1
Exhibit 1
$300,000,000
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
6.00% Collateral Trust Bonds, due 2006
Underwriting Agreement
July 12, 2001
▇▇▇▇▇▇ Brothers Inc.
▇.▇. ▇▇▇▇▇▇ Securities Inc.
As Representatives of the several Underwriters
In care of ▇▇▇▇▇▇ Brothers Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
National Rural Utilities Cooperative Finance Corporation, a District of
Columbia cooperative association (the "Company"), proposes to issue $300,000,000
principal amount of its 6.00% Collateral Trust Bonds due 2006 (the "Bonds"), to
be issued under and secured by an Indenture dated as of February 15, 1994,
between the Company and U.S. Bank National Association, as successor trustee
(the "Trustee"). Such Indenture, as amended by any supplemental indenture, is
hereinafter called the "Indenture". The Bonds are more fully described in the
Registration Statement and in the Prospectus hereinafter mentioned. The Bonds
will be issued in fully registered form only, in denominations of $1,000 and any
integral multiple thereof.
You have advised us (i) that you and any other firms and corporations
named in Schedule I attached hereto (you and such firms and corporations being
hereinafter called the Underwriters, which term shall also include any
underwriter substituted as provided in Section 14 hereof), acting severally and
not jointly, are willing to purchase, on the terms and conditions hereinafter
set forth, the respective principal amounts of the Bonds, aggregating
$300,000,000 principal amount thereof, specified in such Schedule I, and (ii)
that you are authorized, on behalf of yourselves and the other Underwriters, to
enter into this
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Underwriting Agreement
Agreement. Terms used but not otherwise defined herein shall have the meanings
assigned to them in the Indenture.
1. Certain Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter as follows:
(a) Registration Statement and Prospectus. The Company has filed with
the Securities and Exchange Commission (the "Commission") Registration Statement
No. 333-62334, Registration Statement No. 333-68645 and Registration Statement
No. 333-65873 for the registration under the Securities Act of 1933 (the
"Securities Act") of the Bonds (including a prospectus relating thereto) and may
have filed one or more amendments thereto (including one or more amended or
supplemental prospectuses) and such registration statements and any such
amendments have become effective. A prospectus supplement relating to the Bonds
and $1,000,000,000 principal amount of the Company's 5.25% Collateral Trust
Bonds due 2004, including a prospectus (together, the "Prospectus"), has been
prepared and will be filed pursuant to Rule 424 under the Securities Act. The
Company will not file any other amendment of such registration statements or
such prospectus or any supplement to such prospectus on or after the date of
this Agreement and prior to the date and time of delivery of and payment for the
Bonds referred to in Section 3 hereof (the "Closing Date"), except with your
approval. Such registration statements, including financial statements and
exhibits, at the time they became effective, are hereinafter called the
"Registration Statement". Any reference in this Agreement to the Prospectus as
amended or supplemented shall include, without limitation, any prospectus filed
with the Commission pursuant to Rule 424 of the Commission under the Securities
Act which amends or supplements the Prospectus. Any reference herein to the
Registration Statement or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934 (the "Exchange Act")
on or before the effective date of the Registration Statement or the date of
such Prospectus, as the case may be; and any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Registration Statement
or the Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the effective date of the Registration
Statement, or the date of any Prospectus, as the case may be, and deemed to be
incorporated therein by reference.
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Underwriting Agreement
(b) Accuracy of Registration Statement. At all times subsequent to the
date of this Agreement up to and including the Closing Date, and when any
post-effective amendment thereof shall become effective, the Registration
Statement (and the Registration Statement as amended if any post-effective
amendment thereof shall have become effective) will comply in all material
respects with the provisions of the Securities Act and the Exchange Act and the
rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact and will not omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and, at all times subsequent to the date of this Agreement up to and
including the Closing Date, the Prospectus (and the Prospectus as amended or
supplemented, if the Company shall have filed with the Commission any amendment
thereof or supplement thereto) will fully comply with the provisions of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a material
fact and will not omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that none of the
representations and warranties in this paragraph (b) shall apply to (i) that
part of the Registration Statement which shall constitute the Statement of
Eligibility and Qualification (Form T-1) under the Trust Indenture Act of 1939
(the "Trust Indenture Act") of the Trustee or (ii) statements in, or omissions
from, the Registration Statement or the Prospectus or any amendment thereof or
supplement thereto made in reliance upon and in conformity with information
furnished as herein stated or otherwise furnished in writing to the Company by
or on behalf of any Underwriter through you for use in connection with the
preparation of the Registration Statement or the Prospectus or any such
amendment or supplement.
(c) Accountants. The accountants who have certified or shall certify
the financial statements filed and to be filed with the Commission as parts of
the Registration Statement and the Prospectus are independent with respect to
the Company as required by the Securities Act and rules and regulations of the
Commission thereunder.
(d) Due Incorporation. The Company has been duly incorporated and is
now, and on the Closing Date will be, a validly existing cooperative association
in good standing
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Underwriting Agreement
under the laws of the District of Columbia, duly qualified and in good standing
in each jurisdiction in which the ownership or leasing of properties or the
conduct of its business requires it to be qualified (or the failure to be so
qualified will not have a material adverse effect upon the business or condition
of the Company), and the Company has the corporate power and holds all valid
permits and other required authorizations from governmental authorities
necessary to carry on its business as now conducted and as to be conducted on
the Closing Date and as contemplated by the Prospectus.
(e) Material Changes. Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, and
except as set forth therein, there has not been any material adverse change in
the condition, financial or other, or the results of operations of the Company,
whether or not arising from transactions in the ordinary course of business.
(f) Litigation. On the date hereof, except as set forth in the
Prospectus, the Company does not have any litigation pending of a character
which in the opinion of counsel for the Company referred to in Section 13(c)
hereof could result in a judgment or decree having a material adverse effect on
the condition, financial or other, or the results of operations of the Company.
(g) Legality. On the Closing Date, the Bonds will be duly and validly
authorized, and no further authorization, consent or approval of the members and
no further authorization or approval of the Board of Directors of the Company or
any committee thereof will be required for the issuance and sale of the Bonds as
contemplated herein; and neither such issuance or sale of the Bonds nor the
consummation of any other of the transactions herein contemplated will result in
a breach by the Company of any terms of, or constitute a default under, any
other agreement or undertaking of the Company.
(h) No Stop Order. The Commission has not issued and, to the best
knowledge of the Company, is not threatening to issue any order preventing or
suspending the use of the Prospectus (as amended or supplemented, if the Company
shall have filed with the Commission any amendment thereof or supplement
thereto).
(i) Regulation. The Company is not required to be registered as an
investment company under the Investment
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Company Act of 1940 and is not subject to regulation under the Public Utility
Holding Company Act of 1935.
2. Agreement to Purchase. Subject to the terms and conditions and upon
the representations and warranties herein set forth, the Company agrees to sell
to you and any other Underwriters, severally and not jointly, and you and such
other Underwriters, severally and not jointly, agree to purchase from the
Company, the 6.00% Collateral Trust Bonds due 2006, at 100.353% of the principal
amount thereof, plus accrued interest from May 23, 2001, to but not including
the Closing Date, in the principal amounts of the Bonds set forth opposite the
names of the Underwriters in Schedule I hereto, aggregating $300,000,000
principal amount thereof.
3. Closing. Delivery of and payment for the Bonds shall be made at the
office of ▇▇▇▇▇▇ Brothers Inc., Three World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, at 9:30 a.m., New York City time, on July 19, 2001, or such later date
(not later than July 26, 2001) as you, as Representatives of the Underwriters,
shall designate, which date and time may be postponed by agreement between you,
as such Representatives, and the Company or as provided in Section 14 hereof.
Delivery of the Bonds shall be made to you, for the respective accounts of the
several Underwriters, against payment by the several Underwriters through you of
the purchase price thereof, to or upon the order of the Company by certified or
official bank check or checks payable, or wire transfers, in immediately
available funds. The Bonds shall be delivered in definitive global form through
the facilities of The Depository Trust Company ("DTC").
4. Prospectuses. The Company has caused to be delivered to you, as
Representatives of the Underwriters, copies of the Prospectus and has consented
to the use of such copies for the purposes permitted by the Securities Act. The
Company agrees to deliver to you, as Representatives of the Underwriters,
without charge, from time to time during such period as in the opinion of
Cravath, Swaine & ▇▇▇▇▇, counsel for the Underwriters, the Prospectus as
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 such amended or supplemented Prospectus) as
you, as Representatives of the Underwriters, may reasonably request. If, at any
time during the period in which the Company is required to deliver copies of the
Prospectus, as provided in this
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Underwriting Agreement
Section 4, any event known to the Company relating to or affecting the Company
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 the 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 Company, at its
expense, will forthwith prepare and furnish to you for distribution to the
Underwriters 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 when it is
delivered to a purchaser, and will comply with law and with such rules and
regulations. The Company authorizes the Underwriters and all dealers effecting
sales of the Bonds to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Bonds in accordance with
applicable provisions of the Securities Act and the applicable rules and
regulations thereunder for the period during which the Company is required to
deliver copies of the Prospectus as provided in this Section 4.
5. Commission Proceedings as to Registration Statement. The Company
agrees to advise you promptly, as Representatives of the Underwriters, and to
confirm such advice in writing (a) when any post-effective amendment of the
Registration Statement shall have become effective and when any further
amendment of or supplement to the Prospectus shall be filed with the Commission,
(b) of any request by the Commission for any amendment of the Registration
Statement or the Prospectus or for additional information and (c) 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.
The Company 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.
6. Blue Sky. The Company will diligently endeavor, when and as
requested by you, to qualify the Bonds, or such portion thereof as you may
request, for
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Underwriting Agreement
offering and sale under the securities or blue sky laws of any jurisdictions
which you shall designate.
7. Earnings Statement. The Company agrees to make generally available
to its security holders, in accordance with Section 11(a) of the Securities Act
and Rule 158 thereunder, an earnings statement of the Company (which need not be
audited) in reasonable detail and covering a period of at least twelve months
beginning after the effective date of the Registration Statement.
8. Listing. The Company will use its best efforts to (a) comply in all
material respects with the listing requirements of the Luxembourg Stock Exchange
and (b) complete the listing of the Bonds to be sold by the Company on such
exchange prior to the Closing Date.
9. Clearance and Settlement. The Company will cooperate with the
Underwriters to permit the Bonds to be eligible for clearance and settlement
through DTC, Clearstream Banking and Euroclear Bank S.A./N.V.
10. Expenses. The Company agrees to pay all fees and expenses in
connection with (a) the preparation, printing and filing of the Registration
Statement (including all exhibits to the Registration Statement), the Prospectus
and any amendments thereof and supplements thereto, and the furnishing of copies
of each thereof to the Underwriters (including costs of mailing and shipment),
(b) the issuance of the Bonds, (c) the rating of the Bonds by rating agencies,
(d) the delivery of the Bonds to you in New York City for the respective
accounts of the several Underwriters, (e) the qualifying of the Bonds as
provided in Section 6 hereof and the determination of the eligibility of the
Bonds for investment under the laws of such jurisdictions as you may designate
(including fees of not more than $10,000 and disbursements of counsel for the
Underwriters in connection therewith), (f) the costs incident to the listing of
the Bonds on the Luxembourg Stock Exchange and (g) any fees of a book-entry
depositary listing agent, paying agent or transfer agent.
11. Offering Restrictions. Each of the Underwriters represents and
agrees as follows:
(a) United Kingdom. It and each of its affiliates:
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(i) has not offered or sold, and will not offer or sell, in
the United Kingdom any Bonds prior to the date which is six months
after their date of issue, and will not offer or sell in the United
Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal
or agent) for the purposes of their business or in circumstances which
have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995;
(ii) has complied and will comply with all applicable
provisions of the Financial Services ▇▇▇ ▇▇▇▇ with respect to anything
done by it in relation to the Securities in, from or otherwise
involving the United Kingdom; and
(iii) has only issued or passed on, and will only issue or
pass on, to any person in the United Kingdom, any document received in
connection with the issue of the Securities to a person who is of a
kind described in Article 11(3) of the Financial Services Act of 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to
whom such document may otherwise lawfully be issued or passed on.
(b) The Netherlands. It and each of its affiliates has not publicly
promoted and will not publicly promote the offer or sale of the Bonds by
conducting a generalized advertising or cold-calling campaign within or
outside The Netherlands.
(c) Japan. It and each of its affiliates has not offered or sold, and
will not offer or sell directly or indirectly, any of the Bonds in or to
residents of Japan or to any persons for reoffering or resale, directly or
indirectly, in Japan or to any resident of Japan, except pursuant to an
exemption from the registration requirements of the Securities and Exchange
Law of Japan (the "SEL") available thereunder and otherwise in compliance
with the SEL and the other relevant laws, regulations and guidelines of
Japan.
12. Indemnities.
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(a) By the Company. The Company agrees to indemnify and hold harmless
each Underwriter and each person who controls any Underwriter within the meaning
of Section 15 of the Securities Act against any and all losses, claims, damages
or liabilities, joint or several, to which they or any of them may become
subject under the Securities Act, the Exchange Act or any other statute or
common law, and to reimburse the Underwriters and such controlling persons, as
incurred, for any legal or other expenses incurred by them in connection with
investigating any claims and defending any actions, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or any post-effective amendment thereof, or 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, or (ii) any
untrue statement or alleged untrue statement of a material fact contained in the
Prospectus (as amended or supplemented, if the Company shall have filed with the
Commission any amendment thereof or supplement thereto), if used within the
period during which the Underwriters are authorized to use the Prospectus as
provided in Section 4 hereof, or the omission or alleged omission to state
therein (if so used) 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; provided, however, that the indemnity
agreement contained in this Section 12(a) shall not apply to any such losses,
claims, damages, liabilities or actions arising out of, or based upon, any such
untrue statement or alleged untrue statement, or any such omission or alleged
omission, if such statement or omission was made in reliance upon and in
conformity with information furnished as herein stated in Section 15 or
otherwise furnished in writing to the Company by or on behalf of any Underwriter
through you for use in connection with the preparation of the Registration
Statement or the Prospectus or any such amendment thereof or supplement thereto,
or was contained in that part of the Registration Statement constituting the
Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture
Act of the Trustee; provided, further, that, with respect to any untrue
statement or alleged untrue statement made in, or omission or alleged omission
from, the Prospectus, the indemnity agreement contained in this Section 12(a)
with respect to the Prospectus shall not inure to the benefit of any Underwriter
(or the benefit of any person controlling such Underwriter) from whom the person
asserting any such
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losses, claims, damages or liabilities purchased the Bonds which are the subject
thereof, if such person did not receive a copy of the Prospectus (or the
Prospectus as amended or supplemented if the Company shall have made any
amendments thereof or supplements thereto which shall have been furnished to
you, as Representatives of the Underwriters, or to such Underwriter prior to the
time of the below-written confirmation), excluding the documents incorporated
therein by reference, at or prior to the written confirmation of the sale of
such Bonds to such person in any case where delivery of the Prospectus is
required under the Securities Act and the rules and regulations of the
Commission thereunder and any untrue statement or alleged untrue statement or
omission or alleged omission was corrected in the Prospectus (or the Prospectus
as amended or supplemented).
(b) By the Underwriters. Each Underwriter agrees, in the manner and to
the same extent as set forth in Section 12(a) hereof, to indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, the directors of the Company and
those officers of the Company who shall have signed the Registration Statement,
with respect to any statement in or omission from the Registration Statement or
any post-effective amendment thereof or the Prospectus (as amended or
supplemented, if so amended or supplemented), if such statement or omission was
made in reliance upon and in conformity with information furnished as herein
stated in Section 15 or otherwise furnished in writing to the Company through
you on behalf of such Underwriter for use in connection with the preparation of
the Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto.
(c) General. Each indemnified party will, within ten days after the
receipt of notice of the commencement of any action against such indemnified
party in respect of which indemnity may be sought from an indemnifying party on
account of an indemnity agreement contained in this Section 12, notify the
indemnifying party in writing of the commencement thereof. The omission of any
indemnified party so to notify an indemnifying party of any such action shall
not relieve the indemnifying party from any liability which it may have to such
indemnified party on account of the indemnity agreement contained in this
Section 12 or otherwise. Except as provided in the next succeeding sentence, in
case any such action shall be brought against any indemnified party and it shall
notify an indemnifying
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party of the commencement thereof, such indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice in writing from
such indemnifying party to such indemnified party of its election so to assume
the defense thereof, such indemnifying party will not be liable to such
indemnified party under this Section 12 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. Such indemnified party
shall have the right to employ its own counsel in any such action, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of such counsel has been authorized in writing by the
indemnifying party in connection with the defense of such action, (ii) such
indemnified party shall have been advised by such counsel that there are
material legal defenses available to it which are different from or additional
to those available to the indemnifying party (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf of
such indemnified party) or (iii) the indemnifying party shall not have assumed
the defense of such action and employed counsel therefor satisfactory to such
indemnified party within a reasonable time after notice of commencement of such
action, in any of which events such fees and expenses shall be borne by the
indemnifying party. No indemnifying party shall, without the written consent of
the indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include any statement as to, or an admission of,
fault, culpability or a failure to act, by or on behalf of any indemnified
party. No indemnified party shall effect the settlement or compromise of, or
consent of the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification may be sought hereunder
without the consent of the indemnifying party (which consent shall not be
unreasonably withheld).
(d) Contribution. If the indemnification provided for in this Section
12 shall for any reason be
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unavailable to an indemnified party under Section 12(a) or 12(b) hereof in
respect of any loss, claim, damage or liability or any action in respect
thereof, referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Bonds or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Underwriters on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Bonds (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters with respect to such
offering, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company on the one hand and the
Underwriters on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 12(d) were
to be determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation which does
not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 12(d) shall be deemed to include, for purposes of this Section 12(d),
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
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Section 12(d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Bonds underwritten by
it and distributed to the public were offered to the public exceeds the amount
of any damages which such Underwriter has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section 12(d) are
several in proportion to their respective underwriting obligations and not
joint.
(e) Survival of Indemnities. The respective indemnity and contribution
agreements of the Company and the Underwriters contained in this Section 12, and
the representations and warranties of the Company set forth in Section 1 hereof,
shall remain operative and in full force and effect, regardless of any
termination or cancelation of this Agreement or any investigation made by or on
behalf of any Underwriter or any such controlling person or the Company or any
such controlling person, director or officer, and shall survive the delivery of
the Bonds, and any successor of any Underwriter or of any such controlling
person or of the Company, and any legal representative of any such controlling
person, director or officer, as the case may be, shall be entitled to the
benefit of the respective indemnity and contribution agreements.
13. Conditions to Underwriters' Obligations. The several obligations of
the Underwriters hereunder are subject to the accuracy of and compliance with
the representations and warranties of the Company contained in Section 1 hereof,
as of the date hereof and as of the Closing Date, and to the following further
conditions:
(a) Effectiveness of Registration Statement. No stop order suspending
the effectiveness of the Registration Statement or qualification of the
Indenture 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 the
Company or you, threatened by the Commission on the Closing Date.
(b) Opinion of Counsel for the Underwriters. You, as Representatives of
the Underwriters, shall have received from Cravath, Swaine & ▇▇▇▇▇ an
opinion and
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letter, each dated the Closing Date and addressed to the Underwriters, with
respect to the issuance and sale of the Bonds, the form of the Registration
Statement and of the Prospectus (other than the financial statements and
other information of a statistical, accounting or financial nature included
therein) and other related matters as you may reasonably require, and the
Company shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(c) Opinion of Counsel for the Company. The Company shall have
furnished to you, as Representatives of the Underwriters, on the Closing
Date, the opinion, addressed to the Underwriters and dated the Closing
Date, of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel for the Company,
which opinion shall be satisfactory in form and scope to counsel for the
Underwriters, to the following effect:
(i) the Company has been duly incorporated and is validly
existing as a cooperative association in good standing under the laws
of the District of Columbia with corporate power to conduct its
business as described in the Registration Statement;
(ii) the issuance and sale of the Bonds by the Company
pursuant to this Agreement have been duly and validly authorized by all
necessary corporate action; and no authorization, consent, order or
approval of, or filing or registration with, or exemption by, any
government or public body or authority (including, without limitation,
the Rural Utilities Service) of the United States, of the State of New
York or any department or subdivision thereof or to the best of such
counsel's knowledge any court, other than such as may be required under
State securities or blue sky laws and other than registration of the
Bonds under the Securities Act and qualification of the Indenture under
the Trust Indenture Act, is required for the validity of the Bonds or
for the issuance, sale and delivery of the Bonds by the Company
pursuant to this Agreement or for the execution and delivery of this
Agreement by the Company;
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Underwriting Agreement
(iii) the Indenture has been duly authorized by the Company,
has been duly qualified under the Trust Indenture Act, constitutes an
instrument valid and binding on the Company and enforceable in
accordance with its terms, and the Indenture Trustee has a valid first
perfected security interest in the Mortgage Notes in its possession in
New York and, subject to the requirements of Section 9-306 of the New
York Uniform Commercial Code, in the proceeds thereof, subject only to
the exceptions permitted by the Indenture, pledged pursuant to the
Indenture (except that no opinion need be expressed as to the lien on
the Mortgages, as defined in the Indenture, so pledged);
(iv) the Bonds are in the forms provided for in the Indenture,
and, assuming due execution of the Bonds on behalf of the Company and
authentication thereof by the Trustee, the Bonds constitute valid and
binding obligations of the Company enforceable in accordance with their
terms and are entitled to the benefits of the Indenture;
(v) this Agreement has been duly authorized, executed and
delivered by the Company and the performance of this Agreement and the
consummation of the transactions herein contemplated will not result in
a breach of any terms or provisions of, or constitute a default under,
the Articles of Incorporation or By-laws of the Company or any
indenture, deed of trust, note, note agreement or other agreement or
instrument known to such counsel, after due inquiry, to which the
Company is a party or by which the Company or any of its properties is
bound or affected;
(vi) the Bonds and the Indenture conform in all material
respects to the descriptions thereof contained in the Registration
Statement;
(vii) the Registration Statement (and any post-effective
amendment thereof) has become and is effective under the Securities Act
and the Bonds have become registered under the Securities Act, and, to
the best of 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 are pending or
contemplated, and the
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Underwriting Agreement
Registration Statement (and any post-effective amendment thereof), the
Prospectus and each amendment thereof or supplement thereof (except for
the financial statements and other financial data included therein as
to which such counsel need express no opinion) when they became
effective or were filed with the Securities and Exchange Commission
complied as to form in all material respects with the requirements of
the Securities Act, the Exchange Act, the Trust Indenture Act and the
rules and regulations issued thereunder;
(viii) based upon such counsel's participation in the
preparation of the Registration Statement, the Prospectus and documents
incorporated by reference therein, such counsel's discussions with
certain officers and employees of the Company, such counsel's
conferences with representatives of the Company's independent Certified
Public Accountants and such counsel's representation of the Company,
and while such counsel does not pass on or assume any responsibility
for the accuracy, completeness or fairness thereof, nothing has come to
such counsel's attention that causes it to believe that either the
Registration Statement (or any post-effective amendment thereof) as of
the date it became effective, or the Prospectus and each supplement
thereto as of the Closing Date (except in each case for the financial
or statistical data included therein, as to which such counsel
expresses no view) contains 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, and such
counsel does not know of any litigation or any governmental proceeding
instituted or threatened against the Company required to be disclosed
in the Registration Statement or Prospectus and which is not disclosed
therein;
(ix) the Company is not required to be registered as an
investment company under the Investment Company Act of 1940;
(x) the Company is not subject to regulation under the Public
Utility Holding Company Act of 1935; and
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Underwriting Agreement
(xi) the Company 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.
If the certification referred to in clause (ix) of subsection 13(f)
below indicates that the Pledged Property includes collateral other than
Mortgage Notes, the opinion referred to in clause (iii) above shall also
address the security interest of the Indenture Trustee in the Pledged
Property (and in the proceeds thereof) in form reasonably satisfactory to
you.
The foregoing opinion may contain qualifications to the effect that any
sale or transfer by the Trustee under the Indenture of any Pledged Property
(other than a transfer into the name of the Trustee or a nominee thereof)
may be subject to the provisions of the Securities Act and other applicable
securities laws and regulations promulgated thereunder, and, insofar as
such opinion relates to the enforceability of the Bonds and the Indenture,
the enforceability thereof may be limited by bankruptcy, reorganization,
insolvency, moratorium or other laws of general application relating to or
affecting the enforcement of creditors' rights and by general principals of
equity (regardless of whether considered in a proceeding in equity or at
law), including without limitation (a) the possible unavailability of
specific performance, injunctive relief or any other equitable remedy and
(b) concepts of materiality, reasonableness, good faith and fair dealing.
In addition, the Company's obligations and the rights and remedies of the
Trustee and the Bondholders may be subject to possible limitations on the
exercise of remedial or procedural provisions contained in the Indenture
(provided that such limitations do not, in the opinion of such counsel,
make inadequate the remedies afforded thereby for the practical realization
of the substantive benefits provided for in the Bonds and the Indenture).
In rendering the foregoing opinion, Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
may rely as to matters of the law of the District of Columbia upon the
opinion of ▇▇▇▇ ▇▇▇ List, Esq., General Counsel of the Company, addressed
to the Underwriters and dated the Closing Date, satisfactory in form and
scope to counsel for the Underwriters. If Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
LLP
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18
Underwriting Agreement
shall so rely upon the opinion of ▇▇▇▇ ▇▇▇ List, Esq., (i) copies of the
opinion so relied upon shall be delivered to you, as Representatives of the
Underwriters, and to counsel for the Underwriters and (ii) the opinion
required by this Section 13(c) shall also state that Milbank, Tweed, ▇▇▇▇▇▇
& ▇▇▇▇▇▇ LLP has made an independent investigation of the matters in its
opinion covered by the opinion so relied upon and that the Underwriters are
justified in relying upon such opinion.
(d) Opinion of Special Tax Counsel for the Company. The Company shall
have furnished to you, as Representatives of the Underwriters, on the
Closing Date, the opinion, addressed to the Underwriters and dated the
Closing Date, of Hunton & ▇▇▇▇▇▇▇▇, which shall be satisfactory in form and
scope to counsel for the Underwriters, with respect to the disclosure
contained in the Prospectus under the caption "U.S. Taxation" insofar as
such disclosure describes or summarizes matters of U.S. tax law or
constitutes conclusions of U.S. tax law.
(e) Accountants' Letter. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP shall have furnished to
you, as Representatives of the Underwriters, at or prior to the Closing
Date, a letter, addressed to the Underwriters and dated the Closing Date,
confirming that they are independent public accountants with respect to the
Company within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X of the Commission; and stating, as of the
date of such letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five
days prior to the date of such letter), the conclusions and findings of
such firm with respect to the financial information and other matters
covered by its letter delivered to you, as Representatives of the
Underwriters, concurrently with the execution of this Agreement and
confirming in all material respects the conclusions and findings set forth
in such prior letter or, if no such letter shall have been delivered to
you, the conclusions and findings of such firm, in form and substance
satisfactory to you, as Representatives of the Underwriters, with respect
to such financial information and other matters as you, as
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19
Underwriting Agreement
Representatives of the Underwriters, shall reasonably request.
(f) Officer's Certificate. You shall have received, on the Closing
Date, a certificate of the Company dated the Closing Date, signed on its
behalf by the President, the Governor or a Vice President of the Company,
to the effect that the signer of such certificate has examined the
Registration Statement and the Prospectus and that (i) in such person's
opinion, as of the effective date of the Registration Statement, the
Registration Statement 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 did not contain an untrue statement of a material fact and did
not omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, (ii) since the effective date of the Registration Statement 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, (iii)
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any material
adverse change in the condition, financial or other, or earnings of the
Company, whether or not arising from transactions in the ordinary course of
business, other than changes which the Registration Statement and the
Prospectus indicate might occur after the effective date of the
Registration Statement, (iv) the Company has no material contingent
obligations which are required to be disclosed in the Registration
Statement and the Prospectus and are not disclosed therein, (v) 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 Company are contemplated
by the Commission at or prior to the Closing Date, (vi) there are no
material legal proceedings to which the Company is a party or of which
property of the Company is the subject which are required to be disclosed
and which are not disclosed in the Registration Statement and the
Prospectus, (vii) there are no material contracts to which the Company is a
party which are required to be disclosed and which are not disclosed in the
Registration Statement or the Prospectus, (viii) the representations
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20
Underwriting Agreement
and warranties of the Company herein are true and correct as of the Closing
Date and (ix) the Pledged Property consists solely of Mortgage Notes or, if
such is not the case, a description of the other collateral included in the
Pledged Property.
(g) (i) The Company shall not have sustained since the date of the
latest audited financial statements included or incorporated by reference
in the Prospectus, exclusive of any amendment or supplement thereto after
the date hereof, any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus or (ii) since
such date there shall not have been any change in the members' equity or
long-term debt of the Company or any of its subsidiaries or any change, or
any development involving a prospective change, in or affecting the general
affairs, management, financial position, member's equity or results of
operations of the Company and its subsidiaries, otherwise than as set forth
or contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is, in your judgment, so material and
adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Bonds on the terms and in the manner
contemplated in the Prospectus.
(h) On or after the date hereof: (i) no downgrading shall have occurred
in the rating accorded the Company's debt securities by any "nationally
recognized statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) of the Rules and Regulations and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of
any of the Company's debt securities.
(i) On or after the date hereof, there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or the Luxembourg Stock
Exchange, (ii) a banking moratorium on commercial banking activities in New
York declared by Federal or state authorities, (iii) the United States
shall have become engaged in hostilities, there shall
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Underwriting Agreement
have been an escalation in hostilities involving the United States or there
shall have been a declaration of a national emergency or war by the United
States or (iv) such a material adverse change in general economic,
political or financial conditions domestically or internationally (or the
effect of international conditions on the financial markets in the United
States or the effect of conditions in the United States on international
financial markets shall be such) the effect of which, in any such case
described in clause (iii) or (iv), is, in your reasonable judgment, to make
it impracticable or inadvisable to proceed with the public offering or
delivery of the Bonds on the terms and in the manner contemplated in the
Prospectus.
(j) On or prior to the Closing Date, the Company shall have used its
best efforts to obtain listing of the Bonds on the Luxembourg Stock
Exchange.
(k) Miscellaneous. The Company shall have taken, on or prior to the
Closing Date, all other action, if any, which it is stated in the
Registration Statement (or any post-effective amendment thereof) or the
Prospectus (as amended or supplemented, if so amended or supplemented) that
the Company will take prior to or concurrently with the issuance and
delivery of the Bonds, and all agreements herein contained to be performed
on the part of the Company on or prior to the Closing Date shall have been
so performed.
(l) Other Documents. The Company shall have furnished to you and to
Cravath, Swaine & ▇▇▇▇▇ such further certificates and documents as you or
they may have reasonably requested prior to the Closing Date.
If any of the conditions specified in this Section 13 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, this Agreement
and all obligations of the Underwriters hereunder may be canceled on, or at any
time prior to, the Closing Date by you, as Representatives of the Underwriters.
Notice of such cancelation shall be given to the Company in writing, or by
telegraph, telephone or telex confirmed in writing.
14. Substitution of Underwriters. If any one or more of the
Underwriters shall fail or refuse on the Closing Date to purchase and pay for
the Bonds which it or they have agreed to purchase hereunder, then (a) if the
aggregate
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22
Underwriting Agreement
principal amount of the Bonds which the defaulting Underwriter or Underwriters
so agreed to purchase shall not exceed $30,000,000, the nondefaulting
Underwriters shall be obligated to purchase the Bonds from the Company, in
proportion to their respective obligations hereunder and upon the terms herein
set forth, or (b) if the aggregate principal amount of the Bonds which the
defaulting Underwriter or Underwriters so agreed to purchase shall exceed
$30,000,000, either you, as Representatives of the Underwriters, or the Company
shall have the right at any time prior to 9:30 a.m., New York City time, on the
next business day after the Closing Date to procure one or more of the other
Underwriters, or any others, to purchase such Bonds from the Company, in such
amounts as may be agreed upon and upon the terms herein set forth. If within
such specified time neither you, as such Representatives, nor the Company shall
have procured such other Underwriters or any others to purchase the Bonds agreed
to be purchased by the defaulting Underwriter or Underwriters, this Agreement
shall terminate without liability on the part of any nondefaulting Underwriter
or of the Company. In the event of a default by any Underwriter or Underwriters,
as set forth in this Section 14, the Closing Date may be postponed for such
period, not exceeding seven days, as you, as such Representatives, shall
determine in order that any required changes in the Registration Statement and
in the Prospectus or in any other documents or arrangements may be effected. Any
action taken or termination of this Agreement under this Section 14 shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
15. Information Furnished by Underwriters. The Company acknowledges
that (i) the table of Underwriters and their respective participation in the
sale of the Bonds, (ii) the first paragraph under the table of underwriters
related to offering price, concessions and reallowances and (iii) the second
paragraph under the table of underwriters related to stabilization, syndicate
covering transactions and penalty bids under the heading "Underwriting" in the
prospectus supplement portion of the Prospectus, and the last two paragraphs
under the heading "Plan of Distribution" in the Prospectus, constitute the only
information furnished in writing by you, on behalf of the Underwriters, for
inclusion therein, and you, as Representatives of the Underwriters, confirm that
such statements are correct.
16. Termination. This Agreement shall be subject to termination by you,
by notice given to the Company prior
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Underwriting Agreement
to delivery of and payment for the Bonds, if prior to such time any of the
events described in Sections 13(g), 13(h) or 13(i) occurs.
17. Miscellaneous.
(a) Except as otherwise expressly provided in this Agreement, (i)
whenever notice is required by all the provisions of this Agreement to be given
to the Company, such notice shall be in writing addressed to the Company at its
office, Woodland Park, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention
of the Governor, and (ii) whenever notice is required by the provisions of this
Agreement to be given to you, as Representatives of the Underwriters or of any
of them, such notice shall be in writing addressed to you at the office of
▇▇▇▇▇▇ Brothers Inc., Three World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
(b) The Company agrees to furnish to you and to Cravath, Swaine &
▇▇▇▇▇, without charge, a signed copy of the Registration Statement and each
amendment thereof, including all financial statements and all exhibits thereto
(except such financial statements and exhibits as are incorporated therein by
reference and which shall have been previously furnished to you), and to furnish
to each of the other Underwriters, without charge, a copy of the Registration
Statement and each amendment thereof, including all financial statements (except
such financial statements as are incorporated therein by reference) but without
exhibits.
(c) This Agreement is made solely for the benefit of the several
Underwriters and the Company and their respective successors and assigns, and,
to the extent provided in Section 12 hereof, any controlling person referred to
in such Section 12 and the directors of the Company and those officers of the
Company who shall have signed the Registration Statement, and their respective
legal representatives, successors and assigns, and no other person shall acquire
or have any right under or by virtue of this Agreement. The term "successor" or
the term "successors and assigns" as used in this Agreement shall not include
any purchaser, as such purchaser, from any of the Underwriters of the Bonds.
(d) If this Agreement shall be canceled or terminated by the
Underwriters on any of the grounds referred to or specified in Section 13 hereof
or because of any failure or refusal on the part of the Company to comply
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24
Underwriting Agreement
with any of the terms or to fulfill any of the conditions of this Agreement, the
Company will reimburse the Underwriters severally for all their out-of-pocket
expenses (including the fees and disbursements of their counsel) reasonably
incurred by them in connection with the subject matter of this Agreement.
(e) The term "business day" as used in this Agreement shall mean any
day on which the New York Stock Exchange, Inc., is open for trading.
(f) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS.
(g) Section headings have been inserted in this Agreement as a matter
of convenience of reference only and it is agreed that such section headings are
not a part of this Agreement and will not be used in the interpretation of any
provision of this Agreement.
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Underwriting Agreement
Please confirm that you are acting on behalf of yourself and the other
several Underwriters and that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION,
by
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
& Chief Financial
Officer
Acting on behalf of ourselves and the other
several Underwriters named in Schedule I
attached hereto, we hereby confirm as of the
date hereof that this letter correctly sets
forth the agreement between the Company and
the several Underwriters:
▇▇▇▇▇▇ BROTHERS INC.
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
by ▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
by
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
26
SCHEDULE I
Underwriting Agreement dated July 12, 2001
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
Principal Amount of
6.00% Collateral Trust
Bonds due 2006 To Be
Underwriter Purchased
----------- ---------
▇▇▇▇▇▇ Brothers Inc. .............................. $121,430,000
▇.▇. ▇▇▇▇▇▇ Securities Inc. ....................... 150,000,000
BancOne Capital Markets, Inc. ..................... 21,428,000
Barclays Capital Inc. ............................. 7,142,000
------------
Total ....................................... $300,000,000
============