EXHIBIT 1.1
$57,390,000
Rural Electric Cooperative Grantor Trust (KEPCO) Series 1997
Rural Electric Cooperative Grantor Trust Certificates (KEPCO)
Series 1997
FORWARD CERTIFICATE PURCHASE AGREEMENT
December 20, 1996
National Rural Utilities
Cooperative Finance Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
Washington, D.C. 20007
Kansas Electric Power Cooperative, Inc.
P.O. Box 4877
Topeka, Kansas 66604
Ladies and Gentlemen:
The undersigned (hereafter referred to as the "Underwriter") hereby offers
to enter into this Forward Certificate Purchase Agreement (the "Agreement") with
National Rural Utilities Cooperative Finance Corporation ("CFC") and Kansas
Electric Power Cooperative, Inc. (the "Cooperative") for the purchase by the
Underwriter and sale by CFC of $57,390,000 aggregate principal amount of Rural
Electric Cooperative Grantor Trust Certificates Series 1997 (collectively
referred to herein as the "Certificates"). This offer is made subject to
acceptance by CFC and the Cooperative on the date hereof, and upon such
acceptance this Agreement shall become effective in accordance with its terms
and conditions and shall be binding upon CFC, the Cooperative and the
Underwriter. This Agreement will be subject to withdrawal by the Underwriter
upon notice delivered to CFC and the Cooperative at any time prior to the
acceptance hereof by CFC and the Cooperative.
The Certificates will evidence all of the undivided fractional beneficial
interest in the Rural Electric Cooperative Grantor Trust (KEPCO) Series 1997
(the "Trust") created pursuant to the Trust Agreement, as amended and
supplemented from time to time (the "Trust Agreement") dated as of the date
hereof among CFC, the Cooperative and The First National Bank of Chicago, as
Trustee (together with its successors and assigns, if any, the "Trustee").
The Cooperative and ▇▇▇▇▇▇ Guaranty Trust Company of New York (in its
capacity under the Swap Agreement, the "Swap Provider") are entering into a Swap
Agreement (as defined in the Trust Agreement) as of the date hereof relating to
the Certificates, providing that the Cooperative will pay a fixed interest rate
per annum and the Swap Provider will pay interest at a variable rate described
therein. Pursuant to Section 2.1(c) of the Trust Agreement, and effective on
December 18, 1997 (the "Refinancing Date"), the Cooperative has assigned its
interest in the Swap Agreement to the Trustee except as provided in the Trust
Agreement. In addition, the Cooperative and ▇▇▇▇▇▇ Guaranty Trust Company of
New York ("▇▇▇▇▇▇") are entering into the Liquidity Protection Agreement (as
such term is defined in the Trust Agreement) as of the date hereof, and on or
prior to the Refinancing Date the Cooperative and the Liquidity Provider will
enter into the Liquidity Facility (as such terms are defined in the Trust
Agreement), in each case to provide liquidity for the tender of the Certificates
as provided in the Trust Agreement.
The Cooperative and ▇▇▇▇. ▇▇▇▇▇ & Sons Incorporated are entering into
simultaneously herewith a Remarketing Agreement (the "Remarketing Agreement"),
providing for, among other things, the remarketing of Certificates tendered by
the owners thereof as provided in the Trust Agreement.
On November 18, 1997 (the "Deposit Date"), subject to satisfaction of
certain conditions, the Cooperative shall give irrevocable notice to the
Original Trusts (as defined below) that CFC will purchase the Notes, and CFC and
the Cooperative will each deposit with the Original Trusts part of the purchase
price therefor. On the Refinancing Date, and immediately prior to, and
concurrently with, the purchase and sale of the Certificates, CFC will purchase
the Notes held by the Rural Electric Cooperative Grantor Trust (KEPCO) 1988-K1
and by the Rural Electric Cooperative Grantor Trust (KEPCO) 1988-K2
(collectively, the "Original Trusts"; the certificates of the Original Trusts
are collectively referred to herein as the "1988 Certificates"). In addition,
effective as of the Refinancing Date, the Notes, Loan Agreement and Loan
Guarantee Agreement will be amended in certain respects as contemplated by the
Trust Agreement, and CFC will deposit the Notes with the Guarantee endorsed
thereon (as such terms are defined in the Trust Agreement) into the Trust.
The foregoing actions are being taken at the request of the Cooperative
insofar as the Cooperative will realize substantial benefits from such
activities.
As used herein, the "Related Documents" means the Trust Agreement, the
Certificates, the Notes, the Guarantee, the Loan Agreement, the Loan Guarantee
Agreement, the Swap Agreement, the Liquidity Protection Agreement, the Liquidity
Facility or Alternate
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Liquidity Facility, as the case may be, and all guarantees and other agreements
(if any) executed pursuant to the Liquidity Facility or Alternate Liquidity
Facility, as the case may be (collectively the "Liquidity Agreements") and the
Remarketing Agreement. The form of each of the Related Documents is attached
hereto as Schedule I.
Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Trust Agreement.
1. Purchase and Sale. Upon the terms and conditions and upon the basis
of the representations, warranties and agreements herein set forth, the
Underwriter hereby agrees to purchase on the Closing Date (hereinafter defined
in Section 3) from CFC and CFC hereby agrees to sell on the Closing Date to the
Underwriter all (but not less than all) of $57,390,000 aggregate principal
amount of Certificates for an aggregate purchase price of $57,390,000. Upon the
payment by the Underwriter of the purchase price of the Certificates, the
Cooperative shall, in consideration of the Underwriter's providing the service
of underwriting the Certificates and marketing the Certificates to the public
pursuant to this Agreement and providing the services set forth in this
Agreement, pay the Underwriter an underwriter's fee of $286,950 (the
"Underwriter's Fee"). The Certificates shall be dated the date of their
delivery, shall mature on the dates specified in the Trust Agreement (subject to
the terms of the Trust Agreement), shall be subject to redemption as provided in
the Trust Agreement and shall bear interest at the rate or rates determined and
adjusted from time to time in accordance with the Swap Agreement and the Trust
Agreement, payable as provided in the Trust Agreement.
The proceeds of the Certificates will be used to reimburse CFC for the
purchase of all the Notes from the Original Trusts pursuant to the Trust
Agreement.
2. Covenants of CFC and the Cooperative prior to the Closing Date.
(a) The Cooperative covenants and agrees with the Underwriter that:
(i) On or before April 1, 1997 (the "Targeted Filing Date"), the
Cooperative will prepare and (after obtaining the RUS' approval of the portions
thereof that describe the RUS and the Guarantee) will cause CFC as registrant
and on behalf of the Trust as issuer to file with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (including
all exhibits, financial statements and schedules required to be filed in
connection therewith) with respect to the Certificates in conformity with the
rules and regulations of the Securities Act of
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1933, as amended (the "Act") and the rules and regulations (the "Rules and
Regulations") thereunder. In connection therewith, the Cooperative shall obtain
and file as exhibits to the registration statement tax opinions relating to the
federal income tax and Illinois and Virginia state tax aspects of the
transaction. The Cooperative shall comply with the conditions for the use of
such Form for such filing. The Cooperative shall provide to the Underwriter
copies of such registration statement, including any amendments thereto, the
preliminary prospectus contained therein and the exhibits, financial statements
and schedules filed therewith;
(ii) On or before the Targeted Filing Date, the Cooperative shall
file the Trust Agreement and such other statements and documents as are
necessary (including without limitation, statement(s) of eligibility of the
Trustee and any co-trustees on Form T-1 or other applicable form under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act")) to qualify the
Trust Agreement under the Trust Indenture Act if no exemption from such
qualification is available;
(iii) The Cooperative shall use its best efforts to cause such
registration statement to become effective under the Act, and the Trust
Agreement to be qualified under the Trust Indenture Act if no exemption from
such qualification is available on November 18, 1997;
(iv) The Cooperative shall prepare and cause to be filed with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the Act
with respect to the sale or other disposition of the Certificates for so long as
the Underwriter shall deem necessary or appropriate (including prospectus
supplements or amendments with respect to the sale of Certificates from time to
time);
(v) The Cooperative shall furnish to the Underwriter such numbers
of copies of a prospectus, including a preliminary prospectus or any amendment
or supplement to any prospectus, in conformity with the requirements of the Act,
and such other documents, as the Underwriter may reasonably request in order to
facilitate the public sale or other disposition of the Certificates;
(vi) The Cooperative shall use its best efforts to comply with the
Act, the Trust Indenture Act (if applicable) and all applicable Rules and
Regulations;
(vii) The Cooperative shall notify the Underwriter of the happening
of any event of which it has knowledge
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as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(viii) The Cooperative shall prepare and cause CFC to timely file on
behalf of the Trust and otherwise timely file all reports and other documents
and instruments required by the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations thereunder, and each such report,
document and instrument when so filed shall be true and correct in all material
respects and will not contain any untrue statement of material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the Cooperative
shall provide to the Underwriter a copy of each such report, document, or
instrument no later than simultaneously with the filing the same with the
Commission; and
(ix) The Cooperative shall take such other actions as shall be
reasonably requested by the Underwriter in connection with the foregoing.
(a) CFC covenants and agrees with the Cooperative and the Underwriter
to use its best efforts to assist the Cooperative in the Cooperative's
performance of the obligations under Section 2(a) of this Agreement. CFC shall
take all actions necessary or that the Cooperative or the Underwriter reasonably
deems advisable to cause the registration statement to become effective under
the Act. As far in advance as practical before filing the registration statement
or prospectus referred to in Section 2(a) of this Agreement or any amendment or
supplement thereto, the Cooperative will furnish to CFC copies of reasonably
complete drafts of all such documents proposed to be filed (including exhibits),
and CFC shall have the opportunity to object to any disclosure contained therein
and the Cooperative will make the corrections requested by CFC with respect to
such information prior to filing any such registration statement, prospectus, or
amendment or supplement so that it is in form and substance satisfactory to CFC.
The Cooperative shall make available for inspection by CFC and any attorney or
other agent retained by it all records and pertinent documents (collectively,
the "Records") as shall be reasonably necessary to enable them to discharge
their securities law responsibilities, and cause the Cooperative's officers,
directors and employees to supply all information reasonably requested by any
such person in connection with such registration statement, and permit them to
participate in the preparation of such registration statement and any prospectus
contained therein and any amendment or supplement thereto.
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(c) As far in advance as practical before filing thereof, CFC and the
Cooperative shall provide to the Underwriter and its counsel copies of the
registration statement (including all exhibits, schedules and financial
statements), preliminary prospectus and the prospectus and any amendment or
supplement thereto and filings under the Trust Indenture Act (if applicable),
including all amendments and supplements to the foregoing, and afford to the
Underwriter and its counsel a meaningful opportunity to review each of the
foregoing prior to the filing thereof, and all of the foregoing must be in form
and substance satisfactory to the Underwriter and its counsel.
(d) The terms that follow, when used in this Agreement, have the
meanings indicated. The term "Effective Date" means each date that the
Registration Statement and any post-effective amendment or amendments thereto
became or become effective. "Preliminary Prospectus" means any preliminary
prospectus referred to above and any preliminary prospectus included in the
Registration Statement which, at the Effective Date, omits Rule 430A
Information. "Base Prospectus" means the prospectus referred to above contained
in the Registration Statement at the Effective Date. "Prospectus" means the
prospectus, amendment or supplement relating to the Certificates that is first
filed with the Commission pursuant to Rule 424(b) after the date hereof,
together with the Base Prospectus (as such Base Prospectus may have been amended
and together with any supplements thereto) or, if no filing pursuant to Rule
424(b) is required, means the prospectus supplement or amendment, if any,
relating to the Certificates, including the Base Prospectus included in the
Registration Statement at the Effective Date. "Registration Statement" means the
registration statement referred to above and any registration statement required
to be filed under the Act or Rules and Regulations in the form in which it has
or shall become effective and, in the event any post-effective amendment thereto
becomes effective prior to the Closing Date, shall also mean such registration
statement as so amended. Such term shall include Rule 430A Information deemed to
be included therein at the Effective Date as provided by Rule 430A. "Rule 424",
"Rule 430A", and "Regulation S-K" refer to such rules or regulations under the
Act. "Rule 430A Information" means information with respect to the Certificates
and the offering thereof permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A.
(e) Each of CFC and the Cooperative shall take all actions reasonably
necessary (including those actions reasonably requested by the Underwriter) and
within such party's reasonable control to ensure that the conditions to closing
specified in Section 9 (in the case of CFC, only those that refer explicitly to
CFC or its counsel) are satisfied on or before the dates described therein.
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3. Closing. At 10:00 A.M., Baltimore time, on the Refinancing Date, or at
such other time or on such earlier or later business day as shall have been
mutually agreed upon by the Cooperative, CFC and the Underwriter (the "Closing
Date"), and at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., The ▇▇▇▇▇▇▇ Office
Building, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇-1008, or at such
other place as shall be mutually agreed upon, CFC will deliver to the
Underwriter the Certificates, in definitive form, duly executed and
authenticated, and the Cooperative shall pay to the Underwriter the
Underwriter's Fee by wire or check payable in immediately available federal
funds to the order of the Underwriter and shall deliver to the Underwriter the
documents mentioned in Section 9 hereof. The Underwriter will accept such
delivery and pay the purchase price of the Certificates as set forth in Section
1 hereof by wire or check payable in immediately available federal funds to the
order of CFC. The payment and delivery of the Certificates on the Closing Date,
together with the delivery of the aforementioned documents, is herein called the
"Closing." The Certificates will be delivered as book-entry only Certificates
through the facilities of The Depository Trust Company, New York, New York, or
such other securities depository as CFC and the Underwriter may agree upon. The
Certificates will be made available by the Cooperative and CFC to the
Underwriter for checking by 12:00 P.M., Baltimore time, at least two business
days prior to the Closing Date.
4. Representations, Warranties and Covenants.
(a) The Cooperative represents and warrants to, and agrees with, the
Underwriter as follows:
(i) Accuracy of Registration Statement. On the Effective Date,
the Registration Statement did or will comply in all material respects with the
applicable requirements of the Act and the Rules and Regulations; on the
Effective Date and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date, the Prospectus (as amended
and together with any supplements thereto) did or will comply in all material
respects with the applicable requirements of the Act and the Rules and
Regulations; on the Effective Date, the Registration Statement did not or will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and, on the Effective Date, the Prospectus,
if not filed pursuant to Rule 424(b), did not or will not, and on the date of
any filing pursuant to Rule 424(b) and on the Closing Date, the Prospectus (as
amended and together with any supplements thereto), will not, include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the Cooperative makes no
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representations or warranties as to the information contained in or omitted from
the Registration Statement or the Prospectus (or any supplements thereto) (x) in
reliance upon and in conformity with information furnished in writing to the
Cooperative by the Underwriter specifically for use in connection with the
preparation of the Registration Statement or the Prospectus (or any supplements
thereto), (y) under the caption "National Rural Utilities Cooperative Finance
Corporation" or (z) that constitutes the Statement of Eligibility and
Qualification of the Trustee (and any co-trustee) under the Trust Indenture Act.
(ii) Due Incorporation. The Cooperative has been duly incorporated
and is now, and on the Closing Date will be, a validly existing cooperative
association in good standing under the laws of the State of Kansas and the
Cooperative has the corporate power and authority and holds all valid permits
and other required authorizations from governmental authorities necessary to
enter into and perform its obligations under the Related Documents and to carry
on its business as now conducted and as to be conducted on the Closing Date and
as contemplated by the Prospectus.
(iii) Authority. The Cooperative has all requisite corporate power
and authority to enter into and perform its obligations under the Related
Documents. The Related Documents have been duly authorized, executed and
delivered by the Cooperative and constitute its legal, valid and binding
obligations enforceable against the Cooperative in accordance with their
respective terms assuming such documents have been duly authorized, executed and
delivered by the other parties thereto; provided, however, that the
enforceability of the Related Documents may be limited by bankruptcy,
reorganization, insolvency or other laws affecting creditors' rights generally
and general principles of equity.
(iv) Approval. No order, license, consent, authorization or
approval of, or exemption by, or the giving of notice to, or the registration
with or the taking of any other action in respect of, any Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, and no filing, recording, publication or registration in any
public office or any other place, is now, or under existing law in the future
will be, necessary on the Cooperative's behalf to authorize its execution,
delivery and performance of this Agreement or any of the Related Documents other
than (i) registration of the Certificates under the Act, qualification of the
Trust Agreement under the Trust Indenture Act (if required under such Act) and
compliance with state securities and blue sky laws, (ii) rating of the
Certificates, at the time of initial sale, in one of the four highest categories
assigned long-term debt or in an equivalent short-term category by at least one
nationally recognized statistical rating organization that is not
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an affiliated person of the issuer of the Certificates or of any person involved
in the organization or operation of the issuer, and (iii) such as have been
obtained.
(v) No Breach. None of the execution and delivery by the
Cooperative of this Agreement or the Related Documents, the performance of the
Cooperative's obligations hereunder or thereunder and its consummation of the
transactions contemplated hereby or thereby will conflict with or result in any
breach of, or constitute a default under, any applicable laws or any indenture,
mortgage, deed of trust or other instrument or agreement to which the
Cooperative is a party or by which it may be bound or to which any of its
property or assets may be subject, or its certificate of incorporation or by-
laws.
(vi) Execution. This Agreement has been duly authorized, executed
and delivered by the Cooperative.
(vii) Litigation. No litigation is pending, or to Cooperative's
knowledge, threatened in any court in any way contesting the corporate existence
of the Cooperative, or seeking to restrain or to enjoin the issuance, sale or
delivery of the Certificates, or the purchase of the Notes by CFC and the
redemption of the 1988 Certificates, or in any way contesting the validity or
enforceability of the Certificates, this Agreement or any Related Document or
the transactions contemplated hereby and thereby, or contesting in any way the
power of the Cooperative with respect to the Certificates, this Agreement or any
Related Document or the transactions contemplated hereby and thereby or which
could reasonably be expected to have a material adverse effect on the Trust or
the transactions contemplated hereby or in the Related Documents.
(viii) Legality. On the Closing Date, the Certificates will have
been duly and validly authorized and issued, and, when sold to the Underwriter
as provided herein, will conform in all material respects to the description
thereof contained in the Prospectus and will be validly issued and outstanding
and entitled to the benefits of the Trust Agreement.
(ix) Binding Obligation. The Notes are the legal, valid and
binding obligations of the Cooperative and are enforceable in accordance with
their terms, except as such enforceability may be limited by bankruptcy,
reorganization, insolvency or other laws affecting creditors' rights generally
and general principles of equity.
(x) No Defenses. The Notes are not subject to any right of
rescission, setoff, counterclaim or defense, including the defense of usury, and
the operation of any of the terms of the Notes or the exercise of any right
thereunder will not render the
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Notes unenforceable in whole or in part or subject to a right of rescission,
setoff, counterclaim or defense, including the defense of usury, and no such
right of rescission, setoff, counterclaim or defense has been asserted with
respect thereto.
(xi) No Stop Order. The Commission has not issued and, to the
knowledge of the Cooperative, is not threatening to issue any order preventing
or suspending the use of the Prospectus (as amended or supplemented, if CFC
shall have filed with the Commission any amendment thereof or supplement
thereto).
(xii) Investment Company Act. Upon consummation of the
transactions contemplated by this Agreement and the Related Documents the Trust
will be, exempt from, and not obligated to register as an "investment company"
under, the Investment Company Act of 1940, as amended (the "Investment Company
Act"), provided that the Certificates, at the time of initial sale, are rated in
one of the four highest categories assigned long-term debt or in an equivalent
short-term category by at least one nationally recognized statistical rating
organization that is not an affiliated person of the issuer of the Certificates
or of any person involved in the organization or operation of the issuer. The
Cooperative is not, and upon consummation of the transactions contemplated by
this Agreement and the Related Documents the Cooperative will not be, an
"investment company" as defined in the Investment Company Act.
(xiii) Absence of Fraud or Misrepresentation. The Cooperative has
neither taken any action nor omitted to take any action nor made any statement
nor omitted to make any statement that constitutes either a fraud or a
misrepresentation (as such terms are used in 7 U.S.C. (S) 938) in respect of the
authorization, execution or delivery of any Guarantee. In addition to the
foregoing, to the best of the Cooperative's knowledge, there has been no fraud
or misrepresentation (as such terms are used in 7 U.S.C. (S) 938) by any Person
in connection with the authorization, execution or delivery of any Guarantee or
the execution and delivery of the First Amendment to Loan Guarantee Agreement
(b) CFC represents and warrants to, and agrees with, the Underwriter
as follows:
(i) Incorporated Representations. CFC hereby represents and
warrants to, and agrees with, the Underwriter as set forth in Sections 4(a)(i)
[Accuracy of Registration Statement], but only as to the description of CFC,
(a)(iii) [Authority], as to the documents to which it is a party, (a)(iv)
[Approval] (except that an exemption may be needed by CFC under the Employment
Retirement Income Security Act of 1974), (a)(v) [No Breach] (except that an
exemption may be needed by CFC under the Employment Retirement Income Security
Act of 1974), (a)(vi) [Execution], (a)(xi) [No Stop
10
Order], the last sentence of (a)(xii) [Investment Company Act] and (a)(xiii)
[Absence of Fraud or Misrepresentation] as if such provisions were set forth
here in full (and such provisions are incorporated herein by reference);
provided that for purposes of this Section 4(b)(i), all references to "the
Cooperative" in said incorporated provisions shall be changed to "CFC"
(ii) Due Incorporation. CFC has been duly incorporated and is
now, and on the Closing Date will be, a validly existing cooperative association
in good standing under the laws of the District of Columbia and CFC has the
corporate power and authority and holds all valid permits and other required
authorizations from governmental authorities necessary to enter into and perform
its obligations under the Related Documents and to carry on its business as now
conducted and as to be conducted on the Closing Date and as contemplated by the
Prospectus.
(iii) Litigation. On the date hereof, neither the Trust nor CFC
has any litigation pending of a character which in the opinion of counsel for
CFC referred to in Section 9(a)(i) hereof could reasonably be expected to result
in a judgment or decree having a material adverse effect on the Trust or the
transactions contemplated hereby or in the Related Documents.
(iv) Binding Obligation. To the best knowledge of CFC, the Notes
are the legal, valid and binding obligations of the Cooperative and are
enforceable in accordance with their terms, except as such enforceability may be
limited by bankruptcy, reorganization, insolvency or other laws affecting
creditors' rights generally and general principles of equity.
(v) No Defenses. To the best knowledge of CFC, the Notes are not
subject to any right of rescission, setoff, counterclaim or defense, including
the defense of usury, and the operation of any of the terms of the Notes or the
exercise of any right thereunder will not render the Notes unenforceable in
whole or in part or subject to a right of rescission, setoff, counterclaim or
defense, including the defense of usury, and no such right of rescission,
setoff, counterclaim or defense has been asserted with respect thereto.
(vi) Certificates. Assuming the Certificates are issued in
accordance with the Trust Agreement, on the Refinancing Date CFC will be the
lawful owner of the Certificates. Upon sale and delivery of, and payment for,
the Certificates as provided herein, CFC will convey good and marketable title
to the Certificates to the Underwriter, free and clear of all liens,
encumbrances, equities and claims whatsoever.
(vii) Use of Proceeds. Assuming the Certificates are issued in
accordance with the Trust Agreement, on the
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Refinancing Date, CFC will use the proceeds from the sale of the Certificates
hereunder for general corporate purposes and will deposit into the Trust the
Notes with the Guarantee endorsed thereon.
5. Prospectuses. The Cooperative has caused or will cause to be
delivered to the Underwriter copies of each Preliminary Prospectus and has
consented to the use of such copies for the purposes permitted by the Act. The
Cooperative agrees to deliver to the Underwriter, without charge, from time to
time during such period as the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, as many copies of the
Prospectus (and, in the event of any amendment of or supplement to the
Prospectus, of each amended or supplemented Prospectus) as the Underwriter may
reasonably request. If, at any time during the period in which the Cooperative
is required to deliver copies of the Prospectus, as provided in this Section,
any event known to CFC or the Cooperative relating to or affecting the Trust,
the Rural Utilities Service, the Cooperative, the Certificates or any Related
Document shall occur which should be set forth in an amendment of or supplement
to the Prospectus in order to make the statements in the Prospectus not
misleading in the light of the circumstances at the time it is delivered to a
purchaser, or it shall be necessary to amend or supplement the Prospectus to
comply with law or with the rules and regulations of the Commission, the
Cooperative, at its expense, will forthwith prepare (in compliance with its
obligations under Section 2(b) above) and furnish to the Underwriter for
distribution to the Underwriter and dealers a reasonable number of copies of an
amendment or amendments of or a supplement or supplements to the Prospectus
which will so amend or supplement the Prospectus that, as amended or
supplemented, it will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements in the Prospectus not misleading in the light of the
circumstances under which they were made when it is delivered to a purchaser
when required by law to be delivered in connection with sales by an Underwriter
or dealer and will comply with law and with such rules and regulations. Each of
CFC and the Cooperative authorizes the Underwriter and all dealers effecting
sales of the Certificates to use the Prospectus, as from time to time so amended
or supplemented, in connection with the sale of Certificates in accordance with
applicable provisions of the Act and the Rules and Regulations thereunder for
the period during which the Cooperative is required to deliver copies of the
Prospectus as provided in this Section.
6. Commission Proceedings as to Registration Statement. The Cooperative
agrees to advise the Underwriter promptly, and to confirm such advice in
writing, when the Registration Statement shall have become effective. The
Cooperative further agrees to so
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advise the Underwriter (and so confirm such advice) when any post-effective
amendment of the Registration Statement shall have become effective after the
date hereof and when any further amendment of or supplement to the Prospectus
shall be filed with the Commission, of any request made by the Commission for
any amendment of the Registration Statement or the Prospectus or for additional
information and of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or of the initiation of any
proceedings for that purpose. CFC and the Cooperative will use every reasonable
effort to prevent the issuance of such a stop order and, if any such order shall
at any time be issued, to obtain the withdrawal thereof at the earliest possible
moment.
7. Blue Sky. Each of CFC and the Cooperative will diligently endeavor
(at the Cooperative's cost and expense), when and as requested by the
Underwriter, to qualify, or to cause to be qualified, the Certificates, or such
portion thereof as the Underwriter may reasonably request, for offering and sale
under the securities or blue sky laws of any jurisdictions which the Underwriter
shall reasonably designate, and to maintain such qualifications in effect for as
long as may be reasonably required for the distribution of the Certificates; and
to file such statements and reports as may be required by the laws of each
jurisdiction in which the Certificates have been qualified as above provided;
provided that CFC and the Cooperative shall not be required to register or
qualify as a foreign corporation nor, except as to matters relating to the offer
and sale of the Certificates, take any action which would subject it to service
of process generally in any jurisdiction.
8. Earnings Statement. CFC agrees to make generally available to the
holders of the Certificates, in accordance with Section 11(a) of the Act and any
applicable rules promulgated by the Commission thereunder, if applicable,
earnings statements (which need not be audited) for the Trust in reasonable
detail and covering a period of at least twelve months beginning after the
Effective Date of the Registration Statement and to advise the Underwriter when
such statement has been so made available. Such earnings statements shall be so
made available as soon as practicable after the expiration of such period, and
in any event not later than fifteen months after the Effective Date of the
Registration Statement.
9. Conditions Precedent.
(a) Conditions to Underwriter's Obligations. The Underwriter has
entered into this Agreement in reliance upon, and the Underwriter's obligations
under this Agreement to accept delivery of and to pay for the Certificates are
subject to, the accuracy of the information set forth herein, the
representations
13
and warranties of CFC and the Cooperative contained herein and to be contained
in the documents and instruments to be delivered pursuant hereto or to the
Related Documents and the performance by CFC and the Cooperative of their
respective obligations hereunder and under such aforementioned documents and
instruments at or prior to the Closing. The Underwriter's obligations under this
Agreement are and shall be subject to the following conditions, each of which
shall have been accomplished at or prior to the date specified below. The
obligations of CFC and of the Cooperative under this Agreement are and shall be
subject to the condition that they receive the opinion described in Section
9(a)(i)(F) below.
(i) Activities Occurring On or Before the Date Hereof. On or
before the date hereof, the Underwriter shall have received the following each
in form and substance satisfactory to the Underwriter, and CFC and the
Cooperative shall have received the opinion described in Section 9(a)(i)(F):
(A) Documents. Each of the First Amendment to Loan
Agreement, the First Amendment to Loan Guarantee Agreement, the Swap Agreement,
the Liquidity Protection Agreement (including a certificate from ▇▇▇▇▇▇ stating
that the Liquidity Protection Agreement has become effective), the Remarketing
Agreement, the Trust Agreement, the letter agreement among the Cooperative,
▇▇▇▇▇▇ and ▇▇▇▇. ▇▇▇▇▇ & Sons Incorporated regarding the fees of the Remarketing
Agent and ▇▇▇▇▇▇'▇ consent to the appointment of ▇▇▇▇. ▇▇▇▇▇ & Sons Incorporated
as Remarketing Agent and this Agreement, each being dated as of the date hereof,
shall have been fully executed and delivered by the parties thereto, and the
Cooperative shall have delivered to the Underwriter a certificate of the
Executive Vice President of the Cooperative dated the date hereof, certifying
that attached thereto are true and complete copies of each of such documents,
and all certificates and opinions executed and delivered by the parties in
connection therewith (including all amendments or supplements thereto), in each
case as in force and effect as of the date hereof.
(B) Opinions of Counsel. The Underwriter shall have
received legal opinions from the following counsel, addressed to the Underwriter
and dated the date hereof, in each case in form and substance satisfactory to
the Underwriter and its counsel:
(1) CFC. ▇▇▇▇ ▇. ▇▇▇▇, Senior Vice President and
General Counsel for CFC.
(2) Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇. Milbank, Tweed,
▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for CFC.
(3) Cooperative. ▇▇▇▇▇▇ ▇▇▇▇, Esq., General Counsel of
the Cooperative.
14
(4) ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.. ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.,
special finance counsel for the Cooperative.
(5) Trustee and Tender Agent. The Underwriter shall
have received an opinion from in-house counsel to the Trustee and Tender Agent.
(6) Swap Provider. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., counsel to
the Swap Provider.
(7) ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇,
counsel to ▇▇▇▇▇▇.
(C) Administrative Record for Rural Utilities Service. The
Underwriter shall have received a true and complete copy of the administrative
record setting forth the recommendation of the RUS for approval of the First
Amendment to Loan Agreement and the First Amendment to Loan Guarantee Agreement
and the transactions contemplated thereby.
(D) Enabling Resolutions. The Underwriter shall have
received copies of resolutions of the Board of Directors of the Cooperative
authorizing the execution, delivery and performance by the Cooperative of this
Agreement and each of the other Related Documents to which it is a party,
certified by the Secretary or an Assistant Secretary or other authorized officer
of the Cooperative (which certificate shall state that such resolutions are in
full force and effect on the date hereof and have not been amended or
supplemented in any manner).
(E) Incumbency. The Underwriter shall have received a
certificate of the Secretary or an Assistant Secretary or other authorized
officer of each of CFC and the Cooperative, respectively, dated the date hereof,
certifying as to the names and true signatures of the officers of CFC and the
Cooperative, respectively, authorized to execute this Agreement and any other
document to be delivered by CFC and the Cooperative, respectively, hereunder.
(F) Opinion of Underwriter's Counsel. CFC and the
Cooperative shall have received an opinion of counsel to the Underwriter dated
as of the date hereof and addressed to CFC and the Cooperative.
(ii) Activities Occurring On or Before the Deposit Date. On or
before the Deposit Date, the following shall have occurred:
(A) Liquidity Facility. The Liquidity Provider shall have
executed and delivered either a commitment to enter into the Liquidity Facility
on the Refinancing Date (such
15
commitment being dated the Deposit Date) or a Liquidity Facility fully executed
and delivered by the Cooperative and acknowledged by the Swap Provider to become
effective as of the Refinancing Date, and the Cooperative shall have delivered
to the Underwriter a certificate of the Secretary or Assistant Secretary or
other authorized officer of the Cooperative dated the Deposit Date certifying
that attached thereto is a true and complete copy thereof as in full force and
effect as of the Deposit Date.
(B) Effectiveness of Registration Statement and
Qualification under Trust Indenture Act. The Registration Statement shall have
become effective (in form and substance satisfactory to the Underwriter) on the
Deposit Date or at such other time or date as the Underwriter may approve in its
sole discretion.
(C) Refinancing. The following shall have occurred:
(i) (a) The Cooperative shall have taken all actions
contemplated by Section 1.4 of the First Amendment to Loan Agreement, including
the delivery of the notice described therein in accordance with the terms of the
Original Loan Agreement and in compliance with all applicable laws, rules and
regulations, (2) all other activities to be taken on or before the Deposit Date
by the various signatories to the Related Documents under, pursuant to or
contemplated by the Related Documents have been taken and (3) none of the
Related Documents shall have been amended, modified or terminated, and (b) the
Underwriter shall have received a certificate of the Cooperative, signed on its
behalf by a duly authorized officer of the Cooperative and dated the Deposit
Date, to the effect of (a) of this sentence and certifying that attached thereto
are true, correct and complete copies of all documents, certificates and
opinions delivered by any party on or as of the Deposit Date pursuant to the
Trust Agreement, the Liquidity Protection Agreement or any other Related
Document;
(ii) CFC shall have taken all actions contemplated by
Section 1.3(b) of the First Amendment to Loan Agreement, including the delivery
of the notices and the deposit of the Purchase Price described therein in
accordance with the terms of the Original Loan Agreement and in compliance with
all applicable laws, rules and regulations, and the Underwriter shall have
received a certificate of CFC, signed on its behalf by a duly authorized officer
of CFC and dated the Deposit Date, to the effect that the foregoing shall have
occurred and attaching thereto a true, correct and complete copy of the notices
described in said Section 1.3(b) as fully executed by the signatories thereto;
and
(iii) The Trustee shall have delivered the Call Notice
contemplated by Section 7.1 of the Original Trust
16
Agreements (as a result of the delivery of the notices described in Section
1.3(b) of the First Amendment to Loan Agreement) in accordance with the terms of
the Original Trust Agreements , and the Underwriter shall have received on the
Deposit Date a certificate of the Trustee dated the Deposit Date, signed on its
behalf by a duly authorized officer of the Trustee to the effect that the
foregoing shall have occurred, and attaching thereto a true, correct and
complete copies of the notice described above.
(D) Bringdowns. A bringdown certificate or legal opinion,
dated the Deposit Date, of each certificate or legal opinion described in
Section 9(a)(i)(A) and (B) confirming that each statement contained in each such
certificate or each opinion expressed in each such legal opinion, as the case
may be, remains true and correct as of the Deposit Date as if originally
delivered or rendered on or as of the Deposit Date.
(E) Opinion of Counsel to Liquidity Provider. If the
Liquidity Provider has executed and delivered the Liquidity Facility on or prior
to the Deposit Date, the Underwriter shall have received a legal opinion,
addressed to the Underwriter and dated the Deposit Date hereof, from counsel to
the Liquidity Provider substantially in form attached hereto as Exhibit A.
(F) Consents. The Underwriter shall have received certified
copies of all approvals, authorizations or consents of, or notices to or filings
or registrations with, any governmental body, agency or official required for
CFC and the Cooperative to execute, deliver or perform this Agreement and the
Related Documents.
(G) NASD Clearance. The Underwriter shall have received all
necessary approvals, if any, from the National Association of Securities
Dealers, Inc. (the "NASD") regarding this Agreement.
(H) Reliance on Opinions to Ratings Agencies. The
Underwriter shall have received reliance letters relating to each opinion of
counsel (including ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. and counsel to the Swap Provider and
to the Liquidity Provider) rendered to the Trustee, S&P, ▇▇▇▇▇'▇ or any other
Rating Agency by counsel in connection with the rating of the Certificates.
(I) Blue Sky Survey. The Underwriter shall have received at
or prior to the Deposit Date from ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇ a memorandum or summary,
in form and substance satisfactory to the Underwriter, with respect to the
qualification for offering and sale by the Underwriter of the Certificates under
the state securities or blue sky laws of such jurisdictions and the Underwriter
may reasonably have designated to CFC.
17
(J) RUS Certificate. The Underwriter shall have received a
certificate, dated the Deposit Date, from the Administrator of the RUS in the
form attached to the Trust Agreement as Exhibit L.
(iii) Activities Occurring On or Before the Closing Date. On or
before the Closing Date, the following shall have occurred:
(A) Liquidity. If not delivered at Deposit Date, the
Liquidity Provider shall have executed and delivered the Liquidity Facility
dated to be effective as of the Refinancing Date and being fully executed and
delivered by the other parties thereto, and the Cooperative shall have delivered
to the Underwriter a certificate of the Secretary or Assistant Secretary or
other authorized officer of the Cooperative dated the Refinancing Date,
certifying that attached thereto is a true and complete copy of such facility
(including all amendments or supplements thereto) as in force and effect on the
Closing Date.
(B) All Other Conditions Satisfied. Underwriter shall have
received a certificate of an authorized officer of the Cooperative dated the
Refinancing Date, stating that all conditions precedent (other than purchase and
sale of the Certificates pursuant to this Agreement) to (i) the issuance of the
Certificates under the Related Documents and under applicable law, (ii) the
creation of the Trust, the refinancing of the Notes, and the deposit of the
Notes (with the Guarantee endorsed thereon) and the Swap Agreement in the Trust
and (iii) the effectiveness of the Remarketing Agreement and all other Related
Documents shall have been satisfied without waiver (other than waivers consented
to in writing by the Underwriter), and each such issuance, creation,
continuation and effectiveness shall have occurred, and the Underwriter shall
have received a certificate of an authorized officer of the Cooperative dated
the Closing Date, certifying to the foregoing.
(C) Other Documents. CFC and the Cooperative shall have
furnished to the Underwriter and to ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, counsel for the
Underwriter, such further opinions, certificates and documents as the
Underwriter or they may have reasonably requested prior to the Closing Date
resulting from the passage of time or a change in circumstances since the date
of this Agreement.
(D) Effectiveness of Registration Statement. Either a post-
effective amendment to the Registration Statement containing the Prospectus
shall have so become effective or the Prospectus shall have been timely filed or
transmitted by a means reasonably calculated to result in filing with the
Commission in accordance with Rule 424(b); and in either case no stop order
18
suspending the effectiveness of the Registration Statement or the qualification
of the Trust Agreement shall be in effect on the Closing Date, and no
proceedings for the issuance of such an order shall be pending or, to the
knowledge of CFC, the Cooperative or the Underwriter, threatened by the
Commission on the Closing Date.
(E) Trust Indenture Act. The Trust Agreement shall have
been duly qualified under the Trust Indenture Act or counsel for the Cooperative
shall have delivered a written opinion that such is not required.
(F) Representations and Warranties. The representations,
warranties and covenants of CFC and of the Cooperative contained in this
Agreement will be true, complete and correct in all material respects on the
Closing Date with the same effect as if made on the Closing Date.
(G) Related Documents. At the time of the Refinancing, the
Related Documents shall be in full force and effect, shall have become effective
and shall have not been amended, modified or supplemented, except as may have
been agreed to in writing by the Underwriter. The Cooperative shall also deliver
a certificate of an authorized officer of the Cooperative, dated the Closing
Date, certifying that attached thereto are true and complete copies of each of
the Related Documents (including all amendments or supplements thereto) as in
force and effect as of the Closing Date.
(H) Ratings. The Certificates shall have been rated A-1 and
AAA or higher by Standard & Poor's Ratings Group, a division of ▇▇▇▇▇▇-▇▇▇▇,
Inc. ("S&P") and P-1 and Aa1 or higher by ▇▇▇▇▇'▇ Investors Service, Inc.
("Moody's"), and such ratings shall be in effect, and shall not have been
withdrawn or downgraded, as of the Closing Date.
(I) Bringdowns. A bringdown certificate or legal opinion,
dated the Closing Date, of each certificate or legal opinion described in
Section 9(a)(i)(A) and (B) and Section 9(a)(ii)(E) [Opinion of Counsel to
Liquidity Provider if delivered at Deposit Date] confirming that each statement
contained in each such certificate or each opinion expressed in each such legal
opinion, as the case may be, remains true and correct as of the Closing Date as
if originally delivered or rendered on or as of the Closing Date.
(J) Additional Closing Date Opinions. The Underwriter shall
have received opinions, addressed to the Underwriter and dated the Closing Date,
from:
(1) ▇▇▇▇▇▇▇, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇, Esq.
Each of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, and ▇▇▇▇
19
List, Esq., counsel for CFC, in the form attached hereto as Exhibit B.
(2) ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. & Cooperative. Each of
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., special finance counsel for the Cooperative, and ▇▇▇▇▇▇
▇▇▇▇, Esq., counsel for the Cooperative, in the form attached hereto as
Exhibit C.
(3) Counsel for the Liquidity Provider. Counsel to the
Liquidity Provider, substantially in the form of Exhibit A hereto. [if not
delivered at Deposit Date]
(4) Counsel for the Underwriter. ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇,
counsel to the Underwriter, in the form attached hereto as Exhibit D.
(5) Counsel for the Trustee. Counsel to the Trustee to
the effect that the Certificates have been duly authorized, executed, delivered
and authenticated by the Trustee.
(6) Counsel for the Swap Provider. Counsel to the Swap
Provider, in the form of Exhibit E hereto.
(K) Blue Sky Survey. The Underwriter shall have received at
or prior to the Closing Date from ▇▇▇▇▇, Brown & ▇▇▇▇▇ a memorandum or summary,
in form and substance satisfactory to the Underwriter, with respect to the
qualification for offering and sale by the Underwriter of the Certificates under
the state securities or blue sky laws of such jurisdictions and the Underwriter
may reasonably have designated to CFC and the Cooperative.
(L) The Cooperative Officer's Certificate. The Underwriter
shall have received, on the Closing Date, a certificate of the Cooperative dated
the Closing Date, signed on its behalf by the Executive Vice President and Chief
Executive Officer of the Cooperative, to the effect that:
(i) the signer of such certificate has examined the Registration
Statement and any post-effective amendment thereof, and the
Prospectus and any supplement or amendment thereto and that (a) in
his opinion, as of the Effective Date, the Registration Statement,
as amended, (other than the information set forth under the
caption "National Rural Utilities Cooperative Finance
Corporation," which such certificate need not cover) did not
contain an untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and the Prospectus,
including any amendment or supplement thereto, (other than the
information set forth under the caption
20
"National Rural Utilities Cooperative Finance Corporation," which
such certificate need not cover) at earlier of (x) the time it was
filed in accordance with Rule 424(b), if required, and (y) the
time the Registration Statement or a post-effective amendment
thereof including the Prospectus (including any amendment or
supplement thereto) was declared effective, did not contain an
untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and since such time no
event has occurred which should have been set forth in an
amendment or supplement to the Prospectus but which has not been
so set forth, (b) no stop order suspending the effectiveness of
the Registration Statement is in effect on the Closing Date and no
proceedings for the issuance of such an order have been taken or
to the knowledge of the Cooperative are contemplated by the
Commission on or prior to the Closing Date, (c) there are no
material legal proceedings with respect to the Cooperative, the
Trust, the Notes, the Guarantee or the Trust Agreement or of which
property of CFC or the Trust is the subject which are required to
be disclosed and which are not disclosed in the Registration
Statement and the Prospectus, (d) there are no material contracts
as to which CFC is a party which are required to be disclosed and
which are not disclosed in the Registration Statement or the
Prospectus;
(ii) the representations and warranties of the Cooperative
contained herein and in any other Related Document are true and
correct in all material respects on and as of the Closing Date
with the same effect as if made on the date of the Closing Date;
(iii) no litigation is pending, or to his knowledge, threatened in
any court in any way seeking to restrain or to enjoin the
issuance, sale or delivery of the Certificates, or the purchase of
the 1988 Certificates to be purchased with the proceeds of the
Certificates, or in any way contesting or affecting the validity
or enforceability of the Certificates, this Agreement, or any
Related Document or the transactions contemplated hereby and
thereby or contesting in any way the power of CFC or its authority
with respect to the Certificates, this Agreement, or any Related
Document or the transactions contemplated hereby and thereby;
(iv) the Cooperative has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date; and
(v) to the best of such officer's knowledge after due inquiry no
event has occurred and is continuing, or would result from
21
the closing of the purchase and sale of the Certificates pursuant
to this Agreement, which constitutes a default or breach of or
creates in favor of any person or entity a right of termination
under any of the Related Documents.
(M) CFC's Certificate. The Underwriter shall have received
a certificate of CFC, dated the Closing Date, signed on its behalf by the
President, the Governor or a Vice President of CFC, to the effect that
(i) the signer of such certificate has examined the Registration
Statement and any post-effective amendment thereof, and the
Prospectus and any supplement or amendment thereto and that (a) in
his opinion, as of the Effective Date, the information in the
Registration Statement, as amended, set forth under the caption
"National Rural Utilities Cooperative Finance Corporation" did not
contain an untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and the information
set forth in the Prospectus under the caption "National Rural
Utilities Cooperative Finance Corporation" at earlier of (x) the
time it was filed in accordance with Rule 424(b), if required, and
(y) the time the Registration Statement or a post-effective
amendment thereof including the Prospectus (including any
amendment or supplement thereto) was declared effective, did not
contain an untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and
since such time no event has occurred which should have been set
forth in an amendment or supplement to the Prospectus but which
has not been so set forth, (b) no stop order suspending the
effectiveness of the Registration Statement is in effect on the
Closing Date and no proceedings for the issuance of such an order
have been taken or to the knowledge of CFC are contemplated by the
Commission on or prior to the Closing Date, (c) there are no
material legal proceedings with respect to CFC, the Trust, the
Notes, the Guarantee or the Trust Agreement or of which property
of CFC or the Trust is the subject which are required to be
disclosed and which are not disclosed in the Registration
Statement and the Prospectus, (d) there are no material contracts
as to which CFC is a party which are required to be disclosed and
which are not disclosed in the Registration Statement or the
Prospectus;
(ii) the representations and warranties of CFC contained herein
and in any other Related Document are true and correct in all
material respects on and as of the Closing Date with the same
effect as if made on the date of the Closing Date;
22
(iii) to his knowledge no litigation is pending or threatened in
any court in any way seeking to restrain or to enjoin the
issuance, sale or delivery of the Certificates, or the purchase of
the 1988 Certificates to be redeemed or purchased with the
proceeds of the Certificates, or in any way contesting the
validity or enforceability of the Certificates, this Agreement or
any Related Document or the transactions contemplated hereby and
thereby, or contesting in any way the power of the Cooperative
with respect to the Certificates, this Agreement or any Related
Document or the transactions contemplated hereby and thereby;
(iv) CFC has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or
prior to the Closing Date; and
(iv) CFC has obtained all needed exemptions under the Employee
Retirement Income Security Act of 1974 referred to in Section
4(b)(i) of this Agreement.
(N) Enabling Resolutions. The Underwriter shall have
received copies of resolutions of the Board of Directors of the Cooperative
authorizing the execution, delivery and performance by the Cooperative of this
Agreement, certified by the Secretary or an Assistant Secretary or other
authorized officer of the Cooperative (which certificate, dated the Closing
Date, shall state that such resolutions are in full force and effect on the
Closing Date and have not been amended or supplemented in any manner). This
certificate may simply confirm as of the Closing Date the certificate described
in Section 9(a)(i)(D) [Enabling Resolutions] if appropriate.
(O) Incumbency. The Underwriter shall have received a
certificate of the Secretary or an Assistant Secretary or other authorized
officer of each of CFC and the Cooperative, respectively, dated the Closing
Date, certifying as to the names and true signatures of the officers of CFC and
the Cooperative, respectively, authorized to execute any document to be
delivered by CFC and the Cooperative, respectively, hereunder at the Closing.
These certificates may simply confirm as of the Closing Date the certificates
described in Section 9(a)(i)(E) [Incumbency] if there are no changes to those
certificates.
(P) ▇▇▇▇▇▇ Certificate. The Underwriter shall have received
a certificate of an officer of ▇▇▇▇▇▇, dated the Closing Date, to the effect
that the statements and information contained in the Registration Statement and
Prospectus (including amendments and supplements thereto as of the Closing Date)
insofar as they describe ▇▇▇▇▇▇ are fair and accurate.
23
(Q) Liquidity Provider Certificate. The Underwriter shall
have received a certificate of an officer of the Liquidity Provider, dated the
Closing Date, to the effect that the statements and information contained in the
Registration Statement and Prospectus (including amendments and supplements
thereto as of the Closing Date) insofar as they describe the Liquidity Provider
are fair and accurate.
(R) Swap Provider Certificate. The Underwriter shall have
received a certificate of an officer to the Swap Provider, dated as of the
Closing Date, to the effect that the statements and information contained in the
Registration Statement and Prospectus (including amendments and supplements
thereto as of the Closing Date) insofar as they describe the Swap Provider, are
fair and accurate.
(S) Registration Statement. At or prior to the Closing, the
Underwriter shall have received two (2) manually executed copies of the
Registration Statement, (with all exhibits and schedules thereto) including all
amendments thereto.
(T) RUS Certificate. The Underwriter shall have received a
certificate, dated the Closing Date, from the Administrator of the RUS in the
form attached to the Trust Agreement as Exhibit L.
(b) If any of the conditions to the obligations of the Underwriter
contained in this Section or elsewhere in this Agreement shall not have been
satisfied when and as required herein, all obligations of the Underwriter
hereunder may be terminated by the Underwriter on, or at any time prior to, the
Closing Date, by written notice to the Cooperative and CFC (with a copy of such
notice delivered to the Swap Provider). Notice of such cancellation shall be
given in writing, or by telegraph, telecopy, telephone or telex confirmed in
writing.
10. Expenses.
(a) To be Paid by Cooperative. The Cooperative agrees to pay, or
arrange for the payment of, all fees and expenses in connection with (i) the
preparation, printing and filing of the Registration Statement (including all
exhibits to the Registration Statement), any Preliminary Prospectus and the
Prospectus and any amendments thereof and supplements thereto, and the
furnishing of copies of each thereof to the Underwriter (including costs of
mailing and shipment), (ii) the issuance of the Certificates, (iii) the rating
of the Certificates by the Rating Agencies, (iv) the delivery of the
Certificates pursuant to this Agreement, (v) the qualifying of the Certificates
as provided in Section 7 hereof and the determination of the eligibility of the
Certificates for investment under the laws of such jurisdictions as the
24
Underwriter may designate, (vi) the filing fees of the Commission, the filing
fees and expenses incident to securing any required review by the NASD of the
terms of the sale of the Certificates and the expenses, including the fees and
disbursements of counsel for the Underwriter, incurred in connection with the
qualification of the Certificates under state securities or blue sky laws. The
Cooperative shall not, however, be required to pay for any of the Underwriter's
expenses (other than those related to qualification under state securities or
blue sky laws) except that, if this Agreement shall not be consummated because
the conditions in Section 9 hereof are not satisfied, or the Cooperative
exercises its right to terminate the Swap Agreement as set forth therein, or
because this Agreement is terminated by the Underwriter pursuant to Section 9 or
12 hereof, or by reason of any failure, refusal or inability on the part of CFC
or the Cooperative to perform any undertaking or satisfy any condition of this
Agreement or to comply with any of the terms hereof on its part to be performed,
unless such failure to satisfy said condition or to comply with said terms be
due to the default or omission of the Underwriter, then the Cooperative shall
reimburse the Underwriter for reasonable out-of-pocket expenses, including fees
and disbursements of counsel, reasonably incurred in connection with
investigating, marketing and proposing to market the Certificates or in
contemplation of performing their obligations hereunder; but the Cooperative
shall not in any event be liable to the Underwriter for damages on account of
loss or anticipated profits from the sale by the Underwriter of the
Certificates.
(b) To be Paid by CFC. Without limiting CFC's right to recover
expenses under the Loan Agreement, CFC agrees to pay, or arrange for the payment
of, (i) the fees and expenses of the Trustee and the Certificate Registrar, (ii)
the fees and expenses of CFC's counsel, and (iii) the fees and expenses of any
auditors, consultants or others retained by CFC in connection with the
transactions contemplated herein.
(c) Other Fees. The Underwriter shall have no responsibility to pay
the premiums and fees for and expenses in connection with the Swap Agreement,
the Liquidity Facility, the Remarketing Agreement, the Trust Agreement or any
other fee or expense except as specified in Section 10(d) below.
(d) To be Paid by the Underwriter. The Underwriter will pay, or cause
to be paid, fees and disbursements of Underwriter's counsel (except as otherwise
provided in the preceding paragraphs), Underwriter's computer charges and the
charge of the CUSIP Service Bureau for the assignment of CUSIP numbers for the
Certificates.
(e) The provisions of this Section 10 shall not constitute a
stipulation for the benefit of any third parties and
25
no party other than the parties hereto shall be entitled to the payment of fees
and expenses on the basis of this document.
11. Indemnification.
(a) The Cooperative agrees to indemnify and hold harmless the
Underwriter and CFC and each person, if any, who controls the Underwriter or CFC
within the meaning of the Act against any losses, claims, damages or liabilities
to which the Underwriter or such controlling person may become subject under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Underwriter and
CFC and each such controlling person for any legal or other expenses reasonably
incurred by the Underwriter, CFC or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding; provided, however that the Cooperative will not be liable to the
Underwriter or any control person of the Underwriter in any such case to the
extent that (i) any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement, or omission or
alleged omission made in the Registration Statement, any Preliminary Prospectus,
the Prospectus, or such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Cooperative or CFC by or
through the Underwriter specifically for use in the preparation thereof; or (ii)
such statement or omission was contained or made in any Preliminary Prospectus
and corrected in the Prospectus and (a) any such loss, claim, damage or
liability suffered or incurred by the Underwriter (or any person who controls
the Underwriter) resulted from an action, claim or suit by any person who
purchased Certificates which are the subject thereof from the Underwriter in the
offering and (b) the Underwriter failed to deliver or provide a copy of the
Prospectus to such person at or prior to the confirmation of the sale of such
Certificates in any case where such delivery is required by the Act; and
provided further that the Cooperative will not be liable to CFC or any control
person of CFC in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement, or omission or alleged omission made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Cooperative by or through CFC specifically for use in the
preparation thereof.
26
This indemnity agreement will be in addition to any liability which the
Cooperative may otherwise have.
(b) The Underwriter will indemnify and hold harmless the Cooperative
and CFC, each of their respective directors, each of its officers who have
signed the Registration Statement, and each person, if any, who controls the
Cooperative or CFC within the meaning of the Act, against any losses, claims,
damages or liabilities to which the Cooperative or CFC or any such director,
officer, or controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances under which they were made, and will reimburse any legal or
other expenses reasonably incurred by the Cooperative or CFC or any such
director, officer, or controlling person in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
provided, however, that the Underwriter will be liable in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission has been made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Cooperative or CFC by or through the Underwriter specifically
for use in the preparation thereof. CFC and the Cooperative acknowledge that the
statements to be made under the caption "Underwriting" in the Registration
Statement, any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, constitute the only information to be furnished in writing
by or on behalf of or through the Underwriter for use therein. This indemnity
agreement will be in addition to any liability which the Underwriter may
otherwise have.
(c) CFC will indemnify and hold harmless the Underwriter and the
Cooperative, each of their respective directors, each of its officers who have
signed the Registration Statement, and each person, if any, who controls the
Underwriter or the Cooperative within the meaning of the Act, against any
losses, claims, damages or liabilities to which the Underwriter or the
Cooperative or any such director, officer, or controlling person may become
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any
27
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances under which they were made, and will reimburse any legal or
other expenses reasonably incurred by the Cooperative or any such director,
officer, or controlling person in connection with investigating or defending any
such loss, claim, damage, liability, action or proceeding; provided, however,
that CFC will be liable in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Cooperative or the
Underwriter by or through CFC specifically for use in the preparation thereof.
The Underwriter and the Cooperative acknowledge that the statements to be made
under the caption "National Rural Utilities Cooperative Finance Corporation" in
the Registration Statement, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, constitute the only information to be furnished
in writing by or on behalf of or through the CFC for use therein. This
indemnity agreement will be in addition to any liability which CFC may otherwise
have.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 11, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
11(a) or (b) or (c) shall be available to any party who shall fail to give
notice as provided in this Section 11(d) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related and
was materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 11(a) or (b) or (c). In
case any such proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party and shall pay as incurred the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel at its own expense.
Notwithstanding the foregoing, the indemnifying party shall pay as incurred the
fees and expenses of the counsel retained by the
28
indemnified party in the event (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm for all such indemnified parties. Such firm shall be designated in
writing by the Underwriter in the case of parties indemnified pursuant to
Section 11(a) or (c) and by the Cooperative in the case of parties indemnified
pursuant to Section 11(b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but if settled
with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment.
(e) If the indemnification provided for in this Section 11 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 11(a) or (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Cooperative, CFC
and the Underwriter, respectively, as among themselves from the offering of the
Certificates. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the indemnified party failed
to give the notice required under Section 11(d) above, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Cooperative and the Underwriter in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Cooperative, CFC and the Underwriter shall be deemed to be (x) for the
Cooperative, the total net proceeds from the offering (before deducting
expenses) received by CFC as set forth in Section 1 hereof, (y) for CFC, $55,000
(being the approximate amount of one year's Servicer Spread payable to CFC under
the Trust Agreement and (y) for the Underwriter, the Underwriting Fee received
by the Underwriter as set forth in Section 1 hereof. The relative fault shall be
determined by reference to, among other things, whether the untrue and alleged
untrue statement of a
29
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Cooperative, CFC or the Underwriter and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
The Cooperative, CFC and the Underwriter agree that it would not be just
and equitable if contributions pursuant to this Section 11(e) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 11(e).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this Section 11(e) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), (i) the Underwriter shall not be required to
contribute any amount in excess of the Underwriting Fee and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(f) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 11 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party. The Cooperative agrees to indemnify and hold harmless the
Underwriter, CFC and each person, if any, who controls the Underwriter or CFC
against any and all losses, claims, damages and liabilities (i) arising out of
any untrue statement or alleged untrue statement, of a material fact contained
in the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto as the same has been supplemented or amended, or
the omission, or alleged omission, therefrom of a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except any such statements as were based on information
furnished to the Cooperative by the Underwriter, and (ii) to the extent of the
aggregate amount paid in settlement of any litigation arising from a claim based
upon the foregoing and such settlement is effected with the written consent of
the Cooperative.
30
(g) The indemnity agreements contained in this Section 11 shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of the Underwriter, CFC or the Cooperative, or the delivery
of and any payment for any Certificates hereunder, and shall survive the
termination or cancellation of this Agreement.
12. Termination. The Underwriter may terminate this Agreement at any time
on or before the Closing Date in accordance with Section 9(b) [Conditions
Precedent]. The Underwriter may also terminate this Agreement by notification
in writing to the Cooperative and to CFC if at any time subsequent to the date
hereof and at or prior to the Closing Date (i) a stop order, ruling, regulation,
proposed regulation or statement by or on behalf of the Commission shall be
issued or made with respect to the Registration Statement or otherwise to the
effect that the issuance, offering, sale or distribution of obligations of the
general character of the Certificates is in violation of any provisions of the
Act or of the Trust Indenture Act; or (ii) the United States shall have become
engaged in hostilities which have resulted in a declaration of war or a national
emergency; or (iii) any legislation, resolution, order, rule or regulation shall
be enacted or adopted by the legislature of the United States or of any state,
or a decision by any court of competent jurisdiction shall be rendered which has
the effect of making illegal or otherwise restricting, preventing or prohibiting
consummation of, or which increases the cost to the Underwriter (which cost is
not reimbursed to the Underwriter by the Cooperative) of, the transactions
contemplated hereby; or (iv) any litigation shall be instituted, pending or
threatened in writing to restrain or enjoin the issuance or sale of the
Certificates or the purchase or defeasance of the Notes, or challenging any
authority for or the validity of the Certificates or any provision made or
authorized for their payment or the existence or powers of CFC or the
Cooperative or seeking to enjoin the execution or delivery of or challenging the
valid and binding nature of any of the Related Documents; or (v) in the
reasonable judgment of the Underwriter, the market price of the Certificates is
adversely affected because: (A) additional material restrictions not in force as
of the date hereof shall have been imposed upon trading in securities generally
by any governmental authority or by any national securities exchange; or (B) the
New York Stock Exchange or other national securities exchange, or any
governmental authority, shall impose, as to the Certificates or similar
obligations, any material restrictions not now in force, or increase materially
those now in force, with respect to the extension of credit by, or the charge to
the net capital requirements of, underwriters; or (C) the Cooperative shall fail
to make any payment in respect of any indebtedness of the Cooperative that is
guaranteed by the United States of America (or any agency or instrumentality
thereof) when due or within any applicable grace period or the institution of
proceedings under the federal bankruptcy laws by or against the
31
Cooperative; or (D) there shall have occurred a general suspension of trading on
the New York Stock Exchange; or (E) a general banking moratorium shall have been
declared by the United States, State of New York or State of Kansas; or (F) any
change, or any development involving a prospective change in or affecting
particularly the business or properties of the Swap Provider or the Liquidity
Provider shall have occurred which in the reasonable judgment of the Underwriter
would materially adversely affect the market for the Certificates (unless CFC or
the Cooperative shall have procured a replacement party reasonably acceptable to
the Underwriter on substantially the same terms and conditions); or (G) any
ratings of the Certificates by S&P or ▇▇▇▇▇'▇ shall be withdrawn or revised to a
rate lower than A-1 and AAA (in the case of S&P) or P-1 and Aa1 (in the case of
▇▇▇▇▇'▇) or (H) an event shall occur which (a) makes untrue or incorrect in any
material respect, as of the time of such event, any statement or information
contained in the Registration Statement or Prospectus or which is not reflected
in the Registration Statement or Prospectus but should be reflected therein in
order to make the statements and information contained therein not misleading in
any material respect and (b) in the reasonable judgment of the Underwriter,
materially adversely affects the market for the Certificates or the sale, at the
contemplated offering prices, by the Underwriter of the Certificates; or (I) the
RUS shall rescind or otherwise terminate the Guarantee, or any other event shall
occur causing the Guarantee to not be supported by the full faith and credit of
the United States of America; or (J) any of the following shall not have
occurred on or prior to or shall not be true on and as of the Closing Date: (i)
the Notes shall have been delivered by the respective Original Trusts to CFC,
and shall have been amended and the Guarantee shall have been endorsed thereon,
all as is more fully provided in the Related Documents; (ii) CFC shall have
deposited the Notes (as so amended and with the Guarantee endorsed thereon) into
the Trust in accordance with the Trust Agreement; (iii) the Cooperative shall
have assigned the Swap Agreement into the Trust in accordance with the Trust
Agreement; and (iv) the assets of the Trust shall consist solely of the Notes
with the Guarantee endorsed thereon, the Swap Agreement and other rights
described in the Trust Agreement. CFC may terminate this Agreement prior to the
Closing by notification in writing to the Underwriter and the Cooperative if at
any time subsequent to the date hereof and at or prior to the Deposit Date any
of the events listed in clauses (i), (iii) or (v)(I) shall not have occurred, or
if the conditions to CFC's depositing the purchase price with the Original
Trusts specified in the First Amendment to Loan Agreement have not been
satisfied, or if either Original Trust fails to deliver its Note.
13. Notices. Any notice or other communication to be given to CFC, the
Cooperative or the Underwriter under this Agreement may be given by delivering
the same in writing to the parties at their respective addresses set forth
below:
32
If to CFC:
National Rural Utilities Cooperative Finance Cooperation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Finance Officer
If to the Cooperative:
Kansas Electric Power Cooperative, Inc.
P. O. Box 4877
Topeka, Kansas 66604
Attention: Executive Vice President
With a Copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to the Underwriter:
Alex. Brown & Sons Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
With a Copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇, Brown & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
14. Benefit. This Agreement is made solely for the benefit of CFC, the
Cooperative and the Underwriter (including their successors or assigns) and no
other person, partnership, association or corporation shall acquire or have any
right hereunder or by virtue hereof. All representations and agreements of CFC,
the Cooperative and the Underwriter contained in this Agreement shall remain
operative and in full force and effect, regardless of (a) delivery of and
payment for the Certificates hereunder, and (b) any investigations made by or on
behalf of the Underwriter.
15. Approval; Best Efforts. Notwithstanding any provision herein to the
contrary, the performance of any and all obligations of one party hereunder or
the performance of any and all conditions contained herein for the benefit of
one party may be waived by the
33
other party in its sole discretion; provided, however, the Underwriter may not
waive any of the conditions precedent contained within Section 9(a)(ii)(B) or
Section 9(a)(iii)(D) ([Conditions Precedent--Effectiveness of Registration
Statement] on a unilateral basis without the written consent of the Cooperative.
The parties hereto agree to use their reasonable commercial efforts to
effectuate any changes to this Agreement and the Related Documents which may be
necessitated by the passage of time between the date hereof and the Closing Date
in order that the transactions contemplated hereby may be consummated; however,
the foregoing shall not require any party hereto to take any action or to agree
to any changes hereto or thereto if any such action or any such change would, in
the sole opinion of such party, impose any material burden or liability on such
party.
16. Governing Authority, Non-assignability. This Agreement shall be
governed by the laws of the State of New York. This Agreement may not be
assigned by CFC, the Cooperative or the Underwriter.
17. Execution. This Agreement may be executed in multiple counterparts,
each being regarded as an original, and will be valid and enforceable as of the
date first written above.
Yours truly,
▇▇▇▇. BROWN & SONS INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_________________________________
Its: Managing Director
Accepted:
This 20th day of December, 1996
National Rural Utilities Cooperative Finance Corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
______________________________
Its: Assistant Secretary-Treasurer
_____________________________
Kansas Electric Power Cooperative, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
_____________________________
Its: Executive Vice President &
Chief Executive Officer
_____________________________
34
The Undersigned hereby consents to this Agreement.
Rural Electric Cooperative Grantor Trust
(KEPCO) Series 1997
By: The First National Bank of Chicago, as Trustee
By: ______________________________
Its: _____________________________
35
List of Schedules and Exhibits
Schedule I Forms of Related Documents
Exhibit A Form of Opinion of Counsel for
Liquidity Provider
Exhibit B Form of Closing Date Opinion of
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
Exhibit C Form of Closing Date Opinion of
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
Exhibit D Form of Closing Date Opinion of
▇▇▇▇▇, Brown & ▇▇▇▇▇
Exhibit E Form of Closing Date Opinion of
Counsel to Swap Provider
36
SCHEDULE I
Forms of Related Documents
Form of Notes as of the date hereof are attached hereto. For the forms of other
Related Documents, reference is hereby made to the Certificate of Authenticity
delivered by the Cooperative pursuant to Section 9(a)(i)(A) hereof.
37
Exhibit A
to
Forward Certificate Purchase Agreement
Form of Closing Date Opinion from Counsel to Liquidity Provider
n.b.: If the Liquidity Provider provides an opinion at the Deposit Date, the
Closing Date Opinion of the Liquidity Provider's counsel will simply bringdown
the Deposit Date opinion to the Closing Date as contemplated by the bracketed
wording in Section 9(a)(iii)(I) of the Forward Certificate Purchase Agreement.
(1) The Liquidity Provider has the power and authority to execute and
deliver or issue the Liquidity Facility; and
(2) The Liquidity Facility has been duly authorized, executed and
delivered or issued by the Liquidity Provider and constitutes a legal, valid and
binding obligation of the Liquidity Provider enforceable in accordance with its
terms, subject to (a) applicable bankruptcy, reorganization, insolvency,
moratorium and other laws of general applicability relating to or affecting
creditors' rights generally and (b) the application of general principles of
equity regardless of whether such enforceability is considered in a proceeding
in equity or at law.
[If the Liquidity Provider is a foreign bank, this opinion should also
state that the Liquidity Provider is a "bank" for purposes of Section 3(a)(2) of
the Securities Act of 1933, as amended.]
38
Exhibit B
to
Forward Certificate Purchase Agreement
Form of Closing Date Opinion from Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
(in addition to bringdown opinion contemplated by Section 9(a)(iii)(I) of the
Forward Certificate Purchase Agreement)
[Letterhead of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇]
[date]
Alex. Brown & Sons Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as special counsel to National Rural Utilities Cooperative
Finance Corporation ("CFC") in connection with its execution and delivery of a
Forward Certificate Purchase Agreement among it, Kansas Electric Power
Cooperative, Inc. and you (the "Underwriting Agreement"). All capitalized terms
used but not defined herein have the respective meanings given to such terms in
the Underwriting Agreement.
In rendering the opinions expressed below, we have examined such records of
CFC 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, 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 certificates of governmental officials and
appropriate representatives of CFC and upon representations made in or pursuant
to the Related Documents.
In rendering the opinions expressed below, we have assumed, with respect to
all of the documents referred to in this opinion letter, that:
(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 to such
documents;
(ii) all signatories to such documents have been duly authorized; and
(iii) all of the parties to such documents are duly organized and
validly existing and have the power and
authority (corporate, partnership or 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. No approval, authorization, consent, order, registration, filing,
qualification, license or permit of or with the State of New York or Federal
court or governmental agency or body including, without limitation, the Rural
Utilities Service, having jurisdiction over CFC is required for the consummation
by CFC of the transactions contemplated in the Related Documents, except such as
have been obtained under the Act and the Trust Indenture Act and such as may be
required under the blue sky laws of any jurisdiction and [specific other filings
or approvals], which have been made or obtained.
2. CFC is not subject to regulation under the Public Utility Holding
Company Act of 1935;
3. CFC is not a public utility as defined in the Federal Power Act
and is not a natural gas company as defined in the Natural Gas Act;
4. CFC is not an "investment company" under the Investment Company
Act of 1940; and
5. The delivery by CFC to the Underwriter of the Certificates being
sold under the Underwriting Agreement against payment therefor as provided
therein will pass to the Underwriter all right, title and interest of CFC in the
Certificates; and, upon such delivery, the Underwriter, assuming it has no
knowledge of any adverse claim to such Certificates, will receive title to such
Certificates free and clear of all adverse claims.
The foregoing opinions are limited to matters involving the Federal laws of
the United States of America and the law of the State of New York. We do not
express any opinion as to the existence of, or the right, title or interest of
CFC in, to or under, the Certificates.
This opinion letter is provided to you by us in our capacity as counsel to
CFC, and this opinion letter may not be relied upon by any person or for any
purpose other than in connection with the transactions contemplated by the
Underwriting Agreement without, in each instance, our prior written consent.
Very truly yours,
2
Form of Closing Date Opinion from ▇▇▇▇ ▇▇▇▇, Esq., Counsel
There is no pending or, to the best knowledge of such counsel, threatened
action, suit or proceeding before any court or governmental agency, authority or
body or any arbitrator with respect to CFC which, if adversely determined, would
have a material adverse effect on the Certificateholders or Trust.
3
Exhibit C
to
Forward Certificate Purchase Agreement
Form of Closing Date Opinion from ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
(in addition to bringdown opinion contemplated by Section 9(a)(iii)(I) of the
Forward Certificate Purchase Agreement)
(1) The Certificates are validly issued and outstanding, and are a binding
obligation of the Trust, enforceable against the Trust in accordance with its
terms and are entitled to the benefits of the Trust Agreement subject to (a)
applicable bankruptcy, reorganization, moratorium (including, without
limitation, preference and fraudulent conveyance) or similar laws affecting
creditors' rights generally and (b) the application of general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law), including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, and the possible unavailability of
specific performance or injunctive relief;
(2) To the knowledge of such counsel, there is no pending or threatened
action, suit or proceeding before any court or governmental agency, authority or
body or any arbitrator with respect to the Cooperative, the Trust, the
Certificates or the Trust Agreement which, if adversely determined, would have a
material adverse effect on the Certificateholders or Trust, and, to the
knowledge of such counsel, there is no material contract relating to the Trust
or any property conveyed to the Trust which is required to be disclosed in the
Registration Statement or the Prospectus which is not so disclosed;
(3) The Registration Statement has become effective under the Act and the
Certificates have been registered under the Act; any required filing (or
transmission by a means reasonably calculated to result in filing) of the
Prospectus or any supplement thereto pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b); to the knowledge
of such counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or threatened; and the Registration Statement, the Prospectus and
each amendment thereof or supplement thereto (except for the financial and
statistical data included therein as to which such counsel need express no
opinion) comply as to form in all material respects with the applicable
requirements of the Act and the Rules and Regulations thereunder;
(4) No approval, authorization, consent, order, registration, filing,
qualification, license or permit of or with any state or Federal court or
governmental agency or body including, without
limitation, the Rural Utilities Service, having jurisdiction over the
Cooperative or the Trust is required for the consummation by the Cooperative or
the Trust of the transactions contemplated herein, except such as have been
obtained under the Act and the Trust Indenture Act and such as may be required
under the blue sky laws of any jurisdiction and such filings or other approvals
(specified in such opinion) as have been made or obtained;
(5) The Certificates, this Agreement, the Notes, the Guarantees and the
other Related Documents conform in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus as amended or
supplemented;
(6) The Trust Agreement has been duly qualified under the Trust Indenture
Act of 1939, as amended;
(7) The 1988 Certificates have been redeemed, and the Original Trusts
have been terminated, in accordance with the terms of the Original Trust
Agreements and in compliance with all applicable laws, rules and regulations;
(8) The Trust is exempt from, and is not obligated to register as, an
"investment company" under the Investment Company Act of 1940;
(9) The statements in the Registration Statement under the heading
"Certain Federal Income Tax Consequences" are correct as to statements of law,
accurately reflect the opinions ascribed to such counsel therein and address all
material Federal income tax matters with respect to the Certificates.
In addition, such counsel shall state that nothing has come to the attention of
such counsel causing it to believe that at the Effective Date the Registration
Statement, as amended, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus, as amended
or supplemented as of the Closing Date, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
2
Exhibit C-1
to
Forward Certificate Purchase Agreement
Form of Closing Date Opinion from
▇▇▇▇▇▇ ▇▇▇▇, Esq., Counsel to the Cooperative
1. The Cooperative's execution and delivery of the Confirmation
included within the Swap Agreement have been duly authorized by all requisite
corporate action and the Confirmation has been duly executed and delivered by
the Cooperative.
3
Exhibit D
to
Forward Certificate Purchase Agreement
Form of Closing Date Opinion from Counsel to Underwriter
(1) The Registration Statement has become effective under the Act and the
Certificates have been registered under the Act; to the best knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or threatened; and the Registration Statement, the Prospectus and
each amendment thereof or supplement thereto (except for the financial and
statistical data included therein as to which such counsel need express no
opinion) appear on their face to comply as to form in all material respects with
the applicable requirements of the Act and the Rules and Regulations thereunder
as administered by the staff of the Commission.
In addition, such counsel shall state that nothing has come to the attention of
such counsel causing it to believe that at the Effective Date the Registration
Statement, as amended, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus, as amended
or supplemented as of the Closing Date, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
Exhibit E
to
Forward Certificate Purchase Agreement
Form of Closing Date Opinion from Counsel to Swap Provider
1. The Confirmation included within the Swap Agreement has been duly
executed and delivered by the Swap Provider and is the legal valid and binding
obligation of the Swap Provider, enforceable against the Swap Provider in
accordance with its terms, Certificates (except as enforcement thereof may be
limited by bankruptcy, reorganization, insolvency, moratorium or other laws
affecting the enforcement of creditor's rights generally and by general
principles).