇▇▇▇▇ Mac or any affiliate; (3) sold by National Rural or
any affiliate to ▇▇▇▇▇▇ Mac or any affiliate; or (4) sold to any trust
whose beneficial ownership is owned or controlled by ▇▇▇▇▇▇ Mac or an
affiliate.
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||||
|
9.
|
To
the knowledge of the undersigned, each Eligible Security from a Class A
Eligible Member the Allowable Amount of which is included in item 2
satisfies the following criteria on the date of this Certificate:
(1) Long-Term Debt to Net Utility Plant Ratio, as the average ratio of the
most recent three full calendar years for which financial information is
available, does not exceed 90%; (2) Modified Debt Service Coverage
Ratio—Distribution, as the average ratio of the most recent three full
calendar years for which financial information is available, is greater
than or equal to 1.35; (3) Equity to Total Assets Ratio, as the average
ratio of the most recent three full calendar years for which financial
information is available, is greater than or equal to 20%; and (4) the
Eligible Security has a Facility Rating by National Rural of “4.9” or
lower.
|
ANNEX
A
TO
PLEDGE
AGREEMENT
|
10.
|
To
the knowledge of the undersigned, each Eligible Security from a Class B
Eligible Member the Allowable Amount of which is included in item 2
satisfies the following criteria on the date of this Certificate:
(1) Equity to Total Capitalization Ratio, as the average ratio of the most
recent three full calendar years for which financial information is
available, is greater than or equal to 25%; (2) Modified Debt Service
Coverage Ratio—G&T, as the average ratio of the most recent three full
calendar years for which financial information is available, is greater
than or equal to 1.10; (3) Equity to Total Assets Ratio, as the average
ratio of the most recent three full calendar years for which financial
information is available, is greater than or equal to 10%; and (4) the
Eligible Security has a Facility Rating by National Rural of “4.9” or
lower.
|
||||
|
11.
|
So
far as is known to the undersigned, no Event of Default
exists.
|
||||
|
12.
|
To
the extent an Eligible Security listed on Schedule A or Schedule B
has an outstanding principal amount of more than $35 million, the
Allowable Amount of Pledged Collateral set forth in items 1 and 2 above
reflects only $35 million with respect to such Eligible Security (or
a lesser amount representing the difference between $35 million and
the aggregate amount of any notes or bonds of the same Eligible Member
pledged or sold to ▇▇▇▇▇▇ Mac or any affiliate in any previous
transaction), with any excess above $35 million (or the lesser
amount) reflected in item 7 above.
|
||||
|
13.
|
Each
Eligible Member whose notes are Pledged Securities has received or is
eligible to receive a loan or commitment for a loan from RUS or any
successor agency.
|
ANNEX
A
TO
PLEDGE
AGREEMENT
All terms
which are defined in the Pledge Agreement are used herein as so
defined.
Dated:
_____________________
|
OF
NATIONAL RURAL UTILITIES
COOPERATIVE
FINANCE CORPORATION
|
ANNEX
A
TO
PLEDGE
AGREEMENT
PLEDGED
SECURITIES ON DEPOSIT
SCHEDULE
A TO OFFICERS’ CERTIFICATE
DATED
|
Eligible Securities
|
Name of Issuer
|
Allowable Amount (Item 1)
|
||||||
|
Pledged
Securities
(Here
List Securities)
|
||||||||
ANNEX
A
TO
PLEDGE
AGREEMENT
PLEDGED
SECURITIES BEING DEPOSITED
SCHEDULE
B TO OFFICERS’ CERTIFICATE
DATED
|
Eligible Securities
|
Name of Issuer
|
Allowable Amount (Item 2)
|
||||||
|
Pledged
Securities
(Here
List Securities)
|
||||||||