Exhibit 1
$100,000,000
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
6.10% Subordinated Notes due 2044
(Subordinated Deferrable Interest Notes Due 2044)
Underwriting Agreement
February 4, 2004
UBS SECURITIES LLC
As Representative of the several
Underwriters named on Schedule I hereto
In care of UBS Securities LLC
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Dear Sirs:
National Rural Utilities Cooperative Finance Corporation, a District
of Columbia cooperative association (the "Company"), proposes to issue
$100,000,000 principal amount of its 6.10% Subordinated Notes due 2044
(Subordinated Deferrable Interest Notes Due 2044) (the "Securities"), to be
issued under and secured by an Indenture dated as of October 15, 1996, between
the Company and U.S. Bank Trust National Association, as successor trustee (the
"Trustee"). Such Indenture, as it may be amended from time to time, is
hereinafter called the "Indenture". The Securities are more fully described in
the Registration Statement and in the Prospectus hereinafter mentioned. The
Securities will be issued in fully registered form only, in denominations of $25
and any integral multiple thereof.
You have advised us (i) that you and the 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 Securities,
aggregating
2
$100,000,000 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. 333-98523, for the registration under the
Securities Act of 1933 (the "Securities Act"), of the Securities
(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 amendment have
become effective. A prospectus supplement relating to the Securities,
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 statement 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 Securities referred to in Section 3 hereof (the "Closing Date"),
except with your approval. Such registration statements, including
financial statements and exhibits, each 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 "supplement" with
respect to the Registration
3
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
4
the preparation of the Registration Statement or the Prospectus or any
such amendment or supplement.
(c) Accountants. The accountants who have certified or shall certify
the financial statements filed and to be filed with the Commission as
parts of the Registration Statement and the Prospectus are independent
with respect to the Company as required by the Securities Act and rules
and regulations of the Commission thereunder.
(d) Due Incorporation. The Company has been duly incorporated and is
now, and on the Closing Date will be, a validly existing cooperative
association in good standing 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 Securities will be duly and
validly authorized, and no further authorization, consent or approval of
the
5
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 Securities as contemplated herein; and neither such
issuance or sale of the Securities nor the consummation of any other of
the transactions herein contemplated will result in a breach by the
Company of any terms of, or constitute a default under, any other
agreement or undertaking of the Company.
(h) No Stop Order. The Commission has not issued and, to the best
knowledge of the Company, is not threatening to issue any order preventing
or suspending the use of the Prospectus (as amended or supplemented, if
the Company shall have filed with the Commission any amendment thereof or
supplement thereto).
(i) Regulation. The Company is not required to be registered as an
investment company under the Investment Company Act of 1940 and is not
subject to regulation under the Public Utility Holding Company Act of
1935.
(j) New York Stock Exchange Listing. The Securities are expected to
be authorized for listing on the New York Stock Exchange, Inc., within a
30-day period after the initial delivery of the Securities.
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 the other Underwriters, severally and not jointly, and you and
such other Underwriters, severally and not jointly, agree to purchase from the
Company, at $24.2125 per Security, the respective principal amounts of the
Securities set forth opposite the names of the respective Underwriters in
Schedule I hereto, aggregating $100,000,000 principal amount thereof.
3. Closing. Delivery of and payment for the Securities shall be made
at the office of Milbank, Tweed, Xxxxxx & XxXxxx LLP, 1 Chase Xxxxxxxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx, 00000, at 9:30 a.m., New York City time, on February 11,
2004, or such later date (not later than February 18, 2004) as you, as
Representative of the Underwriters, shall designate, which date and time may be
postponed by agreement between you, as such Representative,
6
and the Company or as provided in Section 11 hereof. Delivery of the Securities
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
Securities shall be delivered in global form through the facilities of The
Depository Trust Company.
4. Prospectuses. The Company has caused to be delivered to you, as
Representative 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 Representative of the Underwriters, without
charge, from time to time during such period as in the opinion of Cravath,
Swaine & Xxxxx LLP, 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 amendment of or
supplement to the Prospectus, of such amended or supplemented Prospectus) as
you, as Representative 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
7
Securities to use the Prospectus, as from time to time amended or supplemented,
in connection with the sale of the Securities 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 Representative of the Underwriters, and to
confirm such advice in writing, (a) when any post-effective amendment of the
Registration Statement shall have become effective and when any further
amendment of or supplement to the Prospectus shall be filed with the Commission,
(b) of any request by the Commission for any amendment of the Registration
Statement or the Prospectus or for additional information and (c) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the initiation of any proceedings for that purpose.
The Company will use every reasonable effort to prevent the issuance of such a
stop order and, if any such order shall at any time be issued, to obtain the
withdrawal thereof at the earliest possible moment.
6. Blue Sky. The Company will diligently endeavor, when and as
requested by you, to qualify the Securities, 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 Securities, (c) the rating of the
8
Securities by rating agencies, (d) the delivery of the Securities to you in New
York City for the respective accounts of the several Underwriters and (e) the
qualifying of the Securities as provided in Section 6 hereof and the
determination of the eligibility of the Securities for investment under the laws
of such jurisdictions as you may designate (including fees 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, its directors and officers, and each person who
controls any Underwriter within the meaning of Section 15 of the
Securities Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under
the Securities Act, the Exchange Act or any other statute or common law,
and to reimburse the Underwriters and such controlling persons, as
incurred, for any legal or other expenses incurred by them in connection
with investigating any claims and defending any actions, insofar as such
losses, claims, damages, liabilities or actions arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any post-effective
amendment thereof, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) any untrue statement or alleged
untrue statement of a material fact contained in the Prospectus (as
amended or supplemented, if the Company shall have filed with the
Commission any amendment thereof or supplement thereto), if used within
the period during which the Underwriters are authorized to use the
Prospectus as provided in Section 4 hereof, or the omission or alleged
omission to state therein (if so used) a material fact required to be
stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the indemnity agreement contained in this Section
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,
9
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 its directors or officers or
any person controlling such Underwriter) from whom the person asserting
any such losses, claims, damages or liabilities purchased the Securities
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 Representative 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
Securities 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) 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
10
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
11
such counsel that there are material legal defenses available to it which
are different from or additional to those available to the indemnifying
party (in which case the indemnifying party shall not have the right to
assume the defense of such action on behalf of such indemnified party) or
(iii) the indemnifying party shall not have assumed the defense of such
action and employed counsel therefor satisfactory to such indemnified
party within a reasonable time after notice of commencement of such
action, in any of which events such fees and expenses shall be borne by
the indemnifying party. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise of,
or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification may be
sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability arising out of such action or claim
and (ii) does not include any statement as to, or an admission of, fault,
culpability or a failure to act, by or on behalf of any indemnified party.
No indemnified party shall effect the settlement or compromise of, or
consent 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 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 Securities or (ii) if
the allocation provided by clause (i) above is not
12
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 Securities (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 Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
13
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 the delivery of the Securities, 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. You, as Representative
of the Underwriters, shall have received from Cravath, Swaine & Xxxxx LLP
an opinion and letter, each dated the Closing Date and addressed
14
to the Underwriters, with respect to the issuance and sale of the
Securities, 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 Representative of the Underwriters, on the Closing
Date, the opinion, addressed to the Underwriters and dated the Closing
Date, of Milbank, Tweed, Xxxxxx & XxXxxx 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 Securities by the Company pursuant
to this Agreement have been duly and validly authorized by all
necessary corporate action; and no authorization, consent, order or
approval of, or filing or registration with, or exemption by, any
government or public body or authority (including, without
limitation, the Rural Utilities Service) of the United States 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 Securities under the Securities Act and
qualification of the Indenture under the Trust Indenture Act, is
required for the validity of the Securities or for the issuance,
sale and delivery of the Securities by the Company pursuant to this
Agreement or for the execution and delivery of this Agreement by the
Company;
15
(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;
(iv) the Securities are in the forms provided for in the Indenture,
and, assuming due execution of the Securities on behalf of the
Company and authentication thereof by the Trustee, the Securities
constitute valid and binding obligations of the Company enforceable
in accordance with their terms and are entitled to the benefits of
the Indenture;
(v) this Agreement has been duly authorized, executed and delivered
by the Company and the performance of this Agreement and the
consummation of the transactions herein contemplated will not result
in a breach of any terms or provisions of, or constitute a default
under, the Articles of Incorporation or By-laws of the Company or
any indenture, deed of trust, note, note agreement or other
agreement or instrument known to such counsel, after due inquiry, to
which the Company is a party or by which the Company or any of its
properties is bound or affected;
(vi) the Securities 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 Securities 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
16
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
date thereof and as of the Closing Date (except in each case for the
tax-related disclosure and 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
17
natural gas company as defined in the Natural Gas Act.
In addition, the opinion of Milbank, Tweed, Xxxxxx & XxXxxx LLP
shall address in form and scope satisfactory to counsel for the
Underwriters, with respect to (i) the disclosure contained in the
Prospectus under the caption "U.S. Income Taxation" insofar as such
disclosure describes or summarizes matters of U.S. tax law or constitutes
conclusions of U.S. tax law and (ii) the treatment of the Securities as
debt instruments for U.S. Federal income tax purposes.
The foregoing opinion may contain qualifications to the effect that,
insofar as such opinion relates to the enforceability of the Securities
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 Securities 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 Securities and
the Indenture).
In rendering the foregoing opinion, Milbank, Tweed, Xxxxxx & XxXxxx
LLP may rely as to matters of the law of the District of Columbia upon the
opinion of Xxxx Xxx 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, Xxxxxx & XxXxxx
LLP shall so rely upon the opinion of
18
Xxxx Xxx List, Esq., (i) copies of the opinion so relied upon shall be
delivered to you, as Representative 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, Xxxxxx & XxXxxx LLP has made an
independent investigation of the matters in its opinion covered by the
opinion so relied upon and that the Underwriters are justified in relying
upon such opinion.
(d) Accountants' Letter. Ernst & Young LLP shall have furnished to
you, as Representative 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 Representative 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 Representative of the Underwriters, with respect
to such financial information and other matters as you, as Representative
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 his opinion, as
of the effective date of the Registration Statement, the
19
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 and (viii) the
representations and warranties of the Company herein are true and correct
as of the Closing Date.
(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 so
incorporated after the date hereof), any
20
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 Securities 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
21
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 the 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 Securities 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 Securities, 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 & Xxxxx LLP, 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 Representative 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 Securities which it or they have agreed to purchase hereunder, then (a) if
the aggregate principal amount of the Securities which the defaulting
Underwriter or Underwriters so agreed to purchase shall not exceed $10,000,000,
the nondefaulting Underwriters shall be obligated to purchase the Securities
from the Company, in proportion to their respective
22
obligations hereunder and upon the terms herein set forth, or (b) if the
aggregate principal amount of the Securities which the defaulting Underwriter or
Underwriters so agreed to purchase shall exceed $10,000,000, either you, as
Representative 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 Securities 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 representative, nor the Company shall have procured such other
Underwriters or any others to purchase the Securities 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 Company acknowledges
that (i) the list of Underwriters and their respective participation in the sale
of the Securities, (ii) the paragraph related to offering price, concessions and
reallowances and (iii) the paragraph related to stabilization, syndicate
covering transactions and penalty bids, in each case under the heading
"Underwriting" in the prospectus supplement portion of the Prospectus, and the
last paragraph 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 Representative 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
23
Securities, 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, 0000 Xxxxxxxxxxx Xxx, Xxxxxxx,
Xxxxxxxx 00000, attention of the Governor, and (ii) whenever notice is
required by the provisions of this Agreement to be given to you, as
Representative of the Underwriters or of any of them, such notice shall be
in writing addressed to you care of UBS Securities LLC, 000 Xxxxxxxxxx
Xxxxxxxxx, Xxxxxxxx, XX 00000, Attention: Fixed Income Syndicate (with a
copy to the office of the General Counsel).
(b) The Company agrees to furnish to you and to Cravath, Swaine &
Xxxxx 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 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 Securities.
24
(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, 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/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President,
Chief Financial Officer
and Assistant
Secretary-Treasurer
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
hereof that such letter correctly sets
forth the agreement between the Company
and the several Underwriters:
UBS SECURITIES LLC,
by
/s/ Xxxxx X. Xxxxx
----------------------------
Name: Xxxxx X. Xxxxx
Title: Managing Director
Capital Markets
by
/s/ Xxxx Xxxxxxx
----------------------------
Name: Xxxx Xxxxxxx
Title: Director
Debt Capital Markets
26
SCHEDULE I
Underwriting Agreement dated February 4, 2004
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
6.10% Subordinated Notes due 2044
(Subordinated Deferrable Interest Notes Due 2044)
Principal
Amount of
Securities
to be
Underwriter Purchased
----------- ---------
UBS Securities LLC ............................................ $ 23,875,000
Xxxxxx Brothers Inc. .......................................... 23,875,000
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ............ 23,875,000
Banc of America Securities LLC ................................ 2,000,000
Deutsche Bank Securities Inc. ................................. 2,000,000
HSBC Securities (USA) Inc. .................................... 2,000,000
ABN AMRO Incorporated ......................................... 625,000
X.X. Xxxxxxx & Sons, Inc. ..................................... 625,000
BancOne Capital Markets, Inc. ................................. 625,000
Bear, Xxxxxxx & Co. Inc. ...................................... 625,000
Xxxxxxx Xxxxxx & Co. .......................................... 625,000
Comerica, Inc. ................................................ 625,000
Credit Lyonnais Securities (USA) Inc. ......................... 625,000
Daiwa Securities SMBC Europe .................................. 625,000
H&R Block Financial Advisors, Inc. ............................ 625,000
Xxxxxx Xxxxxxx Corp. .......................................... 625,000
Xxxxxx Xxxxxxxxxx Xxxxx LLC ................................... 625,000
J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc. ............................. 625,000
X.X. Xxxxxx Securities Inc. ................................... 625,000
Xxxx Xxxxx Xxxx Xxxxxx, Inc. .................................. 625,000
McDonald Investments Inc., a KeyCorp company .................. 625,000
Mesirow Financial, Inc. ....................................... 625,000
Xxxxxxxxxxx & Co. Inc. ........................................ 625,000
Xxxxx Xxxxxxx Inc. ............................................ 625,000
Quick & Xxxxxx, Inc. .......................................... 625,000
RBC Xxxx Xxxxxxxx Inc. ........................................ 625,000
Scotia Capital (USA) Inc. ..................................... 625,000
Xxxxxx, Xxxxxxxx & Company Incorporated ....................... 625,000
Suntrust Capital Markets, Inc. ................................ 625,000
TD Securities (USA) Inc. ...................................... 625,000
Xxxxx Fargo Xxx Xxxxxx LLC .................................... 625,000
27
Principal
Amount of
Securities
to be
Underwriter Purchased
----------- ---------
Advest Inc. ................................................... 375,000
BB&T Capital Markets, a division of Xxxxx and Xxxxxxxxxxxx Inc. 375,000
Xxxxxxxx & Partners, L.P. ..................................... 375,000
X.X. Xxxx & Associates, Inc. .................................. 375,000
Xxxxxxx, Xxxxxx & Company ..................................... 375,000
X.X. Xxxxxxxx & Co. ........................................... 375,000
Xxxxxxxxx & Company LLC ....................................... 375,000
Xxxxx Securities Inc. ......................................... 375,000
Xxxxxx, Xxxxx Xxxxx Inc. ...................................... 375,000
Fifth Third Securities, Inc. .................................. 375,000
Xxxxx Xxxxxxxx & Xxxxx ........................................ 375,000
Xxxxxx Xxxxxx & Company, Inc. ................................. 375,000
Xxxxxxx Xxxxx & Associates, Inc. .............................. 375,000
Xxxxxx X. Xxxxx & Co. Inc. .................................... 375,000
Southwest Securities, Inc. .................................... 375,000
The Xxxxxxxx Capital Group, L.P. .............................. 375,000
Xxxxxxxx Capital Partners, L.P. ............................... 375,000
Wedbush Xxxxxx Securities, Inc. ............................... 375,000
TOTAL ......................................................... $100,000,000
============
