Exhibit 1
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
$600,000,000 4.75% Collateral Trust Bonds due 2014
Underwriting Agreement
February 18, ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ Securities LLC
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As Representatives of the several Underwriters
Ladies and Gentlemen:
National Rural Utilities Cooperative Finance Corporation, a District
of Columbia cooperative association (the "Company"), proposes to issue
$600,000,000 principal amount of its 4.75% Collateral Trust Bonds due 2014 (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 principal amount of the Bonds specified in such Schedule I, and
(ii) that you are authorized, on behalf of yourselves and the other
Underwriters, to enter into this 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. 333-72558 and Registration Statement No. 333-109365 for the
registration under the Securities Act of 1933, as amended (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, 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 it 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
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"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.
(c) Accountants. The accountants who have certified or shall
certify the financial statements filed
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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 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.
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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 a purchase price of 99.317% of the principal amount, the principal
amount of Bonds set forth opposite the names of the Underwriters in Schedule I
hereto.
3. Closing. Delivery of and payment for the Bonds shall be made at
the office of Milbank Tweed Hadley & ▇▇▇▇▇▇ LLP, ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 9:30 a.m., New York City time, on February 25, 2004, or
such later date (not later than March 3, 2004) 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
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Cravath, Swaine & ▇▇▇▇▇ LLP, 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 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
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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 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. [Reserved.]
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) and (f) any fees of a
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book-entry depositary, listing agent, paying agent or transfer agent.
11. Offering Restrictions. Each of the Underwriters agrees that it
will not offer, sell or deliver any of the Bonds being underwritten or sold by
it, directly or indirectly, or distribute the Prospectus or any other offering
material relating to the Bonds, in or from any jurisdiction except under
circumstances that will, to the best of such Underwriter's knowledge and belief,
result in compliance with the applicable laws and regulations and which will not
impose any obligations on the Company except as set forth herein, and further
represents and agrees that it:
(a) has not offered or sold and, prior to the expiry of a period of
six months from the issue date of the Bonds, will not offer or sell any
Bonds to persons 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 businesses
or otherwise 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;
(b) has only communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or inducement to
engage in investment activity (within the meaning of the Financial
Services and Markets Act of 2000 ("FSMA")) received by it in connection
with the issue or sale of any Bonds in circumstances in which section
21(1) of the FSMA does not apply to the issuer; and
(c) has complied with and will comply with all applicable provisions
of the FSMA with respect to anything done by it in relation to the Bonds
in, from or otherwise involving the United Kingdom.
12. Indemnities.
(a) By the Company. The Company agrees to indemnify and hold
harmless each Underwriter, its directors and officers, and each person who
controls any Underwriter within the meaning of Section 15 of the
Securities Act
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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 its
directors or officers or any person controlling such
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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 severally and not jointly
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
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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 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
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indemnified party shall 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 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 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
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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 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
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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 &
▇▇▇▇▇ LLP an opinion and 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,
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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;
(iii) the Indenture has been duly authorized by the Company,
has been duly qualified under the Trust Indenture Act and
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 9-315 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 form 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 the
valid and binding obligation 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
(x) 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 (y) result in a breach
15
of any terms or provisions of, or constitute a default under, any
indenture, deed of trust, note, note agreement or other agreement or
instrument or any judgment, order, writ or decree 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, or
(z) result in a violation of any applicable laws, statutes, rules or
regulations of the United States, of the State of New York or any
department or subdivision thereof, other than State securities or
blue sky laws;
(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 thereto (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 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
16
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
(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.
In addition, the opinion of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
shall address in form and scope, satisfactory to counsel for the Underwriters,
the disclosure contained in the Prospectus under the caption "United States
Taxation" insofar as such disclosure describes or summarizes matters of U.S. tax
law or constitutes conclusions of U.S. tax law.
If the certification referred to in clause (ix) of subsection 13(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
17
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 the foregoing
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 principles of equity (regardless
of whether considered in a proceeding in equity or at law), including without
limitation (a) the possible unavailability of specific performance, injunctive
relief or any other equitable remedy and (b) concepts of materiality,
reasonableness, good faith and fair dealing. In addition, the Company's
obligations and the rights and remedies of the Trustee and the holders of the
Bonds 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 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.
18
(d) Accountants' Letter. Ernst & Young 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.
(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 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
19
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 and Permitted Investments or, if such
is not the case, a 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, 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
20
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 of the Company or 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) any outbreak of hostilities involving the
United States, any escalation of hostilities involving the United States, any
attack on the United States or any act of terrorism in which the United States
is involved, (iv) any major disruption in the settlement of securities in the
United States or any other relevant jurisdiction or a declaration of a national
emergency or war by the United States or (v) 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 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
21
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 & ▇▇▇▇▇ LLP 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 principal amount of the Bonds which the defaulting Underwriter or
Underwriters so agreed to purchase shall not exceed $60,000,000, 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 $60,000,000 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
22
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 to delivery of and payment for the
Bonds, if prior to such time any of the events described in Sections 13(f),
13(g) or 13(h) 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 the offices of Banc of
America Securities LLC, ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Transaction Management, ▇.▇. ▇▇▇▇▇▇ Securities Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
23
Incorporated, 4 World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
(b) The Company agrees to furnish to you and to Cravath, Swaine &
▇▇▇▇▇ LLP, 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 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.
24
(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.
25
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: Sr. Vice President &
Chief Financial Officer
26
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:
BANC OF AMERICA SECURITIES LLC,
by /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
▇.▇. ▇▇▇▇▇▇ Securities Inc.,
By /S/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED,
by /S/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Director
27
SCHEDULE I
Underwriting Agreement dated February 18, 2004
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
Principal Amount
of 4.75%
Collateral Trust
Bonds
due 2014
Underwriter to be Purchased
----------- ---------------
Banc of America Securities LLC $160,000,000
▇.▇. ▇▇▇▇▇▇ Securities Inc. 160,000,000
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇
& ▇▇▇▇▇ Incorporated 160,000,000
Scotia Capital (USA) Inc. 36,000,000
ABN AMRO Incorporated 6,000,000
Banc One Capital Markets, Inc. 6,000,000
Comerica Securities, Inc. 6,000,000
Daiwa Securities SMBC Europe Limited 6,000,000
Deutsche Bank Securities Inc. 6,000,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corp. 6,000,000
HSBC Securities (USA) Inc. 6,000,000
▇▇▇▇▇▇ Brothers Inc. 6,000,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. 6,000,000
PNC Capital Markets, Inc. 6,000,000
TD Securities (USA) Inc. 6,000,000
Tokyo-Mitsubishi International plc 6,000,000
UBS Securities LLC 6,000,000
Total $600,000,000
28