<PAGE>1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended February 28, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From To
Commission File Number 1-7102
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DISTRICT OF COLUMBIA 52-0891669
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
Woodland Park, 2201 Cooperative Way, Herndon, VA 22071-3025
(Address of principal executive offices)
Registrant's telephone number, including the area code (703) 709-6700
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.YES X NO
Page 1 of 26
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<TABLE>
<CAPTION>
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
COMBINED BALANCE SHEETS
(Dollar Amounts In Thousands)
A S S E T S
(Unaudited)
February 28, 1995 May 31, 1994
<S> <C> <C>
Cash $ 27,833 $ 22,168
Marketable Securities 10,000 -
Debt Service Investments 42,185 33,668
Loans To Members, net 6,578,803 5,921,022
Receivables 86,885 90,160
Fixed Assets, net 37,793 38,718
Debt Service Reserve Funds 113,797 107,095
Other Assets 7,549 11,465
Total Assets $ 6,904,845 $ 6,224,296
The accompanying notes are an integral part of these combined financial
statements.
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
COMBINED BALANCE SHEETS
(Dollar Amounts In Thousands)
L I A B I L I T I E S A N D M E M B E R S' E Q U I T Y
(Unaudited)
February 28, 1995 May 31, 1994
<S> <C> <C>
Notes Payable, due within one year $ 1,611,591 $ 1,607,975
Accounts Payable 14,658 18,529
Accrued Interest Payable 44,691 35,597
Long-Term Debt 3,699,259 3,042,068
Other Liabilities 22,952 36,301
Commitments, Guarantees and
Contingencies (Notes 7, 9, 10 and 11)
Members' Subordinated Certificates:
Membership subscription
certificates 637,685 640,520
Loan & guarantee certificates 602,202 582,338
Total Members' Subordinated
Certificates 1,239,887 1,222,858
Members' Equity 271,807 260,968
Total Members' Subordinated Certi-
ficates & Members' Equity 1,511,694 1,483,826
Total Liabilities and Members'
Equity $ 6,904,845 $ 6,224,296
The accompanying notes are an integral part of these combined financial
statements.
</TABLE>
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<TABLE>
<CAPTION>
UNAUDITED
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
COMBINED STATEMENTS OF INCOME, EXPENSES AND NET MARGINS
(Dollar Amounts in Thousands)
For the Quarters and Nine Months Ended February 28, 1995 and 1994
Quarters Ended Nine Months Ended
February 28, February 28,
1995 1994 1995 1994
<S> <C> <C>
Operating Income-Interest on
loans to members $116,210 $ 83,317 $318,708 $245,923
Less-cost of funds allocated 96,084 65,338 259,512 192,917
Gross operating margin 20,126 17,979 59,196 53,006
Expenses:
General, administrative and
loan processing 4,150 4,141 12,093 12,211
Provision for loan and
guarantee losses 1,875 11,875 5,625 15,625
Total expenses 6,025 16,016 17,718 27,836
Operating margin 14,101 1,963 41,478 25,170
Nonoperating Income 916 1,056 2,498 3,468
Net Margins $ 15,017 $ 3,019 $ 43,976 $ 28,638
The accompanying notes are an integral part of these combined financial
statements.
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
(UNAUDITED)
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
COMBINED STATEMENTS OF CHANGES IN MEMBERS' EQUITY
(Dollar Amounts in Thousands)
For the Quarters Ended February 28, 1995 and 1994
Patronage Capital
Allocated
Educa-Unal- General
Member-tional located Reserve
Total ships Fund Margins Fund Other
<S> <C> <C> <C> <C> <C> <C>
Quarter Ended February 28, 1995
Balance at November 30, 1994 $256,780 $1,366 $353 $31,248 $318 $223,495
Retirement of patronage capital - - - - - -
Net Margins 15,017 - - 15,017 - -
Other 10 11 - - - (1)
Balance at February 28, 1995 $271,807 $1,377 $353 $46,265 $318 $223,494
Quarter Ended February 28, 1994
Balance at November 30, 1993 $255,336 $1,300 $345 $27,907 $193 $225,591
Retirement of patronage capital (670) - - - - (670)
Net Margins 3,019 - - 3,019 - -
Other 23 19 - 1 - 3
Balance at February 28, 1994 $257,708 $1,319 $345 $30,927 $193 $224,924
The accompanying notes are an integral part of these combined financial statements.
</TABLE>
(UNAUDITED)
<PAGE> 6
<TABLE>
<CAPTION>
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
COMBINED STATEMENTS OF CHANGES IN MEMBERS' EQUITY
(Dollar Amounts in Thousands)
For the Nine Months Ended February 28, 1995 and 1994
Patronage Capital
Allocated
Educa- Unal- General
Member- tional located Reserve
Total ships Fund Margins Fund Other
<S> <C> <C> <C> <C> <C> <C>
Nine Months Ended February 28, 1995
Balance at May 31, 1994 $260,968 $1,339 $325 $2,289 $495 $256,520
Retirement patronage capital (33,701) - - - (177) (33,524)
Net Margins 43,976 - - 43,976 - -
Other 564 38 28 - - 498
Balance at February 28, 1995 $271,807 $1,377 $353 $46,265 $318 $223,494
Nine Months Ended February 28, 1994
Balance at May 31, 1993 $258,299 $1,247 $312 $ 2,289 $488 $253,963
Retirement patronage capital (28,654) - - - (295) (28,359)
Net Margins 28,638 - - 28,638 - -
Other (575) 72 33 - - (680)
Balance at February 28, 1994 $257,708 $1,319 $345 $30,927 $193 $224,924
The accompanying notes are an integral part of these combined financial statements.
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
(UNAUDITED)
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
COMBINED STATEMENTS OF CASH FLOWS
(Dollar Amounts In Thousands)
For the Nine Months Ended February 28, 1995 and 1994
1995 1994
<S> <C> <C>
Cash Flows From Operating Activities:
Accrual basis net margins $ 43,976 $ 28,638
Add (deduct):
Provision for loan and guarantee losses 5,625 15,625
Depreciation 1,149 1,170
Amortization of deferred income (13,555) (14,189)
Amortization of bond issuance costs 977 1,644
Add (deduct) changes in accrual accounts:
Receivables (739) 10,292
Accounts payable (3,871) (540)
Accrued interest payable 9,094 (2,912)
Deferred Income 1,554 13,755
Other 5,503 (4,692)
Net cash flows provided by operating
activities 49,713 48,791
Cash Flows From Investing Activities:
Advances made on loans (2,770,987) (1,624,083)
Principal collected on loans 2,107,581 1,035,005
Investments in fixed assets (224) (159)
Net cash flows used in investing activities (663,630) (589,237)
Cash Flows From Financing Activities:
Notes payable, net 403,616 804,019
Debt service and arbitrage investments, net (18,517) (24,203)
Proceeds from issuance of Long-Term Debt 426,736 104,617
Payments for retirement of Long-Term Debt (169,665) (368,306)
Proceeds from issuance of Members' Subordinated
Certificates 25,839 24,473
Payments for retirement of Members' Subordinated
Certificates (11,373) (9,481)
Payments for retirement of patronage capital (37,054) (29,121)
Net cash flows provided by financing activities 619,582 501,998
Net Cash Flows 5,665 (38,448)
Beginning Cash and Cash Equivalents 22,168 55,450
Ending Cash and Cash Equivalents $ 27,833 $ 17,002
Supplemental Disclosure of Cash Flow Information:
Cash paid during nine months for Interest Expense $ 341,633 $ 196,622
The accompanying notes are an integral part of these combined financial
statements.
</TABLE>
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NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
Notes to Combined Financial Statements
1. General Information
National Rural Utilities Cooperative Finance Corporation ("CFC")
is a private, not-for-profit cooperative association which
provides supplemental financing and related financial service
programs for the benefit of its members. Membership is limited
to certain cooperatives, not-for-profit corporations, public
bodies and related service organizations, as defined in CFC's
Bylaws. CFC is exempt from the payment of Federal income taxes
under Section 501(c)(4) of the Internal Revenue Code.
CFC's 1,046 members as of February 28, 1995, included 903 rural
electric utility system members ("Utility Members"), virtually
all of which are consumer-owned cooperatives, 72 service members
and 71 associate members. The Utility Members included 837
distribution systems and 66 generation and transmission systems
operating in 46 states and U.S. territories. At December 31,
1993, CFC's member systems served approximately 12.4 million
consumers, representing service to an estimated 32.5 million
ultimate users of electricity and owned approximately $62.6
billion (before depreciation of $17.9 billion) in total utility
plant.
On December 5, 1994, the CFC Board of Directors announced their
selection of Mr. Sheldon C. Petersen, effective March 1, 1995,
as CFC's third Governor and Chief Executive Officer since its
incorporation in 1969, to replace the retiring Mr. Charles B.
Gill. Mr. Petersen, formerly the Assistant to the Governor, is
an 18-year veteran of the rural electric industry.
Rural Telephone Finance Cooperative ("RTFC") was incorporated
as a private cooperative association in the State of South
Dakota in September, 1987. RTFC is a controlled affiliate of
CFC and was created for the purpose of providing, securing and
arranging financing for its rural telecommunication members and
affiliates. RTFC's results of operations and financial
condition have been combined with those of CFC in the
accompanying financial statements. As of February 28, 1995,
RTFC had 384 members. RTFC is a taxable entity under Subchapter
T of the Internal Revenue Code and accordingly takes tax
deductions for allocations of net margins to its patrons.
Guaranty Funding Cooperative ("GFC") was incorporated as a
private cooperative association in the state of South Dakota in
December 1991. GFC is a controlled affiliate of CFC and was
created for the purpose of providing and servicing loans to its
members to fund the financing of loans guaranteed by the Rural
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<PAGE> 9
Utilities Service ("RUS", formerly known as the Rural
Electrification Administration, or "REA"). GFC's results of
operations and statements of financial condition have been
combined with those of CFC and RTFC in the accompanying
financial statements. Loans held by GFC were transferred to GFC
by CFC and are guaranteed by the RUS. GFC had four members
other than CFC at February 28, 1995. GFC is a taxable entity
under Subchapter T of the Internal Revenue Code and accordingly
takes deductions for allocations of net margins to its patrons.
In the opinion of management, the accompanying unaudited
combined financial statements contain all adjustments (which
consist only of normal recurring accruals) necessary to present
fairly the combined financial position of CFC, RTFC and GFC as
of February 28, 1995 and May 31, 1994, and the combined results
of operations, cash flows and changes in members' equity for the
nine months ended February 28, 1995 and 1994.
The Notes to Combined Financial Statements for the years ended
May 31, 1994 and 1993 should be read in conjunction with the
accompanying financial statements. (See CFC's Form 10-K for the
year ended May 31, 1994, filed on August 25, 1994). Certain
items on the May 31, 1994 Combined Balance Sheets have been
reclassified to conform with the February 28, 1995 presentation.
Principles of Combination
The accompanying financial statements include the combined
accounts of CFC, RTFC and GFC, after elimination of all material
intercompany accounts and transactions. CFC has a $1,000
membership interest in RTFC and GFC. CFC exercises control over
RTFC and GFC through majority representation on their Boards of
Directors. CFC manages the affairs of RTFC through a long-term
management agreement. CFC services the loans for GFC for which
it collects a servicing fee. As of February 28, 1995, CFC had
committed to lend RTFC up to $1,800.0 million to fund loans to
its members and their affiliates. RTFC had outstanding loans
and unadvanced loan commitments totaling $1,163.0 million and
$1,135.4 million as of February 28, 1995 and May 31, 1994,
respectively. RTFC's net margins are allocated to RTFC's
borrowers. Summary financial information relating to RTFC is
presented below:
<TABLE>
<CAPTION>
At February 28, At May 31,
1995 1994
(Dollar Amounts In Thousands)
<S> <C> <C>
Outstanding loans to members
and their affiliates $872,891 $653,644
Total assets 988,349 743,761
Notes payable to CFC 872,891 653,644
Total liabilities 891,249 663,810
Members' Equity and
Subordinated Certificates 97,100 79,951
</TABLE>
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<PAGE> 10
<TABLE>
<CAPTION>
For the Nine Months Ended February 28,
1995 1994
(Dollar Amounts In Thousands)
<S> <C> <C>
Operating income $38,879 $21,156
Net margins 1,466 1,360
</TABLE>
<TABLE>
<CAPTION>
Summary financial information relating to GFC is presented
below:
At February 28, At May 31,
1995 1994
(Dollar Amounts In Thousands)
<S> <C> <C>
Outstanding loans to members $421,665 $524,081
Total assets 439,553 540,913
Notes payable to CFC 427,875 531,302
Total liabilities 437,379 539,521
Members' Equity 2,174 1,392
</TABLE>
<TABLE>
<CAPTION>
For the Nine Months Ended February 28,
1995 1994
(Dollar Amounts In Thousands)
<S> <C> <C>
Operating income $20,839 $8,312
Net margins 2,142 794
</TABLE>
Unless stated otherwise, references to CFC relate to CFC, RTFC
and GFC on a combined basis.
2. Debt Service Account
A provision of the 1972 Indenture requires monthly deposits into
a debt service account held by the trustee, generally in amounts
equal to one-twelfth of the total annual interest payments,
annual sinking fund payments and the principal amount of bonds
maturing within one year. These deposits may be invested in
permitted investments, as defined in the indenture (generally
bank certificates of deposit and prime rated commercial paper).
On February 15, 1994, CFC completed a new Collateral Trust Bond
Indenture ("1994 Indenture") with First Bank National
Association as trustee. This indenture does not require the
maintenance of a debt service account. CFC's indenture with
Chemical Bank as trustee, dated December 1, 1972, ("1972
Indenture"), does require the maintenance of a debt service
account. All future Collateral Trust Bonds will be issued under
the 1994 Indenture.
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<PAGE> 11
3. Loans Pledged as Collateral to Secure Collateral Trust Bonds
As of February 28, 1995 and May 31, 1994, mortgage notes
representing approximately $575.1 million and $717.8 million,
respectively, related to outstanding long-term loans to members,
were pledged as collateral to secure Collateral Trust Bonds
issued under the 1972 Indenture. Additionally, as of February
28, 1995 and May 31, 1994, mortgage notes representing
approximately $220.6 million and $0 million respectively,
related to outstanding long-term loans to members were pledged
as collateral to secure Collateral Trust Bonds issued under the
1994 Indenture. Both the 1972 Indenture and the 1994 Indenture
require that CFC pledge eligible mortgage notes (or other
permitted assets) as collateral that at least equal the
outstanding balance of Collateral Trust Bonds. Under CFC's
revolving credit agreement (See Note 6), CFC cannot pledge
mortgage notes in excess of 150% of Collateral Trust Bonds
outstanding.
Collateral Trust Bonds outstanding under the 1972 Indenture at
February 28, 1995 and May 31, 1994 were $536.1 million and
$539.9 million, respectively. Collateral Trust Bonds
outstanding under the 1994 Indenture at February 28, 1995 and
May 31, 1994 were $150.0 million and $0 million, respectively.
4. Allowance for Loan and Guarantee Losses
CFC maintains an allowance for loan and guarantee losses at a
level considered to be adequate in relation to the quality and
size of its loan and guarantee portfolio. It is CFC's policy
to periodically review its loans and guarantees and to make
adjustments to the allowance as necessary.
The allowance is based on estimates, and accordingly, actual
loan and guarantee losses may differ from the allowance amount.
As of February 28, 1995 and May 31, 1994, such allowance was
$193.8 million and $188.2 million, respectively.
5. Members' Subordinated Certificates
Members' Subordinated Certificates are subordinated obligations
purchased by members as a condition of membership and in
connection with CFC's extension of long-term loans and
guarantees to them. Those issued as a condition of membership
(Subscription Capital Term Certificates) generally mature 100
years from issuance date and bear interest at 5% per annum. The
other certificates either mature 46 to 50 years from issuance
or amortize proportionately based on the principal balance of
the credit extended, and either are non-interest-bearing or bear
interest at varying rates.
The proceeds from certain non-interest-bearing subordinated
certificates issued in connection with CFC's guarantees of tax-
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<PAGE> 12
exempt bonds are pledged by CFC to the debt service reserve fund
established in connection with the bond issue, and any earnings
from the investment of the fund inure solely to the benefit of
the member.
6. Credit Arrangements
As of February 28, 1995, CFC had two revolving credit agreements
totaling $4,050 million with 55 banks, including Morgan Guaranty
Trust Company of New York as Arranger, Administrative Agent, and
Co-Syndication Agent and The Bank of Nova Scotia as Co-
Syndication Agent. These credit facilities are used principally
to provide liquidity support for CFC's outstanding commercial
paper, CFC's guaranteed commercial paper issued by the National
Cooperative Services Corporation ("NCSC") and the adjustable or
floating/fixed rate bonds which CFC has guaranteed and agreed
to purchase for the benefit of its members. The prior revolving
credit facilities that were replaced on February 28, 1995,
totaled $2,900.0 million and provided liquidity support as of
May 31, 1994.
Under the respective revolving credit agreements, CFC can borrow
up to $2,430.0 million until February 28, 2000 (the "five-year
facility"), and $1,620.0 million until February 27, 1996 (the
"364-day facility"). Any amounts outstanding will be due on
those dates. In connection with the five-year facility, CFC
pays a per annum facility/commitment fee of .125 of 1%. The per
annum facility fee for the 364-day is .10 of 1%. If CFC's
short-term ratings decline, these fees may be increased by no
more than .125 of 1%. Borrowings under both agreements will be
at one or more rates as defined in the agreements, as selected
by CFC.
The revolving credit agreements require CFC, among other things
to maintain Members' Equity and Members' Subordinated
Certificates of at least $1,334.4 million (increased each fiscal
year by 90% of net margins not distributed to members), an
average fixed charge coverage ratio over the six most recent
fiscal quarters of at least 1.025 and prohibits the retirements
of patronage capital unless CFC has achieved a fixed charge
coverage ratio of at least 1.05 for the preceding fiscal year.
The credit agreements prohibit CFC from incurring senior debt
(including guarantees but excluding indebtedness incurred to
fund RUS guaranteed loans) in an amount in excess of ten times
the sum of Members' Equity and subordinated certificates and
restricts, with certain exceptions, the creation by CFC of
liens on its assets and certain other conditions to borrowing.
The agreement also prohibits CFC from pledging collateral in
excess of 150% of the principal amount of Collateral Trust Bonds
outstanding. Provided that CFC is in compliance with these
financial covenants (including that CFC has no material
contingent or other liability or material litigation that were
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<PAGE> 13
not disclosed by or reserved against in its most recent annual
financial statements) and is not in default, CFC may borrow
under the agreements until the termination dates.
As of February 28, 1995 and May 31, 1994, CFC was in compliance
with all covenants and conditions under its revolving credit
agreements. There were no borrowings outstanding under the
revolving credit agreements.
At February 28, 1995 and May 31, 1994, CFC classified $2,430.0
million and $2,030.0 million, respectively of its notes payable
outstanding as long-term debt. CFC expects to maintain more
than $2,430.0 million of notes payable during the next twelve
months. If necessary, CFC can refinance such notes payable on
a long-term basis by borrowing under the five-year facility
subject to the conditions herein.
At May 31, 1994, CFC maintained $610.0 million in separately
negotiated lines of credit, documented by a uniform line of
credit agreement for which a commitment fee of .10 of 1% was
paid. These lines of credit contained the same financial
covenants as the revolving credit agreements and could be
terminated upon 30 days notice by either party. All such lines
were terminated by CFC as of February 28, 1995.
7. Unadvanced Loan Commitments
As of February 28, 1995 and May 31, 1994, CFC had unadvanced
loan commitments, summarized by type of loan, as follows:
<TABLE>
<CAPTION>
(Dollar Amounts In Thousands)
February 28, 1995 May 31, 1994
<S> <C> <C>
Long-term $1,311,987 $1,375,078
Intermediate-term 247,499 275,072
Short-term 3,074,457 2,992,023
Telecommunications 291,239 481,744
Associate Member 57,847 63,613
Nonperforming (See Note 11(b)) 10,000 -
Restructured (See Note 11(c)) 20,000 20,000
Total unadvanced loan
commitments $5,013,029 $5,207,530
</TABLE>
Unadvanced commitments include loans approved by CFC for which
loan contracts have not yet been executed and for which loan
contracts have been executed but funds have not been advanced.
CFC may require additional information to assure itself that all
conditions for advance of funds have been fully met and that
there has been no material change in the member's condition as
represented in the documents supplied to CFC. Since commitments
may expire without being fully drawn upon, the total amounts
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<PAGE> 14
reported as commitments do not necessarily represent future cash
requirements. Collateral and security requirements for loan
commitments are identical to those for advanced loans.
8. Retirement of Patronage Capital
Patronage capital in the amount of $33.7 million was retired on
August 31, 1994, representing one-sixth of the total allocations
for fiscal years 1988, 1989 and 1990 and one-half of the
allocation for fiscal year 1994. Future retirements of
patronage capital allocated to patrons may be made annually as
determined by CFC's Board of Directors with due regard for CFC's
financial condition.
9. Guarantees
As of February 28, 1995 and May 31, 1994, CFC had guaranteed the
following contractual obligations of its members:
<TABLE>
<CAPTION>
(Dollar Amounts In Thousands)
February 28, 1995 May 31, 1994
<S> <C> <C>
Long-term tax-exempt bonds (A) $1,497,545 $1,494,200
Debt portions of leveraged lease
transactions (B) 568,683 646,472
Indemnifications of tax benefit
transfers (C) 393,922 414,512
Other guarantees (D) 119,508 100,643
Total guarantees $2,579,658 $2,655,827
</TABLE>
(A) CFC has unconditionally guaranteed to the holders or to
trustees for the benefit of holders of these bonds the full
principal, premium (if any) and interest payments on each
bond when due. In the event of default, the bonds cannot be
accelerated as long as CFC makes the scheduled debt service
payments. In addition, CFC has agreed to make up, at certain
times, deficiencies in the debt service reserve funds for
some of these issues of bonds. Of the amounts shown, $1,200.0
million and $1,214.6 million as of February 28, 1995 and May
31, 1994, respectively, are adjustable or floating/fixed rate
bonds. The interest rate on such bonds may be converted to
a fixed rate as specified in the indenture for each bond
offering. During the variable rate period (including at the
time of conversion to a fixed rate), CFC has unconditionally
agreed to purchase bonds tendered or called for redemption if
such bonds are not sold to other purchasers by the
remarketing agents.
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<PAGE> 15
(B) CFC has unconditionally guaranteed the repayment of debt
raised by National Cooperative Services Corporation ("NCSC")
for leveraged lease transactions.
(C) CFC has unconditionally guaranteed to lessors certain
indemnity payments which may be required to be made by the
lessees in connection with tax benefit transfers. The
amounts of such guarantees reach a maximum and then decrease
over the life of the lease.
(D) At February 28, 1995 and May 31, 1994, CFC had
unconditionally guaranteed commercial paper, along with the
related interest rate exchange agreement, issued by NCSC of
$34.5 million and $34.8 million, respectively.
10. Interest Rate Exchange Agreements
CFC enters into interest swaps to manage its interest rate risk.
As of February 28, 1995 and May 31, 1994, CFC had $330.0 million
and $130 million, respectively, outstanding in interest rate
exchange agreements. According to agreements related to $130
million, CFC pays a fixed rate of interest and receives interest
based on a variable rate. According to agreements related to
$200.0 million, CFC pays a variable rate (a commercial paper
indexed rate) of interest and receives interest based on a
variable rate (a LIBOR indexed rate). CFC contracted the $200.00
million interest rate exchange agreement in conjunction with the
issuance of $150 million in variable rate Collateral Trust Bonds,
Series 1994-A, due September 15, 1996 and the issuance of $50.0
million in variable rate MTN's on February 28, 1995 due February
27, 1998. The net cost of the interest rate exchange agreements
to CFC is included in the cost of funds.
CFC is exposed on these interest rate swap agreements to interest
rate risk if the counterparty to the interest rate swap agreement
does not perform to the agreement's terms. CFC does have a
policy intended to limit counterparty credit risk by maintaining
swap agreements only with financial institutions with at least a
AA long-term credit rating.
11. Contingencies
(A) At February 28, 1995 and May 31, 1994, nonperforming loans in
the amount of $41.7 million and $44.9 million, respectively,
were on a nonaccrual basis with respect to interest income.
At February 28, 1995 and May 31, 1994, the total amount of
restructured debt was $187.4 million and $165.4 million,
respectively. CFC elected to apply all principal and
interest payments received against principal outstanding on
restructured debt of $133.6 million and $111.5 million,
respectively. At February 28, 1995 and May 31, 1994, CFC had
committed to lend $10.0 million and $0.0 million to non-
performing borrowers, and $20.0 million and $20.0 million
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<PAGE> 16
to restructured borrowers, respectively, all on a senior
secured lien basis. At May 31, 1994 CFC reported a total of
$53.0 million of unadvanced commitments to restructured
borrowers, $33.0 million of which is on a super secured basis
and has been reclassified as long-term in Note 7.
(B) On May 23, 1985, Wabash Valley Power Association, Inc.
("WVPA") filed a voluntary petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code in connection with the
canceled Marble Hill plant construction. On August 7, 1991,
the Bankruptcy Court confirmed WVPA's reorganization plan
pending approval of rates as contemplated in the plan.
In May 1993, CFC advanced $24.4 million in variable interest
rate secured loans to WVPA, which was used to effect an early
redemption of the tax-exempt bonds guaranteed by CFC. As
WVPA is operating under the Bankruptcy Court, CFC has placed
the loans on a non-accrual basis with respect to interest
income recognition. The loans are classified as
nonperforming. As of February 28, 1995, $21.4 million was
outstanding to WVPA.
On June 22, 1994, the U.S. District Court affirmed (over
RUS's objection) the Wabash plan in reorganization. RUS
appealed to the Seventh Circuit Court of Appeals and a
decision is expected soon. The Bankruptcy Court approved
Wabash obtaining a priority facility in the amount of $4
million, CFC has determined that it would provide such
financing with a priority lien. Under the Wabash plan, CFC
would realize an estimated total loss of approximately $12
million ($8.6 million of which has been written off to date),
after the offset of subordinated capital term certificates
(without taking into account interest since the petition
date). CFC and RUS have agreed to distribute all settlement
proceeds from Wabash in compliance with provisions under the
shared mortgage. Upon resolution of the bankruptcy there
will be a final accounting of the cash flow subsequent to the
petition date. At this time it is anticipated that this
final accounting will result in CFC making a net payment to
RUS to true-up the cash distribution between RUS and CFC.
Based on WVPA's preliminary reorganization plan, management
believes that CFC has adequately reserved for any potential
loss.
(C) Deseret Generation & Transmission Co-operative ("Deseret")
and its major creditors entered into an Agreement
Restructuring Obligations ("ARO") document that restructured
Deseret's debt obligation to RUS, CFC and certain other
creditors, including certain lease payments due on the
Bonanza Power Plant. The ARO, which closed in January 1991
with an effective date of January 1, 1989, provides for the
- 16 -
<PAGE> 17
reduction of Deseret's debt service and rental obligations on
the Bonanza Power Plant until 1996 when large sales of power
are intended to commence.
Under the ARO assumptions, CFC expects to fund Deseret's cash
flow shortfalls until at least 1996 under its various
guarantees of debt obligations. Deseret's ability to
generate enough cash flow to service its current debt and
rental payments as well as to begin repayment of the
shortfall funded by CFC thereafter depends on whether it is
able to make the large power sales on which the ARO is
premised. Changes in power demands of Deseret's distribution
system members and the inability of Deseret to sell power to
nonmembers at prices contemplated prior to closing the ARO
have resulted in the revision of Deseret's cash flow
projections since the closing of the ARO. As a result of
these changes, Deseret may be unable to satisfy its payment
obligations under the ARO as early as the end of 1995.
Under the ARO, CFC expected to fund Deseret's cash flow
shortfalls totaling $117 million and expected a maximum
exposure of $439 million in 1996. At February 28, 1995, CFC
had funded $115.9 million of the shortfall. CFC's current
exposure of $456.4 million is greater than the expected
maximum from the ARO because it loaned Deseret funds for the
early redemption, at a premium, of two high interest rate
bond issues.
In response to requests for proposals which Deseret sent out,
Deseret is now evaluating requests from parties for the
purchase of power, assets or the entire Deseret System.
Deseret has announced its intention to develop a proposal on
a stand alone basis, by mid-year.
CFC has placed all loans to Deseret on a nonaccrual basis
with respect to interest income recognition. CFC does not
anticipate interest income recognition on the outstanding
loans until Deseret's power sales produce cash flow
sufficient to service all debts.
As part of a separate agreement, in conjunction with the ARO,
CFC will be obligated to repay out of payments by Deseret
$25.9 million (plus interest) received from a party to the
Bonanza Lease transaction to cover shortfalls in the July
1989, January 1990 and July 1990 lease payments which were
funded by that party. This amount will be repaid if the
available annual cash flows were to exceed the debt repayment
requirements as defined in the ARO (i.e., CFC is no longer
required to fund a shortfall).
As of February 28, 1995, CFC had approximately $456.4 million
in current credit exposure on behalf of Deseret consisting of
- 17 -
<PAGE> 18
$133.6 million in secured loans, and $322.8 million for
guarantees by CFC of various direct and indirect obligations
of Deseret. CFC's guarantees include $8.7 million in tax-
benefit indemnifications and $29.8 million relating to mining
equipment for a coal supplier of Deseret. The remainder of
CFC's guarantee is for semiannual debt service payments on
$284.3 million of bonds issued in a $655 million leveraged
lease financing of a generating station in 1985. Under the
ARO, CFC has also provided Deseret a $20.0 million five-year
senior secured line of credit. At February 28, 1995, there
was no balance outstanding under this line of credit.
During the calendar year 1994 Deseret made monthly cash
payments to CFC which equaled the amount due under the ARO.
CFC believes that given the underlying collateral value and
the terms of the ARO, it has adequately reserved for any
potential loss on its loans and guarantees to Deseret.
(D) As a consequence of high costs associated with its ownership
interest in the Clinton Nuclear Station, Soyland Power
Cooperative ("Soyland") charged costs for wholesale power
which resulted in its member's retail rates being un-
competitive. Despite these high rates, Soyland was unable to
realize revenues sufficient to meet all of its obligations.
Soyland, RUS and CFC entered into a debt restructuring
agreement, dated as of December 15, 1994, which restructured
Soyland's indebtedness to RUS. As part of this agreement,
CFC agreed to extend additional credit to Soyland in the form
of a $30 million senior secured revolving credit facility and
a $30 million loan for capital additions. The revolving
credit loan and the capital additions loan have priority in
payment over the existing RUS loans and the prior CFC loan.
At February 28, 1995, CFC had $49.3 million in outstanding
long-term loans to Soyland which were secured equally and
ratably with the RUS on all assets and future revenues of
Soyland. In addition, CFC had $11.0 million outstanding to
Soyland under the senior secured revolving credit agreement
mentioned above. These lines of credit are to be paid before
all other secured debt. CFC also had $282.9 million in loans
to Soyland which are guaranteed by the U.S. Government (RUS).
CFC believes that, given the underlying collateral value of
its secured loans to Soyland, it has adequately reserved for
any potential loss on its loans.
(E) Vermont Electric Generating & Transmission Cooperative,
("VEG&T"), and Vermont Electric Cooperative, ("VEC"), have
both borrowed from RUS and CFC. Some of the RUS financing to
VEG&T was used to purchase a share of the Seabrook Nuclear
Station. While this interest in Seabrook has been sold, the
- 18 -
<PAGE> 19
proceeds from the sale were not sufficient to repay the
related RUS debt. VEC and VEG&T have been unable to raise
rates, which has caused their cash flows to be insufficient
to service the RUS and CFC debt. VEG&T and VEC stopped
making full payments to both parties in 1986. VEG and VEG&T
have reached separate agreements with RUS, CFC and another
major creditor as a basis for resolving issues among the
parties. Certain aspects of these agreements, including a
rate increase for VEC's customers, will require the approval
of the Vermont Public Service Board ("PSB"). At this time
the favorable action by the PSB is uncertain. If the PSB
acts favorably, CFC has agreed to a settlement with VEC and
VEG&T, whereby CFC will be paid $4,775,000.
At February 28, 1995, VEC owed principal in the amount of
$15.0 million to RUS and $1.9 million to CFC, all of which is
secured. At February 28, 1995, VEG&T owed principal in the
amount of $48.3 million of secured debt to RUS and $4.9
million of unsecured debt to CFC. CFC has secured a
judgement for the VEG&T obligations to CFC against both VEG&T
and VEC.
CFC has placed all loans to VEC and VEG&T on a nonaccrual
basis with respect to interest income recognition.
CFC believes that it has adequately reserved for any
potential loss on its loans to VEC and VEG&T.
12. Loans Guaranteed by RUS
At February 28, 1995, CFC held $429.1 million in Trust
Certificates related to the refinancings of Federal Financing
Bank loans. These Trust Certificates are supported by payments
from certain CFC Power Supply members whose payments are
guaranteed by RUS.
- 19 -
<PAGE> 20
Part I. Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
(all dollar amounts in millions)
Changes in Financial Condition
During the nine months ended February 28, 1995, CFC's total assets
increased by $680.5 or 10.9% to $6,904.8 from $6,224.3 at May 31,
1994, primarily due to increases of $657.8 in net loans outstanding
and $15.6 in cash and marketable securities. Changes to the loan
portfolio included increases of $618.2 in long-term loans and $148.5
in short-term loans offset by decreases of $17.6 in intermediate-term
loans and $104.4 in RUS guaranteed loans. Additionally, during the
first quarter there was $506.4 in line of credit renewals which
resulted in the rollover of existing principal balances during the
first quarter.
Long-term loan activity consisted primarily of $970.5 in advances and
$348.4 in principal repayments. Long-term loan advances of $970.5
included $205.6 for RUS prepayments to 12 members financed by CFC, and
$212.3 for telephone exchange acquisitions to 32 members financed by
RTFC. Additionally, $77.6 of the increase in short-term loans is due
to advances utilized for RUS prepayments that are expected to be
converted to long-term financing.
Net loans to members represented 95% of total assets at February 28,
1995 and May 31, 1994. Long-term loans represented 85% and 84% of
gross loans at February 28, 1995 and May 31, 1994. Fixed rate loans
represented 33% of gross loans at February 28, 1995 and 34% at May 31
and the remaining loans carry a variable rate that may be adjusted
monthly or semi-monthly. At February 28, 1995, only $601.2 or 8.9%
of gross loans were unsecured, compared to $420.6 million or 6.9% at
May 31. All other loans were secured pro-rata with other lenders
(primarily RUS), by all assets and future revenues of the borrower.
At February 28, CFC had provided $2,579.7 in guarantees, a decrease
of $76.1 from the $2,655.8 at May 31. These guarantees relate
primarily to tax-exempt financed pollution control equipment and to
leveraged lease transactions for plant and equipment. All guarantees
are secured on a pro-rata basis with other creditors on all assets and
future revenues of the borrower or by the underlying financed assets.
Also at February 28, CFC had committed to lend $5,013.0, a decrease
of $194.5 from the $5,207.5 committed at May 31. Most unadvanced loan
commitments contain a material adverse change clause. As many of
these commitments are provided for operational back-up liquidity, CFC
does not anticipate funding the majority of the commitments
outstanding.
- 20 -
<PAGE> 21
During the nine months ended February 28, CFC's total liabilities and
members' equity increased by $680.5 or 10.9% to $6,904.8 from $6,224.3
at May 31. The increase was primarily due to increases of $403.6 in
notes payable, $257.2 in long-term debt, $19.9 in loan and guarantee
subordinated certificates, and $44.0 in unallocated margins partially
offset by a decrease of $33.2 in allocated margins.
The notes payable increase of $403.6 is due to increases of $186.0 in
Dealer Commercial Paper and $291.0 in Bank Bid Notes and a decrease
of $73.4 in Member Commercial Paper. The $257.2 increase in long-term
debt is due to increases of $146.3 in Collateral Trust Bonds and
$110.9 in Medium-Term Notes.
During the second quarter, CFC issued $150.0 million of variable rate
Collateral Trust Bonds, Series 1994-A, due September 15, 1996. The
bonds are not redeemable prior to maturity. The variable rate index
for this transaction will be the one month London Inter Bank Offered
Rate (LIBOR). In order to facilitate eliminating the basis risk
between the one month LIBOR and commercial paper (CFC's principle
variable rate funding source), CFC contracted through a swap agreement
to exchange interest payments by CFC receiving the same one month
LIBOR rate index and paying a commercial paper indexed rate.
During the third quarter, CFC issued $50.0 million of variable rate
MTN's due February 27, 1998. The variable rate index for this
transaction will be the three month LIBOR. In order to facilitate
eliminating the basis risk between the three month LIBOR and
commercial paper, CFC contracted through a SWAP agreement to exchange
interest payments with CFC receiving three month LIBOR and paying a
commercial paper indexed rate.
The increase to notes payable and long-term debt was required to fund
the increase in loans outstanding. The increase in subordinated
certificates was due to the issuance of new certificates related to
loans and guarantees. The decrease in allocated margins was primarily
due to a $33.7 million retirement of patronage capital.
The allowance for loan and guarantee losses increased by $5.6 to
$193.8 at February 28, from $188.2 million at May 31. At February 28,
the loan and guarantee loss allowance represented 2.86% of gross
loans, 2.07% of gross loans and guarantees, 84.67% of nonperforming
and restructured loans, and 465.90% of nonperforming loans. The
allowance is periodically reviewed by management for adequacy. In
performing this assessment, management considers various factors
including an analysis of the financial strength of CFC's borrowers,
delinquencies, loan charge-off history, underlying collateral and
economic and industry conditions. As of February 28, management
believes that the allowance for loan and guarantee losses is adequate
to cover any portfolio losses which have occurred or may occur.
CFC has been the selected lender for an estimated 79% of the total RUS
prepaid notes and an estimated 92% of total loans used to prepay RUS
notes as of March 13, 1995. Management has a positive outlook on
- 21 -
<PAGE> 22
future loan growth due to Member loan applications to CFC for an
additional $217.3 for RUS prepayments by 11 members and loan
applications to RTFC for an additional $130.9 in telephone exchange
acquisitions by 20 members.
Changes in the Results of Operations
CFC's net margins are subject to change as interest rates change.
Therefore, CFC uses an interest coverage ratio, instead of the dollar
amount of gross or net margins, as a primary performance indicator.
During the nine months ended February 28, 1995, CFC achieved a Times
Interest Earned Ratio (TIER) of 1.17. This was an increase from the
1.15 TIER for the nine months ended February 28, 1994. Management has
established a 1.10 TIER as its minimum operating level.
Operating income for the nine months ended February 28, 1995, was
$318.7, an increase of $72.8 from the prior year period. The increase
in operating income was due to a positive rate variance of $33.6 and
a positive volume variance of $39.2. For the nine months ended
February 28, 1995 average loans outstanding were $6,450.1 and the
average yield on loans outstanding was 6.61%, compared to average
loans outstanding of $5,471.8 and an average yield of 6.01% for the
nine months ended February 28, 1994.
CFC's cost of funds for the nine months ended February 28, 1995,
totaled $259.5, an increase of $66.6 from the prior year. The
increase was due to a positive rate variance of $48.0 and a positive
volume variance of $18.6. The average cost of funds rate, at February
28, 1995, was 5.38%, an increase of 67 basis points compared to the
average rate of 4.71% at February 28, 1994. Included in the cost of
funds is interest expense on CFC's Subordinated Certificates and other
instruments offset by income from the overnight investments of excess
cash and the interest earnings on debt service investments.
For the nine months ended February 28, 1995, general and
administrative expenses totaled $12.1, a decrease of $0.1 from the
nine months ended February 28, 1994 total of $12.2. General and
administrative expenses represented 25 basis points of average loan
volume for the nine months ended February 28, 1995, which is a
decrease of 5 basis points from the prior year period total of 30
basis points.
The provision for loan and guarantee losses for the nine months ended
February 28, 1995, totaled $5.6 or 12 basis points, compared to the
prior year total of $15.6 or 38 basis points. CFC has maintained the
provision for loan and guarantee losses in line with management's
assessment of the size and quality of the loan portfolio.
Overall, CFC's net margins for the nine months ended February 28,
1995, totaled $44.0, an increase of $15.4 over the prior year period.
Net margins for the nine months ended February 28, 1994, totaled
$28.6.
- 22 -
<PAGE> 23
Liquidity and Capital Resources
CFC is subject to liquidity risk to the extent cash repayments on its
assets or other sources of funds are insufficient to cover the cash
requirements on maturing liabilities. For the most part, CFC funds
its long-term loans with much shorter term maturity debt instruments,
however, CFC's long-term loans typically are repriced monthly or on
a multiple number of years basis, and as such, CFC will match the loan
repricing periods with similarly repriced sources of funding, thus
minimizing interest rate risk.
With regard to liquidity risk, CFC manages its liquidity risk by
ensuring that other sources of funding are available to make debt
maturity payments. CFC accomplishes this in five ways. First, CFC
maintains revolving credit agreements which (subject to certain
conditions) allows CFC to borrow funds on terms of up to five years.
Second, CFC has maintained investment grade ratings, facilitating
access to the capital markets. Third, CFC maintains SEC shelf
registrations for both its Collateral Trust Bonds and its Medium-Term
Notes, either of which (absent market disruptions and assuming CFC
maintains investment grade ratings) could be issued at fixed or
variable rates in sufficient amounts to fund the next 18 to 24 months
funding requirements. Fourth, CFC maintains SEC registrations for the
Grantor Trust Certificates which permits public issuance. Fifth, CFC
obtains much of its funding directly from its members and believes
this funding is more stable than funding obtained from outside
sources.
At February 28, 1995, CFC had $4,050.0 in available credit, $2,430.0
of which is available through February 28, 2000 and $1,620.0 is
available through February 27, 1996. This credit became effective on
February 28, 1995 replacing the previous revolving credit and line of
credit agreements which totaled $3,545.0. As of February 28, CFC was
in compliance with all covenants and conditions to borrowing.
As of February 28, 1995, CFC had shelf registrations for Collateral
Trust Bonds and Medium-Term Notes of $650.0 and $122.1, respectively.
CFC is planning to request an additional $400.0 in issuance authority
from the SEC for its Series C Medium-Term Notes, in early April. As
of February 28, 1995, CFC had SEC shelf registrations for Grantor
Trust Certificates of $139.4.
Member invested funds,including the loan loss allowance, at February
28, 1995 and May 31, 1994, were $3,013.9 and $2,905.6 or 43.0% and
46.0% of CFC's total capitalization, respectively (long- and short-
term debt outstanding, members' certificates and equity and the loan
loss allowance).
CFC's leverage ratio was 4.99 at February 28, 1995, a slight increase
over the 4.63 reported at May 31, 1994. The increase was primarily
due to additional debt required to fund new loans for February 28,
1995 compared with May 31, 1994.
- 23 -
<PAGE> 24
CFC is subject to interest rate risk to the extent CFC's loans are
subject to interest rate adjustment at different times than the
liabilities which fund those assets. Therefore, CFC's interest rate
risk management policy involves the close matching of asset and
liability repricing terms within a range of 5% of gross assets (total
assets plus the loan and guarantee loss allowance netted against gross
loans on the balance sheet). CFC measures the matching of funds to
assets by comparing the amount of fixed rate assets repricing or
amortizing to the total fixed rate debt maturing over the next fiscal
year. At February 28, 1995, CFC had $28.1 in fixed rate assets
amortizing or repricing and $7.2 in fixed rate liabilities maturing
during the final quarter of fiscal year 1995 and during FY 1996. The
difference, $20.9, represents the amount of CFC's assets that are not
considered match-funded as to interest rate. CFC's difference of
$20.9 at February 28, 1995 represents less than one-half of one
percent of gross assets.
- 24 -
<PAGE> 25
Part II
Item 1, Legal Proceedings.
None.
Item 2, Changes in Securities.
None.
Item 3, Defaults upon Senior Securities.
None.
Item 4, Submission of Matters to a Vote of Security Holders.
None.
Item 5, Other Information.
None.
Item 6,
A. Exhibits
4.5 - Revolving Credit Agreements
27 - Financing Data Schedules
B. Reports on Form 8-K.
Agency Letter Agreement filed on February 28, 1995.
- 25 -
<PAGE> 26
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
/s/ Steve L. Lilly
Chief Financial Officer
April 3, 1995
/s/ Angelo M. Salera
Controller (Principal Accounting Officer)
April 3, 1995
- 26 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This Schedule Contains Summary Financial
Information Extracted From The February
28, 1995, Form 10-Q And Is Qualified In
Its Entirety By Reference To Such
Financial Statements
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> May-31-1995
<PERIOD-END> Feb-28-1995
<CASH> 27,833
<SECURITIES> 10,000
<RECEIVABLES> 86,885
<ALLOWANCES> 0
<INVENTORY> 6,578,803
<CURRENT-ASSETS> 6,745,706
<PP&E> 44,274
<DEPRECIATION> 6,481
<TOTAL-ASSETS> 6,904,845
<CURRENT-LIABILITIES> 1,693,892
<BONDS> 3,699,259
0
0
<COMMON> 0
<OTHER-SE> 1,511,694
<TOTAL-LIABILITY-AND-EQUITY> 6,904,845
<SALES> 318,708
<TOTAL-REVENUES> 321,207
<CGS> 259,512
<TOTAL-COSTS> 259,512
<OTHER-EXPENSES> 12,093
<LOSS-PROVISION> 5,625
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 43,976
<INCOME-TAX> 0
<INCOME-CONTINUING> 43,976
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,976
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1 CONFORMED COPY
$1,620,000,000
REVOLVING CREDIT AGREEMENT
dated as of
February 28, 1995
among
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION,
THE BANKS LISTED HEREIN,
J.P. MORGAN SECURITIES INC.
and
THE BANK OF NOVA SCOTIA,
as CO-SYNDICATION AGENTS
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as ADMINISTRATIVE AGENT
Arranged by
J.P. MORGAN SECURITIES INC.
<PAGE>
<PAGE> 2 TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions 1
SECTION 1.02. Accounting Terms and
Determinations 14
SECTION 1.03. Types of Borrowings 15
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend 15
SECTION 2.02. Notice of Committed Borrowings 16
SECTION 2.03. Money Market Borrowings 17
SECTION 2.04. Notice to Banks; Funding of Loans 21
SECTION 2.05. Notes 22
SECTION 2.06. Maturity of Loans 23
SECTION 2.07. Interest Rates 23
SECTION 2.08. Fees 27
SECTION 2.09. Optional Termination or Reduction
of Commitments 27
SECTION 2.10. Mandatory Termination of
Commitments 28
SECTION 2.11. Optional Prepayments 28
SECTION 2.12. General Provisions as to Payments 28
SECTION 2.13. Funding Losses. 29
SECTION 2.14. Computation of Interest and Fees 29
SECTION 2.15. Withholding Tax Exemption. 29
SECTION 2.16. Increase of Commitments. 30
ARTICLE III
CONDITIONS
SECTION 3.01. Closing 31
SECTION 3.02. Borrowings 33
<PAGE> 3 ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence, Power and
Authority 34
SECTION 4.02. Financial Statements 35
SECTION 4.03. Litigation 36
SECTION 4.04. Governmental Authorizations 36
SECTION 4.05. Capital Term Certificates 36
SECTION 4.06. No Violation of Agreements 36
SECTION 4.07. No Event of Default under the
Indentures 37
SECTION 4.08. Compliance with ERISA 38
SECTION 4.09. Compliance with Other Laws 38
SECTION 4.10. Tax Status 38
SECTION 4.11. Investment Company Act 38
SECTION 4.12. Public Utility Holding Company Act 38
SECTION 4.13. Disclosure 38
SECTION 4.14. Subsidiaries 39
SECTION 4.15. Environmental Matters 39
ARTICLE V
COVENANTS
SECTION 5.01. Corporate Existence 40
SECTION 5.02. Disposition of Assets; Merger;
Character of Business; etc. 40
SECTION 5.03. Financial Information 40
SECTION 5.04. Default Certificates 42
SECTION 5.05. Notice of Litigation, Legislative
Developments and Defaults 43
SECTION 5.06. ERISA 44
SECTION 5.07. Payment of Charges 44
SECTION 5.08. Inspection of Books and Assets 44
SECTION 5.09. Indebtedness 45
SECTION 5.10. Liens 46
SECTION 5.11. Maintenance of Insurance 46
SECTION 5.12. Subsidiaries and Joint Ventures 47
SECTION 5.13. Minimum Net Worth 47
SECTION 5.14. Minimum TIER 47
SECTION 5.15. Retirement of Patronage Capital 47
SECTION 5.16. Use of Proceeds 47
<PAGE> 4 ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default 48
SECTION 6.02. Notice of Default 50
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization 51
SECTION 7.02. Agent and Affiliates 51
SECTION 7.03. Action by Agent 51
SECTION 7.04. Consultation with Experts 51
SECTION 7.05. Liability of Agent 51
SECTION 7.06. Indemnification 52
SECTION 7.07. Credit Decision 52
SECTION 7.08. Successor Agent 52
SECTION 7.09. Co-Syndication Agents Not Liable 53
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair 53
SECTION 8.02. Illegality 54
SECTION 8.03. Increased Cost and Reduced Return 54
SECTION 8.04. Base Rate Loans Substituted for
Affected Fixed Rate Loans 56
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices 57
SECTION 9.02. No Waivers 57
SECTION 9.03. Expenses; Documentary Taxes;
Indemnification 58
<PAGE> 5
SECTION 9.04. Sharing of Set-Offs 58
SECTION 9.05. Amendments and Waivers 59
SECTION 9.06. Successors and Assigns 59
SECTION 9.07. Collateral 61
SECTION 9.08. Governing Law 61
SECTION 9.09. Counterparts; Integration;
Effectiveness 61
SECTION 9.10. Several Obligations 62
SECTION 9.11. Termination of Commitments Under
the Prior Credit Agreements 62
SECTION 9.12. Severability 62
Pricing Schedule
Exhibit A - Note
Exhibit B - RUS Guarantee
Exhibit C - Money Market Quote Request
Exhibit D - Invitation for Money Market Quotes
Exhibit E - Money Market Quote
Exhibit F - Opinion of General Counsel for the Borrower
Annex A to Exhibit F - Subsidiaries and
Joint Ventures
Exhibit G - Opinion of Special Counsel for the Borrower
Exhibit H - Opinion of Special Counsel for the Agent
Exhibit I - Extension Agreement
Exhibit J - Assignment and Assumption Agreement
<PAGE>
<PAGE> 6 REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT dated as of February
28, 1995 among NATIONAL RURAL UTILITIES COOPERATIVE FINANCE
CORPORATION, a not-for-profit cooperative association
incorporated under the laws of the District of Columbia, as
Borrower, the BANKS listed on the signature pages hereof,
J.P. MORGAN SECURITIES INC. and THE BANK OF NOVA SCOTIA, as
Co-Syndication Agents, and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms,
as used herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of
Money Market Quotes setting forth Money Market Absolute
Rates pursuant to Section 2.03.
"Adjusted CD Rate" has the meaning set forth in
Section 2.07(b).
"Adjusted London Interbank Offered Rate" has the
meaning set forth in Section 2.07(c).
"Administrative Questionnaire" means, with respect
to each Bank, the administrative questionnaire in the form
submitted to such Bank by the Agent and submitted to the
Agent (with a copy to the Borrower) duly completed by such
Bank.
"Agent" means Morgan Guaranty Trust Company of New
York in its capacity as administrative agent for the Banks
hereunder, and its successors in such capacity.
"Agreement" means this Revolving Credit Agreement,
as the same may from time to time be amended.
"Applicable Lending Office" means, with respect to
any Bank, (i) in the case of its Domestic Loans, its
Domestic Lending Office, (ii) in the case of its Euro-Dollar
Loans, its Euro-Dollar Lending Office and (iii) in the case
of its Money Market Loans, its Money Market Lending Office.
<PAGE> 7 "Assessment Rate" has the meaning set forth in
Section 2.07(b).
"Assignee" has the meaning set forth in Section
9.06(c).
"Bank" means each bank listed on the signature
pages hereof, each Assignee which becomes a Bank pursuant to
Section 9.06(c), and their respective successors.
"Base Rate" means, for any day, a rate per annum
equal to the higher of (i) the Prime Rate for such day and
(ii) the sum of 1/2 of 1% plus the Federal Funds Rate for
such day.
"Base Rate Loan" means a Committed Loan to be made
by a Bank as a Base Rate Loan in accordance with the
applicable Notice of Committed Borrowing or pursuant to
Article VIII.
"Bonds" means any bonds issued pursuant to either
Indenture or both, as the context may require.
"Borrower" means the National Rural Utilities
Cooperative Finance Corporation, a not-for-profit
cooperative association incorporated under the laws of the
District of Columbia, and its successors.
"Borrowing" has the meaning set forth in Section
1.03.
"Capital Term Certificate" means a note of the
Borrower substantially in the form of the membership
subscription certificates and the loan and guarantee
certificates outstanding on the date of the execution and
delivery of this Agreement and any other Indebtedness of the
Borrower having substantially similar provisions as to
subordination as those contained in said outstanding
membership subscription certificates and loan and guarantee
certificates.
"CD Base Rate" has the meaning set forth in
Section 2.07(b).
"CD Loan" means a Committed Loan to be made by a
Bank as a CD Loan in accordance with the applicable Notice
of Committed Borrowing.
"CD Margin" has the meaning set forth in the
Pricing Schedule.
<PAGE> 8 "CD Reference Banks" means The Bank of Nova
Scotia, SunBank, National Association and Morgan Guaranty
Trust Company of New York.
"Closing Date" means the date on or after the
Effective Date on which the Agent shall have received the
documents specified in or pursuant to Section 3.01.
"Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the
signature pages hereof, as such amount may be reduced from
time to time pursuant to Sections 2.09 and 2.10.
"Committed Loan" means a loan made by a Bank
pursuant to Section 2.01.
"Consolidated Subsidiary" means at any date any
Subsidiary or 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.
"Co-Syndication Agents" means J.P. Morgan
Securities Inc. and The Bank of Nova Scotia, each in its
capacity as co-syndication agent for the Banks hereunder,
and their successors in such capacity.
"Default" means any condition or event which
constitutes an Event of Default or which with the giving of
notice or lapse of time or both (as specified in Section
6.01) would, unless cured or waived, become an Event of
Default.
"Derivatives Obligations" of any Person means all
obligations of such Person in respect of any rate swap
transaction, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity
or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any
other similar transaction (including any option with respect
to any of the foregoing transactions) or any combination of
the foregoing transactions.
"Determination Date" shall have the meaning
provided in Section 5.09.
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks in
New York City are authorized by law to close.
<PAGE> 9 "Domestic Lending Office" means, as to each Bank,
its office located at its address set forth in its
Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as
its Domestic Lending Office by notice to the Borrower and
the Agent; provided that any Bank may so designate separate
Domestic Lending Offices for its Base Rate Loans, on the one
hand, and its CD Loans, on the other hand, in which case all
references herein to the Domestic Lending Office of such
Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate
Loans or both.
"Domestic Reserve Percentage" has the meaning set
forth in Section 2.07(b).
"Effective Date" means the date this Agreement
becomes effective in accordance with Section 9.09.
"Environmental Laws" means any and all federal,
state, local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees,
plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and governmental
restrictions relating to the environment, the effect of the
environment on human health or to emissions, discharges or
releases of pollutants, contaminants, Hazardous Substances
or wastes into the environment including, without
limitation, ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport
or handling of pollutants, contaminants, Hazardous
Substances or wastes or the clean-up or other remediation
thereof.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary
and all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section
414 of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic
Business Day on which commercial banks are open for
<PAGE> 10 international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each
Bank, its office, branch or affiliate located at its address
set forth in its Administrative Questionnaire (or identified
in its Administrative Questionnaire as its Euro-Dollar
Lending Office) or such other office, branch or affiliate of
such Bank as it may hereafter designate as its Euro-Dollar
Lending Office by notice to the Borrower and the Agent.
"Euro-Dollar Loan" means a Committed Loan to be
made by a Bank as a Euro-Dollar Loan in accordance with the
applicable Notice of Committed Borrowing.
"Euro-Dollar Margin" has the meaning set forth in
the Pricing Schedule.
"Euro-Dollar Reference Banks" means the principal
London offices of The Bank of Nova Scotia, SunBank, National
Association and Morgan Guaranty Trust Company of New York.
"Euro-Dollar Reserve Percentage" has the meaning
set forth in Section 2.07(c).
"Event of Default" has the meaning set forth in
Section 6.01.
"Federal Funds Rate" means, for any day, the rate
per annum (rounded upward, if necessary, to the nearest
1/100th of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New
York on the Domestic Business Day next succeeding such day,
provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business
Day, and (ii) if no such rate is so published on such next
succeeding Domestic Business Day, the Federal Funds Rate for
such day shall be the average rate quoted to Morgan Guaranty
Trust Company of New York on such day on such transactions
as determined by the Agent.
"Fixed Rate Loans" means CD Loans or Euro-Dollar
Loans or Money Market Loans (excluding Money Market LIBOR
Loans bearing interest at the Base Rate pursuant to Section
8.01(a)) or any combination of the foregoing.
<PAGE> 11 "Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or
indirectly guaranteeing any Indebtedness or lease payments
of any other Person or otherwise in any manner assuring the
holder of any Indebtedness of, or the obligee under any
lease of, any other Person through an agreement, contingent
or otherwise, to purchase Indebtedness or the property
subject to such lease, or to purchase goods, supplies or
services primarily for the purpose of enabling the debtor or
obligor to make payment of the Indebtedness or under such
lease or of assuring such Person against loss, or to supply
funds to or in any other manner invest in the debtor or
obligor, or otherwise; provided that the term Guarantee
shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" when
used as a verb has a correlative meaning.
"Hazardous Substances" means any toxic,
radioactive, caustic or otherwise hazardous substance,
including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Indebtedness" with respect to any Person means:
(1)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;
(2)all indebtedness of others Guaranteed by such
Person;
(3)all indebtedness secured by any Lien upon
property owned by such Person, even though such Person
has not assumed or become liable for the payment of
such indebtedness; and
(4)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;
<PAGE> 12 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 thereafter such money and evidences of
indebtedness so deposited shall not be included in any
computation of the assets of such Person; and provided
further that no provision of this definition shall be
construed to include as "Indebtedness" of the Borrower any
indebtedness by virtue of any agreement by the Borrower to
advance or supply funds to Members.
"Indenture" means either the 1972 Indenture or the
1994 Indenture, and "Indentures" means both such Indentures.
"Interest Period" means: (1) with respect to each
Euro-Dollar Borrowing, the period commencing on the date of
such Borrowing and ending one, two, three or six months
thereafter, as the Borrower may elect in the applicable
Notice of Borrowing; provided that:
(a)any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar
Business Day;
(b)any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c)any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date;
(2) with respect to each CD Borrowing, the period
commencing on the date of such Borrowing and ending 30, 60,
90 or 180 days thereafter, as the Borrower may elect in the
applicable Notice of Borrowing; provided that:
(a)any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day; and
<PAGE> 13 (b) any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date;
(3) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 30 days
thereafter; provided that:
(a)any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day; and
(b)any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date;
(4) with respect to each Money Market LIBOR Borrowing, the
period commencing on the date of such Borrowing and ending
any whole number of months thereafter (but not less than one
month) as the Borrower may elect in accordance with Section
2.03; provided that:
(a)any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar
Business Day;
(b)any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c)any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date; and
(5) with respect to each Money Market Absolute Rate
Borrowing, the period commencing on the date of such
Borrowing and ending such number of days thereafter (but not
less than 30 days) as the Borrower may elect in accordance
with Section 2.03; provided that:
(a)any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
<PAGE> 14 be extended to the next succeeding
Euro-Dollar Business Day; and
(b)any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended, or any successor statute.
"Joint Venture" means any corporation,
partnership, association, joint venture or other entity in
which the Borrower, directly or indirectly through
Subsidiaries or Joint Ventures, has an equity interest at
the time of 10% or more but which is not a Subsidiary;
provided that no Person whose only assets are RUS Guaranteed
Loans and investments incidental thereto shall be deemed a
Joint Venture.
"LIBOR Auction" means a solicitation of Money
Market Quotes setting forth Money Market Margins based on
the London Interbank Offered Rate pursuant to Section 2.03.
"Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset. For the
purposes of this Agreement, the Borrower or any Subsidiary
shall be deemed to own subject to a Lien any asset which it
has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease
or other title retention agreement relating to such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan
or a Money Market Loan and "Loans" means Domestic Loans or
Euro-Dollar Loans or Money Market Loans or any combination
of the foregoing.
"London Interbank Offered Rate" has the meaning
set forth in Section 2.07(c).
"Member" means any Person which is a member or a
patron of the Borrower.
"Minimum Required Net Worth" shall initially be
$1,334,378,200; provided that on each date after May 31,
1994 upon which annual financial statements are required to
be delivered pursuant to Section 5.03(ii), the Minimum
Required Net Worth shall be permanently increased by an
amount, if positive, equal to ninety percent (90%) of (i)
the aggregate amount of Net Margins for the prior fiscal
year minus (ii) the aggregate amount of retirements of
<PAGE> 15 Patronage Capital Certificates made by the
Borrower to Members in the prior fiscal year. In the event
that in any year the amount specified in clause (ii) above
is equal to or greater than the amount specified in clause
(i) above, the Minimum Required Net Worth shall remain the
same for that year.
"Money Market Absolute Rate" has the meaning set
forth in Section 2.03(d).
"Money Market Absolute Rate Loan" means a loan to
be made by a Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each
Bank, its Domestic Lending Office or such other office,
branch or affiliate of such Bank as it may hereafter
designate as its Money Market Lending Office by notice to
the Borrower and the Agent; provided that any Bank may from
time to time by notice to the Borrower and the Agent
designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money
Market Absolute Rate Loans, on the other hand, in which case
all references herein to the Money Market Lending Office of
such Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made
by a Bank pursuant to a LIBOR Auction (including such a loan
bearing interest at the Prime Rate pursuant to Section
8.01(a)).
"Money Market Loan" means a Money Market LIBOR
Loan or a Money Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in
Section 2.03(d).
"Money Market Quote" means an offer by a Bank to
make a Money Market Loan in accordance with Section 2.03.
"Moody's" means Moody's Investors Service, Inc.,
and its successors.
"Net Margins" means operating and non-operating
income of the Borrower and its Subsidiaries determined on a
combined or consolidated basis (excluding income on
Guaranteed Portions of RUS Guaranteed Loans) less, without
duplication, operating and non-operating costs and expenses
of the Borrower and its Subsidiaries determined on a
combined or consolidated basis (excluding costs and expenses
relating to Guaranteed Portions of RUS Guaranteed Loans).
<PAGE> 16 "Net Worth" means the sum of (i) all accounts
which constitute Members' equity in the Borrower, (ii) all
Indebtedness of the Borrower shown in its balance sheet
dated as of May 31, 1994 as "Members' Subordinated
Certificates" and any other Indebtedness of the Borrower
incurred after May 31, 1994 having substantially similar
provisions as to subordination as those contained in said
outstanding certificates and (iii) any amounts reflected in
the financial statements of the Borrower as a reserve for
loan losses.
"1994 Indenture" means the Indenture dated as of
February 15, 1994 between the Borrower and First Bank
National Association, as trustee, as amended and
supplemented from time to time, providing for the issuance
in series of certain collateral trust bonds of the Borrower.
"1972 Indenture" means the Seventeenth
Supplemental Indenture dated as of March 1, 1987, amending
and restating in full the Indenture dated as of December 1,
1972, by and between the Borrower and Chemical Bank (as
successor by merger to Manufacturers Hanover Trust Company),
as trustee.
"Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing
the obligation of the Borrower to repay the Loans, and
"Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a Notice of Committed
Borrowing (as defined in Section 2.02) or a Notice of Money
Market Borrowing (as defined in Section 2.03(f)).
"Parent" means, with respect to any Bank, any
Person controlling such Bank.
"Participant" has the meaning set forth in Section
9.06(b).
"Patronage Capital Certificates" means those
certificates that evidence the allocation of Net Margins by
the Borrower among its Members in proportion to interest
earned by the Borrower from such Members.
"PBGC" means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its
functions under ERISA.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or
<PAGE> 17 organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means any multiemployer plan or single
employer plan, as defined in Section 4001 and subject to
Title IV of ERISA, which is maintained, or at any time
during the five calendar years preceding the date of this
Agreement was maintained, for employees of the Borrower or a
Subsidiary of the Borrower or any member of the ERISA Group.
"Pricing Schedule" means the Schedule attached
hereto identified as such.
"Prime Rate" means the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York in
New York City from time to time as its Prime Rate.
"Prior Credit Agreement" means each of (i) the
$870,000,000 Revolving Credit Agreement dated as of May 28,
1993, as amended by Amendment No. 1 thereto dated as of May
17, 1994, among the Borrower, the banks listed on the
signature pages thereof, Morgan Guaranty Trust Company of
New York, as Administrative Agent and Arranger, and The Bank
of Nova Scotia, as Managing Agent, and (ii) the
$2,030,000,000 Revolving Credit Agreement dated as of May
28, 1993, as amended by Amendment No. 1 thereto dated as of
May 17, 1994, among the Borrower, the banks listed on the
signature pages thereof, Morgan Guaranty Trust Company of
New York, as Administrative Agent and Arranger, and The Bank
of Nova Scotia, as Managing Agent, and "Prior Credit
Agreements" means both such Revolving Credit Agreements.
"Reference Banks" means the CD Reference Banks or
the Euro-Dollar Reference Banks, as the context may require,
and "Reference Bank" means any one of such Reference Banks.
"Refunding Borrowing" means a Committed Borrowing
which, after application of the proceeds thereof, results in
no net increase in the outstanding principal amount of
Committed Loans made by any Bank.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
"Regulation X" means Regulation X of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
"Reportable Event" means an event described in
Section 4043(c) of ERISA or regulations promulgated by the
<PAGE> 18 Department of Labor thereunder (with respect to
which the 30 day notice requirement has not been waived by
the PBGC).
"Required Banks" means at any time Banks having at
least 60% of the aggregate amount of the Commitments or, if
the Commitments shall have been terminated, holding Notes
evidencing at least 60% of the aggregate unpaid principal
amount of the Loans.
"Revolving Credit Period" means the period from
and including the Effective Date to but excluding the
Termination Date.
"RUS" means the Rural Utilities Service of the
Department of Agriculture of the United States of America
(as successor to the Rural Electrification Administration of
the Department of Agriculture of the United States of
America) or any other regulatory body which succeeds to its
functions.
"RUS Guaranteed Loan" means any loan made by any
Person, which loan (x) bears interest at least equal to such
Person's cost of funds and (y) is guaranteed, in whole or in
part, as to principal and interest by the United States of
America through the RUS pursuant to a guarantee, which
guarantee contains provisions no less favorable to the
holder thereof than the provisions set forth in the form of
Exhibit B hereto; and "Guaranteed Portion" of any RUS
Guaranteed Loan means that portion of principal of, and
interest on, such RUS Guaranteed Loan which is guaranteed by
the United States of America through the RUS as provided in
clause (y).
"S&P" means Standard and Poor's Corporation, and
its successors.
"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 whose only assets are RUS Guaranteed
Loans and investments incidental thereto shall be deemed a
Subsidiary. Neither the Rural Telephone Finance Cooperative
nor the Guaranty Funding Cooperative is on the date of this
<PAGE> 19 Agreement a "Subsidiary", except that the Rural
Telephone Finance Cooperative and, but only so long as the
Borrower maintains control of the Board of Directors of the
Guaranty Funding Cooperative (including, without limitation,
the ability to appoint a majority of such Board of
Directors), the Guaranty Funding Cooperative shall each be
considered a "Subsidiary" for purposes of the definitions of
"Net Margins" and "TIER".
"Superior Indebtedness" means all Indebtedness of
the Borrower (other than Capital Term Certificates) and its
Subsidiaries determined on a combined or consolidated basis,
but excluding Indebtedness of the Borrower or any of its
Subsidiaries to the extent that the proceeds of such
Indebtedness are used to fund Guaranteed Portions of RUS
Guaranteed Loans.
"Termination Date" means February 27, 1996 or such
later date to which this Agreement shall have been extended
pursuant to Section 2.01(b), or, if either such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar
Business Day.
"TIER" means, for any period, the ratio of (x) Net
Margins plus interest on Indebtedness of the Borrower or its
Subsidiaries determined on a combined or consolidated basis
(but excluding Indebtedness of the Borrower or any of its
Subsidiaries to the extent that the proceeds of such
Indebtedness are used to fund Guaranteed Portions of RUS
Guaranteed Loans) plus amortization of bond discount and
amortization of bond issuance costs of the Borrower and its
Subsidiaries determined on a combined or consolidated basis
for such period (but excluding such amortization of discount
and issuance costs with respect to Indebtedness referred to
in the preceding parenthetical phrase) to (y) interest on
Indebtedness of the Borrower or its Subsidiaries determined
on a combined or consolidated basis (but excluding
Indebtedness of the Borrower or any of its Subsidiaries to
the extent that the proceeds of such Indebtedness are used
to fund Guaranteed Portions of RUS Guaranteed Loans) plus
amortization of bond discount and amortization of bond
issuance costs of the Borrower and its Subsidiaries
determined on a combined or consolidated basis for such
period (but excluding such amortization of discount and
issuance costs with respect to Indebtedness referred to in
the preceding parenthetical phrase).
SECTION 1.02. Accounting Terms and
Determinations. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made and all
<PAGE> 20 financial statements required to be delivered
hereunder shall be prepared in accordance with generally
accepted accounting principles as in effect from time to
time, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public
accountants) with the most recent audited combined financial
statements of the Borrower and its Consolidated Subsidiaries
delivered to the Banks.
SECTION 1.03. Types of Borrowings. The term
"Borrowing" denotes the aggregation of Loans of one or more
Banks to be made to the Borrower pursuant to Article II on a
single date and for a single Interest Period. Borrowings
are classified for purposes of this Agreement either by
reference to the pricing of Loans comprising such Borrowing
(e.g., a "Euro-Dollar Borrowing" is a Borrowing comprised of
Euro-Dollar Loans) or by reference to the provisions of
Article II under which participation therein is determined
(i.e., a "Committed Borrowing" is a Borrowing under Section
2.01 in which all Banks participate in proportion to their
Commitments, while a "Money Market Borrowing" is a Borrowing
under Section 2.03 in which the Bank participants are
determined on the basis of their bids in accordance
therewith).
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. (a) During
the Revolving Credit Period each Bank severally agrees, on
the terms and conditions set forth in this Agreement, to
make loans to the Borrower pursuant to this Section from
time to time in amounts such that the aggregate principal
amount of Committed Loans by such Bank at any one time
outstanding shall not exceed the amount of its Commitment.
Each Borrowing shall be in an aggregate principal amount of
$25,000,000 or any larger multiple of $1,000,000 (except
that any such Borrowing may be in the maximum aggregate
amount available in accordance with Section 3.02(c) or (d))
and shall be made from the several Banks ratably in
proportion to their respective Commitments. Within the
foregoing limits, the Borrower may borrow under this
Section, repay or, to the extent permitted by Section 2.11,
prepay Loans and reborrow at any time during the Revolving
Credit Period under this Section.
(b) Extension of Commitments. The Termination
Date may be extended from time to time in the manner set
forth in this subsection (b), in each case for a period of
<PAGE> 21 up to 364 days from the date on which Banks having
100% of the Commitments shall have notified the Agent of
their agreement so to extend. If the Borrower wishes to
request an extension of the Termination Date, it shall give
written notice to that effect (such notice to state the date
to which the Termination Date then in effect is requested to
be extended, subject to the provisions of the preceding
sentence) to the Agent not less than 60 nor more than 90
days prior to the Termination Date then in effect, whereupon
the Agent shall promptly notify each of the Banks of such
request and send a copy of the Extension Agreement referred
to below to each Bank. Each Bank will use its best efforts
to respond to such request, whether affirmatively or
negatively, as it may elect in its discretion, within 30
days of such notice to the Agent. If less than all Banks
respond affirmatively to such request within 30 days, then
the Borrower may request the Banks that do not elect to
extend the Termination Date to assign their Commitments in
their entirety, no later than 15 days prior to the
Termination Date then in effect, to one or more Assignees
pursuant to Section 9.06(c) which Assignees will agree to
extend the Termination Date. If all Banks (including such
Assignees and excluding their respective transferor Banks)
respond affirmatively, then, subject to receipt by the Agent
of counterparts of an Extension Agreement in substantially
the form of Exhibit I hereto duly completed and signed by
all of the parties thereto, the Termination Date shall be
extended for the period specified above.
SECTION 2.02. Notice of Committed Borrowings.
The Borrower shall give the Agent notice (a "Notice of
Committed Borrowing") not later than 11:00 A.M. (New York
City time) on (x) the date of each Base Rate Borrowing, (y)
the second Domestic Business Day before each CD Borrowing
and (z) the third Euro-Dollar Business Day before each
Euro-Dollar Borrowing, specifying:
(a)the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic
Borrowing or a Euro-Dollar Business Day in the case of
a Euro-Dollar Borrowing,
(b)the aggregate amount of such Borrowing,
(c)whether the Loans comprising such Borrowing
are to be CD Loans, Base Rate Loans or Euro-Dollar
Loans, and
(d)in the case of a Fixed Rate Borrowing, the
duration of the Interest Period applicable thereto,
<PAGE> 22 subject to the provisions of the definition
of Interest Period.
Notwithstanding the foregoing, no more than 10 Fixed Rate
Borrowings shall be outstanding at any one time, and any
Borrowing which would exceed such limitation shall be made
as a Base Rate Borrowing.
SECTION 2.03. Money Market Borrowings.
(a)The Money Market Option. In addition to
Committed Borrowings pursuant to Section 2.01, the Borrower
may, as set forth in this Section, request the Banks during
the Revolving Credit Period to make offers to make Money
Market Loans to the Borrower. The Banks may, but shall have
no obligation to, make such offers and the Borrower may, but
shall have no obligation to, accept any such offers in the
manner set forth in this Section.
(b)Money Market Quote Request. When the
Borrower wishes to request offers to make Money Market Loans
under this Section, it shall transmit to the Agent by telex
or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit C hereto so as to be
received no later than 10:00 A.M. (New York City time) on
(x) the fifth Euro-Dollar Business Day prior to the date of
Borrowing proposed therein, in the case of a LIBOR Auction
or (y) the Domestic Business Day next preceding the date of
Borrowing proposed therein, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be
effective) specifying:
(i) the proposed date of Borrowing, which shall
be a Euro-Dollar Business Day in the case of a LIBOR
Auction or a Domestic Business Day in the case of an
Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which
shall be $25,000,000 or any larger multiple of
$1,000,000,
(iii) the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of
Interest Period, and
<PAGE> 23 (iv) whether the Money Market Quotes requested
are to set forth a Money Market Margin or a Money Market
Absolute Rate.
The Borrower may request offers to make Money Market Loans
for more than one Interest Period in a single Money Market
Quote Request. No Money Market Quote Request shall be given
within five Euro-Dollar Business Days (or such other number
of days as the Borrower and the Agent may agree) of any
other Money Market Quote Request.
(c)Invitation for Money Market Quotes. Promptly
upon receipt of a Money Market Quote Request, the Agent
shall send to the Banks by telex or facsimile transmission
an Invitation for Money Market Quotes substantially in the
form of Exhibit D hereto, which shall constitute an
invitation by the Borrower to each Bank to submit Money
Market Quotes offering to make the Money Market Loans to
which such Money Market Quote Request relates in accordance
with this Section.
(d)Submission and Contents of Money Market
Quotes. (i) Each Bank may submit a Money Market Quote
containing an offer or offers to make Money Market Loans in
response to any Invitation for Money Market Quotes. Each
Money Market Quote must comply with the requirements of this
subsection (d) and must be submitted to the Agent by telex
or facsimile transmission at its offices specified in or
pursuant to Section 9.01 not later than (x) 2:00 P.M. (New
York City time) on the fourth Euro-Dollar Business Day prior
to the proposed date of Borrowing, in the case of a LIBOR
Auction or (y) 9:00 A.M. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by
the Agent (or any affiliate of the Agent) in the capacity of
a Bank may be submitted, and may only be submitted, if the
Agent or such affiliate notifies the Borrower of the terms
of the offer or offers contained therein not later than (x)
1:00 P.M. (New York City time) on the fourth Euro-Dollar
Business Day prior to the proposed date of Borrowing, in the
case of a LIBOR Auction or (y) 8:45 A.M. (New York City
time) on the proposed date of Borrowing, in the case of an
Absolute Rate Auction. Subject to Articles III and VI, any
Money Market Quote so made shall be irrevocable except with
the written consent of the Agent given on the instructions
of the Borrower.
<PAGE> 24 (ii) Each Money Market Quote shall be in
substantially the form of Exhibit E hereto and shall in any
case specify:
(A)the proposed date of Borrowing,
(B)the principal amount of the Money Market Loan
for which each such offer is being made, which
principal amount (w) may be greater than or less than
the Commitment of the quoting Bank, (x) must be
$1,000,000 or any larger multiple thereof, (y) may not
exceed the principal amount of Money Market Loans for
which offers were requested and (z) may be subject to
an aggregate limitation as to principal amount of Money
Market Loans for which offers being made by such
quoting Bank may be accepted,
(C)in the case of a LIBOR Auction, the margin
above or below the applicable London Interbank Offered
Rate (the "Money Market Margin") offered for each such
Money Market Loan, expressed as a percentage (rounded
to the nearest 1/10,000th of 1%) to be added to or
subtracted from such base rate,
(D)in the case of an Absolute Rate Auction, the
rate of interest per annum (rounded to the nearest
1/10,000th of 1%) (the "Money Market Absolute Rate")
offered for each such Money Market Loan, and
(E)the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate
offers by the quoting Bank with respect to each Interest
Period specified in the related Invitation for Money Market
Quotes.
(iii) Any Money Market Quote shall be disregarded
if it:
(A)is not substantially in conformity with
Exhibit E hereto or does not specify all of the
information required by subsection (d)(ii),
(B)contains qualifying, conditional or similar
language,
(C)proposes terms other than or in addition to
those set forth in the applicable Invitation for Money
Market Quotes, or
(D)arrives after the time set forth in
subsection (d)(i).
<PAGE> 25
(e)Notice to Borrower. The Agent shall promptly
notify the Borrower of the terms (x) of any Money Market
Quote submitted by a Bank that is in accordance with
subsection (d) and (y) of any Money Market Quote that
amends, modifies or is otherwise inconsistent with a
previous Money Market Quote submitted by such Bank with
respect to the same Money Market Quote Request. Any such
subsequent Money Market Quote shall be disregarded by the
Agent unless such subsequent Money Market Quote is submitted
solely to correct a manifest error in such former Money
Market Quote. The Agent's notice to the Borrower shall
specify (A) the aggregate principal amount of Money Market
Loans for which offers have been received for each Interest
Period specified in the related Money Market Quote Request,
(B) the respective principal amounts and Money Market
Margins or Money Market Absolute Rates, as the case may be,
so offered and (C) if applicable, limitations on the
aggregate principal amount of Money Market Loans for which
offers in any single Money Market Quote may be accepted.
(f)Acceptance and Notice by Borrower. Not later
than 10:00 A.M. (New York City time) on (x) the third
Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) the
proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be
effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it
pursuant to subsection (e). In the case of acceptance, such
notice (a "Notice of Money Market Borrowing") shall specify
the aggregate principal amount of offers for each Interest
Period that are accepted. The Borrower may accept any Money
Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount
set forth in the related Money Market Quote Request,
(ii) the aggregate principal amount of each Money
Market Borrowing must be $25,000,000 or any larger
multiple of $1,000,000,
(iii) acceptance of offers may only be made on the
basis of ascending Money Market Margins or Money Market
Absolute Rates, as the case may be, and
<PAGE> 26 (iv) the Borrower may not accept any offer that
is described in subsection (d)(iii) or that otherwise fails
to comply with the requirements of this Agreement.
(g)Allocation by Agent. If offers are made by
two or more Banks with the same Money Market Margins or
Money Market Absolute Rates, as the case may be, for a
greater aggregate principal amount than the amount in
respect of which such offers are accepted for the related
Interest Period, the principal amount of Money Market Loans
in respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as
possible (in such multiples, not greater than $100,000, as
the Agent may deem appropriate) in proportion to the
aggregate principal amounts of such offers. Determinations
by the Agent of the amounts of Money Market Loans shall be
conclusive in the absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a)Upon receipt of a Notice of Borrowing, the
Agent shall promptly notify each Bank of the contents
thereof and of such Bank's share (if any) of such Borrowing
and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(b)Not later than 1:00 P.M. (New York City time)
on the date of each Borrowing, each Bank participating
therein shall (except as provided in subsection (c) of this
Section) make available its share of such Borrowing, in
Federal or other funds immediately available in New York
City, to the Agent at its address specified in or pursuant
to Section 9.01. Unless the Agent determines that any
applicable condition specified in Article III has not been
satisfied, the Agent will make the funds so received from
the Banks available to the Borrower at the Agent's aforesaid
address.
(c)If any Bank makes a new Loan hereunder on a
day on which the Borrower is to repay all or any part of an
outstanding Loan from such Bank, such Bank shall apply the
proceeds of its new Loan to make such repayment and only an
amount equal to the difference (if any) between the amount
being borrowed and the amount being repaid shall be made
available by such Bank to the Agent as provided in
subsection (b), or remitted by the Borrower to the Agent as
provided in Section 2.12, as the case may be.
(d)Unless the Agent shall have been notified by
any Bank prior to the date of Borrowing (or prior to
<PAGE> 27 1:00 P.M. (New York City time) on the date of
Borrowing in the case of a Base Rate Borrowing) that such
Bank does not intend to make available to the Agent such
Bank's portion of the Borrowing to be made on such date, the
Agent may assume that such Bank has made such amount
available to the Agent on such date and the Agent may, in
reliance upon such assumption, make available to the
Borrower a corresponding amount, subject to the provisions
of subsection (c). If such corresponding amount is not in
fact made available to the Agent by such Bank, the Agent
shall be entitled to recover such corresponding amount on
demand from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Borrower and
the Borrower shall promptly pay such corresponding amount to
the Agent. The Agent shall also be entitled to recover from
such Bank or the Borrower interest on such corresponding
amount in respect of each day from the date such
corresponding amount was made available by the Agent to the
Borrower to the date such corresponding amount is recovered
by the Agent, at a rate per annum equal to (x) in the case
of a Bank, the Federal Funds Rate for each such day and (y)
in the case of the Borrower, the then applicable rate for
Base Rate Loans, CD Loans, Euro-Dollar Loans or Money Market
Loans, as appropriate. Nothing herein shall be deemed to
relieve any Bank from its obligation to fulfill its
Commitment hereunder or to prejudice any rights which the
Borrower may have against any Bank as a result of
any default by such Bank hereunder. For purposes of this
subsection (d), no amount paid to the Agent hereunder shall
be considered to have been recovered by the Agent on the
date of payment unless such amount shall have been received
by the Agent by 2:30 P.M. (New York City time) on such date.
SECTION 2.05. Notes. (a) The Loans of each Bank
shall be evidenced by a single Note payable to the order of
such Bank for the account of its Applicable Lending Office
in an amount equal to the aggregate unpaid principal amount
of such Bank's Loans.
(b)Each Bank may, by notice to the Borrower and
the Agent, request that its Loans of a particular type be
evidenced by a separate Note in an amount equal to the
aggregate unpaid principal amount of such Loans. Each such
Note shall be in substantially the form of Exhibit A hereto
with appropriate modifications to reflect the fact that it
evidences solely Loans of the relevant type. Each reference
in this Agreement to the "Note" of such Bank shall be deemed
to refer to and include any or all of such Notes, as the
context may require.
<PAGE> 28 (c) Upon receipt of each Bank's Note pursuant to
Section 3.01(b), the Agent shall forward such Note to such
Bank. Each Bank shall record the date, amount, type and
maturity of each Loan made by it and the date and amount of
each payment of principal made by the Borrower with respect
thereto, and may, if such Bank so elects in connection with
any transfer or enforcement of its Note, endorse on the
schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such
Loan then outstanding; provided that the failure of any Bank
to make any such recordation or endorsement shall not affect
the obligations of the Borrower hereunder or under the
Notes. Each Bank is hereby irrevocably authorized by the
Borrower so to endorse its Note and to attach to and make a
part of its Note a continuation of any such schedule as and
when required.
SECTION 2.06. Maturity of Loans. Each Loan
included in any Borrowing shall mature, and the principal
amount thereof shall be due and payable, on the last day of
the Interest Period applicable to such Borrowing.
SECTION 2.07. Interest Rates. (a) Each Base
Rate Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made
until it becomes due, at a rate per annum equal to the Base
Rate for such day. Such interest shall be payable for each
Interest Period on the last day thereof. Any overdue
principal of or interest on any Base Rate Loan shall bear
interest, payable on demand, for each day until paid at a
rate per annum equal to the sum of 2% plus the rate
otherwise applicable to Base Rate Loans for such day.
(b)Each CD Loan shall bear interest on the
outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the
sum of the CD Margin plus the applicable Adjusted CD Rate;
provided that if any CD Loan shall, as a result of clause
(2)(b) of the definition of Interest Period, have an
Interest Period of less than 30 days, such Loan shall bear
interest during such Interest Period at the rate applicable
to Base Rate Loans during such period. Such interest shall
be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than 90 days, 90 days
after the first day thereof. Any overdue principal of or
interest on any CD Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to
the sum of 2% plus the higher of (i) the sum of the CD
Margin plus the Adjusted CD Rate applicable to such Loan and
(ii) the rate applicable to Base Rate Loans for such day.
<PAGE> 29
The "Adjusted CD Rate" applicable to any Interest
Period means a rate per annum determined pursuant to the
following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upwards, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest
Period is the rate of interest determined by the Agent to be
the average (rounded upward, if necessary, to the next
higher 1/100 of 1%) of the prevailing rates per annum bid at
10:00 A.M. (New York City time) (or as soon thereafter as
practicable) on the first day of such Interest Period by two
or more New York certificate of deposit dealers of
recognized standing for the purchase at face value from each
CD Reference Bank of its certificates of deposit in an
amount comparable to the unpaid principal amount of the CD
Loan of such CD Reference Bank to which such Interest Period
applies and having a maturity comparable to such Interest
Period.
"Domestic Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves)
for a member bank of the Federal Reserve System in New York
City with deposits exceeding five billion dollars in respect
of new non-personal time deposits in dollars in New York
City having a maturity comparable to the related Interest
Period and in an amount of $100,000 or more. The Adjusted
CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve
Percentage.
"Assessment Rate" means for any day the annual
assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund classified as adequately
capitalized and within supervisory subgroup "A" (or a
<PAGE> 30 comparable successor assessment risk
classification) within the meaning of 12 C.F.R. Section
327.3(e) (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor) for such
Corporation's (or such successor's) insuring time deposits
at offices of such institution in the United States. The
Adjusted CD Rate shall be adjusted automatically on and as
of the effective date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on
the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the
sum of the Euro-Dollar Margin plus the applicable Adjusted
London Interbank Offered Rate. Such interest shall be
payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than three months,
three months after the first day thereof.
The "Adjusted London Interbank Offered Rate"
applicable to any Interest Period means a rate per annum
equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i)
the applicable London Interbank Offered Rate by (ii) 1.00
minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to
any Interest Period means the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective
rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London
interbank market at approximately 11:00 A.M. (London time)
two Euro-Dollar Business Days before the first day of such
Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar
Reference Bank to which such Interest Period is to apply and
for a period of time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement for a member bank of the
Federal Reserve System in New York City with deposits
exceeding five billion dollars in respect of "Eurocurrency
liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which
the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which
includes loans by a non-United States office of any Bank to
United States residents). The Adjusted London Interbank
Offered Rate shall be adjusted automatically on and as of
<PAGE> 31 the effective date of any change in the
Euro-Dollar Reserve Percentage.
(d)Any overdue principal of or interest on any
Euro-Dollar Loan shall bear interest, payable on demand, for
each day from and including the date payment thereof was due
to but excluding the date of actual payment, at a rate per
annum equal to the sum of 2% plus the higher of (i) the sum
of the Euro-Dollar Margin plus the Adjusted London Interbank
Offered Rate applicable to such Loan and (ii) the
Euro-Dollar Margin plus the quotient obtained (rounded
upwards, if necessary, to the next higher 1/100 of 1%) by
dividing (x) the average (rounded upward, if necessary, to
the next higher 1/16 of 1%) of the respective rates per
annum at which one day (or, if such amount due remains
unpaid more than three Euro-Dollar Business Days, then for
such other period of time not longer than six months as the
Agent may select) deposits in dollars in an amount
approximately equal to such overdue payment due to each of
the Euro-Dollar Reference Banks are offered to such
Euro-Dollar Reference Bank in the London interbank market
for the applicable period determined as provided above by
(y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if
the circumstances described in clause (a) or (b) of Section
8.01 shall exist, at a rate per annum equal to the sum of 2%
plus the rate applicable to Base Rate Loans for such day).
(e)Subject to Section 8.01(a), each Money Market
LIBOR Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto,
at a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in
accordance with Section 2.07(c) as if each Euro-Dollar
Reference Bank were to participate in the related Money
Market LIBOR Borrowing ratably in proportion to its
Commitment) plus (or minus) the Money Market Margin quoted
by the Bank making such Loan in accordance with Section
2.03. Each Money Market Absolute Rate Loan shall bear
interest on the outstanding principal amount thereof, for
the Interest Period applicable thereto, at a rate per annum
equal to the Money Market Absolute Rate quoted by the Bank
making such Loan in accordance with Section 2.03. Such
interest shall be payable for each Interest Period on the
last day thereof and, if such Interest Period is longer than
three months, at intervals of three months after the first
day thereof. Any overdue principal of or interest on any
Money Market Loan shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to the sum
of 2% plus the Prime Rate for such day.
<PAGE> 32 (f) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give
prompt notice to the Borrower and the participating Banks by
telex or cable of each rate of interest so determined, and
its determination thereof shall be conclusive in the absence
of manifest error.
(g)Each Reference Bank agrees to use its best
efforts to furnish quotations to the Agent as contemplated
by this Section. If any Reference Bank does not furnish a
timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations
furnished by the remaining Reference Bank or Banks or, if
none of such quotations is available on a timely basis, the
provisions of Section 8.01 shall apply.
SECTION 2.08. Fees.
(a)Facility Fee. The Borrower shall pay to the
Agent for the account of the Banks ratably in proportion to
their Commitments a facility fee at the Facility Fee Rate
(determined daily in accordance with the Pricing Schedule).
Such facility fee shall accrue from and including the
Effective Date to but excluding the Termination Date (or
such earlier date as the Commitments shall be terminated) on
the aggregate amount of the Commitments in existence on each
such day (whether used or unused).
(b)Agents' Fees. The Borrower shall pay to the
Agent and the Co-Syndication Agents, each for its own
account, one or more fees in such amounts and at such times
as has been previously agreed between the Borrower and each
of them.
(c)Payments. Accrued fees under subsection (a)
of this Section 2.08 shall be payable quarterly in arrears
on each January 1, April 1, July 1 and October 1, commencing
on the first such date after the Effective Date, and upon
the date of termination of the Commitments in their
entirety.
SECTION 2.09. Optional Termination or Reduction
of Commitments. During the Revolving Credit Period, the
Borrower may, upon at least three Domestic Business Days'
notice to the Agent (which notice the Agent will promptly
deliver to the Banks), (i) terminate the Commitments at any
time, if no Loans are outstanding at such time or
(ii) ratably reduce from time to time by an aggregate amount
of $25,000,000 or any larger multiple of $1,000,000, the
aggregate amount of the Commitments in excess of the
aggregate outstanding principal amount of the Loans.
<PAGE> 33 SECTION 2.10. Mandatory Termination of
Commitments. The Commitments shall terminate on the
Termination Date and any Loans then outstanding (together
with accrued interest thereon) shall be due and payable on
such date.
SECTION 2.11. Optional Prepayments. (a) The
Borrower may, upon at least one Domestic Business Day's
notice to the Agent, prepay any Base Rate Borrowing (or any
Money Market Borrowing bearing interest at the Base Rate
pursuant to Section 8.01(a)) in whole at any time, or from
time to time in part in amounts aggregating $25,000,000 or
any larger multiple of $1,000,000, by paying the principal
amount to be prepaid together with accrued interest thereon
to the date of prepayment. Each such optional prepayment
shall be applied to prepay ratably the Loans of the several
Banks included in such Borrowing.
(b)Except as provided in Section 8.02, the
Borrower may not prepay all or any portion of the principal
amount of any Fixed Rate Loan prior to the maturity thereof.
(c)Upon receipt of a notice of prepayment
pursuant to this Section, the Agent shall promptly notify
each Bank of the contents thereof and of such Bank's ratable
share (if any) of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of,
and interest on, the Loans and of fees hereunder, not later
than 1:00 P.M. (New York City time) on the date when due, in
Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section
9.01. The Agent will promptly distribute to each Bank its
ratable share of each such payment received by the Agent for
the account of the Banks. Whenever any payment of principal
of, or interest on, the Domestic Loans or of fees shall be
due on a day which is not a Domestic Business Day, the date
for payment thereof shall be extended to the next succeeding
Domestic Business Day. Whenever any payment of principal
of, or interest on, the Euro-Dollar Loans shall be due on a
day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case the date
for payment thereof shall be the next preceding Euro-Dollar
Business Day. Whenever any payment of principal of, or
interest on, the Money Market Loans shall be due on a day
which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding
<PAGE> 34 Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or
otherwise, interest thereon shall be payable for such
extended time.
(b)Unless the Agent shall have received notice
from the Borrower prior to the date on which any payment is
due to the Banks hereunder that the Borrower will not make
such payment in full, the Agent may assume that the Borrower
has made such payment in full to the Agent on such date and
the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to
the amount then due such Bank. If and to the extent that
the Borrower shall not have so made such payment, each Bank
shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for
each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower
makes any payment of principal with respect to any Fixed
Rate Loan (pursuant to Article VI or VIII or otherwise) on
any day other than the last day of the Interest Period
applicable thereto, or the end of an applicable period fixed
pursuant to Section 2.07(d), or if the Borrower fails to
borrow any Fixed Rate Loans after notice has been given to
any Bank in accordance with Section 2.04(a), the Borrower
shall reimburse each Bank within 15 days after demand for
any resulting loss or expense incurred by it (or by an
existing or prospective Participant in the related Loan),
including (without limitation) any loss incurred in
obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after
any such payment or failure to borrow, provided that such
Bank shall have delivered to the Borrower a certificate as
to the amount of such loss or expense, which certificate
shall be conclusive in the absence of manifest error.
SECTION 2.14. Computation of Interest and Fees.
Interest based on the Prime Rate and fees hereunder shall be
computed on the basis of a year of 365 days (or 366 days in
a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All
other interest shall be computed on the basis of a year of
360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day).
SECTION 2.15. Withholding Tax Exemption. At
least five Domestic Business Days prior to the first date on
which interest or fees are payable hereunder for the account
of any Bank, each Bank that is not incorporated under the
<PAGE> 35 laws of the United States of America or a state
thereof agrees that it will deliver to each of the Borrower
and the Agent two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, certifying in
either case that such Bank is entitled to receive payments
under this Agreement and its Note without deduction or
withholding of any United States federal income taxes. Each
Bank which so delivers a Form 1001 or 4224 further
undertakes to deliver to each of the Borrower and the Agent
two additional copies of such form (or a successor form) on
or before the date that such form expires or becomes
obsolete or after the occurrence of any event requiring a
change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may
be reasonably requested by the Borrower or the Agent, in
each case certifying that such Bank is entitled to receive
payments under this Agreement and its Note without deduction
or withholding of any United States federal income taxes,
unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on
which any such delivery would otherwise be required which
renders all such forms inapplicable or which would prevent
such Bank from duly completing and delivering any such form
with respect to it and such Bank advises the Borrower and
the Agent that it is not capable of receiving payments
without any deduction or withholding of United States
federal income tax.
SECTION 2.16. Increase of Commitments. Upon at
least 45 days' prior notice to the Agent (which notice the
Agent shall promptly transmit to each of the Banks), the
Borrower shall have the right, subject to the terms and
conditions set forth below and with the consent of the Banks
as set forth below, to increase the aggregate amount of the
Commitments in multiples of $5,000,000. Any such increase
shall apply, at the option of the Borrower, (x) to the
Commitment of one or more Banks, provided that (i) the
Required Banks (including each Bank whose Commitment is to
be increased) shall consent to such increase, (ii) the
amount set forth on the signature pages hereof opposite the
name of each Bank the Commitment of which is being so
increased shall be amended to reflect the increased
Commitment of such Bank and (iii) if any Committed Loans are
outstanding at the time of such an increase, the Borrower
will, notwithstanding anything to the contrary contained in
this Agreement, on the date of such increase incur and repay
or prepay one or more Committed Loans from the Banks in such
amounts so that after giving effect thereto, the Committed
Loans shall be outstanding on a pro rata basis (based on the
Commitments of the Banks after giving effect to the changes
made pursuant hereto on such date) from all the Banks or (y)
<PAGE> 36 to the creation of a new Commitment of an
institution not then a Bank hereunder, provided that (i)
such institution becomes a party to this Agreement as a Bank
by execution and delivery to the Borrower and the Agent of
counterparts of this Agreement, (ii) the Required Banks
shall consent to the creation of such Commitment of such
Bank, (iii) the signature pages hereof shall be amended to
reflect the Commitment of such new Bank, (iv) the Borrower
shall issue a Note to such new Bank in conformity with the
provisions of Section 2.05, (v) if any Committed Loans are
outstanding at the time of the creation of such Commitment
of such Bank, the Borrower will, notwithstanding anything to
the contrary contained in this Agreement, on the date of the
creation of such Commitment incur and repay or prepay one or
more Committed Loans from the Banks in such amounts so that
after giving effect thereto, the Committed Loans shall be
outstanding on a pro rata basis (based on the Commitments of
the Banks after giving effect to the changes made pursuant
hereto on such date) from all the Banks and (vi) if such
institution is neither a banking institution nor an
affiliate of a Bank, such institution must be consented to
by the Agent; provided further that any such increase or
creation may apply, at the option of the Borrower, as set
forth in clause (x) or (y) above but without the consent of
the Required Banks so long as the amount of such increase or
the amount of such new Commitment so created, as the case
may be, when added to the aggregate amount of all such prior
increases in the Commitments and all such prior creations of
new Commitments does not exceed $200,000,000. It is
understood that any increase in the amount of the
Commitments pursuant to this Section 2.16 shall not
constitute an amendment of this Agreement or the Notes.
ARTICLE III
CONDITIONS
SECTION 3.01. Closing. The Closing hereunder
shall occur upon receipt by the Agent of the following
documents, each dated the Closing Date unless otherwise
indicated:
(a)receipt by the Agent of counterparts hereof
signed by each of the parties hereto (or, in the case
of any party as to which an executed counterpart shall
not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other
written confirmation from such party of execution of a
counterpart hereof by such party);
<PAGE> 37 (b)receipt by the Agent for the account of each Bank
of a duly executed Note dated on or before the
Closing Date complying with the provisions of Section
2.05;
(c)receipt by the Agent of an opinion of John
Jay List, Esq., General Counsel of the Borrower,
substantially in the form of Exhibit F hereto and
covering such additional matters relating to the
transactions contemplated hereby as the Required Banks
may reasonably request, such opinion to be in form and
substance satisfactory to the Agent;
(d)receipt by the Agent of an opinion of
Milbank, Tweed, Hadley & McCloy, special counsel for
the Borrower, substantially in the form of Exhibit G
hereto and covering such additional matters relating to
the transactions contemplated hereby as the Required
Banks may reasonably request, such opinion to be in
form and substance satisfactory to the Agent;
(e)receipt by the Agent of an opinion of Davis
Polk & Wardwell, special counsel for the Agent,
substantially in the form of Exhibit H hereto and
covering such additional matters relating to the
transactions contemplated hereby as the Required Banks
may reasonably request, such opinion to be in form and
substance satisfactory to the Agent;
(f)receipt by the Agent of a certificate signed
by the Chief Financial Officer or the Governor and an
Assistant Secretary-Treasurer or the Controller of the
Borrower to the effect set forth in clauses (c) through
(g), inclusive, of Section 3.02 and, in the case of
clauses (c), (e) and (g), setting forth in reasonable
detail the calculations required to establish such
compliance;
(g)receipt by the Agent of all documents the
Required Banks may reasonably request relating to the
existence of the Borrower, the corporate authority for
and the validity of this Agreement and the Notes, and
any other matters relevant hereto, all in form and
substance satisfactory to the Agent; and
(h)evidence satisfactory to the Required Banks
that the Commitments, as defined in each of the Prior
Credit Agreements, have been terminated (except that
Sections 2.13, 7.05, 7.06, 8.03 and 9.03 (and Section
2.12 and Article IX insofar as such Section or Article
relates to such Sections 2.13, 7.05, 7.06, 8.03 and
<PAGE> 38 9.03, as applicable)) of each of the Prior
Credit Agreements shall survive the termination of such
Commitments and shall remain in full force and effect)
and all amounts owed under each of the Prior Credit
Agreements have been paid in full.
The Agent shall promptly notify the Borrower and the Banks
of the Closing Date, and such notice shall be conclusive and
binding on all parties hereto.
SECTION 3.02. Borrowings. The obligation of any
Bank to make a Loan on the occasion of any Borrowing is
subject to the satisfaction of the following conditions:
(a)the fact that the Closing Date shall have
occurred prior to March 1, 1995.
(b)receipt by the Agent of a Notice of Borrowing
as required by Section 2.02 or 2.03, as the case may
be;
(c)the fact that, immediately after such
Borrowing, the Borrower is in compliance with Section
7.12(a) of the 1972 Indenture and Section 7.11 of the
1994 Indenture, as each Indenture is in effect as of
the date hereof;
(d)the fact that, immediately after such
Borrowing, the aggregate outstanding principal amount
of the Loans will not exceed the aggregate amount of
the Commitments;
(e)the fact that, immediately after such
Borrowing, if such Borrowing is not a Refunding
Borrowing, no Default shall have occurred and be
continuing or, if such Borrowing is a Refunding
Borrowing, no Event of Default shall have occurred and
be continuing;
(f)the fact that the representations and
warranties of the Borrower contained in this Agreement
(except, in the case of a Refunding Borrowing, the
representations and warranties set forth in Section
4.03, the second sentence of Section 4.06, and the
first sentence of Section 4.07) shall be true on and as
of the date of such Borrowing (it being understood and
agreed that the representation and warranty set forth
in Section 4.13 shall be true and correct as to all
information furnished prior to the making of the
respective Loan); and
<PAGE> 39 (g) the fact that, at the time of such Borrowing,
(i) there shall be no collateral securing Bonds issued
pursuant to either Indenture of a type other than the
types of collateral permitted to secure Bonds issued
pursuant to such Indenture as of the date hereof and
(ii) the Allowable Amount of Eligible Collateral then
pledged under either Indenture shall not exceed 150% of
the aggregate principal amount of Bonds then
Outstanding under such Indenture and no collateral
shall secure Bonds other than the Eligible Collateral
under such Indenture, the Allowable Amount of which is
included within the prior computation or collateral
previously so pledged which ceases to be such Eligible
Collateral not as a result of any acts or omissions to
act of the Borrower (other than the declaration of an
"event of default" as defined in a Mortgage which
results in the exercise of any right or remedy
described in such Mortgage); each defined term used in
this clause (g) shall have the meaning assigned thereto
in the applicable Indenture.
Each Borrowing hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of
such Borrowing as to the facts specified in clauses (c),
(d), (e), (f) and (g) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower makes the following representations,
warranties and agreements, which shall survive the execution
and delivery of this Agreement and the Notes and the making
of the Loans:
SECTION 4.01. Corporate Existence, Power and
Authority. The Borrower is a cooperative association duly
incorporated, validly existing and in good standing under
the laws of the District of Columbia and has the corporate
power and authority and all material governmental licenses,
authorizations, consents and approvals required to own its
property and assets and to transact the business in which it
is engaged. The Borrower is duly qualified or licensed as a
foreign corporation in good standing in every jurisdiction
in which the nature of the business in which it is engaged
makes such qualification or licensing necessary, except in
those jurisdictions in which the failure to be so qualified
or licensed would not (after qualification, assuming that
the Borrower could so qualify without the payment of any fee
or penalty and retain the rights as they existed prior to
<PAGE 40> such qualification all to an extent so that any
fees or penalties required to be so paid or any rights not
so retained would not, individually or in the aggregate,
have a material adverse effect on the business or financial
condition of the Borrower), individually or in the
aggregate, have a material adverse effect upon the business
or financial condition of the Borrower. The Borrower has
the corporate power and authority to execute, deliver and
carry out the terms and provisions of this Agreement and the
Notes. This Agreement has been, and the Notes when executed
and delivered will have been, duly and validly authorized,
executed and delivered by the Borrower, and this Agreement
constitutes a legal, valid and binding agreement of the
Borrower, and the Notes, when executed and delivered by the
Borrower in accordance with this Agreement, will constitute
legal, valid and binding obligations of the Borrower, in
each case enforceable in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by
general principles of equity.
SECTION 4.02. Financial Statements. (a) The
combined balance sheets of the Borrower and its Consolidated
Subsidiaries as at May 31, 1994 and the related combined
statements of income, expenses and net margins, changes in
Members' equity and cash flows for the fiscal year ended May
31, 1994, including the related notes, accompanied by the
opinion and report thereon of Arthur Andersen & Co.,
certified public accountants, heretofore delivered to the
Banks, present fairly in accordance with generally accepted
accounting principles (i) the combined financial position of
the Borrower and its Consolidated Subsidiaries as at the
date of said balance sheets and (ii) the combined results of
the operations of the Borrower and its Consolidated
Subsidiaries for said fiscal year. The Borrower has no
material liabilities (contingent or otherwise) which are not
disclosed by or reserved against in the most recent audited
financial statements or in the notes thereto other than (i)
Indebtedness incurred and (ii) loan and guarantee
commitments issued in each case by the Borrower in the
ordinary course of business since the date of such financial
statements. All such financial statements have been
prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods,
except as disclosed therein. The same representations as
are set forth in this Section 4.02 shall be deemed to have
been made by the Borrower in respect of the most recent
annual and quarterly financial statements of the Borrower
and its Consolidated Subsidiaries (except that the opinion
and report of Arthur Andersen & Co. may be replaced by an
opinion and report of another nationally recognized firm of
<PAGE> 41 independent certified public accountants)
furnished or required to be furnished to the Banks prior to
or at the time of the making of each Loan hereunder, at the
time the same are furnished or required to be furnished.
(b)The unaudited combined balance sheets of the
Borrower and its Consolidated Subsidiaries as of November
30, 1994 and the related unaudited combined statements of
income, expenses and net margins, changes in Members' equity
and cash flows for the six months then ended, heretofore
delivered to the Banks, present fairly in conformity with
generally accepted accounting principles applied on a basis
consistent with the financial statements referred to in
subsection (a) of this Section 4.02, the combined financial
position of the Borrower and its Consolidated Subsidiaries
as of such date and their combined results of operations and
changes in financial position for such six-month period
(subject to normal year-end adjustments). The Borrower has
no material liabilities (contingent or otherwise) which are
not disclosed by or reserved against in such financial
statements for such six-month period other than Indebtedness
incurred and loan and guarantee commitments issued by the
Borrower in the ordinary course of business since the date
of such financial statements.
SECTION 4.03. Litigation. There are no actions,
suits, proceedings or investigations pending or, to the
Borrower's knowledge, threatened by or before any court or
any governmental authority, body or agency or any
arbitration board which are reasonably likely to materially
adversely affect the business, property, assets, financial
position or results of operations of the Borrower or the
authority or ability of the Borrower to perform its
obligations under this Agreement or the Notes.
SECTION 4.04. Governmental Authorizations. No
authorization, consent, approval or license of, or
declaration, filing or registration with or exemption by,
any governmental authority, body or agency is required in
connection with the execution, delivery or performance by
the Borrower of this Agreement or the Notes.
SECTION 4.05. Capital Term Certificates. The
holders of the Borrower's Capital Term Certificates are not
and will not be entitled to receive any payments with
respect to the principal thereof or interest thereon solely
because of withdrawing or being expelled from membership in
the Borrower.
SECTION 4.06. No Violation of Agreements.
Neither the Borrower nor any Subsidiary is in default in any
<PAGE> 42 material respect under any material agreement or
other instrument to which it is a party or by which it is
bound or its property or assets may be affected. No event
or condition exists which constitutes, or with the giving of
notice or lapse of time or both would constitute, such a
default under any such agreement or other instrument.
Neither the execution and delivery of this Agreement or the
Notes, nor the consummation of any of the transactions
herein or therein contemplated, nor compliance with the
terms and provisions hereof or thereof, will contravene any
provision of law, statute, rule or regulation to which the
Borrower is subject or any judgment, decree, award,
franchise, order or permit applicable to the Borrower, or
will conflict or be inconsistent with, or will result in any
breach of, any of the terms, covenants, conditions or
provisions of, or constitute (or with the giving of notice
or lapse of time, or both, would constitute) a default under
(or condition or event entitling any Person to require,
whether by purchase, redemption, acceleration or otherwise,
the Borrower to perform any obligations prior to the
scheduled maturity thereof), or result in the creation or
imposition of any Lien upon any of the property or assets of
the Borrower pursuant to the terms of, any indenture,
mortgage, deed of trust, agreement or other instrument to
which it may be subject, or violate any provision of the
certificate of incorporation or by-laws of the Borrower.
Without limiting the generality of the foregoing, the
Borrower is not a party to, or otherwise subject to any
provision contained in, any instrument evidencing
Indebtedness of the Borrower, any agreement or indenture
relating thereto or any other contract or agreement
(including its certificate of incorporation and by-laws),
which would be violated by the incurring of the Indebtedness
to be evidenced by the Notes.
SECTION 4.07. No Event of Default under the
Indentures. The Borrower has complied fully with all of the
material provisions of each Indenture. No Event of Default
(within the meaning of such term as defined in each
Indenture) and no event, act or condition (except for
possible non-compliance by the Borrower with any immaterial
provision of such Indenture which in itself is not such an
Event of Default under such Indenture) which with notice or
lapse of time, or both, would constitute such an Event of
Default has occurred and is continuing under such Indenture.
The Borrowings by the Borrower contemplated by this
Agreement will not cause such an Event of Default under, or
the violation of any covenant contained in, either
Indenture.
<PAGE> 43 SECTION 4.08. Compliance with ERISA. The Plans
are in substantial compliance with ERISA, no Plan is
insolvent or in reorganization, no Plan has an accumulated
or waived funding deficiency within the meaning of Section
412 of the Internal Revenue Code, neither the Borrower nor a
Subsidiary of the Borrower nor any member of the ERISA Group
has incurred any material liability (including any material
contingent liability) to or on account of a Plan pursuant to
Section 4062, 4063, 4064, 4201 or 4204 of ERISA, no
proceedings have been instituted to terminate any Plan, and
no condition exists which presents a material risk to the
Borrower or a Subsidiary of the Borrower of incurring a
liability to or on account of a Plan pursuant to any of the
foregoing Sections of ERISA.
SECTION 4.09. Compliance with Other Laws. The
Borrower and each Subsidiary is in compliance, in all
material respects, with all applicable requirements of law
and all applicable rules and regulations of each Federal,
State, municipal or other governmental department, agency or
authority, domestic or foreign.
SECTION 4.10. Tax Status. The Borrower is exempt
from payment of Federal income tax under Section 501(c)(4)
of the Internal Revenue Code.
SECTION 4.11. Investment Company Act. The
Borrower is not an "investment company" or a company
"controlled" by an "investment company", within the meaning
of the Investment Company Act of 1940, as amended.
SECTION 4.12. Public Utility Holding Company Act.
The Borrower is not a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding
company", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended.
SECTION 4.13. Disclosure. To the best of the
Borrower's knowledge, information and belief, neither this
Agreement nor any document, certificate or financial
statement furnished to any Bank by or on behalf of the
Borrower in connection herewith (all such documents,
certificates and financial statements, taken as a whole)
contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the
statements contained herein and therein not misleading.
There is no fact (other than facts of a general economic or
political nature) known to the Borrower which in its
judgment materially adversely affects or in the future is
likely to (so far as is now known to the Borrower) have a
<PAGE> 44 material adverse effect upon the business,
operations, prospects, property, assets or financial
condition of the Borrower which has not been set forth in
this Agreement or in other documents, certificates or
financial statements furnished to the Banks by or on behalf
of the Borrower in connection with the transactions
contemplated hereby.
SECTION 4.14. Subsidiaries. Each of the
Borrower's corporate Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on
its business as now conducted.
SECTION 4.15. Environmental Matters. In the
ordinary course of its business, the Borrower conducts
reviews, to the extent appropriate given the nature of its
business operations, of the effect of Environmental Laws on
the business, operations and properties of the Borrower and
its Subsidiaries, in the course of which it identifies and
evaluates associated liabilities and costs (including,
without limitation, any capital or operating expenditures
required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures
required to achieve or maintain compliance with
environmental protection standards imposed by law or as a
condition of any license, permit or contract, any related
constraints on operating activities, including any periodic
or permanent shutdown of any facility or reduction in the
level of or change in the nature of operations conducted
thereat, any costs or liabilities in connection with
off-site disposal of wastes or Hazardous Substances, and any
actual or potential liabilities to third parties, including
employees, and any related costs and expenses). On the
basis of this review, the Borrower has reasonably concluded
that such associated liabilities and costs, including the
cost of compliance with Environmental Laws, are unlikely to
have a material adverse effect on the business, financial
condition, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a
whole.
<PAGE> 45 ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has
any Commitment hereunder or any amount payable under any
Note or any fee payable pursuant to Section 2.08 or any
other amount then due and payable hereunder remains unpaid:
SECTION 5.01. Corporate Existence. The Borrower,
at its own cost and expense, will, and will cause each
Subsidiary to, do or cause to be done all things necessary
to preserve and keep in full force and effect its corporate
existence, material rights and franchises; provided,
however, that neither the Borrower nor any Subsidiary shall
be required to preserve any right or franchise or, in the
case of a Subsidiary, its corporate existence, if its Board
of Directors shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the
Borrower or such Subsidiary (provided that the termination
of the corporate existence of a Subsidiary shall be
permitted if the Board of Directors of the Borrower shall
determine that its existence is not desirable in the conduct
of the business of the Borrower) and that the loss thereof
is not disadvantageous in any material respect to the Banks.
SECTION 5.02. Disposition of Assets; Merger;
Character of Business; etc. The Borrower will not wind up
or liquidate its business or sell, lease, transfer or
otherwise dispose of all or substantially all of its assets
as an entirety or in a series of related transactions and
will not consolidate with or merge with or into any other
Person other than a merger with a Subsidiary in which the
Borrower is the surviving Person. The Borrower will not
engage in any business other than the business contemplated
by its certificate of incorporation and by-laws, each as in
effect on the Effective Date.
SECTION 5.03. Financial Information. The
Borrower will, and will cause each Subsidiary to, keep its
books of account in accordance with generally accepted
accounting principles and the Borrower will furnish to the
Banks (i) as soon as available and in any event within 60
days after the close of each of the first three quarters of
each fiscal year of the Borrower, as at the end of, and for
the period commencing at the end of the previous fiscal year
and ending with, such quarter, unaudited combined balance
sheets of the Borrower and its Consolidated Subsidiaries and
the related unaudited combined statements of income,
expenses and net margins, changes in Members' equity and
cash flow of the Borrower and its Consolidated Subsidiaries
<PAGE> 46 for such quarter and for the portion of the
Borrower's fiscal year ended at the end of such quarter,
setting forth in each case in comparative form the figures
for the corresponding quarter and the corresponding portion
of the Borrower's previous fiscal year, all in reasonable
detail and certified (subject to normal year-end
adjustments) as to fairness of presentation in accordance
with generally accepted accounting principles and
consistency (except for changes concurred in by the
Borrower's independent certified public accountants) by the
Chief Financial Officer, the Governor, an Assistant
Secretary-Treasurer or the Controller of the Borrower; (ii)
as soon as practicable and in any event within 90 days after
the close of each fiscal year of the Borrower, as at the end
of and for the fiscal year just closed, combined balance
sheets of the Borrower and its Consolidated Subsidiaries and
the related combined statements of income, expenses and net
margins, changes in Members' equity and cash flow for such
fiscal year for the Borrower and its Consolidated
Subsidiaries, all in reasonable detail and fully certified
(without any qualification as to the scope of the audit) by
Arthur Andersen & Co. or other independent certified public
accountants of nationally recognized standing selected by
the Borrower, who shall have audited the books and accounts
of the Borrower for such fiscal year; (iii) together with
the financial statements referred to in clauses (i) and (ii)
above, a certificate signed by the Governor, the Chief
Financial Officer, an Assistant Secretary-Treasurer or the
Controller of the Borrower, in such detail as shall be
reasonably satisfactory to the Required Banks, (x)
identifying (A) all Indebtedness outstanding as at the end
of the fiscal period covered by such financial statements
extended by the Borrower or by any other Person and
Guaranteed by the Borrower to any of the forty Members with
the largest amount of Indebtedness to (or Guaranteed by) the
Borrower outstanding as at the end of the fiscal period
covered by such financial statements (the "Largest Members")
as to which, to the knowledge and information of the
Borrower, the Member is in default (whether in the payment
of the principal thereof or interest thereon or with respect
to any material covenant or agreement contained in any
instrument, mortgage or agreement evidencing or relating to
such Indebtedness) and specifying whether such default has
been waived by the Borrower or such other Person and the
nature and status of each such default not so waived and (B)
the aggregate amount of all Indebtedness outstanding as of
the end of the fiscal period covered by such financial
statements as to which, to the knowledge and information of
the Borrower, Members other than the Largest Members are in
default (whether in the payment of the principal thereof or
interest thereon or with respect to any material covenant or
<PAGE> 47 agreement contained in any instrument, mortgage or
agreement evidencing or relating to such Indebtedness), (y)
identifying the ten Members with the largest amount of
Indebtedness to (or Guaranteed by) the Borrower outstanding
as of the end of the fiscal period covered by such financial
statements, together with the principal amount of such
Indebtedness outstanding with respect to each such Member as
of the end of such fiscal period and (z) identifying all
loans which are RUS Guaranteed Loans and are outstanding as
of the end of the fiscal period covered by such financial
statements, together with (a) the principal amount of each
such RUS Guaranteed Loan as of the end of such fiscal
period, (b) the total amount of Indebtedness incurred by the
Borrower and Subsidiaries of the Borrower in order to fund
such RUS Guaranteed Loan, (c) the total interest expense
incurred during such fiscal period by the Borrower and
Subsidiaries of the Borrower in connection with the
Indebtedness referred to in preceding clause (b) and (d) the
amount of the Guaranteed Portion of such RUS Guaranteed
Loan; (iv) with reasonable promptness, copies of all regular
and periodical financial statements or other financial
reports and documents which the Borrower may make available
to its Members or bondholders or file with the Securities
and Exchange Commission; (v) promptly after obtaining
knowledge or receiving notice of a change (whether an
increase or decrease) in any rating issued by S&P or Moody's
pertaining to any securities of, or guaranteed by, the
Borrower or any of its Subsidiaries or affiliates, a notice
setting forth such change; and (vi) with reasonable
promptness, such other information respecting the business,
operations, prospects and financial condition of the
Borrower or any of its Subsidiaries or any Joint Venture as
any Bank may, from time to time, reasonably request,
including, without limitation, with respect to the
performance and observance by the Borrower of the covenants
and conditions contained in this Agreement.
SECTION 5.04. Default Certificates. Concurrently
with each financial statement delivered to the Banks
pursuant to clauses (i) and (ii) of Section 5.03, the
Borrower will furnish to the Banks a certificate signed by
the Governor, the Chief Financial Officer, an Assistant
Secretary-Treasurer or the Controller of the Borrower to the
effect that the review of the activities of the Borrower
during such year or the portion thereof covered by such
financial statement and of the performance of the Borrower
under this Agreement has been made under his supervision and
that to the best of his knowledge, based on such review,
there exists no event which constitutes a Default or an
Event of Default under this Agreement or, if any such event
exists, specifying the nature thereof, the period of its
<PAGE> 48 existence and what action the Borrower has taken
and proposes to take with respect thereto, which certificate
shall set forth the calculations or other data required to
establish compliance with the provisions of Section 5.09 and
Sections 5.12 through 5.15, inclusive, at the end of such
fiscal quarter or fiscal year, as the case may be. The
Borrower further covenants that upon any such officer of the
Borrower obtaining knowledge of any Default or Event of
Default under this Agreement, it will forthwith, and in no
event later than the close of business on the Business Day
immediately after the day such knowledge is obtained,
deliver to the Banks a statement of any officer referred to
above specifying the nature and the period of existence
thereof and what action the Borrower has taken and proposes
to take with respect thereto.
SECTION 5.05. Notice of Litigation, Legislative
Developments and Defaults. The Borrower will promptly give
written notice to each of the Banks of (i) any action,
proceeding or claim of which the Borrower may have notice,
which may be commenced or asserted against the Borrower or
any Subsidiary in which the amount involved is $1,000,000 or
more and is not covered in full by insurance or as to which
any insurer has disclaimed liability; (ii) any dispute which
may exist between the Borrower or any Subsidiary and any
governmental body, which is likely to materially and
adversely affect the normal business operation of the
Borrower or the Borrower and its Subsidiaries taken as a
whole or any of the material properties and assets of the
Borrower or the Borrower and its Subsidiaries taken as a
whole; (iii) any legislation enacted by any governmental
body and any rulings and regulations promulgated by any
governmental or regulatory bodies, known or which should be
known to the Borrower, affecting the Borrower or any
Subsidiary or generally affecting the Borrower's Members
which is likely to materially and adversely affect the
present or future operations of the Borrower, the Borrower
and its Subsidiaries taken as a whole or the Borrower's
Members; and (iv) any default by the Borrower or any
Subsidiary or event or condition known or which should be
known to the Borrower which with the giving of notice or
lapse of time, or both, would constitute a default, with
respect to any payment or payments in respect of
Indebtedness of the Borrower or such Subsidiary aggregating
in excess of $15,000,000 (whether in payment of principal
thereof or interest thereon or with respect to any material
covenant or agreement contained in any instrument, mortgage,
deed of trust or agreement evidencing or relating to such
Indebtedness or otherwise).
<PAGE> 49 SECTION 5.06. ERISA. As soon as possible and, in
any event, within 10 days after the Borrower or a Subsidiary
of the Borrower knows or has reason to know that a
Reportable Event has occurred, that an accumulated funding
deficiency has been incurred or an application may be or has
been made to the Secretary of the Treasury for a waiver of
the minimum funding standard under Section 412 of the
Internal Revenue Code with respect to a Plan, that a Plan
has been or may be terminated, that proceedings may be or
have been instituted to terminate a Plan, or that the
Borrower, a Subsidiary of the Borrower or any member of the
ERISA Group will or may incur any liability to or on account
of a Plan under Section 4062, 4063, 4064, 4201 or 4204 of
ERISA, the Borrower will deliver to each of the Banks a
certificate of the Chief Financial Officer of the Borrower
setting forth details as to such occurrence and action, if
any, which the Borrower or such Subsidiary is required or
proposes to take, together with any notices required to be
filed with or by the Borrower, such Subsidiary, such member
of the ERISA Group, the PBGC or the plan administrator with
respect thereto. Upon the request of any Bank, the Borrower
will furnish to such Bank a copy of the annual report of
each Plan (Form 5500) required to be filed with the Internal
Revenue Service. Copies of annual reports or any notices
required to be delivered to the Banks hereunder shall be
delivered no later than 10 days after the later of the date
such report or notice has been filed with the Internal
Revenue Service or the PBGC or received by the Borrower or a
Subsidiary of the Borrower.
SECTION 5.07. Payment of Charges. The Borrower
will, and will cause each Subsidiary to, duly pay and
discharge (i) all taxes, assessments and governmental
charges or levies imposed upon or against it or its property
or assets, prior to the date on which penalties attach
thereto, unless and to the extent only that such taxes,
assessments and governmental charges or levies are being
contested in good faith by appropriate proceedings; and (ii)
all lawful claims, including, without limitation, claims for
labor, materials, supplies or services, which might or
could, if unpaid, become a Lien upon such property or
assets, unless and to the extent only that the validity of
the amount thereof is being contested in good faith by
appropriate proceedings.
SECTION 5.08. Inspection of Books and Assets.
The Borrower will, and will cause each Subsidiary to, permit
any representative of any Bank (or any agent or nominee of
such Bank) to visit and inspect any of the property of the
Borrower or such Subsidiary, to examine the books of record
and account of the Borrower or such Subsidiary and to
<PAGE> 50
discuss the affairs, finances and accounts of the
Borrower or such Subsidiary with the officers and
independent public accountants of the Borrower or such
Subsidiary, all at such reasonable times and as often as
such Bank may reasonably request.
SECTION 5.09. Indebtedness. (a) The Borrower
will not, and will not permit any of its Subsidiaries to,
incur, assume or Guarantee any Superior Indebtedness, or
make any optional prepayment on any Capital Term
Certificate, provided that (i) subject to the provisions of
Section 5.12, any Subsidiary may incur Superior Indebtedness
owing to the Borrower or assume or Guarantee Indebtedness of
any Person (other than the Borrower or any of its
Subsidiaries) owing to the Borrower and (ii) the Borrower
may incur, assume or Guarantee Superior Indebtedness or make
optional prepayments on Capital Term Certificates if, after
giving effect to any such action specified above in this
clause (ii), (x) on the date of such incurrence, assumption
or Guarantee or making of such optional prepayment (the
"Determination Date") the aggregate principal amount of
Superior Indebtedness then outstanding would not exceed ten
times the sum of (a) the aggregate principal amount of
Capital Term Certificates outstanding on the Determination
Date and (b) the aggregate amount of Members' equity in the
Borrower, other than Capital Term Certificates, on the
Determination Date and (y) on no given future date would the
aggregate principal amount of Superior Indebtedness
outstanding on the Determination Date which will remain
outstanding on such given future date exceed ten times the
sum of (a) the aggregate principal amount of Capital Term
Certificates outstanding on the Determination Date which
will remain outstanding on such given future date and (b)
the aggregate amount of Members' equity in the Borrower,
other than Capital Term Certificates, on the Determination
Date. The respective principal amounts of Superior
Indebtedness and Capital Term Certificates to be outstanding
on such given future date shall be determined after giving
effect to mandatory sinking fund payments, other mandatory
prepayments and serial and other maturity payments required
to be made on or prior to said given future date by the
terms of such Superior Indebtedness and Capital Term
Certificates or any indenture or other instrument pursuant
to which they are respectively issued.
(b)If any Loan is outstanding hereunder, the
Borrower will not take any action which would prevent it
from then complying, or fail to take any action which would
enable it then to comply, with the provisions of Section
3.02(g), assuming for this purpose only that the Borrower
<PAGE> 51
then intended to borrow from one or more of the Banks hereunder.
SECTION 5.10. Liens. The Borrower will not
create or permit to exist any Lien on or with respect to any
Indebtedness of any Member which is an asset of the
Borrower, now existing or hereafter created, or any
collateral securing any such Indebtedness, and the Borrower
will not permit any Subsidiary to create or permit to exist
any Lien on or with respect to any of such Subsidiary's
assets, except Liens (i) granted by the Borrower to the
trustee pursuant to either Indenture, (ii) on any such
Indebtedness granted by the Borrower to secure any borrowing
for the purpose of making loans to Member power supply
systems or loans to Members for bulk power supply projects
or loans to Members for the purpose of providing financing
to telephone and related systems eligible to borrow from the
RUS, which borrowing or borrowings are on terms (except as
to terms of interest, premium, if any, and amortization) not
materially more disadvantageous to the Borrower's unsecured
creditors than the borrowings under either Indenture (it
being understood that the Borrower can not pledge such
assets to an extent greater than 150% of the aggregate
principal amount of such Indebtedness) and which Liens
secure amounts not exceeding $500,000,000 in the aggregate
at any one time outstanding, (iii) of current taxes not
delinquent or a security for taxes being contested in good
faith, (iv) other than in favor of the PBGC, created by or
resulting from any legal proceedings (including legal
proceedings instituted by the Borrower or any Subsidiary)
which are being contested in good faith by appropriate
proceedings, including appeals of judgments as to which a
stay of execution shall have been issued, and adequate
reserves shall have been established, (v) created by the
Borrower to secure Guarantees by the Borrower of
Indebtedness, the interest on which is excludable from the
gross income of the recipient thereof for Federal income tax
purposes as provided in Section 103(a) of the Internal
Revenue Code or Section 103(a) of the Internal Revenue Code
of 1954, as amended, (x) of a Member which is a state or
political subdivision thereof or (y) of a state or political
subdivision thereof incurred to benefit a Member for one of
the purposes provided in Section 142(a)(2), (4), (5), (6),
(8), (9), (10) or (12) of the Internal Revenue Code or
Section 103(b)(4)(D), (E), (F), (G), (H) or (J) of the
Internal Revenue Code of 1954, as amended, and (vi) granted
by any Subsidiary to the Borrower.
SECTION 5.11. Maintenance of Insurance. The
Borrower will maintain, and will cause each Subsidiary to
maintain, insurance in such amounts, on such forms and with
<PAGE> 52 such companies as is necessary or appropriate for
its business.
SECTION 5.12. Subsidiaries and Joint Ventures.
The sum of the amount of Indebtedness owing to the Borrower
by all of its Subsidiaries and Joint Ventures plus the
amount paid by the Borrower in respect of the stock,
obligations or securities of or any other interest in such
Subsidiaries and Joint Ventures plus any capital
contributions by the Borrower to such Subsidiaries and Joint
Ventures plus the amount of assets otherwise sold or
transferred by the Borrower to such Subsidiaries and Joint
Ventures (other than sales at fair market value) shall not
exceed at any time 10% of the sum of (i) all accounts which,
in accordance with generally accepted accounting principles,
constitute Members' equity in the Borrower at such time and
(ii) all Indebtedness of the Borrower shown in its balance
sheet dated as of May 31, 1994 as "Members' Subordinated
Certificates" as such Indebtedness shall be reduced from
time to time and any other Indebtedness of the Borrower
incurred after May 31, 1994 having substantially similar
provisions as to subordination as those contained in said
outstanding certificates as such other Indebtedness shall be
reduced from time to time, in each case at such time.
SECTION 5.13. Minimum Net Worth. The Borrower
will not at any time permit its Net Worth to be less than
the Minimum Required Net Worth as in effect from time to
time.
SECTION 5.14. Minimum TIER. The Borrower shall
at no time permit the average of the TIERs for the six (6)
immediately preceding fiscal quarters of the Borrower to be
less than 1.025:1.00.
SECTION 5.15. Retirement of Patronage Capital.
The Borrower shall not make, or permit any Subsidiaries of
the Borrower to make, any payments to Members in respect of
Patronage Capital Certificates unless (i) the TIER for the
immediately preceding fiscal year equals or exceeds
1.05:1.00 and (ii) there exists (and would exist after
giving effect to any such payment) no Default or Event of
Default under this Agreement.
SECTION 5.16. Use of Proceeds. The proceeds of
the Loans made hereunder may be used by the Borrower for
general corporate purposes. None of such proceeds will be
used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any
"margin stock", within the meaning of Regulation U. Neither
the Borrower nor any agent acting on its behalf has taken or
<PAGE> 53 will take any action which might cause this
Agreement or the Notes to violate Regulation U or Regulation
X.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more
of the following events ("Events of Default") shall have
occurred and be continuing:
(a)Principal and Interest. The Borrower shall
(i) fail to pay when due (whether upon stated maturity, by
acceleration or otherwise) any principal of the Notes or
(ii) fail, and such failure shall continue uncured for one
or more Business Days, to pay when due (whether upon stated
maturity, by acceleration or otherwise) any interest on the
Notes;
(b)Other Amounts. The Borrower shall fail to
pay when due any fee or other amount payable under this
Agreement and such failure remains uncured for five (5) days
after the due date thereof;
(c)Covenants Without Notice. The Borrower shall
fail to observe or perform any covenant or agreement on its
part to be observed or performed which is set forth in
Section 5.01, 5.02, 5.09, 5.10, 5.12, 5.13, 5.14, 5.15 or
5.16;
(d)Covenants With 10 Days Grace. The Borrower
shall fail to observe or perform any covenant or agreement
on its part to be observed or performed, which is set forth
in Section 5.05, 5.06, 5.07 or 5.08, and such non-observance
or non-performance shall continue unremedied for a period of
more than 10 days;
(e)Other Covenants. The Borrower shall fail to
observe or perform any covenant, condition or agreement on
its part to be observed or performed, other than as referred
to in subsections (a), (b), (c) and (d) above, for a period
of 30 days after written notice specifying such failure and
requesting that it be remedied is given by any Bank to the
Borrower and the other Banks; provided that, if the failure
be such that it cannot be corrected within the applicable
period, but can be corrected within a reasonable period of
time thereafter, it shall not constitute a default if
corrective action is instituted by the Borrower within the
applicable period and diligently pursued until the failure
is corrected;
<PAGE> 54 (f) Representations. Any representation,
warranty, certification or statement made or deemed to be
made by the Borrower in this Agreement or in any
certificate, financial statement or other document delivered
pursuant to this Agreement shall prove to have been
incorrect in any material respect when made or deemed to be
made;
(g)Non-Payments of Indebtedness and/or
Derivatives Obligations. The Borrower or any Subsidiary of
the Borrower shall fail to make any payment or payments
aggregating for the Borrower and its Subsidiaries in excess
of $15,000,000 in respect of Indebtedness and/or Derivatives
Obligations of the Borrower or any Subsidiary (other than
the Notes or any Indebtedness under this Agreement) when due
(whether upon stated maturity, by acceleration or otherwise)
or within any applicable grace period;
(h)Defaults Under Other Agreements. The
Borrower or any Subsidiary shall fail to observe or perform
within any applicable grace period any covenant or agreement
contained in any agreement or instrument relating to any
Indebtedness of the Borrower or any Subsidiary, aggregating
for the Borrower and its Subsidiaries in excess of
$15,000,000 if the effect of such failure is to accelerate,
or to permit the holder of such Indebtedness or any other
Person to accelerate, the maturity of such Indebtedness;
(i)Bankruptcy. The Borrower or any Subsidiary
shall generally not pay its debts as they become due, or
shall admit in writing its inability to pay its debts
generally or shall make a general assignment for the benefit
of creditors; or any proceeding shall be instituted by or
against the Borrower or any Subsidiary seeking to adjudicate
it bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection,
conservation or proceeding in the nature thereof, relief or
composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief or
protection of debtors, or seeking the entry of an order for
relief or the appointment of a receiver (including state
regulatory authorities acting in a similar capacity),
trustee, custodian or other similar official for it or for
any substantial part of its property, and, in the case of
any such proceeding instituted against it (but not
instituted by it) shall remain undismissed or unstayed for a
period of 60 days; or the Borrower or any Subsidiary shall
take any action to authorize any of the actions set forth
above in this subsection (i);
<PAGE> 55 (j) ERISA. A Plan shall fail to maintain the
minimum funding standard required by Section 412 of the
Internal Revenue Code for any plan year or a waiver of such
standard is sought or granted under Section 412(d), or a
Plan is, shall have been or is likely to be terminated or
the subject of termination proceedings under ERISA, or the
Borrower or a Subsidiary of the Borrower or any member of
the ERISA Group has incurred or is likely to incur a
liability to or on account of a Plan under Section 4062,
4063, 4064, 4201 or 4204 of ERISA, and there shall result
from any such event or events either a liability or a
material risk of incurring a liability to the PBGC or a
Plan, which in the opinion of the Required Banks, will have
a material adverse effect upon the business, operations or
the financial condition of the Borrower or a Subsidiary of
the Borrower; or
(k)Money Judgment. A final judgment or order
for the payment of money in excess of $15,000,000 shall be
rendered against the Borrower or any Subsidiary and such
judgment or order shall continue unsatisfied and in effect
for a period of 45 days during which execution shall not be
effectively stayed or deferred (whether by action of a
court, by agreement or otherwise); then, and in any such
event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent, upon the request of the
Required Banks, shall by notice to the Borrower, take any or
all of the following actions, without prejudice to the
rights of the Agent, any Bank or the holder of any Note to
enforce its claims against the Borrower: (a) declare the
Commitments terminated, whereupon the Commitment of each
Bank shall forthwith terminate immediately and any fee
payable pursuant to Section 2.08(a) shall forthwith become
due and payable without any other notice of any kind; or (b)
declare the principal of and accrued interest on the Loans,
and all other obligations owing hereunder, to be, whereupon
the same shall become, forthwith due and payable without
presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; provided
that, if an Event of Default specified in subsection (i)
shall occur, the result which would occur upon the giving of
written notice by the Agent to the Borrower, as specified in
clauses (a) and (b) above, shall occur automatically without
the giving of any such notice.
SECTION 6.02. Notice of Default. The Agent shall
give notice to the Borrower under Section 6.01(e) promptly
upon being requested to do so by any Bank and shall
thereupon notify all the Banks thereof.
<PAGE> 56 ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization.
Each Bank irrevocably appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such
powers under this Agreement and the Notes as are delegated
to the Agent by the terms hereof or thereof, together with
all such powers as are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan
Guaranty Trust Company of New York shall have the same
rights and powers under this Agreement as any other Bank and
may exercise or refrain from exercising the same as though
it were not the Agent, and Morgan Guaranty Trust Company of
New York and its affiliates may accept deposits from, lend
money to, and generally engage in any kind of business with
the Borrower or any Subsidiary or affiliate of the Borrower
as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations
of the Agent hereunder are only those expressly set forth
herein. Without limiting the generality of the foregoing,
the Agent shall not be required to take any action with
respect to any Default, except as expressly provided in
Article VI.
SECTION 7.04. Consultation with Experts. The
Agent may consult with legal counsel (who may be counsel for
the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or
experts.
SECTION 7.05. Liability of Agent. Neither the
Agent nor any of its affiliates nor any of their respective
directors, officers, agents, or employees shall be liable
for any action taken or not taken by it in connection
herewith (i) with the consent or at the request of the
Required Banks or (ii) in the absence of its own gross
negligence or willful misconduct. Neither the Agent nor any
of its affiliates nor any of their respective directors,
officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection
with this Agreement or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or
agreements of the Borrower; (iii) the satisfaction of any
condition specified in Article III, except receipt of items
<PAGE> 57 required to be delivered to the Agent; or (iv) the
validity, effectiveness or genuineness of this Agreement,
the Notes or any other instrument or writing furnished in
connection herewith. The Agent shall not incur any
liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a
bank wire, telex or similar writing) reasonably believed by
it to be genuine or to be signed by the proper party or
parties.
SECTION 7.06. Indemnification. Each Bank shall,
ratably in accordance with its Commitment, indemnify the
Agent, its affiliates and their respective directors,
officers, agents and employees (to the extent not reimbursed
by the Borrower) against any cost, expense (including
counsel fees and disbursements), claim, demand, action, loss
or liability (except such as result from such indemnitee's
gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this
Agreement or any action taken or omitted by such indemnitees
hereunder.
SECTION 7.07. Credit Decision. Each Bank
acknowledges that it has, independently and without reliance
upon the Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as
it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking any action
under this Agreement.
SECTION 7.08. Successor Agent. The Agent may
resign at any time by giving written notice thereof to the
Banks and the Borrower. Upon any such resignation, the
Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed
by the Required Banks, and shall have accepted such
appointment, within 15 days after the retiring Agent gives
notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall
be a commercial bank organized or licensed under the laws of
the United States of America or of any State thereof and
having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of its appointment as
Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the
rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation hereunder
<PAGE> 58 as Agent, the provisions of this Article shall
inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent.
SECTION 7.09. Co-Syndication Agents Not Liable.
Nothing in this Agreement shall impose upon any Co-
Syndication Agent, in such capacity, any duties or
responsibilities whatsoever.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of
any Interest Period for any Fixed Rate Borrowing:
(a)the Agent is advised by the Reference Banks
that deposits in dollars (in the applicable amounts)
are not being offered to the Reference Banks in the
relevant market for such Interest Period, or
(b)in the case of a Committed Borrowing, Banks
having 50% or more of the aggregate amount of the
Commitments advise the Agent that the Adjusted CD Rate
or the Adjusted London Interbank Offered Rate, as the
case may be, as determined by the Agent will not
adequately and fairly reflect the cost to such Banks of
funding their CD Loans or Euro-Dollar Loans, as the
case may be, for such Interest Period,
the Agent shall forthwith give notice thereof to the
Borrower and the Banks, whereupon until the Agent notifies
the Borrower that the circumstances giving rise to such
suspension no longer exist, the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be,
shall be suspended. Unless the Borrower notifies the Agent
at least two Domestic Business Days before the date of any
Fixed Rate Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such
date, (i) if such Fixed Rate Borrowing is a Committed
Borrowing, such Borrowing shall instead be made as a Base
Rate Borrowing and (ii) if such Fixed Rate Borrowing is a
Money Market LIBOR Borrowing, the Money Market LIBOR Loans
comprising such Borrowing shall bear interest for each day
from and including the first day to but excluding the last
day of the Interest Period applicable thereto at the Base
Rate for such day.
<PAGE> 59 SECTION 8.02. Illegality. If, on or after the
date of this Agreement, the adoption of any applicable law,
rule or regulation, or any change therein, or any change in
the interpretation or administration thereof by any
governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof,
or compliance by any Bank (or its Euro-Dollar Lending
Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for
any Bank (or its Euro-Dollar Lending Office) to make,
maintain or fund its Euro-Dollar Loans and such Bank shall
so notify the Agent, the Agent shall forthwith give notice
thereof to the other Banks and the Borrower, whereupon until
such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer
exist, the obligation of such Bank to make Euro-Dollar Loans
shall be suspended. Before giving any notice to the Agent
pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation
will avoid the need for giving such notice and will not, in
the judgment of such Bank, be otherwise disadvantageous to
such Bank. If such Bank shall determine that it may not
lawfully continue to maintain and fund any of its
outstanding Euro-Dollar Loans to maturity and shall so
specify in such notice, the Borrower shall immediately
prepay in full the then outstanding principal amount of each
such Euro-Dollar Loan, together with accrued interest
thereon. Concurrently with prepaying each such Euro-Dollar
Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount from such Bank (on which interest and
principal shall be payable contemporaneously with the
related Euro-Dollar Loans of the other Banks), and such Bank
shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return.
(a) If on or after (x) the date hereof, in the case of any
Committed Loan or any obligation to make Committed Loans or
(y) the date of the related Money Market Quote, in the case
of any Money Market Loan, the adoption of any applicable
law, rule or regulation, or any change therein, or any
change in the interpretation or administration thereof by
any governmental authority, central bank or comparable
agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable
Lending Office) with any request or directive (whether or
not having the force of law) of any such authority, central
bank or comparable agency:
(i) shall subject any Bank (or its Applicable
Lending Office) to any tax, duty or other charge with
<PAGE> 60 respect to its Fixed Rate Loans, its Notes or
its obligation to make Fixed Rate Loans, or shall
change the basis of taxation of payments to any Bank
(or its Applicable Lending Office) of the principal of
or interest on its Fixed Rate Loans or any other
amounts due under this Agreement in respect of its
Fixed Rate Loans or its obligation to make Fixed Rate
Loans (except for changes in the rate of tax on the
overall net income of such Bank or its Applicable
Lending Office imposed by the jurisdiction in which
such Bank's principal executive office or Applicable
Lending Office is located); or
(ii) shall impose, modify or deem applicable any
reserve (including, without limitation, any such
requirement imposed by the Board of Governors of the
Federal Reserve System, but excluding (A) with respect
to any CD Loan, any such requirement included in an
applicable Domestic Reserve Percentage and (B) with
respect to any Euro-Dollar Loan any such requirement
included in an applicable Euro-Dollar Reserve
Percentage), special deposit, insurance assessment
(excluding, with respect to any CD Loan, any such
requirement reflected in an applicable Assessment Rate)
or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Bank
(or its Applicable Lending Office) or shall impose on
any Bank (or its Applicable Lending Office) or on the
United States market for certificates of deposit or the
London interbank market any other condition affecting
its Fixed Rate Loans, its Notes or its obligation to
make Fixed Rate Loans;
and the result of any of the foregoing is to increase the
cost to such Bank (or its Applicable Lending Office) of
making or maintaining any Fixed Rate Loan, or to reduce the
amount of any sum received or receivable by such Bank (or
its Applicable Lending Office) under this Agreement or under
its Note with respect thereto, by an amount deemed by such
Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the Agent), the Borrower shall pay
to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction
(including any amount or amounts equal to any taxes on the
overall net income of such Bank payable by such Bank with
respect to the amount of payments required to be made
pursuant to this Section 8.03(a)).
(b)If any Bank determines that the adoption of
any applicable law, rule, regulation, guideline or request
concerning capital adequacy, or any change therein, or any
<PAGE> 61 change in interpretation or administration thereof
by any governmental authority, central bank or comparable
agency (including, without limitation, any such adoption or
change the effect of which would be, for purposes of capital
adequacy requirements, to treat the Commitments hereunder as
not constituting commitments with an original maturity of
one year or less), occurring after the date hereof, will
have the effect of increasing the amount of capital required
or expected to be maintained by such Bank based on the
existence of such Bank's Commitment hereunder or its
obligations hereunder, it will notify the Borrower. This
determination will be made on a Bank by Bank basis. The
Borrower will pay to each Bank on demand such additional
amounts as are necessary to compensate for the increased
cost to such Bank as a result of the event described in the
first sentence of this Section 8.03(b). In determining such
amount, such Bank will act reasonably and in good faith and
will use averaging and attribution methods which are
reasonable, and such Bank will pass such costs on to the
Borrower only if such costs are passed on in a similar
manner by such Bank to similarly situated borrowers (which
are parties to credit or loan documentation containing a
provision similar to this Section 8.03(b)), as determined by
such Bank in its reasonable discretion. Each Bank's
determination of compensation shall be conclusive if made in
accordance with this provision. Each Bank, upon determining
that any increased costs will be payable pursuant to this
Section 8.03(b), will give prompt written notice thereof to
the Borrower, which notice shall show the basis for
calculation of such increased costs, although the failure to
give any such notice shall not release or diminish any of
the Borrower's obligations to pay increased costs pursuant
to this Section 8.03(b).
(c)Each Bank will promptly notify the Borrower
and the Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such
Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A Bank
claiming compensation under this Section shall furnish a
certificate to the Borrower setting forth the additional
amount or amounts to be paid to it hereunder, which shall be
conclusive in the absence of manifest error. In determining
such amount, such Bank may use any reasonable averaging and
attribution methods.
SECTION 8.04. Base Rate Loans Substituted for
Affected Fixed Rate Loans. If (i) the obligation of any
<PAGE> 62 Bank to make Euro-Dollar Loans has been suspended
pursuant to Section 8.02 or (ii) any Bank has demanded
compensation under Section 8.03(a) and the Borrower shall,
by at least five Euro-Dollar Business Days' prior notice to
such Bank through the Agent, have elected that the
provisions of this Section shall apply to such Bank, then,
unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for
compensation no longer apply:
(a) all Loans which would otherwise be made by
such Bank as CD Loans or Euro-Dollar Loans, as the case
may be, shall be made instead as Base Rate Loans (on
which interest and principal shall be payable
contemporaneously with the related Fixed Rate Loans of
the other Banks), and
(b) after each of its CD Loans or Euro-Dollar
Loans, as the case may be, has been repaid, all
payments of principal which would otherwise be applied
to repay such Fixed Rate Loans shall be applied to
repay its Base Rate Loans instead.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests,
directions, consents, approvals and other communications to
any party hereunder shall be in writing (including bank
wire, telex, facsimile transmission or similar writing) and
shall be given to such party: (x) in the case of the
Borrower or the Agent, at its address or telex or telecopier
number set forth on the signature pages hereof, (y) in the
case of any Bank, at its address or telex or telecopier
number set forth in its Administrative Questionnaire or (z)
in the case of any other party, such other address or telex
or telecopier number as such party may hereafter specify for
the purpose by notice to the Agent and the Borrower. Each
such notice, request, direction, consent, approval or other
communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in
this Section and the appropriate answerback is received or
(ii) if given by any other means, when delivered or received
at the address specified in this Section; provided that
notices to the Agent under Article II or Article VIII shall
not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by
the Agent or any Bank in exercising any right, power or
<PAGE> 63 privilege hereunder or under any Note shall
operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.03. Expenses; Documentary Taxes;
Indemnification. (a) The Borrower shall pay (i) all
reasonable out-of-pocket expenses of the Agent, including
reasonable fees and disbursements of special counsel for the
Agent, in connection with the preparation of this Agreement,
any waiver or consent hereunder or any amendment hereof or
any Default or alleged Default hereunder and (ii) if an
Event of Default occurs, all reasonable out-of-pocket
expenses incurred by the Agent or any Bank, including
reasonable fees and disbursements incurred by counsel or
in-house counsel, in connection with such Event of Default
and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom. The Borrower shall
indemnify each Bank against any transfer taxes, documentary
taxes, assessments or charges made by any governmental
authority by reason of the execution and delivery of this
Agreement or the Notes and any and all liabilities with
respect to or resulting from any delay or omission (unless
solely attributable to such Bank) to pay such taxes.
(b)The Borrower agrees to indemnify each Bank,
their respective affiliates and the respective directors,
officers, agents and employees of the foregoing (each an
"Indemnitee") and hold each Indemnitee harmless from and
against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be
incurred by any Indemnitee (or by the Agent in connection
with its actions as Agent hereunder) in connection with any
investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party
thereto) relating to or arising out of this Agreement or any
actual or proposed use of proceeds of Loans hereunder;
provided that no Indemnitee shall have the right to be
indemnified hereunder for its own gross negligence, willful
misconduct or unlawful conduct as determined by a court of
competent jurisdiction.
SECTION 9.04. Sharing of Set-Offs. Each Bank
agrees that if it shall, by exercising any right of set-off
or counterclaim or otherwise, receive payment of a
proportion of the aggregate amount of principal and interest
due with respect to any Note held by it which is greater
than the proportion received by any other Bank in respect of
<PAGE> 64 the aggregate amount of principal and interest due
with respect to any Note held by such other Bank, the Bank
receiving such proportionately greater payment shall
purchase such participations in the Notes held by the other
Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest
with respect to the Notes held by the Banks shall be shared
by the Banks pro rata; provided that nothing in this Section
shall impair the right of any Bank to exercise any right of
set-off or counterclaim it may have and to apply the amount
subject to such exercise to the payment of indebtedness of
the Borrower other than its indebtedness under the Notes.
The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a
participation in a Note, whether or not acquired pursuant to
the foregoing arrangements, may exercise rights of set-off
or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation
were a direct creditor of the Borrower in the amount of such
participation.
SECTION 9.05. Amendments and Waivers. Any
provision of this Agreement or the Notes may be amended or
waived if, but only if, such amendment or waiver is in
writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected
thereby, by the Agent); provided that no such amendment or
waiver shall, unless signed by all the Banks, (i) increase
or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any
Bank to any additional obligation, (ii) reduce the principal
of or rate of interest on any Loan or any fees hereunder,
(iii) postpone the date fixed for any payment of principal
of or interest on any Loan or any fees hereunder or for any
reduction or termination of any Commitment or (iv) change
the percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes, or the number of Banks, which
shall be required for the Banks or any of them to take any
action under this Section or any other provision of this
Agreement.
SECTION 9.06. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of all Banks.
(b)Any Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in its Commitment or any or all of
<PAGE> 65 its Loans. In the event of any such grant by a
Bank of a participating interest to a Participant, whether
or not upon notice to the Borrower and the Agent, such Bank
shall remain responsible for the performance of its
obligations hereunder, and the Borrower and the Agent shall
continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under
this Agreement. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that
such Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrower hereunder including,
without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement;
provided that such participation agreement may provide that
such Bank will not agree to any modification, amendment or
waiver of this Agreement described in clause (i), (ii) or
(iii) of Section 9.05 without the consent of the
Participant. Subject to the provisions of subsection (e),
the Borrower agrees that each Participant shall, to the
extent provided in its participation agreement, be entitled
to the benefits, and be bound by the obligations, of
Article VIII with respect to its participating interest. An
assignment or other transfer which is not permitted by
subsection (c) or (d) below shall be given effect for
purposes of this Agreement only to the extent of a
participating interest granted in accordance with this
subsection (b).
(c)Any Bank may at any time assign to one or
more banks or other institutions (each an "Assignee") all,
or a proportionate part (but not in any case in an amount
less than $10,000,000) of all, of its rights and obligations
under this Agreement and the Notes, and such Assignee shall
assume such rights and obligations, pursuant to an
Assignment and Assumption Agreement in substantially the
form of Exhibit J hereto executed by such Assignee and such
transferor Bank, with (and subject to) the subscribed
consent of the Borrower and the Agent, such consents not to
be unreasonably withheld; provided that if an Assignee is
another Bank or an affiliate of such transferor Bank, no
such consent shall be required; and provided further that
such assignment may, but need not, include the rights of the
transferor Bank in respect of outstanding Money Market
Loans. Upon execution and delivery of such an instrument
and payment by such Assignee to such transferor Bank of an
amount equal to the purchase price agreed between such
transferor Bank and such Assignee, such Assignee shall be a
Bank party to this Agreement and shall have all the rights
and obligations of a Bank with a Commitment as set forth in
such instrument of assumption, and the transferor Bank shall
be released from its obligations hereunder to a
corresponding extent, and no further consent or action by
<PAGE> 66 any party shall be required. Upon the
consummation of any assignment pursuant to this subsection
(c), the transferor Bank, the Agent and the Borrower shall
make appropriate arrangements so that, if required, a new
Note is issued to the Assignee. In connection with any such
assignment, the transferor Bank shall pay to the Agent an
administrative fee for processing such assignment in the
amount of $2,500. If the Assignee is not incorporated under
the laws of the United States of America or a state thereof,
it shall, prior to the first date on which interest or fees
are payable hereunder for its account, deliver to the
Borrower and the Agent certification as to exemption from
deduction or withholding of any United States federal income
taxes in accordance with Section 2.15.
(d)Any Bank may at any time assign all or any
portion of its rights under this Agreement and its Note to a
Federal Reserve Bank. No such assignment shall release the
transferor Bank from its obligations hereunder.
(e)No Assignee, Participant or other transferee
of any Bank's rights shall be entitled to receive any
greater payment under Section 8.03 than such Bank would have
been entitled to receive with respect to the rights
transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the
provisions of Section 8.02 or 8.03 requiring such Bank to
designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances
giving rise to such greater payment did not exist.
SECTION 9.07. Collateral. Each of the Banks
represents to the Agent and each of the other Banks that it
in good faith is not relying upon any "margin stock" (as
defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.08. Governing Law. This Agreement and
each Note shall be governed by and construed in accordance
with the laws of the State of New York.
SECTION 9.09. Counterparts; Integration;
Effectiveness. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement constitutes the
entire agreement and understanding among the parties hereto
and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject
matter hereof. This Agreement shall become effective upon
receipt by the Agent of counterparts hereof signed by each
<PAGE> 67 of the parties hereto (or, in the case of any
party as to which an executed counterpart shall not have
been received, receipt by the Agent in form satisfactory to
it of telegraphic, telex or other written confirmation from
such party of execution of a counterpart hereof by such
party).
SECTION 9.10. Several Obligations. The
obligations of the Banks hereunder are several. Neither the
failure of any Bank to carry out its obligations hereunder
nor of this Agreement to be duly authorized, executed and
delivery by any Bank shall relieve any other Bank of its
obligations hereunder (or affect the rights hereunder of
such other Bank). No Bank shall be responsible for the
obligations of, or any action taken or omitted by, any other
Bank hereunder.
SECTION 9.11. Termination of Commitments Under
the Prior Credit Agreements. Each party hereto that is also
a party to a Prior Credit Agreement hereby waives the notice
required under Section 2.09 of such Prior Credit Agreement
for the termination of the commitments thereunder and agrees
that on the Effective Date (i) the Commitments, as defined
in such Prior Credit Agreement, shall terminate in their
entirety and (ii) the Borrower will pay or prepay any loans
which exist under such Prior Credit Agreement provided,
however, that the provisions of Sections 2.13, 7.05, 7.06,
8.03 and 9.03 (and Section 2.12 and Article IX insofar as
such Section or Article relates to such Sections 2.13, 7.05,
7.06, 8.03 and 9.03, as applicable) of such Prior Credit
Agreement shall survive the termination of the commitments
thereunder and shall remain in full force and effect.
SECTION 9.12. Severability. In case any
provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way
be affected or impaired thereby.
<PAGE>
<PAGE> 68
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officers as of the day and year first above
written.
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
By /s/ Steven L. Lilly
Title: Chief Financial Officer
Address: Woodland Park
2201 Cooperative Way
Herndon, Virginia 22071-3025
Attention: Kimberly Armstrong
Director of Banking Relations
Telephone No.: (703) 709-6700
Telecopier No.: (703) 709-6779
Commitments
$86,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Sanjeanetta Harris
Title: Vice President
$84,000,000 THE BANK OF NOVA SCOTIA
By /s/ J.R. Trimble
Title: Senior Relationship
Manager
<PAGE> 69
$72,000,000 THE CHASE MANHATTAN BANK, N.A.
By /s/ Marc D. Galligan
Title: Vice President
$72,000,000 THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Richard Waldman
Title: Authorized Agent
$70,000,000 ABN AMRO BANK N.V. NEW YORK BRANCH
By /s/ Olga L. Zoutendljk
Title: Vice President
By /s/ Duane P. Helkowski
Title: Assistant Vice
President
$70,000,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ R. Vernon Howard, Jr.
Title: Vice President
$70,000,000 CREDIT LYONNAIS CAYMAN ISLANDS BRANCH
By /s/ Mary E. Collier
Title: Authorized Signature
<PAGE> 70
$70,000,000 NATIONSBANK, N.A. (CAROLINAS)
By /s/ Lawrence A. Saunders, Jr.
Title: Vice President
$70,000,000 THE TORONTO-DOMINION BANK
By /s/ Jorge A. Garcia
Title: Manager Credit
Administration
$70,000,000 UNION BANK OF SWITZERLAND
By /s/ Stephen A. Cayer
Title: Assistant Treasurer
By /s/ Peter B. Yearley
Title: Vice President
$50,000,000 THE BANK OF TOKYO TRUST COMPANY
By /s/ Michael C. Irwin
Title: Vice President
<PAGE> 71
$50,000,000 COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, B.A.,
"Rabobank Nederland", NEW YORK BRANCH
By /s/ Mark Laponte
Title: Vice President
By /s W. Jeffrey Vollack
Title: Vice President
$40,000,000 CIBC INC.
By /s/ Margaret E. McTigue
Title: Vice President
$40,000,000 MELLON BANK, N.A.
By /s/ Scott Hennessee
Title: Assistant Vice
President
$34,000,000 COMERICA BANK
By /s/ Julie Burke Smith
Title: Vice President
$34,000,000 PNC BANK, NATIONAL ASSOCIATION
By /s/ Thomas A. Majeski
Title: Assistant Vice
President
<PAGE> 72
$30,000,000 DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES
By /s/ Susan A. Hodge
Title: Vice President
By /s/ J. Curtin Beaudouin
Title: Vice President
$30,000,000 THE INDUSTRIAL BANK OF JAPAN, LTD.,
NEW YORK BRANCH
By /s/ Robert W. Ramage, Jr.
Title: Senior Vice President
$24,000,000 SOCIETE GENERALE
By /s/ Gordon R. Eadon
Title: Vice President
$20,000,000 BANCO BILBAO VIZCAYA, S.A.
By /s/ John Carreras
Title: Vice President
$20,000,000 BANK OF MONTREAL
By /s/ Joseph Longpre
Title: Managing Director
<PAGE> 73
$20,000,000 BARCLAYS BANK PLC
By /s/ Vijay Rajguru
Title: Associate Director
$20,000,000 CREDIT SUISSE
By /s/ Dawn E. Rubinstein
Title: Associate
By /s/ Christopher J. Eldin
Title: Member of Senior
Management
$20,000,000 DAIWA BANK TRUST COMPANY
By /s/ Masafumi Asai
Title: Vice President
$20,000,000 FIRST BANK NATIONAL ASSOCIATION
By /s/ Mark R. Olman
Title: Vice President
$20,000,000 FIRST INTERSTATE BANK OF WASHINGTON, N.A.
By /s/ Susan J. Hendrixson
Title: Vice President
<PAGE> 74
$20,000,000 THE FUJI BANK, LIMITED
By /s/ Gina Kearns
Title: Vice President
& Manager
$20,000,000 KREDIETBANK N.V.
By /s/ Diane Grimming
Title: Vice President
By /s/ Robert Snauffer
Title: Vice President
$20,000,000 MONTE DEI PASCHI DI SIENA
By /s/ G. Natalicchi
Title: Senior Vice President
& General Manager
By /s/ Brian R. Landy
Title: Vice President
$20,000,000 NORDDEUTSCHE LANDESBANK GIROZENTRALE
NEW YORK AND/OR CAYMAN ISLANDS BRANCH
By /s/ Stephanie Hoevermann
Title: Vice President
By /s/ Stephen K. Hunter
Title: Senior Vice President
<PAGE> 75
$20,000,000 SIGNET BANK/VIRGINIA
By /s/ Linwood White
Title: Senior Vice President
$20,000,000 THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By /s/ Yoshinori Kawamura
Title: Joint General Manager
$20,000,000 WESTDEUTSCHE LANDESBANK GIROZENTRALE
NEW YORK BRANCH/CAYMAN ISLANDS BRANCH
By /s/ Stephen W. Frey
Title: Vice President
By /s/ Karen E. Hoplock
Title: Vice President
$16,000,000 BANK ONE, ARIZONA, NA
By /s/ Craig Hoskins
Title: Vice President
<PAGE> 76
$16,000,000 BANQUE NATIONALE DE PARIS
By /s/ Phil Truesdale
Title: Vice President
By /s/ Eric Vigne
Title: Senior Vice President
$16,000,000 UNITED STATES NATIONAL BANK OF OREGON
By /s/ Douglas A. Rich
Title: Vice President
$14,000,000 BANCA CRT SpA
By /s/ Robert P. DeSantes
Title: Vice President, Head
of Corporate Banking
By /s/ Franco Marino
Title: First Vice President
& Deputy Manager
$14,000,000 CRESTAR BANK
By /s/ David N. Ryder
Title: Vice President
<PAGE>
<PAGE> 77
$14,000,000 DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
NEW YORK BRANCH
By /s/ John L. Dean
Title: Senior Vice President
By /s/ Karen A. Brinkman
Title: Vice President
$14,000,000 THE DAI-ICHI KANGYO BANK, LTD.,
NEW YORK BRANCH
By /s/ Stephanie R. Rogers
Title: Vice President
$14,000,000 THE NORTHERN TRUST COMPANY
By /s/ David L. Love
Title: Commercial Banking
Officer
$14,000,000 SUNBANK, NATIONAL ASSOCIATION
By /s/ Kristina L. Anderson
Title: Assistant Vice
President
<PAGE>
<PAGE> 78
$12,000,000 BANCO DI NAPOLI S.P.A.
By /s/ Vito Spada
Title: Executive Vice
President
By /s/ Claude P. Mapes
Title: First Vice President
$12,000,000 COMMERZBANK AG NEW YORK BRANCH AND/OR
GRAND CAYMAN BRANCH
By /s/ Juergen Schmleding
Title: Vice President
By /s/ Werner Niemeyer
Title: Vice President
$12,000,000 LLOYDS BANK Plc
By /s/ Ted Walser
Title: Senior Vice President
By /s/ Paul Briamonte
Title: Vice President
$12,000,000 THE TOKAI BANK, LIMITED, NEW YORK BRANCH
By /s/ Masaharu Muto
Title: Deputy General
Manager
<PAGE>
<PAGE> 79
$12,000,000 THE TOYO TRUST & BANKING CO., LTD.
By /s/ Hiroyuki Fukuro
Title: Vice President
By /s/ Howard Tulley Mott
Title: Vice President
$12,000,000 THE YASUDA TRUST & BANKING COMPANY, LTD.
By /s/ Yoshito Kobayashi
Title: Deputy General
Manager
$10,000,000 BANK AUSTRIA AKTIENGESELLSCHAST
By /s/ J. Anthony Seay
Title: Vice President
By /s/ Mark M. Nolan
Title: Assistant Vice
President
$10,000,000 THE BANK OF CALIFORNIA, N.A.
By /s/ Harry S. Matthews
Title: Vice President
<PAGE>
<PAGE> 80
$10,000,000 BAYERISCHE LANDESBANK GIROZENTRALE
CAYMAN ISLANDS BRANCH
By /s/ Wilfried Freudenberger
Title: Executive Vice
President & General
Manager
By /s/ Peter Oberman
Title: First Vice President
Manager Lending
Division
$10,000,000 HARRIS TRUST AND SAVINGS BANK
By /s/ Michael W. Lewis
Title: Senior Vice President
$10,000,000 NATIONAL CITY BANK, COLUMBUS
By /s/ Jeffrey L. Hawthorne
Title: Vice President
$10,000,000 THE SAKURA BANK, LIMITED
By /s/ Hiroshi Shimazaki
Title: Senior Vice President
& Manager
<PAGE> 81
$10,000,000 THE SANWA BANK, LIMITED, ATLANTA AGENCY
By /s/ Peter J. Pawlak
Title: Vice President
& Senior Manager
___________________
Total Commitments
$ 1,620,000,000
<PAGE>
<PAGE> 82
J.P. MORGAN SECURITIES INC.,
as Co-Syndication Agent
By /s/ Suzanne Waltman
Title: Associate
THE BANK OF NOVA SCOTIA,
as Co-Syndication Agent
By /s/ J.R. Trimble
Title: Senior Relationship
Manager
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
By /s/ Sanjeanetta Harris
Title: Vice President
Address:
60 Wall Street
New York, New York 10260
Attention: Loan Department
Telex number: 420230
<PAGE> 83
PRICING SCHEDULE
The "Euro-Dollar Margin", "CD Margin" and "Facility Fee
Rate" for any day are the respective percentages set forth below in
the applicable row under the column corresponding to the Status
that exists on such day:
Status LevelI Level II Level III Level IV
Euro-Dollar
Margin
If Utiliza-
tion is
equal to or
less than
50% 0.175% 0.2% 0.325% 0.425%
If Utiliza-
tion exceeds
50% 0.175% 0.325% 0.45% 0.55%
CD Margin
If Utiliza-
tion is
equal to or
less than
50% 0.3% 0.325% 0.45% 0.55%
If Utiliza-
tion exceeds
50% 0.3% 0.45% 0.575% 0.675%
Facility FeeRate 0.075% 0.1% 0.15% 0.2%
For purposes of this Schedule, the following terms have
the following meanings:
"Level I Status" exists at any date if, at such date, the
Borrower has outstanding senior unsecured long-term debt and such
debt, without third party enhancement, is rated (or, if on such
date the Borrower has no outstanding senior unsecured long-term
<PAGE> 84 debt, evidence satisfactory to the Agent is provided to
the effect that the rating of senior unsecured long-term debt of
the Borrower, assuming that it had outstanding senior unsecured
long-term debt, would be rated) at least AA (or any equivalent
rating which is used in lieu thereof) by S&P and Aa2 (or any
equivalent rating which is used in lieu thereof) by Moody's.
"Level II Status" exists at any date, if at such date,
the Borrower has outstanding senior unsecured long-term debt and
such debt, without third party enhancement, is rated (or, if on
such date the Borrower has no outstanding senior unsecured long-
term debt, evidence satisfactory to the Agent is provided to the
effect that the rating of senior unsecured long-term debt of the
Borrower, assuming that it had outstanding senior unsecured long-
term debt, would be rated) at least AA- (or any equivalent rating
which is used in lieu thereof) or higher by S&P or Aa3 (or any
equivalent rating which is used in lieu thereof) or higher by
Moody's and Level I Status does not exist at such date.
"Level III Status" exists at any date if, at such date,
the Borrower has outstanding senior unsecured long-term debt and
such debt, without third party enhancement, is rated (or, if on
such date the Borrower has no outstanding senior unsecured long-
term debt, evidence satisfactory to the Agent is provided to the
effect that the rating of senior unsecured long-term debt of the
Borrower, assuming that it had outstanding senior unsecured long-
term debt, would be rated) at least A+ (or any equivalent rating
which is used in lieu thereof) or higher by S&P or A1 (or any
equivalent rating which is used in lieu thereof) or higher by
Moody's and neither Level I Status nor Level II Status exists.
"Level IV Status" exists at any date if, at such date,
none of Level I Status, Level II Status or Level III Status exists.
"Status" refers to the determination of which of Level I
Status, Level II Status, Level III Status or Level IV Status exists
at any date.
"Utilization" means at any date the percentage equivalent
of a fraction (i) the numerator of which is the aggregate
outstanding principal amount of the Loans at such date, after
giving effect to any borrowing or payment on such date, and (ii)
the denominator of which is the aggregate amount of the Commitments
at such date, after giving effect to any reduction of the
Commitments on such date. For purposes of this Schedule, if for
any reason any Loans remain outstanding after termination of the
<PAGE> 85 Commitments, the Utilization for each date on or after
the date of such termination shall be deemed to be greater than
50%.
The credit ratings to be utilized for purposes of this
Pricing Schedule shall be, so long as the Borrower's unsecured
Medium Term Notes are rated by either S&P or Moody's, those
assigned to the Borrower's unsecured Medium Term Notes. The rating
in effect at any date is that in effect at the close of business on
such date.
<PAGE>
<PAGE> 86
NOTE EXHIBIT A
New York, New York
For value received, National Rural Utilities
Cooperative Finance Corporation, a not-for-profit
cooperative association incorporated under the laws of the
District of Columbia (the "Borrower"), promises to pay to
the order of
(the "Bank"), for the account of its Applicable Lending
Office, the unpaid principal amount of each Loan made by the
Bank to the Borrower pursuant to the Revolving Credit
Agreement referred to below on the last day of the Interest
Period relating to such Loan. The Borrower promises to pay
interest on the unpaid principal amount of each such Loan on
the dates and at the rate or rates provided for in the
Revolving Credit Agreement. All such payments of principal
and interest shall be made in lawful money of the United
States in Federal or other immediately available funds at
the office of Morgan Guaranty Trust Company of New York, 60
Wall Street, New York, New York.
All Loans made by the Bank, the respective types
and maturities thereof and all repayments of the principal
thereof shall be recorded by the Bank and, prior to any
transfer hereof, appropriate notations to evidence the
foregoing information with respect to each such Loan then
outstanding may be endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule
attached to and made a part hereof; provided that the
failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower
hereunder or under the Revolving Credit Agreement.
This note is one of the Notes referred to in the
$1,620,000,000 Revolving Credit Agreement dated as of
February 28, 1995 among the Borrower, the banks listed on
the signature pages thereof, J.P. Morgan Securities Inc. and
The Bank of Nova Scotia, as Co-Syndication Agents, and
Morgan Guaranty Trust Company of New York, as Administrative
Agent (as the same may be amended from time to time, the
"Revolving Credit Agreement"). Terms defined in the
Revolving Credit Agreement are used herein with the same
meanings. Reference is made to the Revolving Credit
Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
By_______________________________
Title:
<PAGE> 87
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
Date Amount of Type of Amount of Maturity Notation
Loan Loan Principal Date Made By
Repaid
<PAGE>
<PAGE> 88
Form of RUS Guarantee
The United States of America acting through the
Administrator of the Rural Utilities Service ("RUS") hereby
unconditionally guarantees to [name of Payee] the making of
[__%] of the payments of principal and interest when and as
due on this Note of _________ (the "Cooperative") in
accordance with the terms hereof and of the Loan Agreement
referred to in this Note, until such principal and interest
shall be indefeasibly paid in full (which includes interest
accruing on such principal between the date of default under
this Note and the payment in full of this Guarantee),
irrespective of receipt by RUS of any sums or property from
its enforcement of its remedies for the Cooperative default.
This Guarantee shall be incontestable except for fraud or
misrepresentation of which the holder had actual knowledge
at the time it became a holder. RUS hereby waives
diligence, presentment, demand, protest and notice of any
kind, as well as any requirement that [name of Payee]
exhaust any right or take any action against the
Cooperative.
This Guarantee is issued pursuant to Title III of
the Rural Electrification Act of 1936, as amended (7 U.S.C.
{{ 901, et seq.), and the Loan Guarantee and Servicing
Agreement among RUS, the Cooperative, The First National
Bank of Chicago and National Rural Utilities Cooperative
Finance Corporation dated ___________, 19__.
UNITED STATES OF AMERICA
Date___________, 19__ By_______________________
Administrator of Rural
Electrification
Administration
<PAGE> 89 EXHIBIT C
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: National Rural Utilities
Cooperative Finance Corporation (the "Borrower")
Re: $1,620,000,000 Revolving Credit Agreement (the
"Revolving Credit Agreement") dated as of February
__, 1995 among the Borrower, the Banks listed on the
signature pages thereof, J.P. Morgan Securities Inc.
and The Bank of Nova Scotia, as Co-Syndication
Agents, and Morgan Guaranty Trust Company of New
York, as Administrative Agent
We hereby give notice pursuant to Section 2.03 of
the Revolving Credit Agreement that we request Money Market
Quotes for the following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money
Market [Margin] [Absolute Rate]. [The applicable base rate
is the London Interbank Offered Rate.]
Terms used herein have the meanings assigned to
them in the Revolving Credit Agreement.
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
By________________________
Title:
<PAGE> 90
EXHIBIT D
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes
to the National Rural Utilities Cooperative
Finance Corporation (the "Borrower")
Pursuant to Section 2.03 of the $1,620,000,000
Revolving Credit Agreement dated as of February 28, 1995
among the Borrower, the Banks party thereto, J.P. Morgan
Securities Inc. and The Bank of Nova Scotia, as Co-
Syndication Agents, and the undersigned, as Administrative
Agent, we are pleased on behalf of the Borrower to invite
you to submit Money Market Quotes to the Borrower for the
following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money
Market [Margin] [Absolute Rate]. [The applicable base rate
is the London Interbank Offered Rate.]
Please respond to this invitation by no later than
[2:00 P.M.] [9:00 A.M.] (New York City time) on [date].
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By________________
Authorized Officer
<PAGE> 91
EXHIBIT E
Form of Money Market Quote
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
60 Wall Street
New York, New York 10260
Attention:
Re: Money Market Quote to
National Rural Utilities Cooperative
Finance Corporation (the "Borrower")
In response to your invitation on behalf of the
Borrower dated _____________, 19__, we hereby make the
following Money Market Quote on the following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
_____________________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the
following principal amounts, for the following Interest
Periods and at the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
$
$
[Provided, that the aggregate principal amount of Money
Market Loans for which the above offers may be accepted
shall not exceed $____________.]**
__________
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may
not exceed principal amount requested. Specify
aggregate limitation if the sum of the individual
offers exceeds the amount the Bank is willing to lend.
Bids must be made for $1,000,000 or a larger multiple
thereof.
(notes continued on following page)
<PAGE> 92 We understand and agree that the offer(s) set
forth above, subject to the satisfaction of the
applicable conditions set forth in the $1,620,000,000
Revolving Credit Agreement dated as of February 28,
1995 among the Borrower, the Banks listed on the
signature pages thereof, J.P. Morgan Securities Inc.
and The Bank of Nova Scotia, as Co-Syndication Agents,
and yourselves, as Administrative Agent, irrevocably
obligates us to make the Money Market Loan(s) for which
any offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
__________
*** Any number of whole months (but not less than one month)
or not less than 30 days, as specified in the related
Invitation. No more than five bids are permitted for each
Interest Period.
**** Margin over or under the London Interbank Offered Rate
determined for the applicable Interest Period. Specify
percentage (rounded to the nearest 1/10,000 of 1%) and
specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (rounded to the
nearest 1/10,000th of 1%).
<PAGE> 93 EXHIBIT F
OPINION OF JOHN JAY LIST, ESQ.,
GENERAL COUNSEL OF THE BORROWER
February 28, 1995
I am General Counsel of the National Rural
Utilities Cooperative Finance Corporation (the "Borrower")
and am delivering this opinion pursuant to the
$1,620,000,000 Revolving Credit Agreement (the "Agreement")
dated as of February 28, 1995 among the Borrower, the banks
listed on the signature pages thereof, J.P. Morgan
Securities Inc. and The Bank of Nova Scotia, as Co-
Syndication Agents, and Morgan Guaranty Trust Company of New
York, as Administrative Agent. Terms defined in the
Agreement are used herein as therein defined. This opinion
is being rendered to you at the request of my client, the
Borrower, pursuant to Section 3.01(c) of the Agreement.
I have examined originals or copies, certified or
otherwise identified to my satisfaction, of such documents,
corporate records, certificates of public officials and
other instruments and have conducted such other
investigations of fact and law as I have deemed necessary or
advisable for purposes of this opinion.
Upon the basis of the foregoing, I am of the
opinion that:
1. The Borrower is a cooperative association duly
incorporated, validly existing and in good standing under
the laws of the District of Columbia and has the corporate
power and authority and all material governmental licenses,
authorizations, consents and approvals required to own its
property and assets and to transact the business in which it
is engaged. The Borrower is duly qualified or licensed as a
foreign corporation in good standing in every jurisdiction
in which the nature of the business in which it is engaged
makes such qualification or licensing necessary, except in
those jurisdictions in which the failure to be so qualified
or licensed would not (after qualification, assuming that
the Borrower could so qualify without the payment of any fee
or penalty and retain its rights as they existed prior to
such qualification all to an extent so that any fees or
penalties required to be so paid or any rights not so
retained would not, individually or in the aggregate, have a
material adverse effect on the business or financial
<PAGE> 94 conition of the Borrower), individually or in the
aggregate, have a material adverse effect upon the business
or financial condition of the Borrower. The Borrower has
the corporate power and authority to execute, deliver and
carry out the terms and provisions of the Agreement and the
Notes. The Agreement and the Notes have been duly and
validly authorized, executed and delivered by the Borrower,
and the Agreement constitutes a legal, valid and binding
agreement of the Borrower, and the Notes constitute legal,
valid and binding obligations of the Borrower, in each case
enforceable in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by general
principles of equity.
2. There are no actions, suits, proceedings or
investigations pending or, to my knowledge, threatened
against or affecting the Borrower by or before any court or
any governmental authority, body or agency or any
arbitration board which are reasonably likely to materially
adversely affect the business, property, assets, financial
position or results of operations of the Borrower or the
authority or ability of the Borrower to perform its
obligations under the Agreement or the Notes.
3. No authorization, consent, approval or license
of, or declaration, filing or registration with or exemption
by, any governmental authority, body or agency is required
in connection with the execution, delivery or performance by
the Borrower of the Agreement or the Notes.
4. The holders of the Borrower's Capital Term
Certificates are not and will not be entitled to receive any
payments with respect to the principal thereof or interest
thereon solely because of withdrawing or being expelled from
membership in the Borrower.
5. Neither the Borrower nor any Subsidiary is in
default in any material respect under any material agreement
or other instrument to which it is a party or by which it is
bound or its property or assets may be affected. No event
or condition exists which constitutes, or with the giving of
notice or lapse of time or both would constitute, such a
default under any such agreement or other instrument.
Neither the execution and delivery of the Agreement or the
Notes, nor the consummation of any of the transactions
therein contemplated, nor compliance with the terms and
provisions thereof, will contravene any provision of law,
statute, rule or regulation to which the Borrower is subject
or any judgment, decree, award, franchise, order or permit
applicable to the Borrower, or will conflict or be
<PAGE> 95 inconsistent with, or will result in any breach
of, any of the terms, covenants, conditions or provisions
of, or constitute (or with the giving of notice or lapse of
time, or both, would constitute) a default under (or
condition or event entitling any Person to require, whether
by purchase, redemption, acceleration or otherwise, the
Borrower to perform any obligations prior to the scheduled
maturity thereof), or result in the creation or imposition
of any Lien upon any of the property or assets of the
Borrower pursuant to the terms of, any indenture, mortgage,
deed of trust, agreement or other instrument to which it may
be subject, or violate any provision of the certificate of
incorporation or by-laws of the Borrower. Without limiting
the generality of the foregoing, the Borrower is not a party
to, or otherwise subject to any provision contained in, any
instrument evidencing Indebtedness of the Borrower, any
agreement or indenture relating thereto or any other
contract or agreement (including its certificate of
incorporation and by-laws), which would be violated by the
incurring of the Indebtedness to be evidenced by the Notes.
6. The Borrower has complied fully with all of
the material provisions of each Indenture. No Event of
Default (within the meaning of such term as defined in
either Indenture) and no event, act or condition (except for
possible non-compliance by the Borrower with any immaterial
provision of such Indenture which in itself is not such an
Event of Default under such Indenture) which with notice or
lapse of time, or both, would constitute such an Event of
Default has occurred and is continuing under such Indenture.
The borrowings by the Borrower contemplated by the Agreement
will not cause such an Event of Default under, or the
violation of any covenant contained in, either Indenture.
7. Set forth on Annex A attached hereto is a
true, correct and complete list of all of the Borrower's
Subsidiaries and Joint Ventures, the jurisdiction of
incorporation or organization of each such Subsidiary and
Joint Venture and the nature and percentage of the
Borrower's ownership of each such Subsidiary and Joint
Venture.
8. The Commitments (as defined in each of the
Prior Credit Agreements) has been terminated in accordance
with its terms.
<PAGE>
<PAGE> 96
EXHIBIT G
OPINION OF MILBANK, TWEED, HADLEY & McCLOY,
SPECIAL COUNSEL FOR THE BORROWER
February 28, 1995
We have acted as special counsel to National Rural
Utilities Cooperative Finance Corporation (the "Borrower")
in connection with the $1,620,000,000 Revolving Credit
Agreement dated as of February 28, 1995 (the "Agreement")
among the Borrower, the Banks party thereto, J.P. Morgan
Securities Inc. and The Bank of Nova Scotia, as Co-
Syndication Agents, and Morgan Guaranty Trust Company of New
York, in its capacity as Administrative Agent (the "Agent").
All capitalized terms used but not defined herein have the
respective meanings given to such terms in the Agreement.
In rendering the opinions expressed below, we have
examined:
(i)the Agreement;
(ii) the Notes; and
(iii) such corporate records of the Borrower and
such other documents as we have deemed
necessary as a basis for the opinions
expressed below.
In our examination, we have assumed the genuineness of all
signatures (other than the Borrower's), the authenticity of
all documents submitted to us as originals and the
conformity with authentic original documents of all
documents submitted to us as copies. When relevant facts
were not independently established, we have relied upon
statements of governmental officials and upon
representations made in or pursuant to the Agreement and
certificates of appropriate representatives of the Borrower.
In rendering the opinions expressed below, we have
assumed, with respect to all of the documents referred to
in this opinion letter (except as provided below), that:
<PAGE> 97 (i) such documents have been duly authorized by,
have been duly executed and delivered by, and
constitute legal, valid, binding and
enforceable obligations of, all of the
parties (except the Borrower) to such
documents;
(ii) all signatures (except signatures of officers
of the Borrower) to such documents have been
duly authorized; and
(iii) all of the parties to such documents (except
the Borrower) are duly organized and validly
existing and have the power and authority
(corporate and other) to execute, deliver and
perform such documents.
Based upon and subject to the foregoing and
subject also to the comments and qualifications set forth
below, and having considered such questions of law as we
have deemed necessary as a basis for the opinions expressed
below, we are of the opinion that:
1. The Borrower is a cooperative association duly
incorporated, validly existing and in good standing under
the laws of the District of Columbia and has the corporate
power and authority and all material governmental licenses,
authorizations, consents and approvals required to own its
property and assets and to transact the business in which it
is engaged. The Borrower has the corporate power and
authority to execute, deliver and carry out the terms and
provisions of the Agreement and the Notes. The Agreement
and the Notes have been duly and validly authorized,
executed and delivered by the Borrower, and the Agreement
constitutes a legal, valid and binding agreement of the
Borrower, and the Notes constitute legal, valid and binding
obligations of the Borrower, in each case enforceable
against the Borrower in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally
and except as the enforceability of the Agreement and the
Notes is subject to the application of general principles of
equity (regardless of whether considered in a proceeding in
equity or at law), including, without limitation, (a) the
possible unavailability of specific performance, injunctive
relief or any other equitable remedy and (b) concepts of
materiality, reasonableness, good faith and fair dealing.
2. To our best knowledge, there are no actions,
suits, proceedings or investigations pending or threatened
<PAGE> 98 against the Borrower by or before any court or any
governmental authority, body or agency or any arbitration
board which in our view are reasonably likely to materially
adversely affect the business, property, assets, financial
position or results of operations of the Borrower or the
authority or ability of the Borrower to perform its
obligations under the Agreement or the Notes.
3. No authorization, consent, approval or license
of, or declaration, filing or registration with or exemption
by, any governmental authority, body or agency is required
in connection with the execution, delivery or performance by
the Borrower of the Agreement or the Notes.
4. The holders of the Borrower's Capital Term
Certificates are not and will not be entitled to receive any
payments with respect to the principal thereof or interest
thereon solely because of withdrawing or being expelled from
membership in the Borrower.
5. Neither the execution and delivery of the
Agreement or the Notes, nor the consummation of any of the
transactions therein contemplated, nor compliance with the
terms and provisions thereof, will contravene any provision
of law, statute, rule or regulation to which the Borrower is
subject or any judgment, decree, award, franchise, order or
permit known to us applicable to the Borrower, or will
conflict or be inconsistent with, or will result in any
breach of, any of the terms, covenants, conditions or
provisions of, or constitute (or with the giving of notice
or lapse of time, or both, would constitute) a default under
(or condition or event entitling any Person to require,
whether by purchase, redemption, acceleration or otherwise,
the Borrower to perform any obligations prior to the
scheduled maturity thereof), or result in the creation or
imposition of any Lien upon any of the property or assets of
the Borrower pursuant to the terms of, any indenture,
mortgage, deed of trust, agreement or other instrument known
to us to which it may be subject, or violate any provision
of the certificate of incorporation or by-laws of the
Borrower. Without limiting the generality of the foregoing,
to our best knowledge the Borrower is not a party to, or
otherwise subject to any provision contained in, any
instrument evidencing Indebtedness of the Borrower, any
agreement or indenture relating thereto or any other
contract or agreement (including its certificate of
incorporation and by-laws), which would be violated by the
incurring of the Indebtedness to be evidenced by the Notes.
6. The Borrower has received a ruling from the
Internal Revenue Service to the effect that it is exempt
<PAGE> 99 from payment of Federal income tax under Section
501(c)(4) of the Internal Revenue Code of 1986, and nothing
has come to our attention that leads us to believe that the
Borrower is not so exempt.
7. The Borrower is not an "investment company" or
a company "controlled" by an "investment company", within
the meaning of the Investment Company Act of 1940, as
amended.
8. The Borrower is not a "holding company", or a
"subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", as such terms are defined
in the Public Utility Holding Company Act of 1935, as
amended.
9. The Commitments (as defined in each of the
Prior Credit Agreements) have been terminated.
The foregoing opinions are subject to the
following qualifications:
We express no opinion as to the effect of the laws
of any jurisdiction in which any Bank is located (other than
New York) that limit the interest, fees or other charges
such Bank may impose.
We express no opinion concerning any law other
than the law of New York, the District of Columbia and the
federal law of the United States. Insofar as this opinion
pertains to matters of District of Columbia law, we have
relied on the opinion of John Jay List, Esq. being delivered
to you contemporaneously herewith.
This opinion letter is, pursuant to Section
3.01(d) of the Agreement, provided to you by us in our
capacity as special counsel to the Borrower and at its
request and may not be relied upon by any Person or for any
purpose other than in connection with the transactions
contemplated by the Agreement without, in each instance, our
prior written consent.
Very truly yours,
<PAGE> 100 EXHIBIT H
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
February 28, 1995
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the
$1,620,000,000 Revolving Credit Agreement dated as of February
28, 1995 (the "Credit Agreement") among the National Rural
Utilities Cooperative Finance Corporation, a not-for-profit
cooperative association incorporated under the laws of the
District of Columbia (the "Borrower"), the banks listed on the
signature pages thereof (the "Banks"), J.P. Morgan Securities
Inc. and The Bank of Nova Scotia, as Co-Syndication Agents,
and Morgan Guaranty Trust Company of New York, as
Administrative Agent (the "Agent"), and have acted as special
counsel for the Agent for the purpose of rendering this
opinion pursuant to Section 3.01(e) of the Credit Agreement.
Terms defined in the Credit Agreement are used herein as
therein defined.
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents,
corporate records, certificates of public officials and other
instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the
opinion that:
1. The execution, delivery and performance by the
Borrower of the Credit Agreement and the Notes are within the
Borrower's corporate powers and have been duly authorized by
all necessary corporate action.
<PAGE> 101 2. The Credit Agreement constitutes a valid
and binding agreement of the Borrower and the Notes constitute
valid and binding obligations of the Borrower, in each case
enforceable in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by general
principles of equity.
In giving the foregoing opinion, (i) we express no
opinion as to the effect (if any) of any law of any
jurisdiction (except the State of New York) in which any Bank
is located which limits the rate of interest that such Bank
may charge or collect and (ii) we have relied, without
independent investigation, as to all matters governed by the
laws of the District of Columbia, upon the opinion of John Jay
List, Esq., General Counsel of the Borrower, dated the date
hereof, a copy of which has been delivered to you.
Very truly yours,
<PAGE> 102 EXHIBIT I
EXTENSION AGREEMENT
[Date]
National Rural Utilities
Cooperative Finance Corporation
Woodland Park
2201 Cooperative Way
Herndon, VA 22071-3025
Morgan Guaranty Trust Company
of New York, as Administrative Agent
under the Credit Agreement
referred to below
60 Wall Street
New York, NY 10260
Gentlemen:
Effective as of [effective date], the undersigned
hereby agree to extend the Termination Date as now in effect
under the $ 1,620,000,000 Credit Agreement dated as of
February 28, 1995 as amended and supplemented from time to
time (the "Credit Agreement"), among National Rural Utilities
Cooperative Finance Corporation, the Banks listed therein,
J.P. Morgan Securities Inc. and The Bank of Nova Scotia, as
Co-Syndication Agents, and Morgan Guaranty Trust Company of
New York, as Administrative Agent, to [Date]. Terms defined
in the Credit Agreement are used herein as therein defined.
This Extension Agreement shall be construed in
accordance with and governed by the law of the State of New
York.
[NAME OF BANK]
By____________________________
Title:
<PAGE> 103 [NAME OF BANK]
By____________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
By____________________________
Title:
Agreed and accepted:
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
By_______________________________
Title:
<PAGE>
<PAGE> 104 EXHIBIT J
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of ___________, 19__ among
[ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the "Assignee"),
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
(the "Borrower") and MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Administrative Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement
(the "Agreement") relates to the $1,620,000,000 Credit
Agreement dated as of February 28, 1995 (the "Credit
Agreement") among the Borrower, the Assignor and the other
Banks party thereto, as Banks, J.P. Morgan Securities Inc.
and The Bank of Nova Scotia, as Co-Syndication Agents, and
Morgan Guaranty Trust Company of New York, as Administrative
Agent (the "Agent");
WHEREAS, as provided under the Credit Agreement,
the Assignor has a Commitment to make Loans to the Borrower
in an aggregate principal amount at any time outstanding not
to exceed $__________;
WHEREAS, Committed Loans made to the Borrower by
the Assignor under the Credit Agreement in the aggregate
principal amount of $__________ are outstanding at the date
hereof; and
WHEREAS, the Assignor proposes to assign to the
Assignee all of the rights of the Assignor under the Credit
Agreement in respect of a portion of its Commitment
thereunder in an amount equal to $__________ (the "Assigned
Amount"), together with a corresponding portion of its
outstanding Committed Loans, and the Assignee proposes to
accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing
and the mutual agreements contained herein, the parties
hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not
otherwise defined herein shall have the respective meanings
set forth in the Credit Agreement.
<PAGE> 105 SECTION 2. Assignment. The Assignor hereby
assigns and sells to the Assignee all of the rights of the
Assignor under the Credit Agreement to the extent of the
Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the
obligations of the Assignor under the Credit Agreement to
the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the
principal amount of the Committed Loans made by the Assignor
outstanding at the date hereof. Upon the execution and
delivery hereof by the Assignor, the Assignee, the Borrower
and the Agent and the payment of the amounts specified in
Section 3 required to be paid on the date hereof (i) the
Assignee shall, as of the date hereof, succeed to the rights
and be obligated to perform the obligations of a Bank under
the Credit Agreement with a Commitment in an amount equal to
the Assigned Amount, and (ii) the Commitment of the Assignor
shall, as of the date hereof, be reduced by a like amount
and the Assignor released from its obligations under the
Credit Agreement to the extent such obligations have been
assumed by the Assignee. The assignment provided for herein
shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the
assignment and sale contemplated in Section 2 hereof, the
Assignee shall pay to the Assignor on the date hereof in
Federal funds the amount heretofore agreed between them. It
is understood that commitment and/or facility fees accrued
to the date hereof are for the account of the Assignor and
such fees accruing from and including the date hereof are
for the account of the Assignee. Each of the Assignor and
the Assignee hereby agrees that if it receives any amount
under the Credit Agreement which is for the account of the
other party hereto, it shall receive the same for the
account of such other party to the extent of such other
party's interest therein and shall promptly pay the same to
such other party.
SECTION 4. Consent of the Borrower and the Agent.
This Agreement is conditioned upon the consent of the
Borrower and the Agent pursuant to Section 9.06(c) of the
Credit Agreement. The execution of this Agreement by the
Borrower and the Agent is evidence of this consent.
Pursuant to Section 9.06(c) of the Credit Agreement the
Borrower agrees to execute and deliver a Note payable to the
order of the Assignee to evidence the assignment and
assumption provided for herein.
SECTION 5. Non-Reliance on Assignor. The
Assignor makes no representation or warranty in connection
with, and shall have no responsibility with respect to, the
<PAGE> 106 solvency, financial condition, or statements of
the Borrower, or the validity and enforceability of the
obligations of the Borrower in respect of the Credit
Agreement or any Note. The Assignee acknowledges that it
has, independently and without reliance on the Assignor, and
based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to
enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the
business, affairs and financial condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall
be governed by and construed in accordance with the laws of
the State of New York.
SECTION 7. Counterparts. This Agreement may be
signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered by their duly
authorized officers as of the date first above written.
[ASSIGNOR]
By_________________________
Title:
[ASSIGNEE]
By__________________________
Title:
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
By__________________________
Title:
<PAGE> 107
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
By__________________________
Title:
<PAGE>
<PAGE> 108
CONFORMED COPY
$2,430,000,000
REVOLVING CREDIT AGREEMENT
dated as of
February 28, 1995
among
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION,
THE BANKS LISTED HEREIN,
J.P. MORGAN SECURITIES INC.
and
THE BANK OF NOVA SCOTIA,
as CO-SYNDICATION AGENTS
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as ADMINISTRATIVE AGENT
Arranged by
J.P. MORGAN SECURITIES INC.
<PAGE>
<PAGE> 109
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01.Definitions 1
SECTION 1.02.Accounting Terms and Determinations 15
SECTION 1.03.Types of Borrowings 15
ARTICLE II
THE CREDITS
SECTION 2.01.Commitments to Lend 15
SECTION 2.02. Notice of Committed Borrowings 16
SECTION 2.03.Money Market Borrowings 17
SECTION 2.04. Notice to Banks; Funding of Loans 21
SECTION 2.05.Notes 22
SECTION 2.06.Maturity of Loans 23
SECTION 2.07.Interest Rates 23
SECTION 2.08. Fees 27
SECTION 2.09. Optional Termination or Reduction of
Commitments 28
SECTION 2.10. Mandatory Termination of Commitments 28
SECTION 2.11.Optional Prepayments 28
SECTION 2.12.General Provisions as to Payments 28
SECTION 2.13.Funding Losses. 29
SECTION 2.14.Computation of Interest and Fees 30
SECTION 2.15.Withholding Tax Exemption. 30
SECTION 2.16.Increase of Commitments. 30
ARTICLE III
CONDITIONS
SECTION 3.01.Closing 32
SECTION 3.02.Borrowings 33
<PAGE> 110
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01.Corporate Existence, Power and Authority 35
SECTION 4.02.Financial Statements 35
SECTION 4.03.Litigation 36
SECTION 4.04.Governmental Authorizations 37
SECTION 4.05.Capital Term Certificates 37
SECTION 4.06.No Violation of Agreements 37
SECTION 4.07.No Event of Default under the Indentures 38
SECTION 4.08.Compliance with ERISA 38
SECTION 4.09.Compliance with Other Laws 38
SECTION 4.10.Tax Status 38
SECTION 4.11.Investment Company Act 38
SECTION 4.12.Public Utility Holding Company Act 38
SECTION 4.13.Disclosure 39
SECTION 4.14.Subsidiaries 39
SECTION 4.15.Environmental Matters 39
ARTICLE V
COVENANTS
SECTION 5.01.Corporate Existence 40
SECTION 5.02.Disposition of Assets; Merger; Character
of Business; etc. 40
SECTION 5.03.Financial Information 40
SECTION 5.04.Default Certificates 42
SECTION 5.05.Notice of Litigation, Legislative
Developments and Defaults 43
SECTION 5.06.ERISA 44
SECTION 5.07.Payment of Charges 44
SECTION 5.08.Inspection of Books and Assets 45
SECTION 5.09.Indebtedness 45
SECTION 5.10.Liens 46
SECTION 5.11.Maintenance of Insurance 47
SECTION 5.12.Subsidiaries and Joint Ventures 47
SECTION 5.13.Minimum Net Worth 47
SECTION 5.14.Minimum TIER 47
SECTION 5.15.Retirement of Patronage Capital 47
SECTION 5.16.Use of Proceeds 47
<PAGE> 111 ARTICLE VI
DEFAULTS
SECTION 6.01.Events of Default 48
SECTION 6.02.Notice of Default 50
ARTICLE VII
THE AGENT
SECTION 7.01.Appointment and Authorization 51
SECTION 7.02.Agent and Affiliates 51
SECTION 7.03.Action by Agent 51
SECTION 7.04.Consultation with Experts 51
SECTION 7.05.Liability of Agent 51
SECTION 7.06.Indemnification 52
SECTION 7.07.Credit Decision 52
SECTION 7.08.Successor Agent 52
SECTION 7.09.Co-Syndication Agents Not Liable 53
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01.Basis for Determining Interest Rate
Inadequate or Unfair 53
SECTION 8.02.Illegality 54
SECTION 8.03.Increased Cost and Reduced Return 54
SECTION 8.04.Base Rate Loans Substituted for Affected
Fixed Rate Loans 56
ARTICLE IX
MISCELLANEOUS
SECTION 9.01.Notices 57
SECTION 9.02.No Waivers 57
SECTION 9.03.Expenses; Documentary Taxes;
Indemnification 58
SECTION 9.04.Sharing of Set-Offs 58
SECTION 9.05.Amendments and Waivers 59
<PAGE> 112
SECTION 9.06.Successors and Assigns 59
SECTION 9.07.Collateral 61
SECTION 9.08.Governing Law 61
SECTION 9.09.Counterparts; Integration; Effectiveness 61
SECTION 9.10.Several Obligations 62
SECTION 9.11.Termination of Commitments Under the Prior
Credit Agreements 62
SECTION 9.12.Severability 62
Pricing Schedule
Exhibit A - Note
Exhibit B - RUS Guarantee
Exhibit C - Money Market Quote Request
Exhibit D - Invitation for Money Market Quotes
Exhibit E - Money Market Quote
Exhibit F - Opinion of General Counsel for the Borrower
Annex A to Exhibit F - Subsidiaries and
Joint Ventures
Exhibit G - Opinion of Special Counsel for the Borrower
Exhibit H - Opinion of Special Counsel for the Agent
Exhibit I - Extension Agreement
Exhibit J - Assignment and Assumption Agreement
<PAGE>
<PAGE> 113
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT dated as of February
28, 1995 among NATIONAL RURAL UTILITIES COOPERATIVE FINANCE
CORPORATION, a not-for-profit cooperative association
incorporated under the laws of the District of Columbia, as
Borrower, the BANKS listed on the signature pages hereof,
J.P. MORGAN SECURITIES INC. and THE BANK OF NOVA SCOTIA, as
Co-Syndication Agents, and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01.Definitions. The following terms,
as used herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of
Money Market Quotes setting forth Money Market Absolute
Rates pursuant to Section 2.03.
"Adjusted CD Rate" has the meaning set forth in
Section 2.07(b).
"Adjusted London Interbank Offered Rate" has the
meaning set forth in Section 2.07(c).
"Administrative Questionnaire" means, with respect
to each Bank, the administrative questionnaire in the form
submitted to such Bank by the Agent and submitted to the
Agent (with a copy to the Borrower) duly completed by such
Bank.
"Agent" means Morgan Guaranty Trust Company of New
York in its capacity as administrative agent for the Banks
hereunder, and its successors in such capacity.
"Agreement" means this Revolving Credit Agreement,
as the same may from time to time be amended.
"Applicable Lending Office" means, with respect to
any Bank, (i) in the case of its Domestic Loans, its
Domestic Lending Office, (ii) in the case of its Euro-Dollar
<PAGE> 114 Loans, its Euro-Dollar Lending Office and (iii)
in the case of its Money Market Loans, its Money Market
Lending Office.
"Assessment Rate" has the meaning set forth in
Section 2.07(b).
"Assignee" has the meaning set forth in Section
9.06(c).
"Bank" means each bank listed on the signature
pages hereof, each Assignee which becomes a Bank pursuant to
Section 9.06(c), and their respective successors.
"Base Rate" means, for any day, a rate per annum
equal to the higher of (i) the Prime Rate for such day and
(ii) the sum of 1/2 of 1% plus the Federal Funds Rate for
such day.
"Base Rate Loan" means a Committed Loan to be made
by a Bank as a Base Rate Loan in accordance with the
applicable Notice of Committed Borrowing or pursuant to
Article VIII.
"Bonds" means any bonds issued pursuant to either
Indenture or both, as the context may require.
"Borrower" means the National Rural Utilities
Cooperative Finance Corporation, a not-for-profit
cooperative association incorporated under the laws of the
District of Columbia, and its successors.
"Borrowing" has the meaning set forth in Section
1.03.
"Capital Term Certificate" means a note of the
Borrower substantially in the form of the membership
subscription certificates and the loan and guarantee
certificates outstanding on the date of the execution and
delivery of this Agreement and any other Indebtedness of the
Borrower having substantially similar provisions as to
subordination as those contained in said outstanding
membership subscription certificates and loan and guarantee
certificates.
"CD Base Rate" has the meaning set forth in
Section 2.07(b).
"CD Loan" means a Committed Loan to be made by a
Bank as a CD Loan in accordance with the applicable Notice
of Committed Borrowing.
<PAGE> 115 "CD Margin" has the meaning set forth in the
Pricing Schedule.
"CD Reference Banks" means The Bank of Nova
Scotia, SunBank, National Association and Morgan Guaranty
Trust Company of New York.
"Closing Date" means the date on or after the Effective
Date on which the Agent shall have received the documents
specified in or pursuant to Section 3.01.
"Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the
signature pages hereof, as such amount may be reduced from
time to time pursuant to Sections 2.09 and 2.10.
"Committed Loan" means a loan made by a Bank
pursuant to Section 2.01.
"Consolidated Subsidiary" means at any date any
Subsidiary or 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.
"Co-Syndication Agents" means J.P. Morgan
Securities Inc. and The Bank of Nova Scotia, each in its
capacity as co-syndication agent for the Banks hereunder,
and their successors in such capacity.
"Default" means any condition or event which
constitutes an Event of Default or which with the giving of
notice or lapse of time or both (as specified in Section
6.01) would, unless cured or waived, become an Event of
Default.
"Derivatives Obligations" of any Person means all
obligations of such Person in respect of any rate swap
transaction, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity
or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any
other similar transaction (including any option with respect
to any of the foregoing transactions) or any combination of
the foregoing transactions.
"Determination Date" shall have the meaning
provided in Section 5.09.
<PAGE> 116 "Domestic Business Day" means any day except
a Saturday, Sunday or other day on which commercial banks in
New York City are authorized by law to close.
"Domestic Lending Office" means, as to each Bank,
its office located at its address set forth in its
Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as
its Domestic Lending Office by notice to the Borrower and
the Agent; provided that any Bank may so designate separate
Domestic Lending Offices for its Base Rate Loans, on the one
hand, and its CD Loans, on the other hand, in which case all
references herein to the Domestic Lending Office of such
Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate
Loans or both.
"Domestic Reserve Percentage" has the meaning set
forth in Section 2.07(b).
"Effective Date" means the date this Agreement
becomes effective in accordance with Section 9.09.
"Environmental Laws" means any and all federal,
state, local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees,
plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and governmental
restrictions relating to the environment, the effect of the
environment on human health or to emissions, discharges or
releases of pollutants, contaminants, Hazardous Substances
or wastes into the environment including, without
limitation, ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport
or handling of pollutants, contaminants, Hazardous
Substances or wastes or the clean-up or other remediation
thereof.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary
and all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section
<PAGE> 117 414 of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic
Business Day on which commercial banks are open for
international business (including dealings in dollar
deposits) in London.
"Euro-Dollar Lending Office" means, as to each
Bank, its office, branch or affiliate located at its address
set forth in its Administrative Questionnaire (or identified
in its Administrative Questionnaire as its Euro-Dollar
Lending Office) or such other office, branch or affiliate of
such Bank as it may hereafter designate as its Euro-Dollar
Lending Office by notice to the Borrower and the Agent.
"Euro-Dollar Loan" means a Committed Loan to be
made by a Bank as a Euro-Dollar Loan in accordance with the
applicable Notice of Committed Borrowing.
"Euro-Dollar Margin" has the meaning set forth in
the Pricing Schedule.
"Euro-Dollar Reference Banks" means the principal
London offices of The Bank of Nova Scotia, SunBank, National
Association and Morgan Guaranty Trust Company of New York.
"Euro-Dollar Reserve Percentage" has the meaning
set forth in Section 2.07(c).
"Event of Default" has the meaning set forth in
Section 6.01.
"Federal Funds Rate" means, for any day, the rate
per annum (rounded upward, if necessary, to the nearest
1/100th of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New
York on the Domestic Business Day next succeeding such day,
provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business
Day, and (ii) if no such rate is so published on such next
succeeding Domestic Business Day, the Federal Funds Rate for
such day shall be the average rate quoted to Morgan Guaranty
Trust Company of New York on such day on such transactions
as determined by the Agent.
"Fixed Rate Loans" means CD Loans or Euro-Dollar
Loans or Money Market Loans (excluding Money Market LIBOR
<PAGE> 118 Loans bearing interest at the Base Rate pursuant
to Section 8.01(a)) or any combination of the foregoing.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or
indirectly guaranteeing any Indebtedness or lease payments
of any other Person or otherwise in any manner assuring the
holder of any Indebtedness of, or the obligee under any
lease of, any other Person through an agreement, contingent
or otherwise, to purchase Indebtedness or the property
subject to such lease, or to purchase goods, supplies or
services primarily for the purpose of enabling the debtor or
obligor to make payment of the Indebtedness or under such
lease or of assuring such Person against loss, or to supply
funds to or in any other manner invest in the debtor or
obligor, or otherwise; provided that the term Guarantee
shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" when
used as a verb has a correlative meaning.
"Hazardous Substances" means any toxic,
radioactive, caustic or otherwise hazardous substance,
including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Indebtedness" with respect to any Person means:
(1)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;
(2)all indebtedness of others Guaranteed by such
Person;
(3)all indebtedness secured by any Lien upon
property owned by such Person, even though such Person
has not assumed or become liable for the payment of
such indebtedness; and
(4)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
<PAGE> 119 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 thereafter
such money and evidences of indebtedness so deposited shall
not be included in any computation of the assets of such
Person; and provided further that no provision of this
definition shall be construed to include as "Indebtedness"
of the Borrower any indebtedness by virtue of any agreement
by the Borrower to advance or supply funds to Members.
"Indenture" means either the 1972 Indenture or the
1994 Indenture, and "Indentures" means both such Indentures.
"Interest Period" means: (1) with respect to each
Euro-Dollar Borrowing, the period commencing on the date of
such Borrowing and ending one, two, three or six months
thereafter, as the Borrower may elect in the applicable
Notice of Borrowing; provided that:
(a)any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar
Business Day;
(b)any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c)any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date;
(2) with respect to each CD Borrowing, the period
commencing on the date of such Borrowing and ending 30, 60,
90 or 180 days thereafter, as the Borrower may elect in the
applicable Notice of Borrowing; provided that:
(a)any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
<PAGE> 120 be extended to the next succeeding
Euro-Dollar Business Day; and
(b)any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date;
(3) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 30 days
thereafter; provided that:
(a)any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day; and
(b)any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date;
(4) with respect to each Money Market LIBOR Borrowing, the
period commencing on the date of such Borrowing and ending
any whole number of months thereafter (but not less than one
month) as the Borrower may elect in accordance with Section
2.03; provided that:
(a)any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar
Business Day;
(b)any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination
Date; and
(5) with respect to each Money Market Absolute Rate
Borrowing, the period commencing on the date of such
Borrowing and ending such number of days thereafter (but not
less than 30 days) as the Borrower may elect in accordance
with Section 2.03; provided that:
<PAGE> 121 (a)any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day; and
(b)any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended, or any successor statute.
"Joint Venture" means any corporation,
partnership, association, joint venture or other entity in
which the Borrower, directly or indirectly through
Subsidiaries or Joint Ventures, has an equity interest at
the time of 10% or more but which is not a Subsidiary;
provided that no Person whose only assets are RUS Guaranteed
Loans and investments incidental thereto shall be deemed a
Joint Venture.
"LIBOR Auction" means a solicitation of Money
Market Quotes setting forth Money Market Margins based on
the London Interbank Offered Rate pursuant to Section 2.03.
"Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset. For the
purposes of this Agreement, the Borrower or any Subsidiary
shall be deemed to own subject to a Lien any asset which it
has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease
or other title retention agreement relating to such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan
or a Money Market Loan and "Loans" means Domestic Loans or
Euro-Dollar Loans or Money Market Loans or any combination
of the foregoing.
"London Interbank Offered Rate" has the meaning
set forth in Section 2.07(c).
"Member" means any Person which is a member or a
patron of the Borrower.
"Minimum Required Net Worth" shall initially be
$1,334,378,200; provided that on each date after May 31,
1994 upon which annual financial statements are required to
be delivered pursuant to Section 5.03(ii), the Minimum
Required Net Worth shall be permanently increased by an
<PAGE> 122 amount, if positive, equal to ninety percent
(90%) of (i) the aggregate amount of Net Margins for the
prior fiscal year minus (ii) the aggregate amount of
retirements of Patronage Capital Certificates made by the
Borrower to Members in the prior fiscal year. In the event
that in any year the amount specified in clause (ii) above
is equal to or greater than the amount specified in clause
(i) above, the Minimum Required Net Worth shall remain the
same for that year.
"Money Market Absolute Rate" has the meaning set
forth in Section 2.03(d).
"Money Market Absolute Rate Loan" means a loan to
be made by a Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each
Bank, its Domestic Lending Office or such other office,
branch or affiliate of such Bank as it may hereafter
designate as its Money Market Lending Office by notice to
the Borrower and the Agent; provided that any Bank may from
time to time by notice to the Borrower and the Agent
designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money
Market Absolute Rate Loans, on the other hand, in which case
all references herein to the Money Market Lending Office of
such Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made
by a Bank pursuant to a LIBOR Auction (including such a loan
bearing interest at the Prime Rate pursuant to Section
8.01(a)).
"Money Market Loan" means a Money Market LIBOR
Loan or a Money Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in
Section 2.03(d).
"Money Market Quote" means an offer by a Bank to
make a Money Market Loan in accordance with Section 2.03.
"Moody's" means Moody's Investors Service, Inc.,
and its successors.
"Net Margins" means operating and non-operating
income of the Borrower and its Subsidiaries determined on a
combined or consolidated basis (excluding income on
Guaranteed Portions of RUS Guaranteed Loans) less, without
duplication, operating and non-operating costs and expenses
<PAGE> 123 of the Borrower and its Subsidiaries determined
on a combined or consolidated basis (excluding costs and
expenses relating to Guaranteed Portions of RUS Guaranteed
Loans).
"Net Worth" means the sum of (i) all accounts
which constitute Members' equity in the Borrower, (ii) all
Indebtedness of the Borrower shown in its balance sheet
dated as of May 31, 1994 as "Members' Subordinated
Certificates" and any other Indebtedness of the Borrower
incurred after May 31, 1994 having substantially similar
provisions as to subordination as those contained in said
outstanding certificates and (iii) any amounts reflected in
the financial statements of the Borrower as a reserve for
loan losses.
"1994 Indenture" means the Indenture dated as of
February 15, 1994 between the Borrower and First Bank
National Association, as trustee, as amended and
supplemented from time to time, providing for the issuance
in series of certain collateral trust bonds of the Borrower.
"1972 Indenture" means the Seventeenth
Supplemental Indenture dated as of March 1, 1987, amending
and restating in full the Indenture dated as of December 1,
1972, by and between the Borrower and Chemical Bank (as
successor by merger to Manufacturers Hanover Trust Company),
as trustee.
"Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing
the obligation of the Borrower to repay the Loans, and
"Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a Notice of Committed
Borrowing (as defined in Section 2.02) or a Notice of Money
Market Borrowing (as defined in Section 2.03(f)).
"Parent" means, with respect to any Bank, any
Person controlling such Bank.
"Participant" has the meaning set forth in Section
9.06(b).
"Patronage Capital Certificates" means those
certificates that evidence the allocation of Net Margins by
the Borrower among its Members in proportion to interest
earned by the Borrower from such Members.
"PBGC" means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its
<PAGE> 124 functions under ERISA.
"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.
"Plan" means any multiemployer plan or single
employer plan, as defined in Section 4001 and subject to
Title IV of ERISA, which is maintained, or at any time
during the five calendar years preceding the date of this
Agreement was maintained, for employees of the Borrower or a
Subsidiary of the Borrower or any member of the ERISA Group.
"Pricing Schedule" means the Schedule attached
hereto identified as such.
"Prime Rate" means the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York in
New York City from time to time as its Prime Rate.
"Prior Credit Agreement" means each of (i) the
$870,000,000 Revolving Credit Agreement dated as of May 28,
1993, as amended by Amendment No. 1 thereto dated as of May
17, 1994, among the Borrower, the banks listed on the
signature pages thereof, Morgan Guaranty Trust Company of
New York, as Administrative Agent and Arranger, and The Bank
of Nova Scotia, as Managing Agent, and (ii) the
$2,030,000,000 Revolving Credit Agreement dated as of May
28, 1993, as amended by Amendment No. 1 thereto dated as of
May 17, 1994, among the Borrower, the banks listed on the
signature pages thereof, Morgan Guaranty Trust Company of
New York, as Administrative Agent and Arranger, and The Bank
of Nova Scotia, as Managing Agent, and "Prior Credit
Agreements" means both such Revolving Credit Agreements.
"Reference Banks" means the CD Reference Banks or
the Euro-Dollar Reference Banks, as the context may require,
and "Reference Bank" means any one of such Reference Banks.
"Refunding Borrowing" means a Committed Borrowing
which, after application of the proceeds thereof, results in
no net increase in the outstanding principal amount of
Committed Loans made by any Bank.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
<PAGE> 125"Regulation X" means Regulation X of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
"Reportable Event" means an event described in
Section 4043(c) of ERISA or regulations promulgated by the
Department of Labor thereunder (with respect to which the 30
day notice requirement has not been waived by the PBGC).
"Required Banks" means at any time Banks having at
least 60% of the aggregate amount of the Commitments or, if
the Commitments shall have been terminated, holding Notes
evidencing at least 60% of the aggregate unpaid principal
amount of the Loans.
"Revolving Credit Period" means the period from
and including the Effective Date to but excluding the
Termination Date.
"RUS" means the Rural Utilities Service of the
Department of Agriculture of the United States of America
(as successor to the Rural Electrification Administration of
the Department of Agriculture of the United States of
America) or any other regulatory body which succeeds to its
functions.
"RUS Guaranteed Loan" means any loan made by any
Person, which loan (x) bears interest at least equal to such
Person's cost of funds and (y) is guaranteed, in whole or in
part, as to principal and interest by the United States of
America through the RUS pursuant to a guarantee, which
guarantee contains provisions no less favorable to the
holder thereof than the provisions set forth in the form of
Exhibit B hereto; and "Guaranteed Portion" of any RUS
Guaranteed Loan means that portion of principal of, and
interest on, such RUS Guaranteed Loan which is guaranteed by
the United States of America through the RUS as provided in
clause (y).
"S&P" means Standard and Poor's Corporation, and
its successors.
"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
<PAGE> 126 Person in which such Person directly or
indirectly through Subsidiaries has more than a 50% voting
and equity interest, provided that no Person whose only
assets are RUS Guaranteed Loans and investments incidental
thereto shall be deemed a Subsidiary. Neither the Rural
Telephone Finance Cooperative nor the Guaranty Funding
Cooperative is on the date of this Agreement a "Subsidiary",
except that the Rural Telephone Finance Cooperative and, but
only so long as the Borrower maintains control of the Board
of Directors of the Guaranty Funding Cooperative (including,
without limitation, the ability to appoint a majority of
such Board of Directors), the Guaranty Funding Cooperative
shall each be considered a "Subsidiary" for purposes of the
definitions of "Net Margins" and "TIER".
"Superior Indebtedness" means all Indebtedness of
the Borrower (other than Capital Term Certificates) and its
Subsidiaries determined on a combined or consolidated basis,
but excluding Indebtedness of the Borrower or any of its
Subsidiaries to the extent that the proceeds of such
Indebtedness are used to fund Guaranteed Portions of RUS
Guaranteed Loans.
"Termination Date" means February 28, 2000 or such
later date to which this Agreement shall have been extended
pursuant to Section 2.01(b), or, if either such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar
Business Day.
"TIER" means, for any period, the ratio of (x) Net
Margins plus interest on Indebtedness of the Borrower or its
Subsidiaries determined on a combined or consolidated basis
(but excluding Indebtedness of the Borrower or any of its
Subsidiaries to the extent that the proceeds of such
Indebtedness are used to fund Guaranteed Portions of RUS
Guaranteed Loans) plus amortization of bond discount and
amortization of bond issuance costs of the Borrower and its
Subsidiaries determined on a combined or consolidated basis
for such period (but excluding such amortization of discount
and issuance costs with respect to Indebtedness referred to
in the preceding parenthetical phrase) to (y) interest on
Indebtedness of the Borrower or its Subsidiaries determined
on a combined or consolidated basis (but excluding
Indebtedness of the Borrower or any of its Subsidiaries to
the extent that the proceeds of such Indebtedness are used
to fund Guaranteed Portions of RUS Guaranteed Loans) plus
amortization of bond discount and amortization of bond
issuance costs of the Borrower and its Subsidiaries
determined on a combined or consolidated basis for such
period (but excluding such amortization of discount and
issuance costs with respect to Indebtedness referred to in
<PAGE> 127 the preceding parenthetical phrase).
SECTION 1.02.Accounting Terms and
Determinations. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made and all
financial statements required to be delivered hereunder
shall be prepared in accordance with generally accepted
accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred
in by the Borrower's independent public accountants) with
the most recent audited combined financial statements of the
Borrower and its Consolidated Subsidiaries delivered to the
Banks.
SECTION 1.03.Types of Borrowings. The term
"Borrowing" denotes the aggregation of Loans of one or more
Banks to be made to the Borrower pursuant to Article II on a
single date and for a single Interest Period. Borrowings
are classified for purposes of this Agreement either by
reference to the pricing of Loans comprising such Borrowing
(e.g., a "Euro-Dollar Borrowing" is a Borrowing comprised of
Euro-Dollar Loans) or by reference to the provisions of
Article II under which participation therein is determined
(i.e., a "Committed Borrowing" is a Borrowing under Section
2.01 in which all Banks participate in proportion to their
Commitments, while a "Money Market Borrowing" is a Borrowing
under Section 2.03 in which the Bank participants are
determined on the basis of their bids in accordance
therewith).
ARTICLE II
THE CREDITS
SECTION 2.01.Commitments to Lend. (a) During
the Revolving Credit Period each Bank severally agrees, on
the terms and conditions set forth in this Agreement, to
make loans to the Borrower pursuant to this Section from
time to time in amounts such that the aggregate principal
amount of Committed Loans by such Bank at any one time
outstanding shall not exceed the amount of its Commitment.
Each Borrowing shall be in an aggregate principal amount of
$25,000,000 or any larger multiple of $1,000,000 (except
that any such Borrowing may be in the maximum aggregate
amount available in accordance with Section 3.02(c) or (d))
and shall be made from the several Banks ratably in
proportion to their respective Commitments. Within the
foregoing limits, the Borrower may borrow under this
Section, repay or, to the extent permitted by Section 2.11,
<PAGE> 128 prepay Loans and reborrow at any time during the
Revolving Credit Period under this Section.
(b) Extension of Commitments. The Termination
Date may be extended one time in the manner set forth in
this subsection (b), for a period of up to one year from the
date on which Banks having 100% of the Commitments shall
have notified the Agent of their agreement so to extend. If
the Borrower wishes to request an extension of the
Termination Date, it shall give written notice to that
effect (such notice to state the date to which the
Termination Date then in effect is requested to be extended,
subject to the provisions of the preceding sentence) to the
Agent not less than 60 nor more than 90 days prior to the
Termination Date then in effect, whereupon the Agent shall
promptly notify each of the Banks of such request and send a
copy of the Extension Agreement referred to below to each
Bank. Each Bank will use its best efforts to respond to
such request, whether affirmatively or negatively, as it may
elect in its discretion, within 30 days of such notice to
the Agent. If less than all Banks respond affirmatively to
such request within 30 days, then the Borrower may request
the Banks that do not elect to extend the Termination Date
to assign their Commitments in their entirety, no later than
15 days prior to the Termination Date then in effect, to one
or more Assignees pursuant to Section 9.06(c) which
Assignees will agree to extend the Termination Date. If all
Banks (including such Assignees and excluding their
respective transferor Banks) respond affirmatively, then,
subject to receipt by the Agent of counterparts of an
Extension Agreement in substantially the form of Exhibit I
hereto duly completed and signed by all of the parties
thereto, the Termination Date shall be extended for the
period specified above.
SECTION 2.02. Notice of Committed Borrowings.
The Borrower shall give the Agent notice (a "Notice of
Committed Borrowing") not later than 11:00 A.M. (New York
City time) on (x) the date of each Base Rate Borrowing, (y)
the second Domestic Business Day before each CD Borrowing
and (z) the third Euro-Dollar Business Day before each
Euro-Dollar Borrowing, specifying:
(a)the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic
Borrowing or a Euro-Dollar Business Day in the case of
a Euro-Dollar Borrowing,
(b)the aggregate amount of such Borrowing,
(c)whether the Loans comprising such Borrowing
<PAGE> 129are to be CD Loans, Base Rate Loans or Euro-Dollar
Loans, and
(d)in the case of a Fixed Rate Borrowing, the
duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest
Period.
Notwithstanding the foregoing, no more than 10 Fixed Rate
Borrowings shall be outstanding at any one time, and any
Borrowing which would exceed such limitation shall be made
as a Base Rate Borrowing.
SECTION 2.03.Money Market Borrowings.
(a)The Money Market Option. In addition to
Committed Borrowings pursuant to Section 2.01, the Borrower
may, as set forth in this Section, request the Banks during
the Revolving Credit Period to make offers to make Money
Market Loans to the Borrower. The Banks may, but shall have
no obligation to, make such offers and the Borrower may, but
shall have no obligation to, accept any such offers in the
manner set forth in this Section.
(b)Money Market Quote Request. When the
Borrower wishes to request offers to make Money Market Loans
under this Section, it shall transmit to the Agent by telex
or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit C hereto so as to be
received no later than 10:00 A.M. (New York City time) on
(x) the fifth Euro-Dollar Business Day prior to the date of
Borrowing proposed therein, in the case of a LIBOR Auction
or (y) the Domestic Business Day next preceding the date of
Borrowing proposed therein, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be
effective) specifying:
(i) the proposed date of Borrowing, which shall
be a Euro-Dollar Business Day in the case of a LIBOR
Auction or a Domestic Business Day in the case of an
Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which
shall be $30,000,000 or any larger multiple of
$1,000,000,
(iii) the duration of the Interest Period applicable
<PAGE> 130 thereto, subject to the provisions of the
definition of Interest Period, and
(iv) whether the Money Market Quotes requested are
to set forth a Money Market Margin or a Money Market
Absolute Rate.
The Borrower may request offers to make Money Market Loans
for more than one Interest Period in a single Money Market
Quote Request. No Money Market Quote Request shall be given
within five Euro-Dollar Business Days (or such other number
of days as the Borrower and the Agent may agree) of any
other Money Market Quote Request.
(c)Invitation for Money Market Quotes. Promptly
upon receipt of a Money Market Quote Request, the Agent
shall send to the Banks by telex or facsimile transmission
an Invitation for Money Market Quotes substantially in the
form of Exhibit D hereto, which shall constitute an
invitation by the Borrower to each Bank to submit Money
Market Quotes offering to make the Money Market Loans to
which such Money Market Quote Request relates in accordance
with this Section.
(d)Submission and Contents of Money Market
Quotes. (i) Each Bank may submit a Money Market Quote
containing an offer or offers to make Money Market Loans in
response to any Invitation for Money Market Quotes. Each
Money Market Quote must comply with the requirements of this
subsection (d) and must be submitted to the Agent by telex
or facsimile transmission at its offices specified in or
pursuant to Section 9.01 not later than (x) 2:00 P.M. (New
York City time) on the fourth Euro-Dollar Business Day prior
to the proposed date of Borrowing, in the case of a LIBOR
Auction or (y) 9:00 A.M. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by
the Agent (or any affiliate of the Agent) in the capacity of
a Bank may be submitted, and may only be submitted, if the
Agent or such affiliate notifies the Borrower of the terms
of the offer or offers contained therein not later than (x)
1:00 P.M. (New York City time) on the fourth Euro-Dollar
Business Day prior to the proposed date of Borrowing, in the
case of a LIBOR Auction or (y) 8:45 A.M. (New York City
time) on the proposed date of Borrowing, in the case of an
Absolute Rate Auction. Subject to Articles III and VI, any
<PAGE> 131 Money Market Quote so made shall be irrevocable
except with the written consent of the Agent given on the
instructions of the Borrower.
(ii) Each Money Market Quote shall be in
substantially the form of Exhibit E hereto and shall in any
case specify:
(A)the proposed date of Borrowing,
(B)the principal amount of the Money Market Loan
for which each such offer is being made, which
principal amount (w) may be greater than or less than
the Commitment of the quoting Bank, (x) must be
$1,000,000 or any larger multiple thereof, (y) may not
exceed the principal amount of Money Market Loans for
which offers were requested and (z) may be subject to
an aggregate limitation as to principal amount of Money
Market Loans for which offers being made by such
quoting Bank may be accepted,
(C)in the case of a LIBOR Auction, the margin
above or below the applicable London Interbank Offered
Rate (the "Money Market Margin") offered for each such
Money Market Loan, expressed as a percentage (rounded
to the nearest 1/10,000th of 1%) to be added to or
subtracted from such base rate,
(D)in the case of an Absolute Rate Auction, the
rate of interest per annum (rounded to the nearest
1/10,000th of 1%) (the "Money Market Absolute Rate")
offered for each such Money Market Loan, and
(E)the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate
offers by the quoting Bank with respect to each Interest
Period specified in the related Invitation for Money Market
Quotes.
(iii) Any Money Market Quote shall be disregarded
if it:
(A)is not substantially in conformity with
Exhibit E hereto or does not specify all of the
information required by subsection (d)(ii),
(B)contains qualifying, conditional or similar
language,
(C)proposes terms other than or in addition to
those set forth in the applicable Invitation for Money
<PAGE> 132 Market Quotes, or
(D)arrives after the time set forth in
subsection (d)(i).
(e)Notice to Borrower. The Agent shall promptly
notify the Borrower of the terms (x) of any Money Market
Quote submitted by a Bank that is in accordance with
subsection (d) and (y) of any Money Market Quote that
amends, modifies or is otherwise inconsistent with a
previous Money Market Quote submitted by such Bank with
respect to the same Money Market Quote Request. Any such
subsequent Money Market Quote shall be disregarded by the
Agent unless such subsequent Money Market Quote is submitted
solely to correct a manifest error in such former Money
Market Quote. The Agent's notice to the Borrower shall
specify (A) the aggregate principal amount of Money Market
Loans for which offers have been received for each Interest
Period specified in the related Money Market Quote Request,
(B) the respective principal amounts and Money Market
Margins or Money Market Absolute Rates, as the case may be,
so offered and (C) if applicable, limitations on the
aggregate principal amount of Money Market Loans for which
offers in any single Money Market Quote may be accepted.
(f)Acceptance and Notice by Borrower. Not later
than 10:00 A.M. (New York City time) on (x) the third
Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) the
proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be
effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it
pursuant to subsection (e). In the case of acceptance, such
notice (a "Notice of Money Market Borrowing") shall specify
the aggregate principal amount of offers for each Interest
Period that are accepted. The Borrower may accept any Money
Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount
set forth in the related Money Market Quote Request,
(ii) the aggregate principal amount of each Money
Market Borrowing must be $30,000,000 or any larger
multiple of $1,000,000,
<PAGE> 133 (iii) acceptance of offers may only be made on
the basis of ascending Money Market Margins or Money
Market Absolute Rates, as the case may be, and
(iv) the Borrower may not accept any offer that is
described in subsection (d)(iii) or that otherwise
fails to comply with the requirements of this
Agreement.
(g)Allocation by Agent. If offers are made by
two or more Banks with the same Money Market Margins or
Money Market Absolute Rates, as the case may be, for a
greater aggregate principal amount than the amount in
respect of which such offers are accepted for the related
Interest Period, the principal amount of Money Market Loans
in respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as
possible (in such multiples, not greater than $100,000, as
the Agent may deem appropriate) in proportion to the
aggregate principal amounts of such offers. Determinations
by the Agent of the amounts of Money Market Loans shall be
conclusive in the absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a)Upon receipt of a Notice of Borrowing, the
Agent shall promptly notify each Bank of the contents
thereof and of such Bank's share (if any) of such Borrowing
and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(b)Not later than 1:00 P.M. (New York City time)
on the date of each Borrowing, each Bank participating
therein shall (except as provided in subsection (c) of this
Section) make available its share of such Borrowing, in
Federal or other funds immediately available in New York
City, to the Agent at its address specified in or pursuant
to Section 9.01. Unless the Agent determines that any
applicable condition specified in Article III has not been
satisfied, the Agent will make the funds so received from
the Banks available to the Borrower at the Agent's aforesaid
address.
(c)If any Bank makes a new Loan hereunder on a
day on which the Borrower is to repay all or any part of an
outstanding Loan from such Bank, such Bank shall apply the
proceeds of its new Loan to make such repayment and only an
amount equal to the difference (if any) between the amount
being borrowed and the amount being repaid shall be made
available by such Bank to the Agent as provided in
subsection (b), or remitted by the Borrower to the Agent as
<PAGE 134> provided in Section 2.12, as the case may be.
(d)Unless the Agent shall have been notified by
any Bank prior to the date of Borrowing (or prior to
1:00 P.M. (New York City time) on the date of Borrowing in
the case of a Base Rate Borrowing) that such Bank does not
intend to make available to the Agent such Bank's portion of
the Borrowing to be made on such date, the Agent may assume
that such Bank has made such amount available to the Agent
on such date and the Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding
amount, subject to the provisions of subsection (c). If
such corresponding amount is not in fact made available to
the Agent by such Bank, the Agent shall be entitled to
recover such corresponding amount on demand from such Bank.
If such Bank does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent shall
promptly notify the Borrower and the Borrower shall promptly
pay such corresponding amount to the Agent. The Agent shall
also be entitled to recover from such Bank or the Borrower
interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available
by the Agent to the Borrower to the date such corresponding
amount is recovered by the Agent, at a rate per annum equal
to (x) in the case of a Bank, the Federal Funds Rate for
each such day and (y) in the case of the Borrower, the then
applicable rate for Base Rate Loans, CD Loans, Euro-Dollar
Loans or Money Market Loans, as appropriate. Nothing herein
shall be deemed to relieve any Bank from its obligation to
fulfill its Commitment hereunder or to prejudice any rights
which the Borrower may have against any Bank as a result of
any default by such Bank hereunder. For purposes of this
subsection (d), no amount paid to the Agent hereunder shall
be considered to have been recovered by the Agent on the
date of payment unless such amount shall have been received
by the Agent by 2:30 P.M. (New York City time) on such date.
SECTION 2.05.Notes. (a) The Loans of each Bank
shall be evidenced by a single Note payable to the order of
such Bank for the account of its Applicable Lending Office
in an amount equal to the aggregate unpaid principal amount
of such Bank's Loans.
(b)Each Bank may, by notice to the Borrower and
the Agent, request that its Loans of a particular type be
evidenced by a separate Note in an amount equal to the
aggregate unpaid principal amount of such Loans. Each such
Note shall be in substantially the form of Exhibit A hereto
with appropriate modifications to reflect the fact that it
evidences solely Loans of the relevant type. Each reference
in this Agreement to the "Note" of such Bank shall be deemed
<PAGE> 135 to refer to and include any or all of such Notes,
as the context may require.
(c)Upon receipt of each Bank's Note pursuant to
Section 3.01(b), the Agent shall forward such Note to such
Bank. Each Bank shall record the date, amount, type and
maturity of each Loan made by it and the date and amount of
each payment of principal made by the Borrower with respect
thereto, and may, if such Bank so elects in connection with
any transfer or enforcement of its Note, endorse on the
schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such
Loan then outstanding; provided that the failure of any Bank
to make any such recordation or endorsement shall not affect
the obligations of the Borrower hereunder or under the
Notes. Each Bank is hereby irrevocably authorized by the
Borrower so to endorse its Note and to attach to and make a
part of its Note a continuation of any such schedule as and
when required.
SECTION 2.06.Maturity of Loans. Each Loan
included in any Borrowing shall mature, and the principal
amount thereof shall be due and payable, on the last day of
the Interest Period applicable to such Borrowing.
SECTION 2.07.Interest Rates. (a) Each Base
Rate Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made
until it becomes due, at a rate per annum equal to the Base
Rate for such day. Such interest shall be payable for each
Interest Period on the last day thereof. Any overdue
principal of or interest on any Base Rate Loan shall bear
interest, payable on demand, for each day until paid at a
rate per annum equal to the sum of 2% plus the rate
otherwise applicable to Base Rate Loans for such day.
(b)Each CD Loan shall bear interest on the
outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the
sum of the CD Margin plus the applicable Adjusted CD Rate;
provided that if any CD Loan shall, as a result of clause
(2)(b) of the definition of Interest Period, have an
Interest Period of less than 30 days, such Loan shall bear
interest during such Interest Period at the rate applicable
to Base Rate Loans during such period. Such interest shall
be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than 90 days, 90 days
after the first day thereof. Any overdue principal of or
interest on any CD Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to
the sum of 2% plus the higher of (i) the sum of the CD
Margin plus the Adjusted CD Rate applicable to such Loan and
<PAGE> 136 (ii) the rate applicable to Base Rate Loans for
such day.
The "Adjusted CD Rate" applicable to any Interest
Period means a rate per annum determined pursuant to the
following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upwards, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest
Period is the rate of interest determined by the Agent to be
the average (rounded upward, if necessary, to the next
higher 1/100 of 1%) of the prevailing rates per annum bid at
10:00 A.M. (New York City time) (or as soon thereafter as
practicable) on the first day of such Interest Period by two
or more New York certificate of deposit dealers of
recognized standing for the purchase at face value from each
CD Reference Bank of its certificates of deposit in an
amount comparable to the unpaid principal amount of the CD
Loan of such CD Reference Bank to which such Interest Period
applies and having a maturity comparable to such Interest
Period.
"Domestic Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves)
for a member bank of the Federal Reserve System in New York
City with deposits exceeding five billion dollars in respect
of new non-personal time deposits in dollars in New York
City having a maturity comparable to the related Interest
Period and in an amount of $100,000 or more. The Adjusted
CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve
Percentage.
"Assessment Rate" means for any day the annual
assessment rate in effect on such day which is payable by a
<PAGE> 137 member of the Bank Insurance Fund classified as
adequately capitalized and within supervisory subgroup "A"
(or a comparable successor assessment risk classification)
within the meaning of 12 C.F.R. Section 327.3(e) (or any
successor provision) to the Federal Deposit Insurance
Corporation (or any successor) for such Corporation's (or
such successor's) insuring time deposits at offices of such
institution in the United States. The Adjusted CD Rate
shall be adjusted automatically on and as of the effective
date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on
the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the
sum of the Euro-Dollar Margin plus the applicable Adjusted
London Interbank Offered Rate. Such interest shall be
payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than three months,
three months after the first day thereof.
The "Adjusted London Interbank Offered Rate"
applicable to any Interest Period means a rate per annum
equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i)
the applicable London Interbank Offered Rate by (ii) 1.00
minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to
any Interest Period means the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective
rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London
interbank market at approximately 11:00 A.M. (London time)
two Euro-Dollar Business Days before the first day of such
Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar
Reference Bank to which such Interest Period is to apply and
for a period of time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement for a member bank of the
Federal Reserve System in New York City with deposits
exceeding five billion dollars in respect of "Eurocurrency
liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which
the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which
includes loans by a non-United States office of any Bank to
<PAGE> 138 United States residents). The Adjusted London
Interbank Offered Rate shall be adjusted automatically on
and as of the effective date of any change in the
Euro-Dollar Reserve Percentage.
(d)Any overdue principal of or interest on any
Euro-Dollar Loan shall bear interest, payable on demand, for
each day from and including the date payment thereof was due
to but excluding the date of actual payment, at a rate per
annum equal to the sum of 2% plus the higher of (i) the sum
of the Euro-Dollar Margin plus the Adjusted London Interbank
Offered Rate applicable to such Loan and (ii) the
Euro-Dollar Margin plus the quotient obtained (rounded
upwards, if necessary, to the next higher 1/100 of 1%) by
dividing (x) the average (rounded upward, if necessary, to
the next higher 1/16 of 1%) of the respective rates per
annum at which one day (or, if such amount due remains
unpaid more than three Euro-Dollar Business Days, then for
such other period of time not longer than six months as the
Agent may select) deposits in dollars in an amount
approximately equal to such overdue payment due to each of
the Euro-Dollar Reference Banks are offered to such
Euro-Dollar Reference Bank in the London interbank market
for the applicable period determined as provided above by
(y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if
the circumstances described in clause (a) or (b) of Section
8.01 shall exist, at a rate per annum equal to the sum of 2%
plus the rate applicable to Base Rate Loans for such day).
(e)Subject to Section 8.01(a), each Money Market
LIBOR Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto,
at a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in
accordance with Section 2.07(c) as if each Euro-Dollar
Reference Bank were to participate in the related Money
Market LIBOR Borrowing ratably in proportion to its
Commitment) plus (or minus) the Money Market Margin quoted
by the Bank making such Loan in accordance with Section
2.03. Each Money Market Absolute Rate Loan shall bear
interest on the outstanding principal amount thereof, for
the Interest Period applicable thereto, at a rate per annum
equal to the Money Market Absolute Rate quoted by the Bank
making such Loan in accordance with Section 2.03. Such
interest shall be payable for each Interest Period on the
last day thereof and, if such Interest Period is longer than
three months, at intervals of three months after the first
day thereof. Any overdue principal of or interest on any
Money Market Loan shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to the sum
of 2% plus the Prime Rate for such day.
<PAGE> 139 (f) The Agent shall determine each interest
rate applicable to the Loans hereunder. The Agent shall
give prompt notice to the Borrower and the participating
Banks by telex or cable of each rate of interest so
determined, and its determination thereof shall be
conclusive in the absence of manifest error.
(g)Each Reference Bank agrees to use its best
efforts to furnish quotations to the Agent as contemplated
by this Section. If any Reference Bank does not furnish a
timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations
furnished by the remaining Reference Bank or Banks or, if
none of such quotations is available on a timely basis, the
provisions of Section 8.01 shall apply.
SECTION 2.08. Fees.
(a)Commitment Fee. During the Revolving Credit
Period, the Borrower shall pay to the Agent for the account
of the Banks ratably in proportion to their Commitments a
commitment fee at the Commitment Fee Rate (determined daily
in accordance with the Pricing Schedule), for each day
during a calendar month (or, in the case of the calendar
months in which the Revolving Credit Period begins and ends,
the portion thereof) on the daily average amount by which
the aggregate amount of the Commitments in existence on each
day during such calendar month (or portion thereof as
contemplated above) exceeds the aggregate amount of the
Loans outstanding on such day. Such commitment fee shall
accrue from and including the Effective Date to but
excluding the Termination Date (or such earlier date as the
Commitments shall be terminated in their entirety).
(b)Facility Fee. The Borrower shall pay to the
Agent for the account of the Banks ratably in proportion to
their Commitments a facility fee at the Facility Fee Rate
(determined daily in accordance with the Pricing Schedule).
Such facility fee shall accrue from and including the
Effective Date to but excluding the Termination Date (or
such earlier date as the Commitments shall be terminated) on
the aggregate amount of the Commitments in existence on each
such day (whether used or unused).
(c)Agents' Fees. The Borrower shall pay to the
Agent and the Co-Syndication Agents, each for its own
account one or more fees in such amounts and at such times
as has been previously agreed between the Borrower and each
of them.
(d)Payments. Accrued fees under subsections (a)
<PAGE> 140 and (b) of this Section 2.08 shall be payable
quarterly in arrears on each January 1, April 1, July 1 and
October 1, commencing on the first such date after the
Effective Date, and upon the date of termination of the
Commitments in their entirety.
SECTION 2.09. Optional Termination or Reduction
of Commitments. During the Revolving Credit Period, the
Borrower may, upon at least three Domestic Business Days'
notice to the Agent (which notice the Agent will promptly
deliver to the Banks), (i) terminate the Commitments at any
time, if no Loans are outstanding at such time or
(ii) ratably reduce from time to time by an aggregate amount
of $25,000,000 or any larger multiple of $1,000,000, the
aggregate amount of the Commitments in excess of the
aggregate outstanding principal amount of the Loans.
SECTION 2.10. Mandatory Termination of
Commitments. The Commitments shall terminate on the
Termination Date and any Loans then outstanding (together
with accrued interest thereon) shall be due and payable on
such date.
SECTION 2.11.Optional Prepayments. (a) The
Borrower may, upon at least one Domestic Business Day's
notice to the Agent, prepay any Base Rate Borrowing (or any
Money Market Borrowing bearing interest at the Base Rate
pursuant to Section 8.01(a)) in whole at any time, or from
time to time in part in amounts aggregating $30,000,000 or
any larger multiple of $1,000,000, by paying the principal
amount to be prepaid together with accrued interest thereon
to the date of prepayment. Each such optional prepayment
shall be applied to prepay ratably the Loans of the several
Banks included in such Borrowing.
(b)Except as provided in Section 8.02, the
Borrower may not prepay all or any portion of the principal
amount of any Fixed Rate Loan prior to the maturity thereof.
(c)Upon receipt of a notice of prepayment
pursuant to this Section, the Agent shall promptly notify
each Bank of the contents thereof and of such Bank's ratable
share (if any) of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.12.General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of,
and interest on, the Loans and of fees hereunder, not later
than 1:00 P.M. (New York City time) on the date when due, in
Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section
<PAGE> 141 9.01. The Agent will promptly distribute to each
Bank its ratable share of each such payment received by the
Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Domestic Loans or of fees
shall be due on a day which is not a Domestic Business Day,
the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of
principal of, or interest on, the Euro-Dollar Loans shall be
due on a day which is not a Euro-Dollar Business Day, the
date for payment thereof shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case
the date for payment thereof shall be the next preceding
Euro-Dollar Business Day. Whenever any payment of principal
of, or interest on, the Money Market Loans shall be due on a
day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day. If the date for any payment of
principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b)Unless the Agent shall have received notice
from the Borrower prior to the date on which any payment is
due to the Banks hereunder that the Borrower will not make
such payment in full, the Agent may assume that the Borrower
has made such payment in full to the Agent on such date and
the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to
the amount then due such Bank. If and to the extent that
the Borrower shall not have so made such payment, each Bank
shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for
each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.13.Funding Losses. If the Borrower
makes any payment of principal with respect to any Fixed
Rate Loan (pursuant to Article VI or VIII or otherwise) on
any day other than the last day of the Interest Period
applicable thereto, or the end of an applicable period fixed
pursuant to Section 2.07(d), or if the Borrower fails to
borrow any Fixed Rate Loans after notice has been given to
any Bank in accordance with Section 2.04(a), the Borrower
shall reimburse each Bank within 15 days after demand for
any resulting loss or expense incurred by it (or by an
existing or prospective Participant in the related Loan),
including (without limitation) any loss incurred in
obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after
any such payment or failure to borrow, provided that such
<PAGE> 142 Bank shall have delivered to the Borrower a
certificate as to the amount of such loss or expense, which
certificate shall be conclusive in the absence of manifest
error.
SECTION 2.14.Computation of Interest and Fees.
Interest based on the Prime Rate and fees hereunder shall be
computed on the basis of a year of 365 days (or 366 days in
a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All
other interest shall be computed on the basis of a year of
360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day).
SECTION 2.15.Withholding Tax Exemption. At
least five Domestic Business Days prior to the first date on
which interest or fees are payable hereunder for the account
of any Bank, each Bank that is not incorporated under the
laws of the United States of America or a state thereof
agrees that it will deliver to each of the Borrower and the
Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, certifying in either case
that such Bank is entitled to receive payments under this
Agreement and its Note without deduction or withholding of
any United States federal income taxes. Each Bank which so
delivers a Form 1001 or 4224 further undertakes to deliver
to each of the Borrower and the Agent two additional copies
of such form (or a successor form) on or before the date
that such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most
recent form so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, in each case
certifying that such Bank is entitled to receive payments
under this Agreement and its Note without deduction or
withholding of any United States federal income taxes,
unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on
which any such delivery would otherwise be required which
renders all such forms inapplicable or which would prevent
such Bank from duly completing and delivering any such form
with respect to it and such Bank advises the Borrower and
the Agent that it is not capable of receiving payments
without any deduction or withholding of United States
federal income tax.
SECTION 2.16.Increase of Commitments. Upon at
least 45 days' prior notice to the Agent (which notice the
Agent shall promptly transmit to each of the Banks), the
Borrower shall have the right, subject to the terms and
conditions set forth below and with the consent of the Banks
as set forth below, to increase the aggregate amount of the
<PAGE> 143 Commitments in multiples of $5,000,000. Any such
increase shall apply, at the option of the Borrower, (x) to
the Commitment of one or more Banks, provided that (i) the
Required Banks (including each Bank whose Commitment is to
be increased) shall consent to such increase, (ii) the
amount set forth on the signature pages hereof opposite the
name of each Bank the Commitment of which is being so
increased shall be amended to reflect the increased
Commitment of such Bank and (iii) if any Committed Loans are
outstanding at the time of such an increase, the Borrower
will, notwithstanding anything to the contrary contained in
this Agreement, on the date of such increase incur and repay
or prepay one or more Committed Loans from the Banks in such
amounts so that after giving effect thereto, the Committed
Loans shall be outstanding on a pro rata basis (based on the
Commitments of the Banks after giving effect to the changes
made pursuant hereto on such date) from all the Banks or (y)
to the creation of a new Commitment of an institution not
then a Bank hereunder, provided that (i) such institution
becomes a party to this Agreement as a Bank by execution and
delivery to the Borrower and the Agent of counterparts of
this Agreement, (ii) the Required Banks shall consent to the
creation of such Commitment of such Bank, (iii) the
signature pages hereof shall be amended to reflect the
Commitment of such new Bank, (iv) the Borrower shall issue a
Note to such new Bank in conformity with the provisions of
Section 2.05, (v) if any Committed Loans are outstanding at
the time of the creation of such Commitment of such Bank,
the Borrower will, notwithstanding anything to the contrary
contained in this Agreement, on the date of the creation of
such Commitment incur and repay or prepay one or more
Committed Loans from the Banks in such amounts so that after
giving effect thereto, the Committed Loans shall be
outstanding on a pro rata basis (based on the Commitments of
the Banks after giving effect to the changes made pursuant
hereto on such date) from all the Banks and (vi) if such
institution is neither a banking institution nor an
affiliate of a Bank, such institution must be consented to
by the Agent; provided further that any such increase or
creation may apply, at the option of the Borrower, as set
forth in clause (x) or (y) above but without the consent of
the Required Banks so long as the amount of such increase or
the amount of such new Commitment so created, as the case
may be, when added to the aggregate amount of all such prior
increases in the Commitments and all such prior creations of
new Commitments does not exceed $300,000,000. It is
understood that any increase in the amount of the
Commitments pursuant to this Section 2.16 shall not
constitute an amendment of this Agreement or the Notes.
<PAGE> 144
ARTICLE III
CONDITIONS
SECTION 3.01.Closing. The Closing hereunder
shall occur upon receipt by the Agent of the following
documents, each dated the Closing Date unless otherwise
indicated:
(a)receipt by the Agent of counterparts hereof
signed by each of the parties hereto (or, in the case
of any party as to which an executed counterpart shall
not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other
written confirmation from such party of execution of a
counterpart hereof by such party);
(b)receipt by the Agent for the account of each
Bank of a duly executed Note dated on or before the
Closing Date complying with the provisions of Section
2.05;
(c)receipt by the Agent of an opinion of John
Jay List, Esq., General Counsel of the Borrower,
substantially in the form of Exhibit F hereto and
covering such additional matters relating to the
transactions contemplated hereby as the Required Banks
may reasonably request, such opinion to be in form and
substance satisfactory to the Agent;
(d)receipt by the Agent of an opinion of
Milbank, Tweed, Hadley & McCloy, special counsel for
the Borrower, substantially in the form of Exhibit G
hereto and covering such additional matters relating to
the transactions contemplated hereby as the Required
Banks may reasonably request, such opinion to be in
form and substance satisfactory to the Agent;
(e)receipt by the Agent of an opinion of Davis
Polk & Wardwell, special counsel for the Agent,
substantially in the form of Exhibit H hereto and
covering such additional matters relating to the
transactions contemplated hereby as the Required Banks
may reasonably request, such opinion to be in form and
substance satisfactory to the Agent;
(f)receipt by the Agent of a certificate signed
by the Chief Financial Officer or the Governor and an
Assistant Secretary-Treasurer or the Controller of the
Borrower to the effect set forth in clauses (c) through
<PAGE> 145 (g), inclusive, of Section 3.02 and, in the
case of clauses (c), (e) and (g), setting forth in
reasonable detail the calculations required to
establish such compliance;
(g)receipt by the Agent of all documents the
Required Banks may reasonably request relating to the
existence of the Borrower, the corporate authority for
and the validity of this Agreement and the Notes, and
any other matters relevant hereto, all in form and
substance satisfactory to the Agent; and
(h)evidence satisfactory to the Required Banks
that the Commitments, as defined in each of the Prior
Credit Agreements, have been terminated (except that
Sections 2.13, 7.05, 7.06, 8.03 and 9.03 (and Section
2.12 and Article IX insofar as such Section or Article
relates to such Sections 2.13, 7.05, 7.06, 8.03 and
9.03, as applicable)) of each of the Prior Credit
Agreements shall survive the termination of such
Commitments and shall remain in full force and effect)
and all amounts owed under each of the Prior Credit
Agreements have been paid in full.
The Agent shall promptly notify the Borrower and the Banks
of the Closing Date, and such notice shall be conclusive and
binding on all parties hereto.
SECTION 3.02.Borrowings. The obligation of any
Bank to make a Loan on the occasion of any Borrowing is
subject to the satisfaction of the following conditions:
(a)the fact that the Closing Date shall have
occurred prior to March 1, 1995.
(b)receipt by the Agent of a Notice of Borrowing
as required by Section 2.02 or 2.03, as the case may
be;
(c)the fact that, immediately after such
Borrowing, the Borrower is in compliance with Section
7.12(a) of the 1972 Indenture and Section 7.11 of the
1994 Indenture, as each Indenture is in effect as of
the date hereof;
(d)the fact that, immediately after such
Borrowing, the aggregate outstanding principal amount
of the Loans will not exceed the aggregate amount of
the Commitments;
(e)the fact that, immediately after such
<PAGE> 146 Borrowing, if such Borrowing is not a
Refunding Borrowing, no Default shall have occurred and
be continuing or, if such Borrowing is a Refunding
Borrowing, no Event of Default shall have occurred and
be continuing;
(f)the fact that the representations and
warranties of the Borrower contained in this Agreement
(except, in the case of a Refunding Borrowing, the
representations and warranties set forth in Section
4.03, the second sentence of Section 4.06, and the
first sentence of Section 4.07) shall be true on and as
of the date of such Borrowing (it being understood and
agreed that the representation and warranty set forth
in Section 4.13 shall be true and correct as to all
information furnished prior to the making of the
respective Loan); and
(g)the fact that, at the time of such Borrowing,
(i) there shall be no collateral securing Bonds issued
pursuant to either Indenture of a type other than the
types of collateral permitted to secure Bonds issued
pursuant to such Indenture as of the date hereof and
(ii) the Allowable Amount of Eligible Collateral then
pledged under either Indenture shall not exceed 150% of
the aggregate principal amount of Bonds then
Outstanding under such Indenture and no collateral
shall secure Bonds other than the Eligible Collateral
under such Indenture, the Allowable Amount of which is
included within the prior computation or collateral
previously so pledged which ceases to be such Eligible
Collateral not as a result of any acts or omissions to
act of the Borrower (other than the declaration of an
"event of default" as defined in a Mortgage which
results in the exercise of any right or remedy
described in such Mortgage); each defined term used in
this clause (g) shall have the meaning assigned thereto
in the applicable Indenture.
Each Borrowing hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of
such Borrowing as to the facts specified in clauses (c),
(d), (e), (f) and (g) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower makes the following representations,
warranties and agreements, which shall survive the execution
<PAGE> 147 and delivery of this Agreement and the Notes and
the making of the Loans:
SECTION 4.01.Corporate Existence, Power and
Authority. The Borrower is a cooperative association duly
incorporated, validly existing and in good standing under
the laws of the District of Columbia and has the corporate
power and authority and all material governmental licenses,
authorizations, consents and approvals required to own its
property and assets and to transact the business in which it
is engaged. The Borrower is duly qualified or licensed as a
foreign corporation in good standing in every jurisdiction
in which the nature of the business in which it is engaged
makes such qualification or licensing necessary, except in
those jurisdictions in which the failure to be so qualified
or licensed would not (after qualification, assuming that
the Borrower could so qualify without the payment of any fee
or penalty and retain the rights as they existed prior to
such qualification all to an extent so that any fees or
penalties required to be so paid or any rights not so
retained would not, individually or in the aggregate, have a
material adverse effect on the business or financial
condition of the Borrower), individually or in the
aggregate, have a material adverse effect upon the business
or financial condition of the Borrower. The Borrower has
the corporate power and authority to execute, deliver and
carry out the terms and provisions of this Agreement and the
Notes. This Agreement has been, and the Notes when executed
and delivered will have been, duly and validly authorized,
executed and delivered by the Borrower, and this Agreement
constitutes a legal, valid and binding agreement of the
Borrower, and the Notes, when executed and delivered by the
Borrower in accordance with this Agreement, will constitute
legal, valid and binding obligations of the Borrower, in
each case enforceable in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by
general principles of equity.
SECTION 4.02.Financial Statements. (a) The
combined balance sheets of the Borrower and its Consolidated
Subsidiaries as at May 31, 1994 and the related combined
statements of income, expenses and net margins, changes in
Members' equity and cash flows for the fiscal year ended May
31, 1994, including the related notes, accompanied by the
opinion and report thereon of Arthur Andersen & Co.,
certified public accountants, heretofore delivered to the
Banks, present fairly in accordance with generally accepted
accounting principles (i) the combined financial position of
the Borrower and its Consolidated Subsidiaries as at the
date of said balance sheets and (ii) the combined results of
<PAGE> 148 the operations of the Borrower and its
Consolidated Subsidiaries for said fiscal year. The
Borrower has no material liabilities (contingent or
otherwise) which are not disclosed by or reserved against in
the most recent audited financial statements or in the notes
thereto other than (i) Indebtedness incurred and (ii) loan
and guarantee commitments issued in each case by the
Borrower in the ordinary course of business since the date
of such financial statements. All such financial statements
have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with
prior periods, except as disclosed therein. The same
representations as are set forth in this Section 4.02 shall
be deemed to have been made by the Borrower in respect of
the most recent annual and quarterly financial statements of
the Borrower and its Consolidated Subsidiaries (except that
the opinion and report of Arthur Andersen & Co. may be
replaced by an opinion and report of another nationally
recognized firm of independent certified public accountants)
furnished or required to be furnished to the Banks prior to
or at the time of the making of each Loan hereunder, at the
time the same are furnished or required to be furnished.
(b)The unaudited combined balance sheets of the
Borrower and its Consolidated Subsidiaries as of November
30, 1994 and the related unaudited combined statements of
income, expenses and net margins, changes in Members' equity
and cash flows for the six months then ended, heretofore
delivered to the Banks, present fairly in conformity with
generally accepted accounting principles applied on a basis
consistent with the financial statements referred to in
subsection (a) of this Section 4.02, the combined financial
position of the Borrower and its Consolidated Subsidiaries
as of such date and their combined results of operations and
changes in financial position for such six-month period
(subject to normal year-end adjustments). The Borrower has
no material liabilities (contingent or otherwise) which are
not disclosed by or reserved against in such financial
statements for such six-month period other than Indebtedness
incurred and loan and guarantee commitments issued by the
Borrower in the ordinary course of business since the date
of such financial statements.
SECTION 4.03.Litigation. There are no actions,
suits, proceedings or investigations pending or, to the
Borrower's knowledge, threatened by or before any court or
any governmental authority, body or agency or any
arbitration board which are reasonably likely to materially
adversely affect the business, property, assets, financial
position or results of operations of the Borrower or the
authority or ability of the Borrower to perform its
<PAGE> 149 obligations under this Agreement or the Notes.
SECTION 4.04.Governmental Authorizations. No
authorization, consent, approval or license of, or
declaration, filing or registration with or exemption by,
any governmental authority, body or agency is required in
connection with the execution, delivery or performance by
the Borrower of this Agreement or the Notes.
SECTION 4.05.Capital Term Certificates. The
holders of the Borrower's Capital Term Certificates are not
and will not be entitled to receive any payments with
respect to the principal thereof or interest thereon solely
because of withdrawing or being expelled from membership in
the Borrower.
SECTION 4.06.No Violation of Agreements.
Neither the Borrower nor any Subsidiary is in default in any
material respect under any material agreement or other
instrument to which it is a party or by which it is bound or
its property or assets may be affected. No event or
condition exists which constitutes, or with the giving of
notice or lapse of time or both would constitute, such a
default under any such agreement or other instrument.
Neither the execution and delivery of this Agreement or the
Notes, nor the consummation of any of the transactions
herein or therein contemplated, nor compliance with the
terms and provisions hereof or thereof, will contravene any
provision of law, statute, rule or regulation to which the
Borrower is subject or any judgment, decree, award,
franchise, order or permit applicable to the Borrower, or
will conflict or be inconsistent with, or will result in any
breach of, any of the terms, covenants, conditions or
provisions of, or constitute (or with the giving of notice
or lapse of time, or both, would constitute) a default under
(or condition or event entitling any Person to require,
whether by purchase, redemption, acceleration or otherwise,
the Borrower to perform any obligations prior to the
scheduled maturity thereof), or result in the creation or
imposition of any Lien upon any of the property or assets of
the Borrower pursuant to the terms of, any indenture,
mortgage, deed of trust, agreement or other instrument to
which it may be subject, or violate any provision of the
certificate of incorporation or by-laws of the Borrower.
Without limiting the generality of the foregoing, the
Borrower is not a party to, or otherwise subject to any
provision contained in, any instrument evidencing
Indebtedness of the Borrower, any agreement or indenture
relating thereto or any other contract or agreement
(including its certificate of incorporation and by-laws),
which would be violated by the incurring of the Indebtedness
to be evidenced by the Notes.
<PAGE> 150 SECTION 4.07. No Event of Default under the
Indentures. The Borrower has complied fully with all of the
material provisions of each Indenture. No Event of Default
(within the meaning of such term as defined in each
Indenture) and no event, act or condition (except for
possible non-compliance by the Borrower with any immaterial
provision of such Indenture which in itself is not such an
Event of Default under such Indenture) which with notice or
lapse of time, or both, would constitute such an Event of
Default has occurred and is continuing under such Indenture.
The Borrowings by the Borrower contemplated by this
Agreement will not cause such an Event of Default under, or
the violation of any covenant contained in, either
Indenture.
SECTION 4.08.Compliance with ERISA. The Plans
are in substantial compliance with ERISA, no Plan is
insolvent or in reorganization, no Plan has an accumulated
or waived funding deficiency within the meaning of Section
412 of the Internal Revenue Code, neither the Borrower nor a
Subsidiary of the Borrower nor any member of the ERISA Group
has incurred any material liability (including any material
contingent liability) to or on account of a Plan pursuant to
Section 4062, 4063, 4064, 4201 or 4204 of ERISA, no
proceedings have been instituted to terminate any Plan, and
no condition exists which presents a material risk to the
Borrower or a Subsidiary of the Borrower of incurring a
liability to or on account of a Plan pursuant to any of the
foregoing Sections of ERISA.
SECTION 4.09.Compliance with Other Laws. The
Borrower and each Subsidiary is in compliance, in all
material respects, with all applicable requirements of law
and all applicable rules and regulations of each Federal,
State, municipal or other governmental department, agency or
authority, domestic or foreign.
SECTION 4.10.Tax Status. The Borrower is exempt
from payment of Federal income tax under Section 501(c)(4)
of the Internal Revenue Code.
SECTION 4.11.Investment Company Act. The
Borrower is not an "investment company" or a company
"controlled" by an "investment company", within the meaning
of the Investment Company Act of 1940, as amended.
SECTION 4.12.Public Utility Holding Company Act.
The Borrower is not a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding
company", as such terms are defined in the Public Utility
<PAGE> 151 Holding Company Act of 1935, as amended.
SECTION 4.13.Disclosure. To the best of the
Borrower's knowledge, information and belief, neither this
Agreement nor any document, certificate or financial
statement furnished to any Bank by or on behalf of the
Borrower in connection herewith (all such documents,
certificates and financial statements, taken as a whole)
contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the
statements contained herein and therein not misleading.
There is no fact (other than facts of a general economic or
political nature) known to the Borrower which in its
judgment materially adversely affects or in the future is
likely to (so far as is now known to the Borrower) have a
material adverse effect upon the business, operations,
prospects, property, assets or financial condition of the
Borrower which has not been set forth in this Agreement or
in other documents, certificates or financial statements
furnished to the Banks by or on behalf of the Borrower in
connection with the transactions contemplated hereby.
SECTION 4.14.Subsidiaries. Each of the
Borrower's corporate Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on
its business as now conducted.
SECTION 4.15.Environmental Matters. In the
ordinary course of its business, the Borrower conducts
reviews, to the extent appropriate given the nature of its
business operations, of the effect of Environmental Laws on
the business, operations and properties of the Borrower and
its Subsidiaries, in the course of which it identifies and
evaluates associated liabilities and costs (including,
without limitation, any capital or operating expenditures
required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures
required to achieve or maintain compliance with
environmental protection standards imposed by law or as a
condition of any license, permit or contract, any related
constraints on operating activities, including any periodic
or permanent shutdown of any facility or reduction in the
level of or change in the nature of operations conducted
thereat, any costs or liabilities in connection with
off-site disposal of wastes or Hazardous Substances, and any
actual or potential liabilities to third parties, including
employees, and any related costs and expenses). On the
basis of this review, the Borrower has reasonably concluded
<PAGE> 152 that such associated liabilities and costs,
including the cost of compliance with Environmental Laws,
are unlikely to have a material adverse effect on the
business, financial condition, results of operations or
prospects of the Borrower and its Consolidated Subsidiaries,
considered as a whole.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has
any Commitment hereunder or any amount payable under any
Note or any fee payable pursuant to Section 2.08 or any
other amount then due and payable hereunder remains unpaid:
SECTION 5.01.Corporate Existence. The Borrower,
at its own cost and expense, will, and will cause each
Subsidiary to, do or cause to be done all things necessary
to preserve and keep in full force and effect its corporate
existence, material rights and franchises; provided,
however, that neither the Borrower nor any Subsidiary shall
be required to preserve any right or franchise or, in the
case of a Subsidiary, its corporate existence, if its Board
of Directors shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the
Borrower or such Subsidiary (provided that the termination
of the corporate existence of a Subsidiary shall be
permitted if the Board of Directors of the Borrower shall
determine that its existence is not desirable in the conduct
of the business of the Borrower) and that the loss thereof
is not disadvantageous in any material respect to the Banks.
SECTION 5.02.Disposition of Assets; Merger;
Character of Business; etc. The Borrower will not wind up
or liquidate its business or sell, lease, transfer or
otherwise dispose of all or substantially all of its assets
as an entirety or in a series of related transactions and
will not consolidate with or merge with or into any other
Person other than a merger with a Subsidiary in which the
Borrower is the surviving Person. The Borrower will not
engage in any business other than the business contemplated
by its certificate of incorporation and by-laws, each as in
effect on the Effective Date.
SECTION 5.03.Financial Information. The
Borrower will, and will cause each Subsidiary to, keep its
books of account in accordance with generally accepted
accounting principles and the Borrower will furnish to the
Banks (i) as soon as available and in any event within 60
<PAGE> 153 days after the close of each of the first three
quarters of each fiscal year of the Borrower, as at the end
of, and for the period commencing at the end of the previous
fiscal year and ending with, such quarter, unaudited
combined balance sheets of the Borrower and its Consolidated
Subsidiaries and the related unaudited combined statements
of income, expenses and net margins, changes in Members'
equity and cash flow of the Borrower and its Consolidated
Subsidiaries for such quarter and for the portion of the
Borrower's fiscal year ended at the end of such quarter,
setting forth in each case in comparative form the figures
for the corresponding quarter and the corresponding portion
of the Borrower's previous fiscal year, all in reasonable
detail and certified (subject to normal year-end
adjustments) as to fairness of presentation in accordance
with generally accepted accounting principles and
consistency (except for changes concurred in by the
Borrower's independent certified public accountants) by the
Chief Financial Officer, the Governor, an Assistant
Secretary-Treasurer or the Controller of the Borrower; (ii)
as soon as practicable and in any event within 90 days after
the close of each fiscal year of the Borrower, as at the end
of and for the fiscal year just closed, combined balance
sheets of the Borrower and its Consolidated Subsidiaries and
the related combined statements of income, expenses and net
margins, changes in Members' equity and cash flow for such
fiscal year for the Borrower and its Consolidated
Subsidiaries, all in reasonable detail and fully certified
(without any qualification as to the scope of the audit) by
Arthur Andersen & Co. or other independent certified public
accountants of nationally recognized standing selected by
the Borrower, who shall have audited the books and accounts
of the Borrower for such fiscal year; (iii) together with
the financial statements referred to in clauses (i) and (ii)
above, a certificate signed by the Governor, the Chief
Financial Officer, an Assistant Secretary-Treasurer or the
Controller of the Borrower, in such detail as shall be
reasonably satisfactory to the Required Banks, (x)
identifying (A) all Indebtedness outstanding as at the end
of the fiscal period covered by such financial statements
extended by the Borrower or by any other Person and
Guaranteed by the Borrower to any of the forty Members with
the largest amount of Indebtedness to (or Guaranteed by) the
Borrower outstanding as at the end of the fiscal period
covered by such financial statements (the "Largest Members")
as to which, to the knowledge and information of the
Borrower, the Member is in default (whether in the payment
of the principal thereof or interest thereon or with respect
to any material covenant or agreement contained in any
instrument, mortgage or agreement evidencing or relating to
such Indebtedness) and specifying whether such default has
<PAGE> 154 been waived by the Borrower or such other Person
and the nature and status of each such default not so waived
and (B) the aggregate amount of all Indebtedness outstanding
as of the end of the fiscal period covered by such financial
statements as to which, to the knowledge and information of
the Borrower, Members other than the Largest Members are in
default (whether in the payment of the principal thereof or
interest thereon or with respect to any material covenant or
agreement contained in any instrument, mortgage or agreement
evidencing or relating to such Indebtedness), (y)
identifying the ten Members with the largest amount of
Indebtedness to (or Guaranteed by) the Borrower outstanding
as of the end of the fiscal period covered by such financial
statements, together with the principal amount of such
Indebtedness outstanding with respect to each such Member as
of the end of such fiscal period and (z) identifying all
loans which are RUS Guaranteed Loans and are outstanding as
of the end of the fiscal period covered by such financial
statements, together with (a) the principal amount of each
such RUS Guaranteed Loan as of the end of such fiscal
period, (b) the total amount of Indebtedness incurred by the
Borrower and Subsidiaries of the Borrower in order to fund
such RUS Guaranteed Loan, (c) the total interest expense
incurred during such fiscal period by the Borrower and
Subsidiaries of the Borrower in connection with the
Indebtedness referred to in preceding clause (b) and (d) the
amount of the Guaranteed Portion of such RUS Guaranteed
Loan; (iv) with reasonable promptness, copies of all regular
and periodical financial statements or other financial
reports and documents which the Borrower may make available
to its Members or bondholders or file with the Securities
and Exchange Commission; (v) promptly after obtaining
knowledge or receiving notice of a change (whether an
increase or decrease) in any rating issued by S&P or Moody's
pertaining to any securities of, or guaranteed by, the
Borrower or any of its Subsidiaries or affiliates, a notice
setting forth such change; and (vi) with reasonable
promptness, such other information respecting the business,
operations, prospects and financial condition of the
Borrower or any of its Subsidiaries or any Joint Venture as
any Bank may, from time to time, reasonably request,
including, without limitation, with respect to the
performance and observance by the Borrower of the covenants
and conditions contained in this Agreement.
SECTION 5.04.Default Certificates. Concurrently
with each financial statement delivered to the Banks
pursuant to clauses (i) and (ii) of Section 5.03, the
Borrower will furnish to the Banks a certificate signed by
the Governor, the Chief Financial Officer, an Assistant
Secretary-Treasurer or the Controller of the Borrower to the
<PAGE> 155 effect that the review of the activities of the
Borrower during such year or the portion thereof covered by
such financial statement and of the performance of the
Borrower under this Agreement has been made under his
supervision and that to the best of his knowledge, based on
such review, there exists no event which constitutes a
Default or an Event of Default under this Agreement or, if
any such event exists, specifying the nature thereof, the
period of its existence and what action the Borrower has
taken and proposes to take with respect thereto, which
certificate shall set forth the calculations or other data
required to establish compliance with the provisions of
Section 5.09 and Sections 5.12 through 5.15, inclusive, at
the end of such fiscal quarter or fiscal year, as the case
may be. The Borrower further covenants that upon any such
officer of the Borrower obtaining knowledge of any Default
or Event of Default under this Agreement, it will forthwith,
and in no event later than the close of business on the
Business Day immediately after the day such knowledge is
obtained, deliver to the Banks a statement of any officer
referred to above specifying the nature and the period of
existence thereof and what action the Borrower has taken and
proposes to take with respect thereto.
SECTION 5.05.Notice of Litigation, Legislative
Developments and Defaults. The Borrower will promptly give
written notice to each of the Banks of (i) any action,
proceeding or claim of which the Borrower may have notice,
which may be commenced or asserted against the Borrower or
any Subsidiary in which the amount involved is $1,000,000 or
more and is not covered in full by insurance or as to which
any insurer has disclaimed liability; (ii) any dispute which
may exist between the Borrower or any Subsidiary and any
governmental body, which is likely to materially and
adversely affect the normal business operation of the
Borrower or the Borrower and its Subsidiaries taken as a
whole or any of the material properties and assets of the
Borrower or the Borrower and its Subsidiaries taken as a
whole; (iii) any legislation enacted by any governmental
body and any rulings and regulations promulgated by any
governmental or regulatory bodies, known or which should be
known to the Borrower, affecting the Borrower or any
Subsidiary or generally affecting the Borrower's Members
which is likely to materially and adversely affect the
present or future operations of the Borrower, the Borrower
and its Subsidiaries taken as a whole or the Borrower's
Members; and (iv) any default by the Borrower or any
Subsidiary or event or condition known or which should be
known to the Borrower which with the giving of notice or
lapse of time, or both, would constitute a default, with
respect to any payment or payments in respect of
<PAGE> 156 Indebtedness of the Borrower or such Subsidiary
aggregating in excess of $15,000,000 (whether in payment of
principal thereof or interest thereon or with respect to any
material covenant or agreement contained in any instrument,
mortgage, deed of trust or agreement evidencing or relating
to such Indebtedness or otherwise).
SECTION 5.06.ERISA. As soon as possible and, in
any event, within 10 days after the Borrower or a Subsidiary
of the Borrower knows or has reason to know that a
Reportable Event has occurred, that an accumulated funding
deficiency has been incurred or an application may be or has
been made to the Secretary of the Treasury for a waiver of
the minimum funding standard under Section 412 of the
Internal Revenue Code with respect to a Plan, that a Plan
has been or may be terminated, that proceedings may be or
have been instituted to terminate a Plan, or that the
Borrower, a Subsidiary of the Borrower or any member of the
ERISA Group will or may incur any liability to or on account
of a Plan under Section 4062, 4063, 4064, 4201 or 4204 of
ERISA, the Borrower will deliver to each of the Banks a
certificate of the Chief Financial Officer of the Borrower
setting forth details as to such occurrence and action, if
any, which the Borrower or such Subsidiary is required or
proposes to take, together with any notices required to be
filed with or by the Borrower, such Subsidiary, such member
of the ERISA Group, the PBGC or the plan administrator with
respect thereto. Upon the request of any Bank, the Borrower
will furnish to such Bank a copy of the annual report of
each Plan (Form 5500) required to be filed with the Internal
Revenue Service. Copies of annual reports or any notices
required to be delivered to the Banks hereunder shall be
delivered no later than 10 days after the later of the date
such report or notice has been filed with the Internal
Revenue Service or the PBGC or received by the Borrower or a
Subsidiary of the Borrower.
SECTION 5.07.Payment of Charges. The Borrower
will, and will cause each Subsidiary to, duly pay and
discharge (i) all taxes, assessments and governmental
charges or levies imposed upon or against it or its property
or assets, prior to the date on which penalties attach
thereto, unless and to the extent only that such taxes,
assessments and governmental charges or levies are being
contested in good faith by appropriate proceedings; and (ii)
all lawful claims, including, without limitation, claims for
labor, materials, supplies or services, which might or
could, if unpaid, become a Lien upon such property or
assets, unless and to the extent only that the validity of
the amount thereof is being contested in good faith by
appropriate proceedings.
<PAGE> 157 SECTION 5.08. Inspection of Books and
Assets. The Borrower will, and will cause each Subsidiary
to, permit any representative of any Bank (or any agent or
nominee of such Bank) to visit and inspect any of the
property of the Borrower or such Subsidiary, to examine the
books of record and account of the Borrower or such
Subsidiary and to discuss the affairs, finances and accounts
of the Borrower or such Subsidiary with the officers and
independent public accountants of the Borrower or such
Subsidiary, all at such reasonable times and as often as
such Bank may reasonably request.
SECTION 5.09.Indebtedness. (a) The Borrower
will not, and will not permit any of its Subsidiaries to,
incur, assume or Guarantee any Superior Indebtedness, or
make any optional prepayment on any Capital Term
Certificate, provided that (i) subject to the provisions of
Section 5.12, any Subsidiary may incur Superior Indebtedness
owing to the Borrower or assume or Guarantee Indebtedness of
any Person (other than the Borrower or any of its
Subsidiaries) owing to the Borrower and (ii) the Borrower
may incur, assume or Guarantee Superior Indebtedness or make
optional prepayments on Capital Term Certificates if, after
giving effect to any such action specified above in this
clause (ii), (x) on the date of such incurrence, assumption
or Guarantee or making of such optional prepayment (the
"Determination Date") the aggregate principal amount of
Superior Indebtedness then outstanding would not exceed ten
times the sum of (a) the aggregate principal amount of
Capital Term Certificates outstanding on the Determination
Date and (b) the aggregate amount of Members' equity in the
Borrower, other than Capital Term Certificates, on the
Determination Date and (y) on no given future date would the
aggregate principal amount of Superior Indebtedness
outstanding on the Determination Date which will remain
outstanding on such given future date exceed ten times the
sum of (a) the aggregate principal amount of Capital Term
Certificates outstanding on the Determination Date which
will remain outstanding on such given future date and (b)
the aggregate amount of Members' equity in the Borrower,
other than Capital Term Certificates, on the Determination
Date. The respective principal amounts of Superior
Indebtedness and Capital Term Certificates to be outstanding
on such given future date shall be determined after giving
effect to mandatory sinking fund payments, other mandatory
prepayments and serial and other maturity payments required
to be made on or prior to said given future date by the
terms of such Superior Indebtedness and Capital Term
Certificates or any indenture or other instrument pursuant
to which they are respectively issued.
<PAGE> 158 (b) If any Loan is outstanding hereunder,
the Borrower will not take any action which would prevent it
from then complying, or fail to take any action which would
enable it then to comply, with the provisions of Section
3.02(g), assuming for this purpose only that the Borrower
then intended to borrow from one or more of the Banks
hereunder.
SECTION 5.10.Liens. The Borrower will not
create or permit to exist any Lien on or with respect to any
Indebtedness of any Member which is an asset of the
Borrower, now existing or hereafter created, or any
collateral securing any such Indebtedness, and the Borrower
will not permit any Subsidiary to create or permit to exist
any Lien on or with respect to any of such Subsidiary's
assets, except Liens (i) granted by the Borrower to the
trustee pursuant to either Indenture, (ii) on any such
Indebtedness granted by the Borrower to secure any borrowing
for the purpose of making loans to Member power supply
systems or loans to Members for bulk power supply projects
or loans to Members for the purpose of providing financing
to telephone and related systems eligible to borrow from the
RUS, which borrowing or borrowings are on terms (except as
to terms of interest, premium, if any, and amortization) not
materially more disadvantageous to the Borrower's unsecured
creditors than the borrowings under either Indenture (it
being understood that the Borrower can not pledge such
assets to an extent greater than 150% of the aggregate
principal amount of such Indebtedness) and which Liens
secure amounts not exceeding $500,000,000 in the aggregate
at any one time outstanding, (iii) of current taxes not
delinquent or a security for taxes being contested in good
faith, (iv) other than in favor of the PBGC, created by or
resulting from any legal proceedings (including legal
proceedings instituted by the Borrower or any Subsidiary)
which are being contested in good faith by appropriate
proceedings, including appeals of judgments as to which a
stay of execution shall have been issued, and adequate
reserves shall have been established, (v) created by the
Borrower to secure Guarantees by the Borrower of
Indebtedness, the interest on which is excludable from the
gross income of the recipient thereof for Federal income tax
purposes as provided in Section 103(a) of the Internal
Revenue Code or Section 103(a) of the Internal Revenue Code
of 1954, as amended, (x) of a Member which is a state or
political subdivision thereof or (y) of a state or political
subdivision thereof incurred to benefit a Member for one of
the purposes provided in Section 142(a)(2), (4), (5), (6),
(8), (9), (10) or (12) of the Internal Revenue Code or
Section 103(b)(4)(D), (E), (F), (G), (H) or (J) of the
Internal Revenue Code of 1954, as amended, and (vi) granted
<PAGE> 159 by any Subsidiary to the Borrower.
SECTION 5.11.Maintenance of Insurance. The
Borrower will maintain, and will cause each Subsidiary to
maintain, insurance in such amounts, on such forms and with
such companies as is necessary or appropriate for its
business.
SECTION 5.12.Subsidiaries and Joint Ventures.
The sum of the amount of Indebtedness owing to the Borrower
by all of its Subsidiaries and Joint Ventures plus the
amount paid by the Borrower in respect of the stock,
obligations or securities of or any other interest in such
Subsidiaries and Joint Ventures plus any capital
contributions by the Borrower to such Subsidiaries and Joint
Ventures plus the amount of assets otherwise sold or
transferred by the Borrower to such Subsidiaries and Joint
Ventures (other than sales at fair market value) shall not
exceed at any time 10% of the sum of (i) all accounts which,
in accordance with generally accepted accounting principles,
constitute Members' equity in the Borrower at such time and
(ii) all Indebtedness of the Borrower shown in its balance
sheet dated as of May 31, 1994 as "Members' Subordinated
Certificates" as such Indebtedness shall be reduced from
time to time and any other Indebtedness of the Borrower
incurred after May 31, 1994 having substantially similar
provisions as to subordination as those contained in said
outstanding certificates as such other Indebtedness shall be
reduced from time to time, in each case at such time.
SECTION 5.13.Minimum Net Worth. The Borrower
will not at any time permit its Net Worth to be less than
the Minimum Required Net Worth as in effect from time to
time.
SECTION 5.14.Minimum TIER. The Borrower shall
at no time permit the average of the TIERs for the six (6)
immediately preceding fiscal quarters of the Borrower to be
less than 1.025:1.00.
SECTION 5.15.Retirement of Patronage Capital.
The Borrower shall not make, or permit any Subsidiaries of
the Borrower to make, any payments to Members in respect of
Patronage Capital Certificates unless (i) the TIER for the
immediately preceding fiscal year equals or exceeds
1.05:1.00 and (ii) there exists (and would exist after
giving effect to any such payment) no Default or Event of
Default under this Agreement.
SECTION 5.16.Use of Proceeds. The proceeds of
the Loans made hereunder may be used by the Borrower for
<PAGE> 160 general corporate purposes. None of such
proceeds will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock", within the meaning of
Regulation U. Neither the Borrower nor any agent acting on
its behalf has taken or will take any action which might
cause this Agreement or the Notes to violate Regulation U or
Regulation X.
ARTICLE VI
DEFAULTS
SECTION 6.01.Events of Default. If one or more
of the following events ("Events of Default") shall have
occurred and be continuing:
(a)Principal and Interest. The Borrower shall
(i) fail to pay when due (whether upon stated maturity, by
acceleration or otherwise) any principal of the Notes or
(ii) fail, and such failure shall continue uncured for one
or more Business Days, to pay when due (whether upon stated
maturity, by acceleration or otherwise) any interest on the
Notes;
(b)Other Amounts. The Borrower shall fail to
pay when due any fee or other amount payable under this
Agreement and such failure remains uncured for five (5) days
after the due date thereof;
(c)Covenants Without Notice. The Borrower shall
fail to observe or perform any covenant or agreement on its
part to be observed or performed which is set forth in
Section 5.01, 5.02, 5.09, 5.10, 5.12, 5.13, 5.14, 5.15 or
5.16;
(d)Covenants With 10 Days Grace. The Borrower
shall fail to observe or perform any covenant or agreement
on its part to be observed or performed, which is set forth
in Section 5.05, 5.06, 5.07 or 5.08, and such non-observance
or non-performance shall continue unremedied for a period of
more than 10 days;
(e)Other Covenants. The Borrower shall fail to
observe or perform any covenant, condition or agreement on
its part to be observed or performed, other than as referred
to in subsections (a), (b), (c) and (d) above, for a period
of 30 days after written notice specifying such failure and
requesting that it be remedied is given by any Bank to the
Borrower and the other Banks; provided that, if the failure
be such that it cannot be corrected within the applicable
<PAGE> 161 period, but can be corrected within a reasonable
period of time thereafter, it shall not constitute a default
if corrective action is instituted by the Borrower within
the applicable period and diligently pursued until the
failure is corrected;
(f)Representations. Any representation,
warranty, certification or statement made or deemed to be
made by the Borrower in this Agreement or in any
certificate, financial statement or other document delivered
pursuant to this Agreement shall prove to have been
incorrect in any material respect when made or deemed to be
made;
(g)Non-Payments of Indebtedness and/or
Derivatives Obligations. The Borrower or any Subsidiary of
the Borrower shall fail to make any payment or payments
aggregating for the Borrower and its Subsidiaries in excess
of $15,000,000 in respect of Indebtedness and/or Derivatives
Obligations of the Borrower or any Subsidiary (other than
the Notes or any Indebtedness under this Agreement) when due
(whether upon stated maturity, by acceleration or otherwise)
or within any applicable grace period;
(h)Defaults Under Other Agreements. The
Borrower or any Subsidiary shall fail to observe or perform
within any applicable grace period any covenant or agreement
contained in any agreement or instrument relating to any
Indebtedness of the Borrower or any Subsidiary, aggregating
for the Borrower and its Subsidiaries in excess of
$15,000,000 if the effect of such failure is to accelerate,
or to permit the holder of such Indebtedness or any other
Person to accelerate, the maturity of such Indebtedness;
(i)Bankruptcy. The Borrower or any Subsidiary
shall generally not pay its debts as they become due, or
shall admit in writing its inability to pay its debts
generally or shall make a general assignment for the benefit
of creditors; or any proceeding shall be instituted by or
against the Borrower or any Subsidiary seeking to adjudicate
it bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection,
conservation or proceeding in the nature thereof, relief or
composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief or
protection of debtors, or seeking the entry of an order for
relief or the appointment of a receiver (including state
regulatory authorities acting in a similar capacity),
trustee, custodian or other similar official for it or for
any substantial part of its property, and, in the case of
any such proceeding instituted against it (but not
<PAGE> 162 instituted by it) shall remain undismissed or
unstayed for a period of 60 days; or the Borrower or any
Subsidiary shall take any action to authorize any of the
actions set forth above in this subsection (i);
(j)ERISA. A Plan shall fail to maintain the
minimum funding standard required by Section 412 of the
Internal Revenue Code for any plan year or a waiver of such
standard is sought or granted under Section 412(d), or a
Plan is, shall have been or is likely to be terminated or
the subject of termination proceedings under ERISA, or the
Borrower or a Subsidiary of the Borrower or any member of
the ERISA Group has incurred or is likely to incur a
liability to or on account of a Plan under Section 4062,
4063, 4064, 4201 or 4204 of ERISA, and there shall result
from any such event or events either a liability or a
material risk of incurring a liability to the PBGC or a
Plan, which in the opinion of the Required Banks, will have
a material adverse effect upon the business, operations or
the financial condition of the Borrower or a Subsidiary of
the Borrower; or
(k)Money Judgment. A final judgment or order
for the payment of money in excess of $15,000,000 shall be
rendered against the Borrower or any Subsidiary and such
judgment or order shall continue unsatisfied and in effect
for a period of 45 days during which execution shall not be
effectively stayed or deferred (whether by action of a
court, by agreement or otherwise); then, and in any such
event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent, upon the request of the
Required Banks, shall by notice to the Borrower, take any or
all of the following actions, without prejudice to the
rights of the Agent, any Bank or the holder of any Note to
enforce its claims against the Borrower: (a) declare the
Commitments terminated, whereupon the Commitment of each
Bank shall forthwith terminate immediately and any fee
payable pursuant to Section 2.08(a) or (b) shall forthwith
become due and payable without any other notice of any kind;
or (b) declare the principal of and accrued interest on the
Loans, and all other obligations owing hereunder, to be,
whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower;
provided that, if an Event of Default specified in
subsection (i) shall occur, the result which would occur
upon the giving of written notice by the Agent to the
Borrower, as specified in clauses (a) and (b) above, shall
occur automatically without the giving of any such notice.
SECTION 6.02.Notice of Default. The Agent shall
<PAGE 163) give notice to the Borrower under Section 6.01(e)
promptly upon being requested to do so by any Bank and shall
thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01.Appointment and Authorization.
Each Bank irrevocably appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such
powers under this Agreement and the Notes as are delegated
to the Agent by the terms hereof or thereof, together with
all such powers as are reasonably incidental thereto.
SECTION 7.02.Agent and Affiliates. Morgan
Guaranty Trust Company of New York shall have the same
rights and powers under this Agreement as any other Bank and
may exercise or refrain from exercising the same as though
it were not the Agent, and Morgan Guaranty Trust Company of
New York and its affiliates may accept deposits from, lend
money to, and generally engage in any kind of business with
the Borrower or any Subsidiary or affiliate of the Borrower
as if it were not the Agent hereunder.
SECTION 7.03.Action by Agent. The obligations
of the Agent hereunder are only those expressly set forth
herein. Without limiting the generality of the foregoing,
the Agent shall not be required to take any action with
respect to any Default, except as expressly provided in
Article VI.
SECTION 7.04.Consultation with Experts. The
Agent may consult with legal counsel (who may be counsel for
the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or
experts.
SECTION 7.05.Liability of Agent. Neither the
Agent nor any of its affiliates nor any of their respective
directors, officers, agents, or employees shall be liable
for any action taken or not taken by it in connection
herewith (i) with the consent or at the request of the
Required Banks or (ii) in the absence of its own gross
negligence or willful misconduct. Neither the Agent nor any
of its affiliates nor any of their respective directors,
officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into or verify (i) any
<PAGE> 164 statement, warranty or representation made in
connection with this Agreement or any borrowing hereunder;
(ii) the performance or observance of any of the covenants
or agreements of the Borrower; (iii) the satisfaction of any
condition specified in Article III, except receipt of items
required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of this Agreement, the Notes or
any other instrument or writing furnished in connection
herewith. The Agent shall not incur any liability by acting
in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex
or similar writing) reasonably believed by it to be genuine
or to be signed by the proper party or parties.
SECTION 7.06.Indemnification. Each Bank shall,
ratably in accordance with its Commitment, indemnify the
Agent, its affiliates and their respective directors,
officers, agents and employees (to the extent not reimbursed
by the Borrower) against any cost, expense (including
counsel fees and disbursements), claim, demand, action, loss
or liability (except such as result from such indemnitee's
gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this
Agreement or any action taken or omitted by such indemnitees
hereunder.
SECTION 7.07.Credit Decision. Each Bank
acknowledges that it has, independently and without reliance
upon the Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as
it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking any action
under this Agreement.
SECTION 7.08.Successor Agent. The Agent may
resign at any time by giving written notice thereof to the
Banks and the Borrower. Upon any such resignation, the
Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed
by the Required Banks, and shall have accepted such
appointment, within 15 days after the retiring Agent gives
notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall
be a commercial bank organized or licensed under the laws of
the United States of America or of any State thereof and
having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of its appointment as
<PAGE> 165 Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested
with all the rights and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this
Article shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent.
SECTION 7.09.Co-Syndication Agents Not Liable.
Nothing in this Agreement shall impose upon any Co-
Syndication Agent, in such capacity, any duties or
responsibilities whatsoever.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01.Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of
any Interest Period for any Fixed Rate Borrowing:
(a)the Agent is advised by the Reference Banks
that deposits in dollars (in the applicable amounts)
are not being offered to the Reference Banks in the
relevant market for such Interest Period, or
(b)in the case of a Committed Borrowing, Banks
having 50% or more of the aggregate amount of the
Commitments advise the Agent that the Adjusted CD Rate
or the Adjusted London Interbank Offered Rate, as the
case may be, as determined by the Agent will not
adequately and fairly reflect the cost to such Banks of
funding their CD Loans or Euro-Dollar Loans, as the
case may be, for such Interest Period,
the Agent shall forthwith give notice thereof to the
Borrower and the Banks, whereupon until the Agent notifies
the Borrower that the circumstances giving rise to such
suspension no longer exist, the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be,
shall be suspended. Unless the Borrower notifies the Agent
at least two Domestic Business Days before the date of any
Fixed Rate Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such
date, (i) if such Fixed Rate Borrowing is a Committed
Borrowing, such Borrowing shall instead be made as a Base
Rate Borrowing and (ii) if such Fixed Rate Borrowing is a
Money Market LIBOR Borrowing, the Money Market LIBOR Loans
comprising such Borrowing shall bear interest for each day
<PAGE> 166 from and including the first day to but excluding
the last day of the Interest Period applicable thereto at
the Base Rate for such day.
SECTION 8.02.Illegality. If, on or after the
date of this Agreement, the adoption of any applicable law,
rule or regulation, or any change therein, or any change in
the interpretation or administration thereof by any
governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof,
or compliance by any Bank (or its Euro-Dollar Lending
Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for
any Bank (or its Euro-Dollar Lending Office) to make,
maintain or fund its Euro-Dollar Loans and such Bank shall
so notify the Agent, the Agent shall forthwith give notice
thereof to the other Banks and the Borrower, whereupon until
such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer
exist, the obligation of such Bank to make Euro-Dollar Loans
shall be suspended. Before giving any notice to the Agent
pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation
will avoid the need for giving such notice and will not, in
the judgment of such Bank, be otherwise disadvantageous to
such Bank. If such Bank shall determine that it may not
lawfully continue to maintain and fund any of its
outstanding Euro-Dollar Loans to maturity and shall so
specify in such notice, the Borrower shall immediately
prepay in full the then outstanding principal amount of each
such Euro-Dollar Loan, together with accrued interest
thereon. Concurrently with prepaying each such Euro-Dollar
Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount from such Bank (on which interest and
principal shall be payable contemporaneously with the
related Euro-Dollar Loans of the other Banks), and such Bank
shall make such a Base Rate Loan.
SECTION 8.03.Increased Cost and Reduced Return.
(a) If on or after (x) the date hereof, in the case of any
Committed Loan or any obligation to make Committed Loans or
(y) the date of the related Money Market Quote, in the case
of any Money Market Loan, the adoption of any applicable
law, rule or regulation, or any change therein, or any
change in the interpretation or administration thereof by
any governmental authority, central bank or comparable
agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable
Lending Office) with any request or directive (whether or
not having the force of law) of any such authority, central
<PAGE> 167 bank or comparable agency:
(i) shall subject any Bank (or its Applicable
Lending Office) to any tax, duty or other charge with
respect to its Fixed Rate Loans, its Notes or its
obligation to make Fixed Rate Loans, or shall change
the basis of taxation of payments to any Bank (or its
Applicable Lending Office) of the principal of or
interest on its Fixed Rate Loans or any other amounts
due under this Agreement in respect of its Fixed Rate
Loans or its obligation to make Fixed Rate Loans
(except for changes in the rate of tax on the overall
net income of such Bank or its Applicable Lending
Office imposed by the jurisdiction in which such Bank's
principal executive office or Applicable Lending Office
is located); or
(ii) shall impose, modify or deem applicable any
reserve (including, without limitation, any such
requirement imposed by the Board of Governors of the
Federal Reserve System, but excluding (A) with respect
to any CD Loan, any such requirement included in an
applicable Domestic Reserve Percentage and (B) with
respect to any Euro-Dollar Loan any such requirement
included in an applicable Euro-Dollar Reserve
Percentage), special deposit, insurance assessment
(excluding, with respect to any CD Loan, any such
requirement reflected in an applicable Assessment Rate)
or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Bank
(or its Applicable Lending Office) or shall impose on
any Bank (or its Applicable Lending Office) or on the
United States market for certificates of deposit or the
London interbank market any other condition affecting
its Fixed Rate Loans, its Notes or its obligation to
make Fixed Rate Loans;
and the result of any of the foregoing is to increase the
cost to such Bank (or its Applicable Lending Office) of
making or maintaining any Fixed Rate Loan, or to reduce the
amount of any sum received or receivable by such Bank (or
its Applicable Lending Office) under this Agreement or under
its Note with respect thereto, by an amount deemed by such
Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the Agent), the Borrower shall pay
to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction
(including any amount or amounts equal to any taxes on the
overall net income of such Bank payable by such Bank with
respect to the amount of payments required to be made
pursuant to this Section 8.03(a)).
<PAGE> 168 (b) If any Bank determines that the adoption
of any applicable law, rule, regulation, guideline or
request concerning capital adequacy, or any change therein,
or any change in interpretation or administration thereof by
any governmental authority, central bank or comparable
agency occurring after the date hereof, will have the effect
of increasing the amount of capital required or expected to
be maintained by such Bank based on the existence of such
Bank's Commitment hereunder or its obligations hereunder, it
will notify the Borrower. This determination will be made
on a Bank by Bank basis. The Borrower will pay to each Bank
on demand such additional amounts as are necessary to
compensate for the increased cost to such Bank as a result
of the event described in the first sentence of this Section
8.03(b). In determining such amount, such Bank will act
reasonably and in good faith and will use averaging and
attribution methods which are reasonable, and such Bank will
pass such costs on to the Borrower only if such costs are
passed on in a similar manner by such Bank to similarly
situated borrowers (which are parties to credit or loan
documentation containing a provision similar to this Section
8.03(b)), as determined by such Bank in its reasonable
discretion. Each Bank's determination of compensation shall
be conclusive if made in accordance with this provision.
Each Bank, upon determining that any increased costs will be
payable pursuant to this Section 8.03(b), will give prompt
written notice thereof to the Borrower, which notice shall
show the basis for calculation of such increased costs,
although the failure to give any such notice shall not
release or diminish any of the Borrower's obligations to pay
increased costs pursuant to this Section 8.03(b).
(c)Each Bank will promptly notify the Borrower
and the Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such
Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A Bank
claiming compensation under this Section shall furnish a
certificate to the Borrower setting forth the additional
amount or amounts to be paid to it hereunder, which shall be
conclusive in the absence of manifest error. In determining
such amount, such Bank may use any reasonable averaging and
attribution methods.
SECTION 8.04.Base Rate Loans Substituted for
Affected Fixed Rate Loans. If (i) the obligation of any
Bank to make Euro-Dollar Loans has been suspended pursuant
to Section 8.02 or (ii) any Bank has demanded compensation
<PAGE> 169 under Section 8.03(a) and the Borrower shall, by
at least five Euro-Dollar Business Days' prior notice to
such Bank through the Agent, have elected that the
provisions of this Section shall apply to such Bank, then,
unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for
compensation no longer apply:
(a) all Loans which would otherwise be made by
such Bank as CD Loans or Euro-Dollar Loans, as the case
may be, shall be made instead as Base Rate Loans (on
which interest and principal shall be payable
contemporaneously with the related Fixed Rate Loans of
the other Banks), and
(b) after each of its CD Loans or Euro-Dollar
Loans, as the case may be, has been repaid, all
payments of principal which would otherwise be applied
to repay such Fixed Rate Loans shall be applied to
repay its Base Rate Loans instead.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01.Notices. All notices, requests,
directions, consents, approvals and other communications to
any party hereunder shall be in writing (including bank
wire, telex, facsimile transmission or similar writing) and
shall be given to such party: (x) in the case of the
Borrower or the Agent, at its address or telex or telecopier
number set forth on the signature pages hereof, (y) in the
case of any Bank, at its address or telex or telecopier
number set forth in its Administrative Questionnaire or (z)
in the case of any other party, such other address or telex
or telecopier number as such party may hereafter specify for
the purpose by notice to the Agent and the Borrower. Each
such notice, request, direction, consent, approval or other
communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in
this Section and the appropriate answerback is received or
(ii) if given by any other means, when delivered or received
at the address specified in this Section; provided that
notices to the Agent under Article II or Article VIII shall
not be effective until received.
SECTION 9.02.No Waivers. No failure or delay by
the Agent or any Bank in exercising any right, power or
privilege hereunder or under any Note shall operate as a
waiver thereof nor shall any single or partial exercise
<PAGE> 170 thereof preclude any other or further exercise
thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.03.Expenses; Documentary Taxes;
Indemnification. (a) The Borrower shall pay (i) all
reasonable out-of-pocket expenses of the Agent, including
reasonable fees and disbursements of special counsel for the
Agent, in connection with the preparation of this Agreement,
any waiver or consent hereunder or any amendment hereof or
any Default or alleged Default hereunder and (ii) if an
Event of Default occurs, all reasonable out-of-pocket
expenses incurred by the Agent or any Bank, including
reasonable fees and disbursements incurred by counsel or
in-house counsel, in connection with such Event of Default
and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom. The Borrower shall
indemnify each Bank against any transfer taxes, documentary
taxes, assessments or charges made by any governmental
authority by reason of the execution and delivery of this
Agreement or the Notes and any and all liabilities with
respect to or resulting from any delay or omission (unless
solely attributable to such Bank) to pay such taxes.
(b)The Borrower agrees to indemnify each Bank,
their respective affiliates and the respective directors,
officers, agents and employees of the foregoing (each an
"Indemnitee") and hold each Indemnitee harmless from and
against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be
incurred by any Indemnitee (or by the Agent in connection
with its actions as Agent hereunder) in connection with any
investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party
thereto) relating to or arising out of this Agreement or any
actual or proposed use of proceeds of Loans hereunder;
provided that no Indemnitee shall have the right to be
indemnified hereunder for its own gross negligence, willful
misconduct or unlawful conduct as determined by a court of
competent jurisdiction.
SECTION 9.04.Sharing of Set-Offs. Each Bank
agrees that if it shall, by exercising any right of set-off
or counterclaim or otherwise, receive payment of a
proportion of the aggregate amount of principal and interest
due with respect to any Note held by it which is greater
than the proportion received by any other Bank in respect of
the aggregate amount of principal and interest due with
respect to any Note held by such other Bank, the Bank
<PAGE> 171 receiving such proportionately greater payment
shall purchase such participations in the Notes held by the
other Banks, and such other adjustments shall be made, as
may be required so that all such payments of principal and
interest with respect to the Notes held by the Banks shall
be shared by the Banks pro rata; provided that nothing in
this Section shall impair the right of any Bank to exercise
any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its indebtedness
under the Notes. The Borrower agrees, to the fullest extent
it may effectively do so under applicable law, that any
holder of a participation in a Note, whether or not acquired
pursuant to the foregoing arrangements, may exercise rights
of set-off or counterclaim and other rights with respect to
such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the
amount of such participation.
SECTION 9.05.Amendments and Waivers. Any
provision of this Agreement or the Notes may be amended or
waived if, but only if, such amendment or waiver is in
writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected
thereby, by the Agent); provided that no such amendment or
waiver shall, unless signed by all the Banks, (i) increase
or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any
Bank to any additional obligation, (ii) reduce the principal
of or rate of interest on any Loan or any fees hereunder,
(iii) postpone the date fixed for any payment of principal
of or interest on any Loan or any fees hereunder or for any
reduction or termination of any Commitment or (iv) change
the percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes, or the number of Banks, which
shall be required for the Banks or any of them to take any
action under this Section or any other provision of this
Agreement.
SECTION 9.06.Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of all Banks.
(b)Any Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in its Commitment or any or all of
its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon
<PAGE> 172 notice to the Borrower and the Agent, such Bank
shall remain responsible for the performance of its
obligations hereunder, and the Borrower and the Agent shall
continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under
this Agreement. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that
such Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrower hereunder including,
without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement;
provided that such participation agreement may provide that
such Bank will not agree to any modification, amendment or
waiver of this Agreement described in clause (i), (ii) or
(iii) of Section 9.05 without the consent of the
Participant. Subject to the provisions of subsection (e),
the Borrower agrees that each Participant shall, to the
extent provided in its participation agreement, be entitled
to the benefits, and be bound by the obligations, of
Article VIII with respect to its participating interest. An
assignment or other transfer which is not permitted by
subsection (c) or (d) below shall be given effect for
purposes of this Agreement only to the extent of a
participating interest granted in accordance with this
subsection (b).
(c)Any Bank may at any time assign to one or
more banks or other institutions (each an "Assignee") all,
or a proportionate part (but not in any case in an amount
less than $15,000,000) of all, of its rights and obligations
under this Agreement and the Notes, and such Assignee shall
assume such rights and obligations, pursuant to an
Assignment and Assumption Agreement in substantially the
form of Exhibit J hereto executed by such Assignee and such
transferor Bank, with (and subject to) the subscribed
consent of the Borrower and the Agent, such consents not to
be unreasonably withheld; provided that if an Assignee is
another Bank or an affiliate of such transferor Bank, no
such consent shall be required; and provided further that
such assignment may, but need not, include the rights of the
transferor Bank in respect of outstanding Money Market
Loans. Upon execution and delivery of such an instrument
and payment by such Assignee to such transferor Bank of an
amount equal to the purchase price agreed between such
transferor Bank and such Assignee, such Assignee shall be a
Bank party to this Agreement and shall have all the rights
and obligations of a Bank with a Commitment as set forth in
such instrument of assumption, and the transferor Bank shall
be released from its obligations hereunder to a
corresponding extent, and no further consent or action by
any party shall be required. Upon the consummation of any
assignment pursuant to this subsection (c), the transferor
<PAGE> 173 Bank, the Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note is
issued to the Assignee. In connection with any such
assignment, the transferor Bank shall pay to the Agent an
administrative fee for processing such assignment in the
amount of $2,500. If the Assignee is not incorporated under
the laws of the United States of America or a state thereof,
it shall, prior to the first date on which interest or fees
are payable hereunder for its account, deliver to the
Borrower and the Agent certification as to exemption from
deduction or withholding of any United States federal income
taxes in accordance with Section 2.15.
(d)Any Bank may at any time assign all or any
portion of its rights under this Agreement and its Note to a
Federal Reserve Bank. No such assignment shall release the
transferor Bank from its obligations hereunder.
(e)No Assignee, Participant or other transferee
of any Bank's rights shall be entitled to receive any
greater payment under Section 8.03 than such Bank would have
been entitled to receive with respect to the rights
transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the
provisions of Section 8.02 or 8.03 requiring such Bank to
designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances
giving rise to such greater payment did not exist.
SECTION 9.07.Collateral. Each of the Banks
represents to the Agent and each of the other Banks that it
in good faith is not relying upon any "margin stock" (as
defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.08.Governing Law. This Agreement and
each Note shall be governed by and construed in accordance
with the laws of the State of New York.
SECTION 9.09.Counterparts; Integration;
Effectiveness. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement constitutes the
entire agreement and understanding among the parties hereto
and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject
matter hereof. This Agreement shall become effective upon
receipt by the Agent of counterparts hereof signed by each
of the parties hereto (or, in the case of any party as to
which an executed counterpart shall not have been received,
<PAGE> 174 receipt by the Agent in form satisfactory to it
of telegraphic, telex or other written confirmation from
such party of execution of a counterpart hereof by such
party).
SECTION 9.10.Several Obligations. The
obligations of the Banks hereunder are several. Neither the
failure of any Bank to carry out its obligations hereunder
nor of this Agreement to be duly authorized, executed and
delivery by any Bank shall relieve any other Bank of its
obligations hereunder (or affect the rights hereunder of
such other Bank). No Bank shall be responsible for the
obligations of, or any action taken or omitted by, any other
Bank hereunder.
SECTION 9.11.Termination of Commitments Under
the Prior Credit Agreements. Each party hereto that is also
a party to a Prior Credit Agreement hereby waives the notice
required under Section 2.09 of such Prior Credit Agreement
for the termination of the commitments thereunder and agrees
that on the Effective Date (i) the Commitments, as defined
in such Prior Credit Agreement, shall terminate in their
entirety and (ii) the Borrower will pay or prepay any loans
which exist under such Prior Credit Agreement provided,
however, that the provisions of Sections 2.13, 7.05, 7.06,
8.03 and 9.03 (and Section 2.12 and Article IX insofar as
such Section or Article relates to such Sections 2.13, 7.05,
7.06, 8.03 and 9.03, as applicable) of such Prior Credit
Agreement shall survive the termination of the commitments
thereunder and shall remain in full force and effect.
SECTION 9.12.Severability. In case any
provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way
be affected or impaired thereby.
<PAGE>
<PAGE> 175 IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first
above written.
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
By /s/ Steven L. Lilly
Title: Chief Financial Officer
Address: Woodland Park
2201 Cooperative Way
Herndon, Virginia 22071-3025
Attention: Kimberly Armstrong
Director of Banking Relations
Telephone No.: (703) 709-6700
Telecopier No.: (703) 709-6779
Commitments
$129,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Sanjeanetta Harris
Title: Vice President
$126,000,000 THE BANK OF NOVA SCOTIA
By /s/ J.R. Trimble
Title: Senior Relationship
Manager
<PAGE> 176
$108,000,000 THE CHASE MANHATTAN BANK, N.A.
By /s/ Marc D. Galligan
Title: Vice President
$108,000,000 THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Richard Waldman
Title: Authorized Agent
$105,000,000 ABN AMRO BANK N.V. NEW YORK BRANCH
By /s/ Olga L. Zoutendljk
Title: Vice President
By /s/ Duane P. Helkowski
Title: Assistant Vice
President
$105,000,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ R. Vernon Howard, Jr.
Title: Vice President
$105,000,000 CREDIT LYONNAIS CAYMAN ISLANDS BRANCH
By /s/ Mary E. Collier
Title: Authorized Signature
<PAGE> 177
$105,000,000 NATIONSBANK, N.A. (CAROLINAS)
By /s/ Lawrence A. Saunders, Jr.
Title: Vice President
$105,000,000 THE TORONTO-DOMINION BANK
By /s/ Jorge A. Garcia
Title: Manager Credit
Administration
$105,000,000 UNION BANK OF SWITZERLAND
By /s/ Stephen A. Cayer
Title: Assistant Treasurer
By /s/ Peter B. Yearley
Title: Vice President
$75,000,000 THE BANK OF TOKYO TRUST COMPANY
By /s/ Michael C. Irwin
Title: Vice President
<PAGE> 178
$75,000,000 COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, B.A.,
"Rabobank Nederland", NEW YORK BRANCH
By /s/ Mark Laponte
Title: Vice President
By /s W. Jeffrey Vollack
Title: Vice President
$60,000,000 CIBC INC.
By /s/ Margaret E. McTigue
Title: Vice President
$60,000,000 MELLON BANK, N.A.
By /s/ Scott Hennessee
Title: Assistant Vice
President
$51,000,000 COMERICA BANK
By /s/ Julie Burke Smith
Title: Vice President
$51,000,000 PNC BANK, NATIONAL ASSOCIATION
By /s/ Thomas A. Majeski
Title: Assistant Vice
President
<PAGE> 179
$45,000,000 DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES
By /s/ Susan A. Hodge
Title: Vice President
By /s/ J. Curtin Beaudouin
Title: Vice President
$45,000,000 THE INDUSTRIAL BANK OF JAPAN, LTD.,
NEW YORK BRANCH
By /s/ Robert W. Ramage, Jr.
Title: Senior Vice President
$36,000,000 SOCIETE GENERALE
By /s/ Gordon R. Eadon
Title: Vice President
$36,000,000 BANCO BILBAO VIZCAYA, S.A.
By /s/ John Carreras
Title: Vice President
$36,000,000 BANK OF MONTREAL
By /s/ Joseph Longpre
Title: Managing Director
<PAGE> 180
$30,000,000 BARCLAYS BANK PLC
By /s/ Vijay Rajguru
Title: Associate Director
$30,000,000 CREDIT SUISSE
By /s/ Dawn E. Rubinstein
Title: Associate
By /s/ Christopher J. Eldin
Title: Member of Senior
Management
$30,000,000 DAIWA BANK TRUST COMPANY
By /s/ Masafumi Asai
Title: Vice President
$30,000,000 FIRST BANK NATIONAL ASSOCIATION
By /s/ Mark R. Olman
Title: Vice President
$30,000,000 FIRST INTERSTATE BANK OF WASHINGTON, N.A.
By /s/ Susan J. Hendrixson
Title: Vice President
<PAGE> 181
$30,000,000 THE FUJI BANK, LIMITED
By /s/ Gina Kearns
Title: Vice President
& Manager
$30,000,000 KREDIETBANK N.V.
By /s/ Diane Grimming
Title: Vice President
By /s/ Robert Snauffer
Title: Vice President
$30,000,000 MONTE DEI PASCHI DI SIENA
By /s/ G. Natalicchi
Title: Senior Vice President
& General Manager
By /s/ Brian R. Landy
Title: Vice President
$30,000,000 NORDDEUTSCHE LANDESBANK GIROZENTRALE
NEW YORK AND/OR CAYMAN ISLANDS BRANCH
By /s/ Stephanie Hoevermann
Title: Vice President
By /s/ Stephen K. Hunter
Title: Senior Vice President
<PAGE> 182
$30,000,000 SIGNET BANK/VIRGINIA
By /s/ Linwood White
Title: Senior Vice President
$30,000,000 THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By /s/ Yoshinori Kawamura
Title: Joint General Manager
$30,000,000 WESTDEUTSCHE LANDESBANK GIROZENTRALE
NEW YORK BRANCH/CAYMAN ISLANDS BRANCH
By /s/ Stephen W. Frey
Title: Vice President
By /s/ Karen E. Hoplock
Title: Vice President
$24,000,000 BANK ONE, ARIZONA, NA
By /s/ Craig Hoskins
Title: Vice President
<PAGE> 183
$24,000,000 BANQUE NATIONALE DE PARIS
By /s/ Phil Truesdale
Title: Vice President
By /s/ Eric Vigne
Title: Senior Vice President
$24,000,000 UNITED STATES NATIONAL BANK OF OREGON
By /s/ Douglas A. Rich
Title: Vice President
$21,000,000 BANCA CRT SpA
By /s/ Robert P. DeSantes
Title: Vice President, Head
of Corporate Banking
By /s/ Franco Marino
Title: First Vice President
& Deputy Manager
$21,000,000 CRESTAR BANK
By /s/ David N. Ryder
Title: Vice President
<PAGE>
<PAGE> 184
$21,000,000 DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
NEW YORK BRANCH
By /s/ John L. Dean
Title: Senior Vice President
By /s/ Karen A. Brinkman
Title: Vice President
$21,000,000 THE DAI-ICHI KANGYO BANK, LTD.,
NEW YORK BRANCH
By /s/ Stephanie R. Rogers
Title: Vice President
$21,000,000 THE NORTHERN TRUST COMPANY
By /s/ David L. Love
Title: Commercial Banking
Officer
$21,000,000 SUNBANK, NATIONAL ASSOCIATION
By /s/ Kristina L. Anderson
Title: Assistant Vice
President
<PAGE>
<PAGE> 185
$18,000,000 BANCO DI NAPOLI S.P.A.
By /s/ Vito Spada
Title: Executive Vice
President
By /s/ Claude P. Mapes
Title: First Vice President
$18,000,000 COMMERZBANK AG NEW YORK BRANCH AND/OR
GRAND CAYMAN BRANCH
By /s/ Juergen Schmleking
Title: Vice President
By /s/ Werner Niemeyer
Title: Vice President
$18,000,000 LLOYDS BANK Plc
By /s/ Ted Walser
Title: Senior Vice President
By /s/ Paul Briamonte
Title: Vice President
$18,000,000 THE TOKAI BANK, LIMITED, NEW YORK BRANCH
By /s/ Masaharu Muto
Title: Deputy General
Manager
<PAGE>
<PAGE> 186
$18,000,000 THE TOYO TRUST & BANKING CO., LTD.
By /s/ Hiroyuki Fukuro
Title: Vice President
By /s/ Howard Tulley Mott
Title: Vice President
$18,000,000 THE YASUDA TRUST & BANKING COMPANY, LTD.
By /s/ Yoshito Kobayashi
Title: Deputy General
Manager
$15,000,000 BANK AUSTRIA AKTIENGESELLSCHAST
By /s/ J. Anthony Seay
Title: Vice President
By /s/ Mark M. Nolan
Title: Assistant Vice
President
$15,000,000 THE BANK OF CALIFORNIA, N.A.
By /s/ Harry S. Matthews
Title: Vice President
<PAGE>
<PAGE> 187
$15,000,000 BAYERISCHE LANDESBANK GIROZENTRALE
CAYMAN ISLANDS BRANCH
By /s/ Wilfried Freudenberger
Title: Executive Vice
President & General
Manager
By /s/ Peter Oberman
Title: First Vice President
Manager Lending
Division
$15,000,000 HARRIS TRUST AND SAVINGS BANK
By /s/ Michael W. Lewis
Title: Senior Vice President
$15,000,000 NATIONAL CITY BANK, COLUMBUS
By /s/ Jeffrey L. Hawthorne
Title: Vice President
$15,000,000 THE SAKURA BANK, LIMITED
By /s/ Hiroshi Shimazaki
Title: Senior Vice President
& Manager
<PAGE> 188
$15,000,000 THE SANWA BANK, LIMITED, ATLANTA AGENCY
By /s/ Peter J. Pawlak
Title: Vice President
& Senior Manager
___________________
Total Commitments
$ 2,430,000,000
<PAGE>
<PAGE> 189
J.P. MORGAN SECURITIES INC.,
as Co-Syndication Agent
By /s/ Suzanne Waltman
Title: Associate
THE BANK OF NOVA SCOTIA,
as Co-Syndication Agent
By /s/ J.R. Trimble
Title: Senior Relationship
Manager
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
By /s/ Sanjeanetta Harris
Title: Vice President
Address:
60 Wall Street
New York, New York 10260
Attention: Loan Department
Telex number: 420230
<PAGE>
<PAGE> 190
PRICING SCHEDULE
The "Euro-Dollar Margin", "CD Margin", "Commitment
Fee Rate" and "Facility Fee Rate" for any day are the
respective percentages set forth below in the applicable row
under the column corresponding to the Status that exists on
such day:
Status Level I Level II Level III Level IV
Euro-Dollar
Margin
If Utiliza-
tion is
equal to or
less than
50% 0.15% 0.2% 0.35% 0.425%
If Utiliza-
tion exceeds
50% 0.15% 0.325% 0.475% 0.55%
CD Margin
If Utiliza-
tion is
equal to or
less than
50% 0.275% 0.325% 0.475% 0.55%
If Utiliza-
tion exceeds
50% 0.275% 0.45% 0.6% 0.675%
Commitment Fee
Rate 0% 0.025% 0.025% 0.05%
Facility Fee
Rate 0.1% 0.1% 0.125% 0.2%
For purposes of this Schedule, the following terms
have the following meanings:
<PAGE> 191 "Level I Status" exists at any date if, at
such date, the Borrower has outstanding senior unsecured
long-term debt and such debt, without third party
enhancement, is rated (or, if on such date the Borrower has
no outstanding senior unsecured long-term debt, evidence
satisfactory to the Agent is provided to the effect that the
rating of senior unsecured long-term debt of the Borrower,
assuming that it had outstanding senior unsecured long-term
debt, would be rated) at least AA (or any equivalent rating
which is used in lieu thereof) by S&P and Aa2 (or any
equivalent rating which is used in lieu thereof) by Moody's.
"Level II Status" exists at any date, if at such
date, the Borrower has outstanding senior unsecured long-
term debt and such debt, without third party enhancement, is
rated (or, if on such date the Borrower has no outstanding
senior unsecured long-term debt, evidence satisfactory to
the Agent is provided to the effect that the rating of
senior unsecured long-term debt of the Borrower, assuming
that it had outstanding senior unsecured long-term debt,
would be rated) at least AA- (or any equivalent rating which
is used in lieu thereof) or higher by S&P or Aa3 (or any
equivalent rating which is used in lieu thereof) or higher
by Moody's and Level I Status does not exist at such date.
"Level III Status" exists at any date if, at such
date, the Borrower has outstanding senior unsecured long-
term debt and such debt, without third party enhancement, is
rated (or, if on such date the Borrower has no outstanding
senior unsecured long-term debt, evidence satisfactory to
the Agent is provided to the effect that the rating of
senior unsecured long-term debt of the Borrower, assuming
that it had outstanding senior unsecured long-term debt,
would be rated) at least A+ (or any equivalent rating which
is used in lieu thereof) or higher by S&P or A1 (or any
equivalent rating which is used in lieu thereof) or higher
by Moody's and neither Level I Status nor Level II Status
exists.
"Level IV Status" exists at any date if, at such
date, none of Level I Status, Level II Status or Level III
Status exists.
"Status" refers to the determination of which of
Level I Status, Level II Status, Level III Status or Level
IV Status exists at any date.
<PAGE> 192 "Utilization" means at any date the
percentage equivalent of a fraction (i) the numerator of
which is the aggregate outstanding principal amount of the
Loans at such date, after giving effect to any borrowing or
payment on such date, and (ii) the denominator of which is
the aggregate amount of the Commitments at such date, after
giving effect to any reduction of the Commitments on such
date. For purposes of this Schedule, if for any reason any
Loans remain outstanding after termination of the
Commitments, the Utilization for each date on or after the
date of such termination shall be deemed to be greater than
50%.
The credit ratings to be utilized for purposes of
this Pricing Schedule shall be, so long as the Borrower's
unsecured Medium Term Notes are rated by either S&P or
Moody's, those assigned to the Borrower's unsecured Medium
Term Notes. The rating in effect at any date is that in
effect at the close of business on such date.
<PAGE>
<PAGE> 193 EXHIBIT A
NOTE
New York, New York
, 19
For value received, National Rural Utilities
Cooperative Finance Corporation, a not-for-profit cooperative
association incorporated under the laws of the District of
Columbia (the "Borrower"), promises to pay to the order of
(the "Bank"), for the account of its Applicable Lending
Office, the unpaid principal amount of each Loan made by the
Bank to the Borrower pursuant to the Revolving Credit
Agreement referred to below on the last day of the Interest
Period relating to such Loan. The Borrower promises to pay
interest on the unpaid principal amount of each such Loan on
the dates and at the rate or rates provided for in the
Revolving Credit Agreement. All such payments of principal
and interest shall be made in lawful money of the United
States in Federal or other immediately available funds at the
office of Morgan Guaranty Trust Company of New York, 60 Wall
Street, New York, New York.
All Loans made by the Bank, the respective types and
maturities thereof and all repayments of the principal thereof
shall be recorded by the Bank and, prior to any transfer
hereof, appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding
may be endorsed by the Bank on the schedule attached hereto,
or on a continuation of such schedule attached to and made a
part hereof; provided that the failure of the Bank to make any
such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Revolving
Credit Agreement.
This note is one of the Notes referred to in the
$2,430,000,000 Revolving Credit Agreement dated as of February
28, 1995 among the Borrower, the banks listed on the signature
pages thereof, J.P. Morgan Securities Inc. and The Bank of
Nova Scotia, as Co-Syndication Agents, and Morgan Guaranty
Trust Company of New York, as Administrative Agent (as the
same may be amended from time to time, the "Revolving Credit
Agreement").<PAGE>
<PAGE> 194
Terms defined in the Revolving Credit Agreement are
used herein with the same meanings. Reference is made to the
Revolving Credit Agreement for provisions for the prepayment
hereof and the acceleration of the maturity hereof.
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
By_______________________________
Title: <PAGE>
<PAGE> 195
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
Date Amount of Type of Amount of Maturity Notation
Loan Loan Principal Date Made By
Repaid
<PAGE> 196 EXHIBIT B
Form of RUS Guarantee
The United States of America acting through the
Administrator of the Rural Utilities Service ("RUS") hereby
unconditionally guarantees to [name of Payee] the making of
[__%] of the payments of principal and interest when and as
due on this Note of _________ (the "Cooperative") in
accordance with the terms hereof and of the Loan Agreement
referred to in this Note, until such principal and interest
shall be indefeasibly paid in full (which includes interest
accruing on such principal between the date of default under
this Note and the payment in full of this Guarantee),
irrespective of receipt by RUS of any sums or property from
its enforcement of its remedies for the Cooperative default.
This Guarantee shall be incontestable except for fraud or
misrepresentation of which the holder had actual knowledge at
the time it became a holder. RUS hereby waives diligence,
presentment, demand, protest and notice of any kind, as well
as any requirement that [name of Payee] exhaust any right or
take any action against the Cooperative.
This Guarantee is issued pursuant to Title III of
the Rural Electrification Act of 1936, as amended (7 U.S.C.
{{ 901, et seq.), and the Loan Guarantee and Servicing
Agreement among RUS, the Cooperative, The First National Bank
of Chicago and National Rural Utilities Cooperative Finance
Corporation dated ___________, 19__.
UNITED STATES OF AMERICA
Date___________, 19__ By_______________________
Administrator of Rural
Electrification
Administration
<PAGE> 197
EXHIBIT C
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: National Rural Utilities
Cooperative Finance Corporation (the "Borrower")
Re: $2,430,000,000 Revolving Credit Agreement (the
"Revolving Credit Agreement") dated as of February
__, 1995 among the Borrower, the Banks listed on the
signature pages thereof, J.P. Morgan Securities Inc.
and The Bank of Nova Scotia, as Co-Syndication
Agents, and Morgan Guaranty Trust Company of New
York, as Administrative Agent
We hereby give notice pursuant to Section 2.03 of the
Revolving Credit Agreement that we request Money Market Quotes
for the following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market
[Margin] [Absolute Rate]. [The applicable base rate is the
London Interbank Offered Rate.]
Terms used herein have the meanings assigned to them
in the Revolving Credit Agreement.
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
By________________________
Title:
<PAGE> 198
EXHIBIT D
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes
to the National Rural Utilities Cooperative
Finance Corporation (the "Borrower")
Pursuant to Section 2.03 of the $2,430,000,000
Revolving Credit Agreement dated as of February 28, 1995
among the Borrower, the Banks party thereto, J.P. Morgan
Securities Inc. and The Bank of Nova Scotia, as Co-
Syndication Agents, and the undersigned, as Administrative
Agent, we are pleased on behalf of the Borrower to invite
you to submit Money Market Quotes to the Borrower for the
following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money
Market [Margin] [Absolute Rate]. [The applicable base rate
is the London Interbank Offered Rate.]
Please respond to this invitation by no later than
[2:00 P.M.] [9:00 A.M.] (New York City time) on [date].
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By______________________
Authorized Officer
<PAGE> 199 EXHIBIT E
Form of Money Market Quote
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
60 Wall Street
New York, New York 10260
Attention:
Re: Money Market Quote to
National Rural Utilities Cooperative
Finance Corporation (the "Borrower")
In response to your invitation on behalf of the
Borrower dated _____________, 19__, we hereby make the
following Money Market Quote on the following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
_____________________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the
following principal amounts, for the following Interest
Periods and at the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
$
$
[Provided, that the aggregate principal amount of Money
Market Loans for which the above offers may be accepted
shall not exceed $____________.]**
__________
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may
not exceed principal amount requested. Specify
aggregate limitation if the sum of the individual
offers exceeds the amount the Bank is willing to lend.
Bids must be made for $1,000,000 or a larger multiple
thereof.
(notes continued on following page)
<PAGE> 200
We understand and agree that the offer(s) set
forth above, subject to the satisfaction of the
applicable conditions set forth in the $2,430,000,000
Revolving Credit Agreement dated as of February 28,
1995 among the Borrower, the Banks listed on the
signature pages thereof, J.P. Morgan Securities Inc.
and The Bank of Nova Scotia, as Co-Syndication Agents,
and yourselves, as Administrative Agent, irrevocably
obligates us to make the Money Market Loan(s) for which
any offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
__________
*** Any number of whole months (but not less than one month)
or not less than 30 days, as specified in the related
Invitation. No more than five bids are permitted for each
Interest Period.
**** Margin over or under the London Interbank Offered Rate
determined for the applicable Interest Period. Specify
percentage (rounded to the nearest 1/10,000 of 1%) and specify
whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (rounded to the
nearest 1/10,000th of 1%).
<PAGE> 201 EXHIBIT F
OPINION OF JOHN JAY LIST, ESQ.,
GENERAL COUNSEL OF THE BORROWER
February 28, 1995
I am General Counsel of the National Rural Utilities
Cooperative Finance Corporation (the "Borrower") and am
delivering this opinion pursuant to the $2,430,000,000
Revolving Credit Agreement (the "Agreement") dated as of
February 28, 1995 among the Borrower, the banks listed on the
signature pages thereof, J.P. Morgan Securities Inc. and The
Bank of Nova Scotia, as Co-Syndication Agents, and Morgan
Guaranty Trust Company of New York, as Administrative Agent.
Terms defined in the Agreement are used herein as therein
defined. This opinion is being rendered to you at the request
of my client, the Borrower, pursuant to Section 3.01(c) of the
Agreement.
I have examined originals or copies, certified or
otherwise identified to my satisfaction, of such documents,
corporate records, certificates of public officials and other
instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, I am of the opinion
that:
1. The Borrower is a cooperative association duly
incorporated, validly existing and in good standing under the
laws of the District of Columbia and has the corporate power
and authority and all material governmental licenses,
authorizations, consents and approvals required to own its
property and assets and to transact the business in which it
is engaged. The Borrower is duly qualified or licensed as a
foreign corporation in good standing in every jurisdiction in
which the nature of the business in which it is engaged makes
such qualification or licensing necessary, except in those
jurisdictions in which the failure to be so qualified or
licensed would not (after qualification, assuming that the
Borrower could so qualify without the payment of any fee or
penalty and retain its rights as they existed prior to such
qualification all to an extent so that any fees or penalties
required to be so paid or any rights not so retained would
not, individually or in the aggregate, have a material adverse
effect on the business or financial condition of the
<PAGE> 202 Borrower), individually or in the aggregate, have
a material adverse effect upon the business or financial
condition of the Borrower. The Borrower has the corporate
power and authority to execute, deliver and carry out the
terms and provisions of the Agreement and the Notes. The
Agreement and the Notes have been duly and validly authorized,
executed and delivered by the Borrower, and the Agreement
constitutes a legal, valid and binding agreement of the
Borrower, and the Notes constitute legal, valid and binding
obligations of the Borrower, in each case enforceable in
accordance with its terms, except as the same may be limited
by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and by general principles of equity.
2. There are no actions, suits, proceedings or
investigations pending or, to my knowledge, threatened against
or affecting the Borrower by or before any court or any
governmental authority, body or agency or any arbitration
board which are reasonably likely to materially adversely
affect the business, property, assets, financial position or
results of operations of the Borrower or the authority or
ability of the Borrower to perform its obligations under the
Agreement or the Notes.
3. No authorization, consent, approval or license
of, or declaration, filing or registration with or exemption
by, any governmental authority, body or agency is required in
connection with the execution, delivery or performance by the
Borrower of the Agreement or the Notes.
4. The holders of the Borrower's Capital Term
Certificates are not and will not be entitled to receive any
payments with respect to the principal thereof or interest
thereon solely because of withdrawing or being expelled from
membership in the Borrower.
5. Neither the Borrower nor any Subsidiary is in
default in any material respect under any material agreement
or other instrument to which it is a party or by which it is
bound or its property or assets may be affected. No event or
condition exists which constitutes, or with the giving of
notice or lapse of time or both would constitute, such a
default under any such agreement or other instrument. Neither
the execution and delivery of the Agreement or the Notes, nor
the consummation of any of the transactions therein
contemplated, nor compliance with the terms and provisions
thereof, will contravene any provision of law, statute, rule
or regulation to which the Borrower is subject or any
judgment, decree, award, franchise, order or permit applicable
to the Borrower, or will conflict or be inconsistent with, or
will result in any breach of, any of the terms, covenants,
<PAGE> 203 conditions or provisions of, or constitute (or with
the giving of notice or lapse of time, or both, would
constitute) a default under (or condition or event entitling
any Person to require, whether by purchase, redemption,
acceleration or otherwise, the Borrower to perform any
obligations prior to the scheduled maturity thereof), or
result in the creation or imposition of any Lien upon any of
the property or assets of the Borrower pursuant to the terms
of, any indenture, mortgage, deed of trust, agreement or other
instrument to which it may be subject, or violate any
provision of the certificate of incorporation or by-laws of
the Borrower. Without limiting the generality of the
foregoing, the Borrower is not a party to, or otherwise
subject to any provision contained in, any instrument
evidencing Indebtedness of the Borrower, any agreement or
indenture relating thereto or any other contract or agreement
(including its certificate of incorporation and by-laws),
which would be violated by the incurring of the Indebtedness
to be evidenced by the Notes.
6. The Borrower has complied fully with all of the
material provisions of each Indenture. No Event of Default
(within the meaning of such term as defined in either
Indenture) and no event, act or condition (except for possible
non-compliance by the Borrower with any immaterial provision
of such Indenture which in itself is not such an Event of
Default under such Indenture) which with notice or lapse of
time, or both, would constitute such an Event of Default has
occurred and is continuing under such Indenture. The
borrowings by the Borrower contemplated by the Agreement will
not cause such an Event of Default under, or the violation of
any covenant contained in, either Indenture.
7. Set forth on Annex A attached hereto is a true,
correct and complete list of all of the Borrower's
Subsidiaries and Joint Ventures, the jurisdiction of
incorporation or organization of each such Subsidiary and
Joint Venture and the nature and percentage of the Borrower's
ownership of each such Subsidiary and Joint Venture.
8. The Commitments (as defined in each of the Prior
Credit Agreements) has been terminated in accordance with its
terms.
<PAGE> 204
EXHIBIT G
OPINION OF MILBANK, TWEED, HADLEY & McCLOY,
SPECIAL COUNSEL FOR THE BORROWER
February 28, 1995
We have acted as special counsel to National Rural
Utilities Cooperative Finance Corporation (the "Borrower")
in connection with the $2,430,000,000 Revolving Credit
Agreement dated as of February 28, 1995 (the "Agreement")
among the Borrower, the Banks party thereto, J.P. Morgan
Securities Inc. and The Bank of Nova Scotia, as Co-
Syndication Agents, and Morgan Guaranty Trust Company of New
York, in its capacity as Administrative Agent (the "Agent").
All capitalized terms used but not defined herein have the
respective meanings given to such terms in the Agreement.
In rendering the opinions expressed below, we have
examined:
(i)the Agreement;
(ii) the Notes; and
(iii) such corporate records of the Borrower and
such other documents as we have deemed
necessary as a basis for the opinions
expressed below.
In our examination, we have assumed the genuineness of all
signatures (other than the Borrower's), the authenticity of
all documents submitted to us as originals and the
conformity with authentic original documents of all
documents submitted to us as copies. When relevant facts
were not independently established, we have relied upon
statements of governmental officials and upon
representations made in or pursuant to the Agreement and
certificates of appropriate representatives of the Borrower.
In rendering the opinions expressed below, we have
assumed, with respect to all of the documents referred to
in this opinion letter (except as provided below), that:
<PAGE> 205 (i) such documents have been duly authorized
by, have been duly executed and
delivered by, and constitute legal,
valid, binding and enforceable
obligations of, all of the parties
(except the Borrower) to such documents;
(ii) all signatures (except signatures of officers
of the Borrower) to such documents have been
duly authorized; and
(iii) all of the parties to such documents (except
the Borrower) are duly organized and validly
existing and have the power and authority
(corporate and other) to execute, deliver and
perform such documents.
Based upon and subject to the foregoing and
subject also to the comments and qualifications set forth
below, and having considered such questions of law as we
have deemed necessary as a basis for the opinions expressed
below, we are of the opinion that:
1. The Borrower is a cooperative association duly
incorporated, validly existing and in good standing under
the laws of the District of Columbia and has the corporate
power and authority and all material governmental licenses,
authorizations, consents and approvals required to own its
property and assets and to transact the business in which it
is engaged. The Borrower has the corporate power and
authority to execute, deliver and carry out the terms and
provisions of the Agreement and the Notes. The Agreement
and the Notes have been duly and validly authorized,
executed and delivered by the Borrower, and the Agreement
constitutes a legal, valid and binding agreement of the
Borrower, and the Notes constitute legal, valid and binding
obligations of the Borrower, in each case enforceable
against the Borrower in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally
and except as the enforceability of the Agreement and the
Notes is subject to the application of general principles of
equity (regardless of whether considered in a proceeding in
equity or at law), including, without limitation, (a) the
possible unavailability of specific performance, injunctive
relief or any other equitable remedy and (b) concepts of
materiality, reasonableness, good faith and fair dealing.
2. To our best knowledge, there are no actions,
suits, proceedings or investigations pending or threatened
<PAGE> 106 against the Borrower by or before any court or
any governmental authority, body or agency or any
arbitration board which in our view are reasonably likely to
materially adversely affect the business, property, assets,
financial position or results of operations of the Borrower
or the authority or ability of the Borrower to perform its
obligations under the Agreement or the Notes.
3. No authorization, consent, approval or license
of, or declaration, filing or registration with or exemption
by, any governmental authority, body or agency is required
in connection with the execution, delivery or performance by
the Borrower of the Agreement or the Notes.
4. The holders of the Borrower's Capital Term
Certificates are not and will not be entitled to receive any
payments with respect to the principal thereof or interest
thereon solely because of withdrawing or being expelled from
membership in the Borrower.
5. Neither the execution and delivery of the
Agreement or the Notes, nor the consummation of any of the
transactions therein contemplated, nor compliance with the
terms and provisions thereof, will contravene any provision
of law, statute, rule or regulation to which the Borrower is
subject or any judgment, decree, award, franchise, order or
permit known to us applicable to the Borrower, or will
conflict or be inconsistent with, or will result in any
breach of, any of the terms, covenants, conditions or
provisions of, or constitute (or with the giving of notice
or lapse of time, or both, would constitute) a default under
(or condition or event entitling any Person to require,
whether by purchase, redemption, acceleration or otherwise,
the Borrower to perform any obligations prior to the
scheduled maturity thereof), or result in the creation or
imposition of any Lien upon any of the property or assets of
the Borrower pursuant to the terms of, any indenture,
mortgage, deed of trust, agreement or other instrument known
to us to which it may be subject, or violate any provision
of the certificate of incorporation or by-laws of the
Borrower. Without limiting the generality of the foregoing,
to our best knowledge the Borrower is not a party to, or
otherwise subject to any provision contained in, any
instrument evidencing Indebtedness of the Borrower, any
agreement or indenture relating thereto or any other
contract or agreement (including its certificate of
incorporation and by-laws), which would be violated by the
incurring of the Indebtedness to be evidenced by the Notes.
6. The Borrower has received a ruling from the
Internal Revenue Service to the effect that it is exempt
<PAGE> 207 from payment of Federal income tax under Section
501(c)(4) of the Internal Revenue Code of 1986, and nothing
has come to our attention that leads us to believe that the
Borrower is not so exempt.
7. The Borrower is not an "investment company" or
a company "controlled" by an "investment company", within
the meaning of the Investment Company Act of 1940, as
amended.
8. The Borrower is not a "holding company", or a
"subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", as such terms are defined
in the Public Utility Holding Company Act of 1935, as
amended.
9. The Commitments (as defined in each of the
Prior Credit Agreements) have been terminated.
The foregoing opinions are subject to the
following qualifications:
We express no opinion as to the effect of the laws
of any jurisdiction in which any Bank is located (other than
New York) that limit the interest, fees or other charges
such Bank may impose.
We express no opinion concerning any law other
than the law of New York, the District of Columbia and the
federal law of the United States. Insofar as this opinion
pertains to matters of District of Columbia law, we have
relied on the opinion of John Jay List, Esq. being delivered
to you contemporaneously herewith.
This opinion letter is, pursuant to Section
3.01(d) of the Agreement, provided to you by us in our
capacity as special counsel to the Borrower and at its
request and may not be relied upon by any Person or for any
purpose other than in connection with the transactions
contemplated by the Agreement without, in each instance, our
prior written consent.
Very truly yours,
<PAGE> 208 EXHIBIT H
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
February 28, 1995
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the
$2,430,000,000 Revolving Credit Agreement dated as of February
28, 1995 (the "Credit Agreement") among the National Rural
Utilities Cooperative Finance Corporation, a not-for-profit
cooperative association incorporated under the laws of the
District of Columbia (the "Borrower"), the banks listed on the
signature pages thereof (the "Banks"), J.P. Morgan Securities
Inc. and The Bank of Nova Scotia, as Co-Syndication Agents,
and Morgan Guaranty Trust Company of New York, as
Administrative Agent (the "Agent"), and have acted as special
counsel for the Agent for the purpose of rendering this
opinion pursuant to Section 3.01(e) of the Credit Agreement.
Terms defined in the Credit Agreement are used herein as
therein defined.
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents,
corporate records, certificates of public officials and other
instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the
opinion that:
1. The execution, delivery and performance by the
Borrower of the Credit Agreement and the Notes are within the
Borrower's corporate powers and have been duly authorized by
all necessary corporate action.
<PAGE> 209 2. The Credit Agreement constitutes a valid
and binding agreement of the Borrower and the Notes constitute
valid and binding obligations of the Borrower, in each case
enforceable in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by general
principles of equity.
In giving the foregoing opinion, (i) we express no
opinion as to the effect (if any) of any law of any
jurisdiction (except the State of New York) in which any Bank
is located which limits the rate of interest that such Bank
may charge or collect and (ii) we have relied, without
independent investigation, as to all matters governed by the
laws of the District of Columbia, upon the opinion of John Jay
List, Esq., General Counsel of the Borrower, dated the date
hereof, a copy of which has been delivered to you.
Very truly yours,
<PAGE> 210 EXHIBIT I
EXTENSION AGREEMENT
[Date]
National Rural Utilities
Cooperative Finance Corporation
Woodland Park
2201 Cooperative Way
Herndon, VA 22071-3025
Morgan Guaranty Trust Company
of New York, as Administrative Agent
under the Credit Agreement
referred to below
60 Wall Street
New York, NY 10260
Gentlemen:
Effective as of [effective date], the undersigned
hereby agree to extend the Termination Date as now in effect
under the $ 2,430,000,000 Credit Agreement dated as of
February 28, 1995 as amended and supplemented from time to
time (the "Credit Agreement"), among National Rural Utilities
Cooperative Finance Corporation, the Banks listed therein,
J.P. Morgan Securities Inc. and The Bank of Nova Scotia, as
Co-Syndication Agents, and Morgan Guaranty Trust Company of
New York, as Administrative Agent, to [Date]. Terms defined
in the Credit Agreement are used herein as therein defined.
This Extension Agreement shall be construed in
accordance with and governed by the law of the State of New
York.
[NAME OF BANK]
By____________________________
Title:
<PAGE> 211 [NAME OF BANK]
By____________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
By____________________________
Title:
Agreed and accepted:
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
By_______________________________
Title:
<PAGE> 212 EXHIBIT J
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of ___________, 19__ among
[ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the "Assignee"),
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION (the
"Borrower") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Administrative Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement
(the "Agreement") relates to the $2,430,000,000 Credit
Agreement dated as of February 28, 1995 (the "Credit
Agreement") among the Borrower, the Assignor and the other
Banks party thereto, as Banks, J.P. Morgan Securities Inc. and
The Bank of Nova Scotia, as Co-Syndication Agents, and Morgan
Guaranty Trust Company of New York, as Administrative Agent
(the "Agent");
WHEREAS, as provided under the Credit Agreement, the
Assignor has a Commitment to make Loans to the Borrower in an
aggregate principal amount at any time outstanding not to
exceed $__________;
WHEREAS, Committed Loans made to the Borrower by the
Assignor under the Credit Agreement in the aggregate principal
amount of $__________ are outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the
Assignee all of the rights of the Assignor under the Credit
Agreement in respect of a portion of its Commitment thereunder
in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding
Committed Loans, and the Assignee proposes to accept
assignment of such rights and assume the corresponding
obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing
and the mutual agreements contained herein, the parties hereto
agree as follows:
SECTION 1. Definitions. All capitalized terms not
otherwise defined herein shall have the respective meanings
set forth in the Credit Agreement.
<PAGE> 213 SECTION 2. Assignment. The Assignor hereby
assigns and sells to the Assignee all of the rights of the
Assignor under the Credit Agreement to the extent of the
Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the
obligations of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, including the purchase from the
Assignor of the corresponding portion of the principal amount
of the Committed Loans made by the Assignor outstanding at the
date hereof. Upon the execution and delivery hereof by the
Assignor, the Assignee, the Borrower and the Agent and the
payment of the amounts specified in Section 3 required to be
paid on the date hereof (i) the Assignee shall, as of the date
hereof, succeed to the rights and be obligated to perform the
obligations of a Bank under the Credit Agreement with a
Commitment in an amount equal to the Assigned Amount, and (ii)
the Commitment of the Assignor shall, as of the date hereof,
be reduced by a like amount and the Assignor released from its
obligations under the Credit Agreement to the extent such
obligations have been assumed by the Assignee. The assignment
provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the
assignment and sale contemplated in Section 2 hereof, the
Assignee shall pay to the Assignor on the date hereof in
Federal funds the amount heretofore agreed between them. It is
understood that commitment and/or facility fees accrued to the
date hereof are for the account of the Assignor and such fees
accruing from and including the date hereof are for the
account of the Assignee. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under
the Credit Agreement which is for the account of the other
party hereto, it shall receive the same for the account of
such other party to the extent of such other party's interest
therein and shall promptly pay the same to such other party.
SECTION 4. Consent of the Borrower and the Agent.
This Agreement is conditioned upon the consent of the Borrower
and the Agent pursuant to Section 9.06(c) of the Credit
Agreement. The execution of this Agreement by the Borrower
and the Agent is evidence of this consent. Pursuant to
Section 9.06(c) of the Credit Agreement the Borrower agrees to
execute and deliver a Note payable to the order of the
Assignee to evidence the assignment and assumption provided
for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor
makes no representation or warranty in connection with, and
shall have no responsibility with respect to, the solvency,
financial condition, or statements of the Borrower, or the
validity and enforceability of the obligations of the Borrower
<PAGE> 214 in respect of the Credit Agreement or any Note.
The Assignee acknowledges that it has, independently and
without reliance on the Assignor, and based on such documents
and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and
will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of
the Borrower.
SECTION 6. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York.
SECTION 7. Counterparts. This Agreement may be
signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered by their duly
authorized officers as of the date first above written.
[ASSIGNOR]
By_________________________
Title:
[ASSIGNEE]
By__________________________
Title:
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
By__________________________
Title:
<PAGE> 215
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
By__________________________
Title:
