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Exhibit 1
$300,000,000
National Rural Utilities
Cooperative Finance Corporation
6.200% Collateral Trust Bonds, Due 2008
Underwriting Agreement
February 3, 1998
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇
& ▇▇▇▇▇ Incorporated
▇▇▇▇▇▇▇, Sachs & Co.
In care of ▇▇▇▇▇▇ Brothers Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
National Rural Utilities Cooperative Finance Corporation, a District
of Columbia cooperative association (the "Company"), proposes to issue
$300,000,000 principal amount of its 6.200% Collateral Trust Bonds, Due 2008
(the "Bonds"), to be issued under and secured by an Indenture dated as of
February 15, 1994, between the Company and First Bank National Association (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.
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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 11 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 Agreement.
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. 333-05689, 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 statement and any such
amendments have become effective. The Company has also filed with the Commission
Registration Statement No. 333-21677, which, pursuant to Rule 429 under the
Securities Act, includes a prospectus covering certain of the Company's
securities previously registered and unissued under Registration Statement No.
333-05689, and such registration statement has become effective. A prospectus
supplement relating to the Bonds, 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-
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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.
(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.
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(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 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 10(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.
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(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 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, at 99.054% of the principal amount thereof, the respective principal
amounts of the Bonds set forth opposite the names of the respective 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 February 6, 1998, or such later
date (not later than February 13, 1998) 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
11 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 Depository Trust Company.
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
Cravat, ▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Underwriters, 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
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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 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.
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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 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. 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 and (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).
9. Indemnities.
(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
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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 9(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 12 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 9(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 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 9(a)
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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 12 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 9, 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 9 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 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 9 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
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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 9 shall for any reason be unavailable to an indemnified party under
Section 9(a) or 9(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
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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 9(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 9(d) shall be deemed to include, for purposes
of this Section 9(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 Section 9(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 9(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 9, 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
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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.
10. 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. The form and validity
of the Indenture, the form and validity of the Bonds, the legality and
sufficiency of the authorization of the issuance and sale of the Bonds
hereunder, and all corporate proceedings and other legal matters incident
to the foregoing, and the form of the Registration Statement and of the
Prospectus (other than financial statements and other financial data),
shall have been approved as of the Closing Date by Cravath, Swaine &
▇▇▇▇▇, counsel for the Underwriters.
(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, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, 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
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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 or 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;
(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
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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 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
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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
(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 10(e)
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
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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, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
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, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
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 10(c) shall also state that Milbank, Tweed,
▇▇▇▇▇▇ & ▇▇▇▇▇▇ 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) 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 Representatives
of the Underwriters, shall reasonably request.
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(e) 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 his 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
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
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description of the other collateral included in the Pledged Property.
(f) (i) The Company shall not have sustained since the date of the
latest audited financial statements included or incorporated by reference
in the Prospectus 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.
(g) 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.
(h) 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, (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 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 (or
the effect of international conditions on the financial markets in the
United States shall be such)
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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.
(i) 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.
(j) Other Documents. The Company shall have furnished to you and to
Cravath, Swaine & ▇▇▇▇▇, counsel for the Underwriters, 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 10 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.
11 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 principal amount of the Bonds which the defaulting Underwriter or
Underwriters so agreed to purchase shall not exceed $10,000,000, the
nondefaulting Underwriters of 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 $10,000,000, 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
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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 representative, 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 11, the Closing
Date may be postponed for such period, not exceeding seven days, as you, as such
representative, 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 11 shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
12 Information Furnished by Underwriters. The statement set forth in
the last paragraph on the cover of, in the last paragraph on page 2 of, and
under the heading "Underwriting" in, the prospectus supplement portion of the
Prospectus, and 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.
13 Termination. This Agreement shall be subject to termination by
you, by notice given to the Company prior to delivery of and payment for the
Bonds, if prior to such time any of the events described in Sections 10(f),
10(g) or 10(h) occurs.
14 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 your office, Three
World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
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(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 9 hereof, any controlling person referred to
in such Section 9 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 10 hereof
or because of any failure or refusal on the part of the Company to comply 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.
(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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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
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice
President and Chief
Financial Officer
Acting on behalf of ourselves and
the other several Underwriters named
in Schedule I attached to the
foregoing letter, we hereby confirm
as of the date thereof that such letter
correctly sets forth the agreement between
the Company and the several Underwriters:
▇▇▇▇▇▇ BROTHERS INC.,
By
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
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SCHEDULE I
Underwriting Agreement dated February 3, 1998
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
Principal Amount
of Bonds
Underwriter to be Purchased
----------- ---------------
▇▇▇▇▇▇ Brothers Inc. ........................ $102,000,000
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated. ................... 99,000,000
▇▇▇▇▇▇▇, Sachs & Co. ........................ 99,000,000
------------
Total ........................... $300,000,000
============