EXECUTION COPY
FARMER MAC MORTGAGE SECURITIES
CORPORATION
as Note Purchaser
NATIONAL RURAL
UTILITIES
COOPERATIVE FINANCE
CORPORATION
as Borrower
FEDERAL AGRICULTURAL MORTGAGE
CORPORATION
as Guarantor
_______________________________
NOTE PURCHASE
AGREEMENT
_______________________________
Dated as of May 22,
2009
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TABLE OF CONTENTS
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Page
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RECITALS
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1
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ARTICLE I
DEFINITIONS
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1
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SECTION
1.01. Definitions
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1
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SECTION
1.02. Principles of Construction
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4
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ARTICLE II
PURCHASE OF NOTES
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4
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SECTION
2.01. Purchase of Notes; Minimum
Denominations
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4
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SECTION
2.02. Interest Rates and Payment
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5
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SECTION
2.03. Maturity
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7
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ARTICLE III
CONDITIONS PRECEDENT
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7
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SECTION
3.01. Conditions Precedent to the Purchase of Each
Note
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7
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SECTION
3.02. Certificate of Pledged
Collateral
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8
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ARTICLE IV
REPORTING REQUIRMENTS
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8
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SECTION
4.01. Annual Reporting Requirements
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8
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SECTION
4.02. Default Notices
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9
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ARTICLE V
REPRESENTATIONS OF THE PARTIES
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9
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SECTION
5.01. Represenations of Farmer Mac and the
Purchaser
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9
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SECTION
5.02. Representations of National
Rural
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9
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ARTICLE VI
SECURITY AND COLLATERAL
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11
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SECTION
6.01. Security and Collateral
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11
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ARTICLE VII
EVENTS OF DEFAULT
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12
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SECTION
7.01. Events of Defaults
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12
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SECTION
7.02. Acceleration
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13
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SECTION
7.03. Remedies Not Exclusive
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13
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ARTICLE VIII
MISCELLANEOUS
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13
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SECTION
8.01. GOVERNING LAW
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13
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SECTION
8.02. WAIVER OF JURY TRIAL
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13
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SECTION
8.03. Notices
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13
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SECTION
8.04. Benefit of Agreement
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14
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SECTION
8.05. Entire Agreement
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14
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SECTION
8.06. Amendments and Waivers
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14
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SECTION
8.07. Counterparts
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14
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SECTION
8.08. Termination of Agreement
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14
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SECTION
8.09. Survival
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14
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SECTION
8.10. Severability
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15
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ARTICLE IX
GUARANTEE
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15
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SECTION
9.01 Guarantee
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15
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SECTION
9.02 Control by Guarantor
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16
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Schedule I
– Addresses for Notices
Schedule II
– Form of Applicable Margin Notice
Schedule III
– Form of Pricing Agreement
Annex A-1
– Form of Fixed Rate Note
Annex A-2
– Form of Floating Rate Note
Annex B –
Opinion of Counsel to National Rural
Annex C –
Officers’ Certificate
Annex D –
Form of Securities Purchase Agreement
NOTE PURCHASE
AGREEMENT
NOTE PURCHASE AGREEMENT, dated as of May 22,
2009, among FARMER MAC MORTGAGE SECURITIES CORPORATION (the “
Purchaser ”), a wholly owned subsidiary of FEDERAL
AGRICULTURAL MORTGAGE CORPORATION, a federally-chartered
instrumentality of the United States and an institution of the Farm
Credit System (“ Farmer Mac ” or the “
Guarantor ”); NATIONAL RURAL UTILITIES COOPERATIVE
FINANCE CORPORATION, a cooperative association existing under the
laws of the District of Columbia (“ National Rural
”); and Farmer Mac, as Guarantor.
RECITALS
WHEREAS National Rural wishes from time to time
to issue and sell Notes to the Purchaser, and the Purchaser wishes
from time to time to purchase such Notes from National Rural, all
on the terms and subject to the conditions herein provided;
and
WHEREAS Farmer Mac is an instrumentality of the
United States formed to provide for a secondary market for
agricultural real estate mortgages and rural utilities loans;
National Rural is a non-profit cooperative and Farmer Mac, the
Purchaser and National Rural have agreed that the Notes will be
secured by the pledge of notes for borrowings from National Rural
by members of National Rural, as provided herein.
NOW, THEREFORE, in consideration of the mutual
agreements herein contained, Farmer Mac, the Purchaser and National
Rural agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01.
Definitions
. As used in this Agreement, the
following terms shall have the following meanings:
“ Agreement ” means this Note
Purchase Agreement, as the same may be amended from time to
time.
“ Applicable Margin ” means
the Applicable Margin (LIBOR) or the Applicable Margin (Treasury),
as the context may require.
“ Applicable Margin (LIBOR) ”
means the margin to be added to the LIBOR Rate to determine the
rate of interest payable on the Floating Rate Notes from time to
time. The Applicable Margin (LIBOR) shall be
communicated in writing by Farmer Mac to National Rural in
accordance with Section 2.02(d) hereof, in the form of Schedule II
hereof, and calculated by Farmer Mac as follows: (i) Farmer
Mac’s Cost of Funds (expressed in relation to the LIBOR
Rate), plus 0.75%, minus (ii) the LIBOR Rate. The
Applicable Margin (LIBOR) for any Floating Rate Note shall be set
forth in the applicable Pricing Agreement.
“ Applicable Margin (Treasury)
” means the margin to be added to the Treasury Rate to
determine the rate of interest payable on the Fixed Rate
Notes. The Applicable Margin (Treasury) shall be
communicated in writing by Farmer Mac to National Rural in
accordance with Section 2.02(d) hereof, in the form of Schedule II
hereof, and calculated by Farmer Mac as follows: (i) Farmer
Mac’s Cost of Funds (expressed in relation to the Treasury
Rate), plus 0.75%, minus (ii) the Treasury Rate. The
Applicable Margin (Treasury) for any Fixed Rate Note shall be set
forth in the applicable Pricing Agreement.
“ Business Day ” means any
day other than a Saturday, a Sunday, or a day on which any of the
Federal Reserve Bank of New York, Farmer Mac’s office in
Washington, DC or National Rural’s office in Virginia is not
open for business.
“ Certificate of Pledged Collateral
” has the meaning given to that term in the Pledge
Agreement.
“ Closing Date ” means the
date of the funding of each issuance of Notes hereunder, which date
shall be set forth in the applicable Pricing Agreement.
“ Collateral Agent ” means
U.S. Bank National Association, or its successor, as collateral
agent under the Pledge Agreement.
“ Control Party ” means (i)
the Guarantor, so long as no Guarantor Default has occurred and is
continuing, or (ii) the holders of the Notes for so long as a
Guarantor Default has occurred and is continuing.
“ Dollar ” or “
$ ” means the lawful money of the United States of
America.
“ Eligible Member ” has the
meaning given to that term in the Pledge Agreement.
“ Event of Default ” has the
meaning given to that term in Section 7.01.
“ Farmer Mac’s Cost of Funds
” means the cost of funds quoted by Farmer Mac to National
Rural based on Farmer Mac’s estimate of the economic cost to
obtain cash funds from the wholesale funding market by issuing
unsecured medium-term notes to fully fund to maturity the Note or
Notes purchased by Purchaser from National Rural.
“ Farmer Mac Series C Preferred
Stock ” means shares of Non-Voting Cumulative Preferred
Stock, Series C issued by Farmer Mac.
“ Final Maturity Date ” means
December 31, 2016, or such other date as agreed to by the
parties.
“ Financial Statements ”, in
respect of a Fiscal Year, means the consolidated financial
statements (including footnotes) of National Rural for that Fiscal
Year as audited by independent certified public accountants
selected by National Rural.
“ Fiscal Year ” means the
fiscal year of National Rural, as such may be changed from time to
time, which at the date hereof commences on June 1 of each calendar
year and ends on May 31 of the following calendar year.
“ Fixed Rate Notes ” means
one or more fixed rate notes of National Rural payable to the
Purchaser, having the terms provided for in Article II of this
Agreement and otherwise in the form of Annex A-1 attached hereto,
except to the extent the parties may have approved changes therein
in the applicable Pricing Agreement.
“ Floating Rate Notes ”
means one or more floating rate notes of National Rural payable to
the Purchaser, having the terms provided for in Article II of this
Agreement and otherwise in the form of Annex A-2 attached hereto,
except to the extent the parties may have approved changes therein
in the applicable Pricing Agreement.
“ Guarantor Default ” means a
default by the Guarantor under its obligations pursuant to Article
IX which is existing and continuing.
“ Interest Payment Date ”
means the dates set forth in the Pricing Agreement for notes as the
interest payment dates therefor; provided, however, that if any
such date is not a Business Day, such Interest Payment Date that
would otherwise be such date will be the next Business Day
following such date.
“ Interest Period ”
means, with respect to Floating Rate Notes, until all
outstanding principal amount of the Floating Rate Notes and
interest accrued thereon have been paid in full, each 3-month
period determined as set forth in the applicable Pricing Agreement
unless a different period is agreed by the parties hereto and set
forth in such Pricing Agreement; provided , that the initial
Interest Period means the period from and including the date of
issuance to and excluding the first Interest Payment Date following
the date of issuance; provided, further , that if any
Interest Period would end on a day other than a Business Day, then
such Interest Period shall be extended to and include the next
succeeding Business Day and the next Interest Period shall commence
on the next succeeding day.
“ LIBOR Rate ” shall mean,
for any Interest Period, the rate appearing on Reuters Page LIBOR01
(or on any successor or substitute page of such service, or if the
Reuters service ceases to be available, any successor to or
substitute for such service providing rate quotations comparable to
those currently provided on such page of such service, as mutually
agreed by National Rural and Farmer Mac from time to time for
purposes of providing quotations of interest rates applicable to
Dollar deposits in the London interbank market) as of 11:00 a.m.,
London time, on the day that is two London Banking Days prior to
the commencement of such Interest Period, as the rate for the
offering of Dollar deposits with a maturity of three months (unless
another maturity is agreed by the parties hereto and set forth in
the applicable Pricing Agreement). Unless otherwise
agreed by the parties hereto and set forth in the applicable
Pricing Agreement, such rate shall apply for the initial Interest
Period for any advance notwithstanding that such initial Interest
Period for an advance may be shorter than three months.
“ London Banking Day ” shall
mean any day on which commercial banks and foreign exchange markets
settle payments and are open for general business (including
dealings in foreign exchange and foreign currency deposits) in the
Dollar, in London, England.
“ Member ” shall mean any
Person who is member of National Rural.
“ National Rural Notice ” has
the meaning given to that term in the Pledge Agreement.
“ Notes ” means the Fixed
Rate Notes and the Floating Rate Notes, or any one or more of them
as the context may require.
“ Note Documents ” means the
Notes, this Agreement, and the Pledge Agreement.
“ Notice of Borrowing ” has
the meaning set forth in Section 2.01 hereof.
“ Person ” means an
individual, a corporation, a partnership, an association, a trust
or any other entity or organization, including a government or
political subdivision or an agency or instrumentality
thereof.
“ Pledge Agreement ” means
the Pledge Agreement dated as of the date hereof, among National
Rural, the Purchaser, Farmer Mac and the Collateral
Agent.
“ Pledged Collateral ” has
the meaning given to that term in the Pledge Agreement.
“ Pledged Securities ” has
the meaning given to that term in the Pledge Agreement.
“ Pricing Agreement ” means
the Pricing Agreement for each issuance of Notes among Farmer Mac,
the Purchaser and National Rural in the form of Schedule III
attached hereto.
“ Securities Purchase Agreement
” means the Series C Preferred Stock Purchase Agreement, a
form of which is attached hereto as Annex D .
“ Treasury Rate ” means the
applicable benchmark United States Treasury rate agreed at the time
of pricing a Note and set forth in the applicable Pricing
Agreement.
SECTION 1.02. Principles of
Construction . Unless the context shall otherwise
indicate, the terms defined in Section 1.01 hereof include the
plural as well as the singular and the singular as well as the
plural. The words “hereafter”,
“herein”, “hereof”, “hereto”
and “hereunder”, and words of similar import, refer to
this Agreement as a whole. The descriptive headings of
the various articles and sections of this Agreement were formulated
and inserted for convenience only and shall not be deemed to affect
the meaning or construction of the provisions hereof.
ARTICLE II
PURCHASE OF NOTES
SECTION 2.01.
Purchase of Notes; Minimum Denominations . The
Purchaser agrees to purchase Notes, at 100% of their principal
amount, from time to time before the Final Maturity Date, as
requested by National Rural by written notice (each, a “
Notice of Borrowing ”) to Farmer Mac in an aggregate
principal amount, for all Notes outstanding hereunder at any one
time, not in excess of $1 billion, subject to satisfaction of the
conditions set
forth herein. National Rural may
borrow, repay (subject to the terms of the applicable Notes being
repaid) and reborrow funds at any time or from time to time up to,
but not including, the Final Maturity Date. Each advance
under this Agreement shall be disbursed in a minimum amount of $50
million and additional increments of $5 million in excess
thereof or such other amounts as agreed to in the applicable
Pricing Agreement. Each advance shall price within 3
Business Days of National Rural providing a Notice of Borrowing to
Farmer Mac and shall close and fund within 3 Business Days of
pricing, subject to satisfaction of the conditions set forth herein
and in accordance with the procedures set forth in Section 2.02(d)
hereof, unless otherwise agreed by the parties hereto and set forth
in the applicable Pricing Agreement.
SECTION 2.02.
Interest Rates and Payment .
(a) Floating Rate
Notes . Each Floating Rate Note shall bear interest,
payable quarterly in arrears unless otherwise agreed by the parties
hereto and set forth in the applicable Pricing Agreement, on the
outstanding principal amount thereof (computed on the basis of a
360-day year and the actual number of days elapsed) from its date
of issuance until final payment on the maturity date thereof or
otherwise at a variable rate per annum equal to the LIBOR Rate for
each Interest Period plus the Applicable Margin
(LIBOR). The LIBOR Rate shall reset as of the first day
of each Interest Period. The (i) initial LIBOR Rate and
(ii) Applicable Margin (LIBOR) for the term of each Floating Rate
Note shall be specified in the applicable Pricing
Agreement. Interest only shall be payable on each
Interest Payment Date. The Interest Payment Dates shall
be determined at the time of an advance and set forth in the
applicable Pricing Agreement. The principal amount of
each Floating Rate Note, together with any accrued but unpaid
interest, shall be due and payable on the maturity date for such
Note.
(b) Fixed Rate
Notes . Each Fixed Rate Note shall bear interest,
payable semi-annually in arrears unless otherwise agreed by the
parties hereto and set forth in the applicable Pricing Agreement on
the outstanding principal amount thereof (computed on the basis of
a 30-day month and a 360-day year) from its date of issuance until
final payment on the maturity date thereof or otherwise at a fixed
rate per annum equal to the Treasury Rate plus the Applicable
Margin (Treasury), in each case as specified for the term of each
Fixed Rate Note in the applicable Pricing
Agreement. Interest only shall be payable on each
Interest Payment Date. The Interest Payment Dates shall
be determined at the time of an advance and set forth in the
applicable Pricing Agreement. The principal amount of
each Fixed Rate Note, together with any accrued but unpaid
interest, shall be due and payable on the applicable maturity date
for such Note.
(c) Default
Interest . To the extent any payment of interest or
principal is not paid when due, interest shall continue to accrue
thereon at the applicable rate per annum determined as provided
above plus one percent.
(d) Notice of
Borrowing; Determination of Applicable Margin; Procedure for
Pricing . (i) Each Notice of Borrowing
shall indicate the amount of the Note and the desired maturity date
of such Note that National Rural requests to be
advanced. A Notice of Borrowing may
request preliminary pricing indications for more than one type of
Note, with the understanding that only one type of Note will be
issued on any particular Closing Date, unless otherwise agreed by
the parties hereto in a Pricing Agreement. Each Notice
of Borrowing shall also provide name, telephone and email contact
information of an authorized representative of National
Rural.
(ii) Upon receipt of a
Notice of Borrowing from National Rural, Farmer Mac shall, within 2
Business Days, provide to National Rural a preliminary indication
of the Applicable Margin (LIBOR) or Applicable Margin (Treasury),
or both, as applicable to any Notice of Borrowing; provided
that Farmer Mac shall not be obligated to provide an indication of
pricing if Farmer Mac uses its best efforts to obtain and provide
such preliminary indication, but determines in its sole discretion
reasonably exercised after consultation with National Rural that
market conditions are unfavorable for the issuance of debt to fund
Notes with the terms set forth in the Notice of
Borrowing. Upon an acceptance of such preliminary
indication of pricing by National Rural, the applicable Note will
price within one Business Day (and may price on the day of the
preliminary pricing if the parties so agree) thereafter, unless the
parties otherwise agree to a longer period of time as set forth in
the applicable Pricing Agreement. Farmer Mac shall
provide National Rural with written notice of the final Applicable
Margin (LIBOR) or Applicable Margin (Treasury) no later than the
time of pricing of each advance. National Rural shall be
deemed to approve of such pricing so long as the Applicable Margin
(LIBOR) or Applicable Margin (Treasury) shall not exceed the
preliminary indication by more than 5 basis points
(0.05%). If the final pricing does exceed the
preliminary indication by more than 5 basis points (0.05%), an
authorized representative of National Rural must agree via email
confirmation prior to or simultaneously with the pricing to accept
such margin.
(e) Payments and
Prepayments.
(i) Each Floating Rate
Note shall not be prepayable during the term of such
Note.
(ii) Each Fixed Rate
Note shall not be prepayable during the term of such Note unless
otherwise agreed by Farmer Mac and National Rural and set forth in
the applicable Pricing Agreement. If the parties agree
that an issuance of Fixed Rate Notes may be prepayable prior to the
maturity date of such Notes, then (A) the applicable Pricing
Agreement shall set forth the scheduled call dates, and (B) unless
otherwise agreed by the parties and set forth in the applicable
Pricing Agreement, National Rural may prepay such Note upon at
least nine (9) Business Days prior written notice to Farmer Mac,
which notice shall be received by Farmer Mac on a day that is on or
before the ninth Business Day prior to the related call date, but
in any event, no later than noon eastern time on the ninth Business
Day prior to the related call date. In the event that
any such repayment or prepayment of the principal amount of any
Note is made on a day other than an Interest Payment Date, accrued
interest on the principal amount thereof shall be
payable through and excluding the call date on
which such repayment or prepayment is made.
(iii) The prepayment
terms of any other type of Fixed Rate Note or Floating Rate Note
shall be set forth in the applicable Pricing Agreement.
(f) Payment
Notice . Farmer Mac shall send to National Rural,
not later than the fifth Business Day prior to an Interest Payment
Date for any Note, a notice setting forth the amount of principal
and interest, as applicable, due and owing on the next Interest
Payment Date for such Note.
SECTION 2.03.
Maturity. Each Note shall mature on the maturity date set forth
in the applicable Pricing Agreement and in any event no later than
the Final Maturity Date.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01.
Conditions Precedent to the Purchase of Each Note
. On each Closing Date, the Purchaser shall be under no
obligation to purchase any Note unless and until the following
conditions have been satisfied:
(a) The Notes
. Farmer Mac shall have received the original of such
Notes, duly executed on behalf of National Rural, in the applicable
form attached as Annex A-1 or A-2 hereto, or otherwise in a form
agreed by the parties.
(b) The Pledge
Agreement . Farmer Mac shall have received an
original of the Pledge Agreement duly executed on behalf of
National Rural and the Collateral Agent.
(c) Opinion of
Counsel . Farmer Mac shall have received an opinion
of counsel to National Rural substantially in the form of Annex B,
attached hereto.
(d) Financial and
Other Information . National Rural shall have
provided Farmer Mac with its most recent Financial Statements and
such other information concerning National Rural as Farmer Mac
shall have reasonably requested.
(e) No Material
Adverse Change . National Rural shall have certified
to Farmer Mac (in the manner specified in paragraph (i) of this
Section 3.01), and Farmer Mac shall be satisfied, that no material
adverse change shall have occurred in the financial condition or
business of National Rural between the end of National
Rural’s most recently completed Fiscal Year for which
Financial Statements have been made publicly available and the date
of the purchase of such Note, which has not been set forth in
documents, certificates or financial information furnished to
Farmer Mac or publicly filed.
(f) UCC Filing
. National Rural shall have provided Farmer Mac with
evidence that National Rural has filed the financing statement
required pursuant to Section 2.02(i) of the Pledge
Agreement.
(g) No Event of
Default . National Rural shall have certified to
Farmer Mac and Farmer Mac shall be satisfied that no Event of
Default shall have occurred and be continuing.
(h) Invest to
Participate . National Rural shall have entered into
a Securities Purchase Agreement to purchase Farmer Mac Series C
Preferred Stock such that National Rural shall own or have agreed
to purchase at least 4% of the sum of (1) the aggregate principal
amount of the Notes outstanding hereunder and (2) the aggregate
principal amount of the notes outstanding under both of the Note
Purchase Agreement among the parties dated as of December 15, 2008
and the Note Purchase Agreement among the parties dated as of
February 5, 2009, taking into account the advance made hereunder on
the Closing Date.
(i) Certification
of Senior Management . National Rural shall have
provided Farmer Mac a certification by any vice president of
National Rural, substantially in the form of Annex C attached
hereto, as to the following: (i) that National Rural is a lending
institution organized as a private, not-for-profit, cooperative
association with the appropriate expertise, experience and
qualifications to make loans to its Members for rural
electrification and related purposes; (ii) the matters to be
certified under paragraphs (e) and (g) of this Section 3.01;
and (iii) the representations and warranties of National
Rural.
SECTION 3.02. Certificate of
Pledged Collateral . No later than three Business
Days after each advance hereunder, National Rural shall provide
Farmer Mac and the Collateral Agent a copy of a Certificate of
Pledged Collateral, dated as of the last day of the calendar month
most recently ended at least 10 Business Days prior to such
authentication and delivery, or a more recent date, at National
Rural’s option, in accordance with the terms of the Pledge
Agreement.
ARTICLE IV
REPORTING REQUIREMENTS
SECTION 4.01.
Annual Reporting Requirements . So long as any
Notes remain outstanding, National Rural shall provide Farmer Mac
with the following items within 90 days of the end of each Fiscal
Year, in each case, in form and substance satisfactory to Farmer
Mac:
(a) the Financial
Statements for such Fiscal Year;
(b) a Certificate of
Pledged Collateral;
(c) a receipt from the
Collateral Agent, or such other evidence as is satisfactory to
Farmer Mac, as to the Pledged Collateral held by the Collateral
Agent at the end of such Fiscal Year; and
(d) such other
information concerning National Rural or the Pledged Collateral as
is reasonably requested by Farmer Mac.
SECTION 4.02.
Default Notices . If an action, occurrence or
event shall happen that is, or with notice and the passage of time
would become, an Event of Default, National Rural shall deliver a
National Rural Notice of such action, occurrence or event to Farmer
Mac before 4:00 p.m. (District of Columbia time) on the
Business Day following the date National Rural becomes aware of
such action, occurrence or event, and, if such Event of Default
should occur, shall submit to Farmer Mac, within five days
thereafter, a report setting forth its views as to the reasons for
the Event of Default, the anticipated duration of the Event of
Default and what corrective actions National Rural is taking to
cure such Event of Default.
ARTICLE V
REPRESENTATIONS OF THE
PARTIES
SECTION 5.01.
Representations of Farmer Mac and the Purchaser
. Each of Farmer Mac and the Purchaser jointly and
severally represent to National Rural that on the date hereof and
on each date on which the Purchaser purchases a Note from National
Rural:
(a) it has all
necessary authority and has taken all necessary corporate action,
and obtained all necessary approvals, in order for it to execute
and deliver all Note Documents to which it is a party and for its
obligations and agreements under the Note Documents to constitute
valid and binding obligations of Farmer Mac and the Purchaser; and
in particular the terms of the transaction, and the actions taken
by Farmer Mac and the Purchaser, are in compliance with and in
satisfaction of the requirements of the Farm Credit Administration,
as amended or waived by the Farm Credit Administration;
and
(b) The Purchaser is
purchasing the Notes for its own account and not with a view to the
distribution thereof, provided that the disposition by Farmer Mac
or the Purchaser of their property shall at all times be within
their control. Farmer Mac and the Purchaser each
understands that the Notes have not been registered under the
Securities Act of 1933, as amended, and may be resold only if an
exemption from registration is available.
SECTION 5.02.
Representations of National Rural .
National Rural hereby represents to
Farmer Mac and the Purchaser that on the date hereof and on each
date on which the Purchaser purchases a Note from National
Rural:
(a) National Rural has
been duly organi
