U.S. $5,074,816,000*
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
Medium-Term Notes, Series C
AGENCY AGREEMENT
October 23, 2003
Xxxxxx Brothers Inc.
ABN AMRO Incorporated
Banc of America Securities LLC
Banc One Capital Markets, Inc.
Deutsche Bank Securities Inc.
X.X. Xxxxxx Securities Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Scotia Capital (USA) Inc.
UBS Securities LLC
c/x Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
National Rural Utilities Cooperative Finance Corporation, a
District of Columbia cooperative association (the "Company"), confirms its
agreement with each of you (individually, an "Agent" and, collectively, the
"Agents") with respect to the issue and sale by the Company of up to U.S.
$5,074,816,000*/ aggregate principal amount of
--------------------
* Or the U.S. dollar equivalent in certain specified foreign currencies.
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its Medium-Term Notes, Series C (such Medium-Term Notes, Series C, together with
such additional Medium-Term Notes of the Company as are added to this Agreement
pursuant to an Amendment, the "Securities"). The Securities are to be issued
from time to time pursuant to an Indenture, dated as of December 15, 1987 (as
supplemented by a First Supplemental Indenture dated as of October 1, 1990, and
as it may be supplemented or amended from time to time, the "Indenture"),
between the Company and U.S. Bank Trust National Association, as successor
trustee (the "Trustee").
Subject to the terms and conditions stated herein and subject
to the reservation by the Company of the right to sell Securities directly on
its own behalf at any time, and to any person, and to designate or select
additional agents, the Company hereby appoints the Agents as the exclusive
agents of the Company for the purpose of soliciting or receiving offers to
purchase the Securities from the Company by others. This Agreement shall only
apply to sales of the Securities on original issuance and not to sales of any
other securities or evidences of indebtedness of the Company and only on the
specific terms set forth herein.
SECTION 1. Representations and Warranties. The Company
represents and warrants to each Agent as of the date hereof, as of each Closing
Date (as defined in Section 2(f) hereof), as of each settlement date in respect
of any principal purchase (whether pursuant to a Purchase Agreement or
otherwise) and as of the times referred to in Sections 6(a) and 6(b) hereof
(each Closing Date, each settlement date and each such time being hereinafter
sometimes referred to as a "Representation Date"), as follows:
(a) Registration Statement and Prospectus. The Company has
filed with the Securities and Exchange Commission (the "Commission")
Registration Statement on Form S-3 No. 333-109310 (and any registration
statements referred to in any Amendment (as defined in Section 12 hereof)) for
the registration under the Securities Act of 1933 (the "Act") of the Securities
(including a prospectus relating to the registration statements) and has filed
and may file one or more amendments thereto (including one or more amended or
supplemental prospectuses) and such registration statements and any such
amendments have become effective. Each such registration statement, including
financial statements and exhibits, at the time it became effective under the
Act, as amended and supplemented (including all documents incorporated therein
by reference), is hereinafter referred to as a "Registration Statement". A
prospectus supplement dated October 23, 2003, relating to the Securities and to
Registration Statement No. 333-109310, including a prospectus, has been prepared
and will be filed pursuant to Rule 424 of the rules and regulations of the
Commission (the "Rules and Regulations") under the Act (such prospectus and
prospectus supplement (or, in the case of any Amendment, the prospectus and
prospectus supplement referred to therein) are herein referred to as the
"Prospectus"). 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 Rules and Regulations which amends or
supplements the Prospectus. Any reference herein to a 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 such
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Registration Statement or the date of the Prospectus, as the case may be; and
any reference herein to the terms "amend", "amendment" or "supplement" with
respect to a 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 such Registration Statement, or the date of the Prospectus, as
the case may be, and deemed to be incorporated therein by reference.
(b) Accuracy of Registration Statements. Each Registration
Statement (and such Registration Statement as amended if any post-effective
amendment thereof shall have become effective) complies in all material respects
with the provisions of the Act and the Exchange Act and the Rules and
Regulations and does not contain an untrue statement of a material fact and does
not omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and the Prospectus (and the
Prospectus as amended or supplemented, if the Company shall have filed with the
Commission any amendment thereof or supplement thereto) fully complies with the
provisions of the Act and the Exchange Act and the Rules and Regulations and
does not contain any untrue statement of a material fact or 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 any Registration Statement
which shall constitute the Statement of Eligibility (Form T-1) under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), of the Trustee or
(ii) statements in, or omissions from, any Registration Statement or the
Prospectus or any amendment thereof or supplement thereto made in reliance upon
and in conformity with information furnished in writing to the Company by or on
behalf of an Agent for use in connection with the preparation of such
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 any Registration Statement and the Prospectus are independent with
respect to the Company as required by the Act and the Rules and Regulations.
(d) Due Incorporation. The Company has been duly incorporated
and is 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 any Representation Date, and as contemplated by the Prospectus.
(e) Material Changes. Since the respective dates as of which
information is given in each Registration Statement and the Prospectus, and
except as set forth in the Prospectus, there has not been any material adverse
change in the condition, financial or
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other, or the results of operations of the Company, whether or not arising from
transactions in the ordinary course of business.
(f) Litigation. 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 5(f) 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. The Securities and the Indenture are 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 is required for the issuance and sale of
the Securities as contemplated herein; and neither such issuance or sale of
Securities nor the consummation of any other of the transactions herein
contemplated will conflict with, result in the creation or imposition of any
lien, charge or encumbrance upon any of the assets of the Company or 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; and except as required by the
Act, the Trust Indenture Act, the Exchange Act and applicable state securities
laws, no consent, authorization or order of, or filing or registration with, any
court or governmental agency is required for the execution, delivery and
performance by the Company of the transactions contemplated by this Agreement,
each applicable Purchase Agreement (as defined in Section 11), if any, or the
Indenture. The Securities and the Indenture conform in all material respects to
the descriptions thereof contained in the Prospectus. Each Security delivered or
sold hereunder will constitute, as of such delivery or sale, the legal, valid
and binding obligation of the Company enforceable in accordance with its terms
and will be entitled to the benefits of the Indenture and the terms of such
Security will have been approved by the Governor or the Chief Financial Officer
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.
SECTION 2. Solicitations as Agent. (a) On the basis of the
representations and warranties contained herein, but subject to the terms and
conditions herein set forth, each Agent agrees, as an agent of the Company, to
use its reasonable best efforts to solicit offers to purchase the Securities
upon the terms and conditions set forth in the Prospectus. No Agent shall
otherwise employ, pay or compensate any other person to solicit offers to
purchase the Securities or to perform any of its functions as Agent without the
prior written consent of the Company, which consent shall not be unreasonably
withheld.
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(b) The Company reserves the right, in its sole discretion, to
suspend solicitation by the Agents in their capacities as Agents of offers to
purchase the Securities from the Company commencing at any time for any period
of time or permanently. Upon receipt of at least one business day's prior notice
from the Company, the Agents will forthwith suspend solicitation of offers to
purchase Securities from the Company until such time as the Company has advised
the Agents that such solicitation may be resumed.
(c) Promptly upon the closing of the sale of any Securities
sold by the Company as a result of a solicitation made by an Agent, the Company
agrees to pay such Agent a commission in accordance with the schedule set forth
in Exhibit A hereto, or such other fee as is mutually agreed upon by the Company
and such Agent.
(d) The Agents are authorized to solicit offers to purchase
the Securities only in denominations of U.S. $1,000** or any amount in excess
thereof which is an integral multiple thereof, at a purchase price equal to 100%
of the principal amount thereof or such other amount as shall be specified by
the Company. Each Agent shall communicate to the Company, in accordance with the
Procedures (as defined below), each reasonable offer to purchase Securities
received by it as an Agent other than those rejected by such Agent. The Company
shall have the sole right to accept offers to purchase the Securities and may
reject any such offer in whole or in part. Each Agent shall have the right, in
its discretion reasonably exercised without advising the Company, to reject any
offer to purchase the Securities received by it, in whole or in part, and any
such rejection shall not be deemed a breach of its agreement contained herein.
(e) Administrative procedures respecting the sale of
Securities (the "Procedures") shall be agreed upon from time to time by the
appropriate representatives of each Agent and the Company. The Procedures
initially shall include those procedures set forth in Exhibit B hereto. Each
Agent and the Company agree to perform the respective duties and obligations
specifically provided to be performed by each of them herein and in the
Procedures.
(f) The documents initially required to be delivered by
Section 5 hereof and the documents required to be delivered by Section 5 hereof
in connection with each Amendment shall be delivered at the office of Milbank,
Tweed, Xxxxxx & XxXxxx LLP, Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
not later than 10:00 A.M., New York City time, on the date of this Agreement, or
such Amendment, or at such later time as may be mutually agreed upon by the
Company and the Agents (each a "Closing Date").
SECTION 3. Covenants of the Company. The Company covenants and
agrees:
---------------------
**Or the equivalent in the relevant foreign currency (rounded down to
an integral multiple of currency of the denomination specified in the relevant
supplement to the Prospectus), or such larger amount in integral multiples of
such currency.
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(a) to furnish promptly to each Agent and to its counsel,
without charge, a signed copy of each Registration Statement as filed with the
Commission and each amendment or supplement thereto (other than pricing
supplements which need only be furnished to the Agents for the Securities
covered thereby), and a copy of each Prospectus thereafter filed with the
Commission, including all supplements thereto (other than pricing supplements)
and, upon request of such Agent, all documents incorporated therein by reference
and all consents and exhibits filed therewith;
(b) to deliver promptly to the Agents such number of the
following documents as they may request:
(i) conformed copies of each Registration Statement (excluding
exhibits other than the computation of the ratio of earnings to fixed
charges, the Indenture and this Agreement);
(ii) each Prospectus; and
(iii) any documents incorporated by reference in the
Prospectus;
and the Company authorizes each Agent to use such documents during the period
referred to in (c) below (subject to the limitations set forth therein) in
connection with the sale of the Securities in accordance with the applicable
provisions of the Act and the Rules and Regulations;
(c) if, during any period in which, in the opinion of counsel
for the Agents (provided, if the Agents are no longer soliciting (or have been
instructed to stop soliciting) purchases of Securities, such opinion is known to
the Company), a prospectus relating to the Securities is required to be
delivered under the Act, any event known to the Company occurs as a result of
which the Prospectus would include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or if it
is necessary at any time to amend the Prospectus to comply with the Act or the
Rules and Regulations, to notify the Agents promptly to suspend solicitation of
purchases of the Securities (and the Agents will do so); and if the Company
shall decide to amend or supplement a Registration Statement or the Prospectus
for purposes of offering the Securities, to promptly advise the Agents by
telephone (with confirmation in writing) and, except as otherwise provided in
any relevant Purchase Agreement, to promptly prepare and file with the
Commission an amendment or supplement, whether by filing such documents pursuant
to the Act or the Exchange Act, as may be necessary to correct such untrue
statement or omission or to make such Registration Statement or the Prospectus
comply with such requirements and to prepare and furnish to the Agents at its
own expense such amendment or supplement to such Registration Statement or the
Prospectus as will correct such Registration Statement or the Prospectus;
provided, however, that the Company shall in any event promptly prepare, file
and furnish an Agent with such an amendment or supplement if such Agent shall
then hold any Securities acquired from the Company as principal (other than such
Securities as such Agent shall have held for a period of six months or more);
7
(d) to timely file with the Commission during the period
referred to in the proviso to (c) above and during any time the Agents are
permitted to solicit offers as Agents as provided hereunder (i) any amendment or
supplement to a Registration Statement or any Prospectus that may, in the
judgment of the Company, be required by the Act or requested by the Commission
and (ii) all documents (and any amendments to previously filed documents)
required to be filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act;
(e) prior to filing with the Commission, during the period
referred to in the proviso to (c) above and during any time the Agents are
permitted to solicit offers as Agents as provided hereunder, (i) any amendment
or supplement to a Registration Statement, (ii) any amendment or supplement to
the Prospectus or (iii) upon request of any Agent, any document incorporated by
reference in any Registration Statement or any amendment of or supplement to any
such incorporated document, to furnish a copy thereof to the Agents and counsel
for the Agents;
(f) to advise the Agents immediately (i) when any
post-effective amendment to any Registration Statement relating to or covering
the Securities becomes effective and when any further amendment of or supplement
to the Prospectus shall be filed with the Commission, (ii) of any request or
proposed request by the Commission for an amendment or supplement to any
Registration Statement, to the Prospectus, to any document incorporated by
reference in any of the foregoing or for any additional information, (iii) of
the issuance by the Commission of any stop order suspending the effectiveness of
any Registration Statement or any order directed to the Prospectus or any
document incorporated therein by reference or the initiation or threat of any
stop order proceeding or of any challenge to the accuracy or adequacy of any
document incorporated by reference in the Prospectus, (iv) of receipt by the
Company of any notification with respect to the suspension of the qualification
of the Securities for sale in any jurisdiction or the initiation or threat of
any proceeding for that purpose and (v) of the happening of any event which
makes untrue any statement of a material fact made in any Registration Statement
or the Prospectus as amended or supplemented or which requires the making of a
change in any such Registration Statement or the Prospectus as amended or
supplemented in order to make any material statement therein not misleading;
(g) if, during the period referred to in the proviso to (c)
above and during any time the Agents are permitted to solicit offers as Agents
as provided hereunder, the Commission shall issue a stop order suspending the
effectiveness of a Registration Statement, to make every reasonable effort to
obtain the lifting of that order at the earliest possible time;
(h) as soon as practicable, but not later than 18 months,
after the date of each acceptance by the Company of an offer to purchase
Securities hereunder, to make generally available to its security holders an
earnings statement covering a period of at least 12 months beginning after the
later of (i) the effective date of the most recent Registration Statement, (ii)
the effective date of the most recent post-effective amendment to the most
recent Registration Statement to become effective prior to the date of such
acceptance and (iii) the date of the Company's most recent Annual Report
8
on Form 10-K filed with the Commission prior to the date of such acceptance
which will satisfy the provisions of Section 11(a) of the Act (including, at the
option of the Company, Rule 158 of the Rules and Regulations under the Act);
(i) so long as any of the Securities are outstanding, to make
available to the Agents, not later than the time the Company makes the same
available to others, copies of all public reports or releases and all reports
and financial statements furnished by the Company to any securities exchange on
which the Securities are listed pursuant to requirements of or agreements with
such exchange or to the Commission pursuant to the Exchange Act or any rule or
regulation of the Commission thereunder;
(j) on or prior to the date on which the Company shall release
to the general public interim financial information, if any, with respect to
each of the first three quarters of any fiscal year, to make available such
information to each Agent and, except as otherwise provided in any relevant
Purchase Agreement, to cause the Prospectus to be amended or supplemented to set
forth or incorporate by reference such information, as well as such other
information and explanations as shall be necessary for an understanding of such
amounts or as shall be required by the Act or the Rules and Regulations;
provided, however, that if on the date of such release the Agents shall not be
engaged or shall have been instructed not to engage in solicitation of purchases
of the Securities as Agents of the Company, and shall not then hold any
Securities acquired from the Company as principal (other than such Securities as
shall have been held for a period of six months or more), the Company shall not
be obligated so to amend or supplement the Prospectus until such time as
solicitation of purchases of the Securities shall with the Company's consent be
resumed or the Company shall subsequently enter into a new Purchase Agreement
with one of you;
(k) on or prior to the date on which the Company shall release
to the general public financial information included in or derived from the
audited financial statements of the Company for the preceding fiscal year, to
make available such information to each Agent and to cause each Registration
Statement and the Prospectus to be amended or supplemented, initially to set
forth capsule financial information with respect to the results of operations of
the Company for such year and corresponding information for the prior year, as
well as such other information and explanations as shall be necessary for an
understanding of such amounts or as shall be required by the Act or the Rules
and Regulations, and, on or before the date that the Company's Annual Report on
Form 10-K is filed with the Commission, to cause each Registration Statement and
the Prospectus to be amended to set forth or incorporate such audited financial
statements and the report or reports of independent accountants with respect
thereto, as well as such other information and explanations as shall be
necessary for an understanding of such financial statements or as shall be
required by the Act or the Rules and Regulations; provided, however, that if on
the date of such release the Agents shall not be engaged or shall have been
instructed not to engage in solicitation of purchases of the Securities as
Agents of the Company, and shall not then hold any Securities acquired from the
Company as principal (other than such Securities as shall have been held for a
period of six months or more), the Company shall not be obligated so to amend or
supplement the Prospectus until such time as solicitation of purchases of the
Securities shall with the
9
Company's consent be resumed or the Company shall subsequently enter into a new
Purchase Agreement with one of you; and
(l) to endeavor, in cooperation with the Agents, to qualify
the Securities for offering and sale under the securities laws of such
jurisdictions as any Agent may designate, and to maintain such qualifications in
effect for as long as may be required for the distribution of the Securities;
and to file such statements and reports as may be required by the laws of each
jurisdiction in which the Securities have been qualified as above provided;
provided that the Company shall not be required to register or qualify as a
foreign corporation nor, except as to matters relating to the offer and sale of
the Securities, take any action which would subject it to service of process
generally in any jurisdiction.
SECTION 4. Payment of Expenses. The Company will pay (i) the
costs incident to the authorization, issuance and delivery of the Securities and
any taxes (other than transfer taxes) payable in that connection, (ii) the costs
incident to the preparation, printing and filing under the Act of each
Registration Statement and any amendments and exhibits thereto, (iii) the costs
incident to the preparation, printing and filing of any document and any
amendments and exhibits thereto required to be filed by the Company under the
Exchange Act, (iv) the costs of preparing, printing and mailing of the
Prospectus and any amendment or supplement to the Prospectus, (v) the costs of
distributing each Registration Statement, as originally filed, and each
amendment and post-effective amendment thereof (including exhibits), the
Prospectus, any supplement or amendment to the Prospectus and any documents
incorporated by reference in any of the foregoing documents, (vi) the fees and
disbursements of the Trustee and its counsel, (vii) the costs and fees in
connection with the listing of the Securities on any securities exchange, (viii)
the cost of any filings with the National Association of Securities Dealers,
Inc., (ix) the fees and disbursements of counsel to the Company, (x) the fees
paid to rating agencies in connection with the rating of the Securities, (xi)
the fees and expenses of qualifying the Securities under the securities laws of
the several jurisdictions as provided in Section 3(l) hereof and of preparing
and printing a Blue Sky Memorandum and a memorandum concerning the legality of
the Securities as an investment (including fees and expenses of counsel for the
Agents in connection therewith), (xii) the cost of the "tombstone" advertisement
and such other advertising expenses agreed to by the Company and Agents in
connection with the solicitation of offers to purchase Securities, and (xiii)
all other costs and expenses incident to the performance of the Company's
obligations under this Agreement (including any Purchase Agreement). In
addition, subject to the provisions of Section 7, the Company agrees to
reimburse the Agents for the fees and disbursements of their legal counsel
(except that the Company shall not be liable for the fees and disbursements of
more than one separate firm of attorneys).
Except as specifically provided in this Section and herein,
the Agents agree to pay all their costs and expenses.
SECTION 5. Conditions of Obligations. The obligation of the
Agents, as agents of the Company, under this Agreement to solicit offers to
purchase the Securities, as well as the obligation of each Agent to purchase
Securities pursuant to any Purchase
10
Agreement or otherwise, is subject to the accuracy, on each Representation Date,
of the representations and warranties of the Company contained herein, to the
accuracy of the statements of the Company's officers made in any certificate
furnished pursuant to the provisions hereof to the extent then relevant, to the
performance by the Company in all material respects of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) No stop order suspending the effectiveness of any
Registration Statement, or any part thereof, nor any order directed to any
document incorporated by reference in the Prospectus shall have been issued and
no stop order proceeding shall have been initiated or threatened by the
Commission and no challenge by the Commission shall be pending to the accuracy
or adequacy of any document incorporated by reference in the Prospectus; any
request of the Commission for inclusion of additional information in any
Registration Statement or the Prospectus or otherwise shall have been withdrawn
or complied with; and after the date of any Purchase Agreement (and prior to the
closing date for the Securities referred to therein) the Company shall not have
filed with the Commission any amendment or supplement to any Registration
Statement or the Prospectus (or any document incorporated by reference therein)
without the consent of the Agent or Agents party thereto.
(b) No order suspending the sale of the Securities in any
jurisdiction designated by an Agent pursuant to Section 3(l) hereof shall have
been issued, and no proceeding for that purpose shall have been initiated or
threatened.
(c) The Agents shall not have discovered and disclosed to the
Company that any Registration Statement or the Prospectus, as amended or
supplemented, contains an untrue statement of a fact which, in the opinion of
counsel for the Agents, is material or omits to state a fact which, in the
opinion of such counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(d) At each Closing Date, the Agents shall have received from
Cravath, Swaine & Xxxxx LLP, counsel for the Agents, such opinion and letter,
dated such Closing Date, with respect to the issuance and sale of the
Securities, the Indenture, each Registration Statement and the Prospectus, as
amended or supplemented, and other related matters as the Agents 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.
(e) At each Closing Date, the Agents shall have received the
opinion, addressed to the Agents and dated such Closing Date, of Xxxx Xxx List,
Esq., General Counsel of the Company, in form and scope satisfactory to the
Agents and their counsel, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a cooperative association under the laws of the District of
Columbia with corporate power to conduct its business as described in
each Registration Statement;
11
(ii) the issuance and sale of the Securities by the Company
pursuant to this Agreement (and, if the opinion is being given pursuant
to Section 6(c) hereof on account of the Company having entered into a
Purchase Agreement, the applicable Purchase Agreement) have been duly
and validly authorized by all necessary corporate action (subject to
the approval of the terms of each Security by the Governor or the Chief
Financial Officer of the Company); and no authorization, consent, order
or approval of, or filing or registration with, or exemption by, any
government or public body or authority of the District of Columbia or
any department or subdivision thereof 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 and any Purchase Agreement or
for the execution and delivery of this Agreement, any Purchase
Agreement and the Indenture by the Company (except that such counsel
need not express an opinion as to whether offers or sales by Agents
require qualification or registration under the securities laws of the
District of Columbia);
(iii) the Indenture has been duly authorized by the Company
and constitutes an instrument valid and binding on the Company and
enforceable in accordance with its terms;
(iv) the Securities, assuming they are in a form conforming to
the specimens thereof examined by such counsel, and assuming due
execution of the Securities on behalf of the Company and authentication
thereof by the Trustee and issuance thereof in accordance with the
terms of the Indenture and delivery thereof against payment therefor in
accordance with the terms of this Agreement (and any Purchase
Agreement) and subject to the approval of the terms of each Security by
the Governor or the Chief Financial Officer of the Company, will
constitute valid and binding obligations of the Company enforceable in
accordance with their terms and will be 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) no consent, approval, authorization or order of any court
or governmental agency, authority or body of the District of Columbia
is required for the consummation of the transactions contemplated in
this Agreement (including any Purchase Agreement) (except that such
counsel need not express an opinion as to whether offers or sales by
Agents require qualification or registration under the securities laws
of the District of Columbia); and
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(vii) there is no tax of the District of Columbia or the
Commonwealth of Virginia applicable to the execution of the Indenture.
Such counsel shall state that nothing has come to the
attention of such counsel causing him to believe, based upon such counsel's
participation in the preparation of each Registration Statement or otherwise,
that any Registration Statement (or any post-effective amendment thereof), at
the time such Registration Statement became effective and at the effective time
of any such amendment or supplement, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make statements therein not misleading, or that the Prospectus
(as amended or supplemented, if amended or supplemented), as of the Closing
Date, 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, in light of the circumstances under which they were made, 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 any Registration Statement or the Prospectus and which is not disclosed
therein.
Insofar as such opinion relates to the enforceability of the
Securities and the Indenture, such counsel may state that the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights of creditors generally
and may be limited 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, and by laws with respect to or affecting the remedies
provided for in the Securities and the Indenture (provided that such laws do
not, in the opinion of such counsel, make inadequate the remedies afforded
thereby for the realization of the benefits provided for in the Securities and
the Indenture).
(f) At each Closing Date, the Agents shall have received the
opinion, addressed to the Agents and dated such Closing Date, of Milbank, Tweed,
Xxxxxx & XxXxxx LLP, counsel to the Company, in form and scope satisfactory to
the Agents and their counsel, to the effect that:
(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 Prospectus;
(ii) the issuance and sale of the Securities by the Company
pursuant to this Agreement (and, if the opinion is being given pursuant
to Section 6(d) hereof on account of the Company having entered into a
Purchase Agreement, the applicable Purchase Agreement) have been duly
and validly authorized by all necessary corporate action (subject to
the approval of the terms of each Security by the Governor or the Chief
Financial Officer of the Company); and no authorization, consent, order
or approval of, or filing or registration with, or
13
exemption by, any governmental 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 knowledge of such counsel, 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 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 (including any
Purchase Agreement) or for the execution and delivery of this Agreement
(including any Purchase Agreement) and the Indenture 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;
(iv) the Securities, assuming they are in a form conforming to
the specimens thereof examined by such counsel, and assuming due
execution of the Securities on behalf of the Company and authentication
thereof by the Trustee and issuance thereof in accordance with the
terms of the Indenture and delivery thereof against payment therefor in
accordance with the terms of this Agreement (and any Purchase
Agreement) and subject to the approval of the terms each Security by
the Governor or the Chief Financial Officer of the Company, will
constitute valid and binding obligations of the Company enforceable in
accordance with their terms and will be entitled to the benefits of the
Indenture;
(v) this Agreement (including any Purchase Agreement) has been
duly authorized, executed and delivered by the Company and the
performance of this Agreement (including any Purchase 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 each Registration
Statement; the statements made in the Prospectus under the caption
"Description of Securities" and in the prospectus supplement dated
October 23, 2003, under the caption "Description of the Medium-Term
Notes" (and the comparable provisions of any supplement to the
Prospectus approved by the Agents), insofar as they purport to
summarize the provisions of documents or agreements specifically
referred to therein, fairly present the information called for with
respect thereto by Form S-3; and the legal conclusions contained in the
Prospectus under the caption "United States Taxation" are correct in
all material respects and the discussion thereunder does not omit any
material provision with respect to the matters covered;
14
(vii) each Registration Statement (and any posteffective
amendment thereof) has become and is effective under the Act and the
Securities have become registered under the Act, and, to the best of
the knowledge of such counsel, no stop order suspending the
effectiveness of any Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated, and each Registration Statement (and any post-effective
amendment thereof) and 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
Securities and Exchange Commission complied as to form in all material
respects with the requirements of the Act, the Exchange Act, the Trust
Indenture Act and the rules and regulations issued thereunder;
(viii) the Company is not required to be registered as an
investment company under the Investment Company Act of 1940;
(ix) the Company is not subject to regulation under the Public
Utility Holding Company Act of 1935; and
(x) the Company is not a public utility as defined in the
Federal Power Act.
Such counsel shall state that based upon such counsel's
participation in the preparation of each 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, nothing has come to the attention
of such counsel causing it to believe that such Registration Statement (or any
post-effective amendment thereof), at the time such Registration Statement
became effective and at the effective time of any such amendment or supplement,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make statements therein not
misleading, or that the Prospectus (as amended or supplemented, if amended or
supplemented), as of the Closing Date, 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, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel need
express no opinion concerning financial or statistical data included therein)
and such counsel does not know of any litigation or any governmental proceeding
instituted or threatened against the Company required to be disclosed in any
Registration Statement or the Prospectus and which is not disclosed therein.
Such counsel shall also state that to the best knowledge of
such counsel, no order directed to any document incorporated by reference in the
Prospectus has been issued and no challenge has been made by any regulatory
agency to the accuracy or adequacy of any such document.
15
Insofar as such opinion relates to the enforceability of the
Securities and the Indenture, such counsel may state that the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights of creditors generally
and may be limited 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, and by laws with respect to or affecting the remedies
provided for in the Securities and the Indenture (provided that such laws do
not, in the opinion of such counsel, make inadequate the remedies afforded
thereby for the realization of the 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 Agents and dated such Closing Date, satisfactory in form and scope to
counsel for the Agents. If Milbank, Tweed, Xxxxxx & XxXxxx LLP shall so rely
upon the opinion of Xxxx Xxx List, Esq., (i) copies of the opinion so relied
upon (to the extent such opinion is different than the opinion required by
Section 5(e)) shall be delivered to you and to counsel for the Agents and (ii)
the opinion required by this Section 5(f) 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 Agents are justified
in relying upon such opinion.
(g) The Company shall have furnished to the Agents on each
Closing Date a certificate, dated such Closing Date, of its President, Governor,
Vice President or Chief Financial Officer stating that: (i) the representations,
warranties and agreements of the Company in Section 1 hereof are true and
correct as of such Closing Date; the Company has complied in all material
respects with all its agreements contained herein; and the conditions set forth
in Sections 5(a) and 5(b) hereof have been fulfilled, (ii) in his opinion, as of
the effective date of each Registration Statement, such 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, in light of the circumstances under which they were made,
not misleading, and, as of the effective date of the most recent Registration
Statement, the Prospectus did not contain an untrue statement of a material fact
and did not omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, (iii) since the
effective date of the most recent 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, (iv) since the respective dates as of which
information is given in the most recent
16
Registration Statement and the Prospectus, as amended or supplemented, 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, (v) the Company has no material contingent
obligations which are required to be disclosed in any Registration Statement or
the Prospectus and are not disclosed therein, (vi) no stop order suspending the
effectiveness of any Registration Statement is in effect on such 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 on or prior to such
Closing Date, (vii) 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 in any Registration Statement or the Prospectus and are not
disclosed therein and (viii) there are no material contracts to which the
Company is a party which are required to be disclosed in the Registration
Statement or the Prospectus and are not disclosed therein.
(h) Ernst & Young LLP (or successor independent public
accountants with respect to the Company within the meaning of the Act and the
Rules and Regulations) shall have furnished to the Agents, at or prior to each
Closing Date, a letter, addressed to the Agents and dated such Closing Date,
confirming that they are independent public accountants with respect to the
Company within the meaning of the 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 the Agents
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 the Agents with respect to such
financial information and other matters as the Agents shall reasonably request.
(i) 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 by 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 is, in any case described in clause (iv) or
(v), in the judgment of the relevant Agent (which, in the case of a syndicated
issue, shall be the lead manager(s)), to make it impracticable or inadvisable to
17
proceed with the solicitation of offers to purchase or the purchase or delivery
of the Securities on the terms and in the manner contemplated in the Prospectus;
provided, however, that in the event that any Agent agrees to purchase
Securities as a principal (whether pursuant to a Purchase Agreement or
otherwise) there shall not have occurred any of the foregoing subsequent to the
date of such agreement.
(j) Prior to each Closing Date, the Company shall have
furnished to the Agents and to Cravath, Swaine & Xxxxx LLP, counsel to the
Agents, such further certificates and documents as the Agents or counsel to the
Agents may have reasonably requested prior to such Closing Date.
If any of the conditions specified in this Section 5 shall not
have been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement and all obligations of the Agents hereunder may be canceled on, or at
any time prior to, any Closing Date by the Agents. Notice of such cancelation
shall be given to the Company in writing, or by facsimile, telephone or telex
confirmed in writing.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are on the date of delivery in the form and
scope satisfactory to counsel for the Agents.
In the event that any Agent purchases Securities as a
principal (whether pursuant to a Purchase Agreement or otherwise), the
conditions of Section 3 of the Purchase Agreement set forth in Exhibit C hereto
shall also apply to such purchase.
SECTION 6. Additional Covenants of the Company. The Company
covenants and agrees that:
(a) Each acceptance by it of an offer for the purchase of
Securities shall be deemed to be an affirmation to the Agent which procured the
offer that the representations and warranties of the Company contained in this
Agreement and in any certificate theretofore given to the Agents pursuant hereto
(to the extent relevant to such purchase) are true and correct at the time of
such acceptance, and an undertaking that such representations and warranties
will be true and correct at the time for delivery to the purchaser or his agent
of the Securities relating to such acceptance as though made at and as of each
such time (and it is understood that such representations and warranties shall
relate to each Registration Statement and the Prospectus as amended or
supplemented to each such time).
(b) Each time that any Registration Statement or the
Prospectus shall be amended or supplemented (other than by a pricing supplement
or an amendment or supplement providing solely for a change in the interest
rates or maturities of the Securities or a change in the principal amount of
Securities remaining to be sold, a change in payment dates or similar changes))
or the Company files with the Commission any document incorporated by reference
into the Prospectus (except in all cases by filing a report on Form 8-K,
pursuant to the Exchange Act, solely to add exhibits to documents
18
previously filed), the Company shall, within fifteen days of such amendment,
supplement or filing, furnish the Agents with a certificate of the President,
Governor or Chief Financial Officer of the Company in form satisfactory to the
Agents to the effect that the statements contained in the certificate referred
to in Section 5(g) hereof which was last furnished to the Agents are true and
correct at the time of such amendment, supplement or filing, as the case may be,
as though made at and as of such time (except that such statements shall be
deemed to relate to such Registration Statement and the Prospectus as amended
and supplemented to such time) or, in lieu of such certificate, a certificate of
the same tenor as the certificate referred to in said Section 5(g) modified as
necessary to relate to such Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such certificate; provided, however,
that the Agents shall have no obligation to solicit offers to purchase the
Securities until such certificate has been furnished to the Agents; provided,
further, that, except if the Agents shall then hold any Securities acquired from
the Company as principal (other than such Securities as shall have been held for
a period of six months or more), no certificate need be given during any period
in which the Agents have been instructed to or have suspended the solicitation
and receipt of offers to purchase Securities but shall be required to be given
before the Agents shall again be obligated to solicit offers to purchase the
Securities.
(c) Each time that any Registration Statement or the
Prospectus shall be amended or supplemented (other than by a pricing supplement
or an amendment or supplement providing solely for a change in the interest
rates or maturities of the Securities or a change in the principal amount of
Securities remaining to be sold, a change in payment dates or similar changes)
or the Company files with the Commission any document incorporated by reference
into the Prospectus (except in all cases by filing a report on Form 8-K,
pursuant to the Exchange Act, solely to add exhibits to documents previously
filed), the Company shall, within fifteen days of such amendment, supplement or
filing, furnish the Agents and their counsel with a written opinion of the
General Counsel of the Company, addressed to the Agents and dated the date of
delivery of such opinion, in form satisfactory to the Agents, of the same tenor
as the opinion referred to in Section 5(e) hereof, but modified, as necessary,
to relate to such Registration Statement and the Prospectus as amended or
supplemented to the time of delivery of such opinion; provided, however, that in
lieu of such opinion, such counsel may furnish the Agents with a letter to the
effect that the Agents may rely on such prior opinion to the same extent as
though it was dated the date of such letter authorizing reliance (except that
statements in such prior opinion shall be deemed to relate to such Registration
Statement and the Prospectus as amended or supplemented to the time of delivery
of such letter authorizing reliance); provided, further, that the Agents shall
have no obligation to solicit offers to purchase the Securities until such
opinion or letter, as applicable, has been furnished to the Agents; and
provided, further, that, except if the Agents shall then hold any Securities
acquired from the Company as principal (other than such Securities as each Agent
shall have held for a period of six months or more), no opinion or certificate
need be given during any period in which the Agents have been instructed to or
have suspended the solicitation and receipt of offers to purchase Securities but
shall be required to be given before the Agents shall again be obligated to
solicit offers to purchase the Securities.
19
(d) Each time that the Company files with the Commission its
Annual Report on Form 10-K, pursuant to the Exchange Act, incorporated by
reference into the Prospectus, the Company shall furnish the Agents and their
counsel with a written opinion of Milbank, Tweed, Xxxxxx & XxXxxx LLP, counsel
to the Company, addressed to the Agents and dated the date of delivery of such
opinion, in form satisfactory to the Agents, of the same tenor as the opinion
referred to in Section 5(f) hereof, but modified, as necessary, to relate to
such Prospectus as supplemented to the time of delivery of such opinion;
provided, however, that in lieu of such opinion, such counsel may furnish the
Agents with a letter to the effect that the Agents may rely on such prior
opinion to the same extent as though it was dated the date of such letter
authorizing reliance (except that the statements in such prior opinion shall be
deemed to relate to such Prospectus as supplemented to the time of delivery of
such letter reauthorizing reliance); provided, further, that, except if the
Agents shall then hold any Securities acquired from the Company as principal
(other than such Securities as shall have been held for a period of six months
or more), no letter need be given during any period in which the Agents have
been instructed to or have suspended the solicitation and receipt of offers to
purchase Securities but shall be required to be given before the Agents shall
again be obligated to solicit offers to purchase the Securities.
(e) Each time that the Company files with the Commission its
Annual Report on Form 10-K, pursuant to the Exchange Act, incorporated by
reference into the Prospectus, the Company shall cause Ernst & Young LLP (or
successor independent public accountants with respect to the Company within the
meaning of the Act and the Rules and Regulations), within fifteen days of such
filing, to furnish the Agents a letter, addressed jointly to the Company and the
Agents and dated the date of delivery of such letter, in form and substance
reasonably satisfactory to the Agents, of the same tenor as the letter referred
to in Section 5(h) hereof but modified to relate to such Prospectus, as
supplemented to the date of such letter, with such changes as may be necessary
to reflect changes in the financial statements and other information derived
from the accounting records of the Company; provided, however, that the Agents
shall have no obligation to solicit offers to purchase the Securities until such
letter has been furnished to the Agents; provided, further, that except if the
Agents shall then hold any Securities acquired from the Company as principal
(other than such Securities as shall have been held for a period of six months
or more), no letter need be given during any period in which the Agents have
been instructed to or have suspended the solicitation and receipt of offers to
purchase Securities but shall be required to be given before the Agents shall
again be obligated to solicit offers to purchase the Securities.
(f) Any time after any Registration Statement or the
Prospectus shall be amended or supplemented (other than by a pricing supplement
or an amendment or supplement providing solely for a change in the interest
rates or maturities of the Securities or a change in the principal amount of
Securities remaining to be sold, a change in payment dates or similar changes)
or the Company files with the Commission any document incorporated by reference
into the Prospectus (except in all cases by filing a report on Form 8-K,
pursuant to the Exchange Act, solely to add exhibits to documents previously
filed or by a filing referenced in Section 6(d) or 6(e)) that the Company
proposes to issue any Securities hereunder it shall have first furnished the
Agents and
20
their counsel a written opinion of Milbank, Tweed, Xxxxxx & XxXxxx LLP, counsel
to the Company, addressed to the Agents and dated the date of delivery of such
opinion, in form satisfactory to the Agents, of the same tenor as the opinion
referred to in Section 5(f) hereof, but modified, as necessary, to relate to
such Registration Statement and the Prospectus as amended or supplemented to the
time of delivery of such opinion; provided, however, that in lieu of such
opinion, such counsel may furnish the Agents with a letter to the effect that
the Agents may rely on such prior opinion to the same extent as though it was
dated the date of such letter authorizing reliance (except that the statements
in such prior opinion shall be deemed to relate to such Registration Statement
and the Prospectus as amended or supplemented to the time of delivery of such
letter reauthorizing reliance).
(g) Any time after any Registration Statement or the
Prospectus shall be amended or supplemented to include additional financial
information with respect to the Company or the Company files with the Commission
any document incorporated by reference into the Prospectus which contains
additional financial information (other than by a filing referred to in Section
6(d) or 6(e)) that the Company proposes to issue any Securities hereunder it
shall have first caused Ernst & Young LLP (or successor independent public
accountants with respect to the Company within the meaning of the Act and the
Rules and Regulations) to furnish the Agents, a letter, addressed jointly to the
Company and the Agents and dated the date of delivery of such letter, in form
and substance reasonably satisfactory to the Agents, of the same tenor as the
letter referred to in Section 5(h) hereof but modified to relate to such
Registration Statement and the Prospectus, as amended and supplemented to the
date of such letter, with such changes as may be necessary to reflect changes in
the financial statements and other information derived from the accounting
records of the Company; provided, however, that if any Registration Statement or
the Prospectus is amended or supplemented solely to include financial
information with respect to the Company as of and for a fiscal quarter, Ernst &
Young LLP (or successor independent public accountants with respect to the
Company within the meaning of the Act and the Rules and Regulations) may limit
the scope of such letter to the unaudited financial statements included in such
amendment or supplement unless there is contained therein any other accounting,
financial or statistical information with respect to the Company that, in the
reasonable judgment of the Agents, should be covered by such letter, in which
event such letter shall also cover such other information.
(h) On request from time to time by any Agent, the Company
will advise the Agents of the amount of Securities sold (which for this purpose
shall include medium-term notes having terms substantially similar to the terms
of the Securities but constituting one or more separate series of securities for
purposes of the Indenture and sold outside the United States pursuant to any
other agreement), and the amount remaining registered under the Securities Act
and authorized for issuance and sale hereunder.
SECTION 7. Indemnification and Contribution. (a) The Company
shall indemnify and hold harmless the Agents (for purposes of this Section 7,
the "Agents" shall be deemed to include the Agents and all subsidiaries and
affiliates of the Agents to
21
the extent such subsidiaries and affiliates are agents of the Company in
accordance with the provisions of Section 2(a)) and each director or officer of
an Agent and each person, if any, who controls an Agent within the meaning of
the Act from and against any loss, claim, damage or liability, joint or several,
to which such Agent or controlling person may become subject, under the Act, the
Exchange Act or other federal or state statutory law or regulation or common
law, and to reimburse the Agents and such directors, officers and controlling
persons for any legal or other expenses incurred by them in connection with
investigating any claims and defending any actions, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any post-effective amendment thereof or 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 Agent claiming indemnification is authorized to use the Prospectus as
provided hereunder, or arises out of, or is based upon, the omission or alleged
omission to state therein (if so used, in the case of such Prospectus) a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement or
any post-effective amendment thereof or the Prospectus (as amended and
supplemented) in reliance upon and in conformity with written information
furnished as herein stated in Section 7(e) to the Company by the Agent claiming
indemnification specifically for inclusion therein or contained in that part of
such Registration Statement constituting the Statement of Eligibility (Form T-1)
under the Trust Indenture Act of the Trustee; and provided, further, that as to
any Prospectus (as amended and supplemented) this indemnity agreement shall not
inure to the benefit of an Agent or any of its directors or officers or any
person controlling such Agent on account of any loss, claim, damage, liability
or action arising from the sale of Securities to any person by such Agent if
such Agent failed to send or give 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 such Agent prior to the
time of the below-written confirmation) to that person at or prior to the time
written confirmation of the sale of such Securities was sent to such person, and
the untrue statement or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact in such Prospectus was corrected in
such amendment or supplement, unless such failure resulted from non-compliance
by the Company with Section 3(b) hereof. For purposes of the second proviso to
the immediately preceding sentence, the term "Prospectus (or the Prospectus as
amended or supplemented if the Company shall have made any amendments thereof or
supplements thereto)" shall not be deemed to include the documents incorporated
therein by reference and under no circumstances shall any Agent be obligated to
send or give any document incorporated by reference or any supplement or
amendment to any document incorporated by reference in the Prospectus to any
person. The foregoing indemnity agreement is in addition to any liability which
the Company may otherwise have to an Agent or any director, officer or any
controlling person.
22
(b) Each Agent shall indemnify and hold harmless the Company,
each of its directors, each of its officers who signed any Registration
Statement and any person who controls the Company within the meaning of the Act
from and against any loss, claim, damage or liability, joint or several, and any
action in respect thereof, to which the Company or any such director, officer or
controlling person may become subject, under the Act, the Exchange Act or
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement of a material fact
contained in such Registration Statement or any post-effective amendment thereof
or the Prospectus (or any amendment thereof or supplement thereto), or arises
out of, or is based upon, 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, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by such Agent specifically for inclusion therein, and shall reimburse
the Company or any such director, officer or controlling person for any legal
and other expenses reasonably incurred by such indemnified party in
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action. The foregoing indemnity agreement is in addition to
any liability which an Agent may otherwise have to the Company or any of its
directors, officers or controlling persons. The information with respect to the
manner of distribution of the Securities by the Agents and with respect to the
Agents set forth in any Prospectus Supplement as expressly specified in writing
by the Agents constitutes the only information furnished in writing by the
Agents for inclusion in the Registration Statements and the Prospectus, and the
Agents confirm that such information is correct.
(c) Each indemnified party will, promptly 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 7, 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 (to the extent not prejudiced by such
delay) which it may have to such indemnified party on account of the indemnity
agreement contained in this Section 7 or otherwise; provided, however, that,
notwithstanding any prejudice caused by such delay, the indemnifying party's
liability with respect to contribution as set forth in Section 7(d) shall not be
relieved. 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 7 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
23
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, provided that (x) the indemnifying party
shall not, in connection with any one such action, or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses with
respect to any period during the pendency of such action or similar or related
actions of more than one separate firm of attorneys (except where local counsel
is necessary in connection with such action or similar or related actions) for
all indemnified parties so named, designated in writing by such Agent or the
Agents if the indemnifying party is the Company or by the Company if the
indemnifying party is an Agent or the Agents, and (y) the firm of attorneys so
designated may be changed from time to time with respect to different periods
during the pendency of such action or similar or related actions. The
indemnifying party shall not be liable for any settlement of any action or claim
effected without its consent, which consent shall not be unreasonably withheld.
(d) If the indemnification provided for in this Section 7
shall for any reason be unavailable to, or insufficient to hold harmless, an
indemnified party under Section 7(a) or 7(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 indemnified or
indemnifying Agent or Agents on the other from the offering of the Securities 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 indemnified or indemnifying Agent or Agents
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 an Agent 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
bears to the total commissions received by such Agent with respect to such
offering. The relative fault shall be determined by reference to 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 such Agent, 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
24
Agents agree that it would not be just and equitable if contributions pursuant
to this Section 7(d) were to be determined by pro rata allocation 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 7(d) shall be deemed to include, for
purposes of this Section 7(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 7(d), no Agent
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities sold through such Agent and distributed to
the public were offered to the public exceeds the amount of any damages which
such Agent 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 Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. No person shall be obligated to contribute
hereunder any amounts in payment for any settlement of any action or claim
effected without such person's consent, which consent shall not be unreasonably
withheld.
(e) The Company acknowledges that (i) the first sentence of
the last paragraph of text on the cover, (ii) the first sentence of the second
paragraph of text under the caption "Plan of Distribution" and (iii) the last
paragraph of text under the caption "Plan of Distribution", constitute the only
information furnished in writing by you, as Agents, for inclusion therein, and
you, as Agents, confirm that such statements are correct.
SECTION 8. Status of Each Agent. In soliciting offers to
purchase the Securities from the Company pursuant to this Agreement (other than
offers to purchase pursuant to Section 11), each Agent is acting solely as agent
for the Company and not as principal. Each Agent will make reasonable efforts to
assist the Company in obtaining performance by each purchaser whose offer to
purchase Securities from the Company has been solicited by such Agent and
accepted by the Company but such Agent shall have no liability to the Company in
the event any such purchase is not consummated for any reason. If the Company
shall default (which default shall include, but is not limited to, the Company
having told an Agent not to settle any order which the Company has accepted) in
its obligations to deliver Securities to a purchaser whose offer it has
accepted, the Company shall hold each Agent harmless against any loss, claim or
damage arising from or as a result of such default by the Company, provided such
default is not attributable to the fault of such Agent.
SECTION 9. Representations and Warranties to Survive Delivery.
All representations and warranties of the Company contained in this Agreement,
or contained in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of the
termination or cancellation of this Agreement or any investigation made by or on
behalf of an Agent or any person controlling such Agent or by or on behalf of
the Company, and shall survive each delivery of and payment for any of the
Securities.
25
SECTION 10. Termination. This Agreement may be terminated for
any reason, at any time, by any party hereto upon the giving of one day's
written notice of such termination to the other parties hereto, provided,
however, if such terminating party is an Agent, such termination shall be
effective only with respect to such terminating party. The provisions of
Sections 3(c), 3(h), 4, 7, 8, 9, 13 and 14 hereof shall survive any such
termination.
SECTION 11. Purchases as Principal. From time to time an Agent
may agree with the Company to purchase Securities from the Company as principal,
in which case such purchase shall be made in accordance with the terms of a
separate agreement (a "Purchase Agreement") to be entered into between such
Agent and the Company in the form attached hereto as Exhibit C. A Purchase
Agreement, to the extent set forth therein, may incorporate by reference
specified provisions of this Agreement.
SECTION 12. Amendments to Add Securities. From time to time,
the Company and the Agents may enter into amendments to this Agreement (any such
amendment shall be herein referred to as an "Amendment") for the purpose of
increasing the aggregate principal amount of Securities to which this Agreement
shall relate. Such Amendment may be in the form attached hereto as Exhibit D.
SECTION 13. Notices. Except as otherwise provided herein, all
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if received or transmitted by any standard form
of telecommunication.
Notices to the Agents shall be directed to them as follows:
Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Fixed Income Syndicate/Medium Term Note Desk
ABN AMRO Incorporated
Park Avenue Plaza
55 E. 52nd St. 6th Floor
New York, N.Y. 10055
Attention: Fixed Income Syndicate
00
Xxxx xx Xxxxxxx Securities LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Product Management - Medium Term Notes
Banc One Capital Markets, Inc.
1 Bank Xxx Xxxxx
XX XX0-0000
Xxxxxxx, XX 00000
Attention: Investment Grade Securities
Deutsche Bank Securities Inc.
00 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Debt Capital Markets
X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
27
Attention: Medium-Term Note Desk, Eighth Floor
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
World Xxxxxxxxx Xxxxxx
Xxxxx Xxxxx
Xxx Xxxx, XX 00000-0000
Attention: Product Management-Medium Term Notes
Scotia Capital (USA) Inc.
Xxx Xxxxxxx Xxxxx
000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Debt Capital Markets
UBS Securities LLC
000 Xxxxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
Attention: Fixed Income Syndicate
Notices to the Company shall be directed to it as follows:
National Rural Utilities Cooperative
Finance Corporation
Woodland Park
0000 Xxxxxxxxxxx Xxx
00
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
SECTION 14. Binding Effect; Benefits. This Agreement shall be
binding upon each Agent, the Company and their respective successors. This
Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except that (a) the representations, warranties, indemnities and
agreements of the Company contained in this Agreement shall also be deemed to be
for the benefit of any entity or entities deemed to be an "Agent" for the
purposes of Section 7 and the person or persons, if any, who control an Agent
within the meaning of Section 15 of the Act, and (b) the indemnity agreements of
the Agents contained in Section 7 hereof shall be deemed to be for the benefit
of directors of the Company, officers of the Company who have signed a
Registration Statement and any persons controlling the Company. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
No purchaser of Securities shall be deemed to be a successor by reason merely of
such purchase.
SECTION 15. Miscellaneous. (a) The term "business day" as used
in this Agreement shall mean any day which is not a Saturday or Sunday, which in
New York City is not a day on which banking institutions are generally
authorized or obligated by law to close and on which the New York Stock
Exchange, Inc. is open for trading.
(b) 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.
SECTION 16. Governing Law; Counterparts. This Agreement shall
be governed by and construed in accordance with the laws of New York. This
Agreement may be executed in counterparts and the executed counterparts shall
together constitute a single instrument.
If the foregoing correctly sets forth our agreement, please
indicate your acceptance hereof in the space provided for that purpose below.
Very truly yours,
NATIONAL RURAL UTILITIES
COOPREATIVE FINANCE
CORPORATION,
by /s/ XXXXXX X. XXXXX
------------------------------------
Name: Xxxxxx X. Xxxxx
29
Title: Senior Vice President and
Chief Financial Officer;
Assistant Secretary-Treasurer
CONFIRMED AND ACCEPTED as of the
date first above written:
XXXXXX BROTHERS INC.,
by /s/ XXXXXX XXXXXXXX
------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Senior Vice President
ABN AMRO INCORPORATED,
by /s/ XXXXXXX XXXXXX
------------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Director
BANC OF AMERICA SECURITIES LLC,
by /s/ XXXX XXXXX
------------------------------
Name: Xxxx Xxxxx
Title: Principal
BANC ONE CAPITAL MARKETS, INC.
by /s/ XXXXX X. XXXX
------------------------------
Name: Xxxxx X. Xxxx
Title: Managing Director
30
DEUTSCHE BANK SECURITIES INC.
by /s/ XXX XXXXXXXXXXXXX
------------------------------
Name: Xxx Xxxxxxxxxxxxx
Title Managing Director
by /s/ XXXX XXXXXXXXXX
-------------------------------
Name: Xxxx Xxxxxxxxxx
Title: Director
X.X. XXXXXX SECURITIES INC.
by /s/ XXXX X. XXXXXXX, XX.
------------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: Vice President
XXXXXXX LYNCH, PIERCE, XXXXXX &
XXXXX INCORPORATED
by /s/ XXXXX XXXXX
------------------------------
Name: Xxxxx Xxxxx
Title: Authorized Signatory
SCOTIA CAPITAL (USA) INC.
by /s/ XXXX XXXXXXXXX
------------------------------
Name: Xxxx Xxxxxxxxx
Title: Managing Director
UBS SECURITIES LLC
by /s/ XXXX XXXXXXX
------------------------------
Name: Xxxx Xxxxxxx
Title: Director, Debt Capital
Markets
EXHIBIT A
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
Medium-Term Notes, Series C
Schedule of Payments
The Company agrees to pay each Agent a commission equal to the
following percentage of the aggregate principal amount of Securities or
percentage of the aggregate Dollar Equivalent of the Foreign Currency (as
defined in the Indenture) of the principal amount of Securities placed by such
Agent, as the case may be, or such other fee as is mutually agreed upon by the
Company and such Agent:
Term Commission Rate
---- ---------------
9 months to less than 1 year 0.125%
1 year to less than 18 months 0.150%
18 months to less than 2 years 0.200%
2 years to less than 3 years 0.250%
3 years to less than 4 years 0.350%
4 years to less than 5 years 0.450%
5 years to less than 7 years 0.500%
7 years to less than 10 years 0.550%
10 years to less than 15 years 0.600%
15 years to less than 30 years 0.625%
30 years or more To be negotiated
at time of sale
EXHIBIT B
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
Medium-Term Notes, Series C
Administrative Procedures
Medium-Term Notes, Series C, with maturities of nine months or
more from date of issue (the "Notes") are to be offered on a continuing basis by
National Rural Utilities Cooperative Finance Corporation (the "Company"). Xxxxxx
Brothers Inc., ABN AMRO Incorporated, Banc of America Securities LLC, Banc One
Capital Markets, Inc., Deutsche Bank Securities Inc., X.X. Xxxxxx Securities
Inc., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, Scotia Capital (USA)
Inc. and UBS Securities LLC, as agents (each an "Agent" and, collectively, the
"Agents"), have agreed to use their best efforts to solicit offers to purchase
the Notes. The Notes are being sold pursuant to an Agency Agreement between the
Company and the Agents dated October 23, 2003 (as it may be supplemented or
amended from time to time, the "Agency Agreement"), to which these
administrative procedures are attached as an exhibit. The Company has also
reserved the right to sell Notes directly on its own behalf. The Notes will be
issued pursuant to an Indenture, dated as of December 15, 1987 (as supplemented
by a First Supplemental Indenture dated as of October 1, 1990 and as it may be
supplemented or amended from time to time, the "Indenture"), between the Company
and U.S. Bank Trust National Association, as successor trustee (the "Trustee").
The Notes will rank equally with all other unsecured and unsubordinated
indebtedness of the Company and will have been registered with the Securities
and Exchange Commission (the "Commission"). Unless otherwise defined herein,
terms defined in the Agency Agreement or Indenture shall have the same meaning
when used in this exhibit.
Each Note will be represented by either a Global Security (as
defined hereinafter) delivered to the Trustee as agent for The Depository Trust
Company ("DTC"), and recorded in the book-entry system maintained by DTC (a
"Book-Entry Note") or a certificate delivered to the Holder thereof or a Person
designated by such Holder (a "Certificated Note"). Only Notes denominated and
payable in U.S. dollars may be issued as Book-Entry Notes. Owners of beneficial
interests in Book-Entry Notes will be entitled to delivery of Certificated Notes
only under the limited circumstances described in the Indenture.
Administrative responsibilities, document control and
record-keeping functions to be performed by the Company will be performed by its
Treasurer or Chief Financial Officer. Administrative procedures for the offering
are explained below.
Book-Entry Notes will be issued in accordance with the
administrative procedures set forth in Part II and Part III hereof and the
Letter of Representations of the Company and the Trustee to DTC dated June 19,
1996, as amended or supplemented from time to time (the "Letter of
Representations"), and Certificated Notes will be issued in accordance with the
administrative procedures set forth in Part I and Part III hereof. Notes for
which interest is calculated on the basis of a fixed interest rate, which may be
2
zero, are referred to herein as "Fixed Rate Notes." Notes for which interest is
calculated on the basis of a floating interest rate are referred to herein as
"Floating Rate Notes." To the extent the procedures set forth below conflict
with the provisions of the Notes, the Indenture, the Letter of Representations
or the Agency Agreement, the relevant provisions of the Notes, the Indenture,
the Letter of Representations and the Agency Agreement shall control.
PART I
Administrative Procedures for Certificated Notes
Price to Public
Each Certificated Note will be issued at 100% of principal
amount, unless otherwise determined by the Company.
Date of Issuance
Each Certificated Note will be dated and issued as of the date
of its authentication by the Trustee.
Maturities
Each Certificated Note will mature on a Business Day (as
defined in Part III below) selected by the purchaser and agreed upon by the
Company, with maturities of nine months or more from the date of issuance.
Registration
Certificated Notes will be issued only in fully registered
form. U.S. Bank Trust National Association (the "Paying Agent") will serve as
registrar and transfer agent in connection with the Certificated Notes.
Denominations
The Certificated Notes will be issued and payable in U.S.
dollars in the denomination of $1,000 or any integral multiple thereof unless
otherwise determined by the Company.
The Company may determine, upon agreement with a purchaser of
Certificated Notes, that such Certificated Notes will be denominated and payable
in a foreign currency to be specified in a supplement to the Prospectus
("Specified Currency"). In such case, unless otherwise specified in such
supplement, the authorized denominations of such Certificated Notes will be the
equivalent, as determined by the noon (New York City time) buying rate for such
Specified Currency for cable transfers quoted in New York City as certified for
customs purposes by the Federal Reserve Bank of New York (the "Market Exchange
Rate") on the Business Day immediately preceding the Settlement Date (as defined
below) for such Certificated Notes, of U.S. $1,000
3
(rounded down to an integral multiple of units of specified denominations of
such Specified Currency). If such rates are not available for any reason, the
Market Exchange Rate will be determined in accordance with the alternative
provision for determining the Market Exchange Rate pursuant to Section 311(i) of
the Indenture.
Interest Payments
Each Fixed Rate Certificated Note will bear interest from its
issue date (the "Original Issue Date") at the annual rate stated on the face
thereof, payable on January 15 and July 15 of each year (the "Interest Payment
Dates"), commencing (unless otherwise specified in the applicable supplement to
the Prospectus) on the first Interest Payment Date after issuance, and at Stated
Maturity or upon redemption, if applicable. Interest on each Certificated Note
will be calculated and paid on the basis of a 360-day year of twelve 30-day
months (unless otherwise specified in the applicable supplement to the
Prospectus). Interest will be payable to the Person in whose name such
Certificated Note is registered at the close of business on the January 1 or
July 1 (the "Regular Record Dates") next preceding the respective Interest
Payment Date; provided, however, that (i) if an Original Issue Date falls
between a Regular Record Date and an Interest Payment Date, the first payment of
interest will occur on the Interest Payment Date following the next Regular
Record Date and (ii) interest payable at Maturity will be payable to the Person
to whom principal shall be payable (whether or not such Maturity is an Interest
Payment Date). Any payment of principal and interest on such Certificated Note
required to be paid on an Interest Payment Date or at Stated Maturity or upon
redemption, if applicable, which is not a Business Day shall be postponed to the
next day which is a Business Day. All interest payments (excluding interest
payments made at Stated Maturity or upon redemption, if applicable) will be made
by check mailed to the Person entitled thereto as provided above.
Notwithstanding the foregoing, a holder of $10,000,000 or more in aggregate
principal amount of Certificated Notes of like tenor and terms shall be entitled
to receive such payments of interest by wire transfer in immediately available
funds, but only if appropriate instructions have been received in writing by the
Paying Agent on or prior to the applicable Regular Record Date for any such
payment of interest.
On the fifth Business Day immediately preceding each Interest
Payment Date, the Trustee will furnish the Company with the total amount (to the
extent known to the Trustee on such date) of the interest payments to be made on
such Interest Payment Date. The Trustee (or any duly selected paying agent) will
provide monthly to the Company's finance department a list of the principal and
interest to be paid on Certificated Notes maturing in the next succeeding month.
To the extent provided in the Indenture, the Company will provide to the Paying
Agent not later than the payment date sufficient moneys to pay in full all
principal and interest payments due on such payment date. The Paying Agent will
assume responsibility for withholding taxes on interest paid as required by law.
For special provisions relating to the Floating Rate Notes,
see Appendix A hereto. Special provisions relating to Certificated Notes
denominated in a Specified
4
Currency may be agreed upon by the Company and the Agents at a later time (the
"Specified Currency Provisions").
Settlement
The receipt of immediately available funds in U.S. dollars by
the Company in payment for a Certificated Note (less the applicable commission)
and the authentication and issuance of such Certificated Note shall, with
respect to such Certificated Note, constitute "Settlement" and the date thereof
shall be referred to as the "Settlement Date". All offers to purchase
Certificated Notes accepted by the Company will be settled from one to five
Business Days, or one to three Business Days, should the U.S. Securities and
Exchange Commission so require, from the date of acceptance by the Company
pursuant to the timetable for Settlement set forth below unless the Company and
the purchaser agree to Settlement on a different date; provided, however, that
the Company will so notify the Trustee (which notice with respect to a
Certificated Note denominated in a Specified Currency will not be less than five
Business Days prior to the Settlement Date) of any such different date on or
before the Business Day immediately prior to the Settlement Date.
Settlement Procedures
In the event of a purchase of Certificated Notes by an Agent,
as principal, appropriate Settlement details will be set forth in the applicable
Purchase Agreement to be entered into between such Agent and the Company
pursuant to the Agency Agreement.
Settlement procedures with regard to each Certificated Note
sold through an Agent, as agent (the "Presenting Agent"), shall be as follows:
A. The Presenting Agent will advise the Company, and after
the Company has accepted the offer, the Trustee, in writing by
telex, facsimile or other electronic transmission, of the following
Settlement information:
1. Exact name in which Certificated Note is to
be registered ("Registered Owner").
2. Exact address of the Registered Owner and
address for payment of principal and
interest, if any.
3. Taxpayer identification number of the
Registered Owner.
4. Principal amount of the Certificated Note
(and, if multiple Certificated Notes are to
be issued, denominations thereof).
5. If the Certificated Notes are to be
denominated in a Specified Currency, whether
principal and interest is to be paid in U.S.
dollars or the Specified Currency.
5
6. Settlement Date.
7. Date of Maturity.
8. Interest rate:
(a) Fixed Rate Notes:
i) Interest Rate
ii) Interest Reset Dates
(b) Floating Rate Notes:
i) Interest Rate Basis
ii) Initial Interest Rate
iii) Spread or Spread Multiplier, if any
iv) Interest Reset Periods and Interest
Reset Dates
v) Index Maturity
vi) Maximum and Minimum Interest Rates,
if any
vii) Calculation Agent
viii) Calculation Date
ix) Interest Determination Dates
(c) Interest Payment Periods and
Interest Payment Dates
(d) Regular Record Date.
9. If applicable, the date on or after which
the Certificated Notes are redeemable at the
option of the Company.
10. Wire transfer information (including
overseas bank account of the country of the
Specified Currency, if any).
11. Presenting Agent's commission (to be paid in
the form of a discount from the proceeds
remitted to the Company upon Settlement).
12. Trade Date
13. Net Proceeds to Company
14. Extension of Maturity Option (including the
basis or formula, of any, for the setting of
the Interest Rate or Spread and/or Spread
Multiplier, as applicable).
15. Renewal of Note Provisions.
B. The Company will confirm to the Trustee (i) by telephone,
telex, facsimile or other electronic transmission, the above Settlement
information and
6
(ii) by facsimile in the form attached as Appendix B, that the terms of
the Notes have been approved by the Governor or the Chief Financial
Officer of the Company, and the Trustee will assign a Certificated Note
number to the transaction. If the Company rejects an offer, the Company
will promptly notify the Presenting Agent by telephone, telex,
facsimile or other electronic transmission.
C. The exchange rate agent, if any, appointed by the Company
will notify the Company, the Trustee and the Presenting Agent of the
Market Exchange Rate and the denominations of Certificated Notes which
are to be denominated and payable in a Specified Currency.
D. The Trustee will complete the preprinted 4-ply Certificated
Note packet, the form of which was previously approved by the Company,
the Agents and the Trustee.
E. The Trustee will authenticate and deliver the Certificated
Note (with the attached white confirmation) and the yellow and blue
stubs to the Presenting Agent. The Presenting Agent will acknowledge
receipt of the Certificated Note by completing the yellow stub and
returning it to the Trustee.
F. The Presenting Agent will cause to be wire transferred to a
bank account designated by the Company immediately available funds in
U.S. dollars in the amount of the principal amount of the Certificated
Note, less the applicable commission.
G. The Presenting Agent will deliver the Certificated Note
(with the attached white confirmation) to the purchaser against payment
in immediately available funds in the amount of the principal amount of
the Certificated Note. The Presenting Agent will deliver to the
purchaser a copy of the most recent Prospectus applicable to the
Certificated Note with or prior to delivery of the Certificated Note
and the confirmation and payment by the purchaser for the Certificated
Note. If instructed by the purchaser to deliver the Certificated Note
and confirmation to different locations, the Certificated Note and the
confirmation will each be accompanied or preceded by the Prospectus
applicable to the Certificated Note being delivered.
H. The Presenting Agent will obtain the acknowledgement of
receipt for the Certificated Note and Prospectus by the purchaser
through the purchaser's completion of the blue stub.
I. The Trustee will mail the pink stub to the Company's Chief
Financial Officer or other appropriate official.
Settlement Procedures Timetable
For offers accepted by the Company, Settlement procedures "A"
through "I" set forth above shall be completed on or before the respective times
set forth below:
7
Settlement
Procedure Time (New York)
--------- -----
A 4 P.M. on date of order (2 P.M. on date of order in
the case of Certificated Notes with a
Settlement Date on the Business Day after
the date of order)
B 5 P.M. on date of order (3 P.M. on date of order in
the case of Certificated Notes with a
Settlement Date on the Business Day after
the date of order)
C 10 A.M. on the Settlement Date
D-E 12:30 P.M. on the Settlement Date (1 P.M. on the
Settlement Date in the case of Certificated
Notes denominated in a Specified Currency)
F 2 P.M. on the Settlement Date
G-H 3 P.M. on the Settlement Date
I 5 P.M. on the Business Day after the Settlement Date
Fails
In the event that a purchaser of a Certificated Note shall
either fail to accept delivery of or make payment for Certificated Note on the
date fixed by the Company for Settlement, the Presenting Agent will immediately
notify the Trustee and the Company's Chief Financial Officer or other
appropriate official by telephone, confirmed in writing, of such failure and
return the Certificated Note to the Trustee. Upon the Trustee's receipt of the
Certificated Note from the Presenting Agent, the Company will promptly return to
the Presenting Agent an amount of immediately available funds in U.S. dollars
equal to any amount previously transferred to the Company in respect of the
Certificated Note pursuant to advances made by such Agent. Such returns will be
made on the Settlement Date, if possible, and in any event not later than 12
noon (New York City time) on the Business Day following the Settlement Date. The
Company will reimburse the Presenting Agent on an equitable basis for its loss
of the use of the funds during the period when the funds were credited to the
account of the Company. Upon receipt of the Certificated Note in respect of
which the default occurred, the Trustee will xxxx the Certificated Note
"cancelled", make appropriate entries in its records and deliver the
Certificated Note to the Company with an appropriate debit advice. The
Presenting Agent will not be entitled to any commission with respect to any
Certificated Note which the purchaser does not accept or make payment for.
Redemption
8
Except as otherwise specified in an applicable supplement to
the Prospectus and on the Certificated Notes, the Certificated Notes will not be
redeemable prior to their Stated Maturity. If so specified in such a supplement
and on the Certificated Note, such Certificated Note will be subject to
redemption by the Company, at one or more redemption prices (expressed as a
percentage of the principal amount of such Certificated Note) applicable during
one or more redemption periods, together with interest accrued thereon on the
date fixed for redemption.
Notice of redemption shall be given in accordance with Section
1104 of the Indenture. In the event of redemption in part of any Certificated
Note, a new Certificated Note for the amount of the unredeemed portion shall be
issued in the name of the Holder upon cancellation of the redeemed Certificated
Note.
Maturity
Upon presentation of each Certificated Note at Stated Maturity
(unless the Company has exercised its option to extend the Stated Maturity of a
Certificated Note) or upon redemption the Trustee (or any duly appointed Paying
Agent) will pay the principal amount or redemption price thereof, together with
accrued interest due at Stated Maturity or the date of redemption. Such payment
shall be made in immediately available funds in U.S. dollars (except as provided
in any Specified Currency Provisions), provided that the Certificated Note is
presented to the Trustee (or any such Paying Agent) in time for the Trustee (or
such Paying Agent) to make payments in such funds in accordance with its normal
procedures. To the extent provided in the Indenture, the Company will provide
the Trustee (and any such Paying Agent) with funds available for immediate use
for such purpose. Certificated Notes presented at Stated Maturity or upon
redemption will be cancelled by the Trustee as provided in the Indenture.
PART II
Administrative Procedures for
Book-Entry Notes
In connection with the qualification of the Book-Entry Notes
for eligibility in the book-entry system maintained by DTC, the Trustee will
perform the custodial, document control and administrative functions described
below, in accordance with its obligations under the Letter of Representations
and a Medium-Term Note Certificate Agreement between the Trustee and DTC dated
as of October 18, 1989 (the "Medium-Term Note Certificate Agreement"), a copy of
which is attached hereto, and its obligations as a participant in DTC, including
DTC's Same-Day Funds Settlement System ("SDFS").
Price to Public
Each Book-Entry Note will be issued at 100% of principal
amount, unless otherwise determined by the Company.
Date of Issuance
9
On any Settlement Date (as defined under "Settlement" below)
for one or more Book-Entry Notes, the Company will issue a single global
security in fully registered form without coupons (a "Global Security")
representing up to $200,000,000 principal amount of all such Book-Entry Notes
that have the same terms. Each Global Security will be dated and issued as of
the date of its authentication by the Trustee. Each Global Security will bear an
original issue date, which will be (i) with respect to an original Global
Security (or any portion thereof), the original issue date specified in such
Global Security and (ii) following a consolidation of Global Securities, with
respect to the Global Security resulting from such consolidation, the most
recent Interest Payment Date (as defined in the Indenture) to which interest has
been paid or duly provided for on the predecessor Global Securities, regardless
of the date of authentication of such resulting Global Security. No Global
Security will represent (i) both Fixed Rate Book-Entry Notes and Floating Rate
Book-Entry Notes or (ii) any Certificated Note.
Identification Numbers
The Company has arranged with the CUSIP Service Bureau of
Standard & Poor's Corporation (the "CUSIP Service Bureau") for the reservation
of a series of CUSIP numbers, which series consists of approximately 900 CUSIP
numbers and relates to Global Securities representing Book-Entry Notes and
book-entry medium-term notes issued by the Company with other series
designations. The Company has obtained from the CUSIP Service Bureau a written
list of such reserved CUSIP numbers and has provided a copy of such list to DTC
and the Trustee. The Company will assign CUSIP numbers to Global Securities as
described below under Settlement Procedure "B". DTC will notify the CUSIP
Service Bureau periodically of the CUSIP numbers that the Company has assigned
to Global Securities. The Trustee will notify the Company at any time when fewer
than 100 of the reserved CUSIP numbers remain unassigned to Global Securities,
and, if it deems necessary, the Company will reserve additional CUSIP numbers
for assignment to Global Securities. Upon obtaining such additional CUSIP
numbers, the Company shall deliver a list of such addition CUSIP numbers to the
Trustee and DTC.
Registration
Global Securities will be issued only in fully registered form
without coupons. Each Global Security will be registered in the name of CEDE &
CO., as nominee for DTC, on the securities register for the Notes maintained
under the Indenture. The beneficial owner of a Book-Entry Note (or one or more
indirect participants in DTC designated by such owner) will designate one or
more participants in DTC (with respect to such Book-Entry Note, the
"Participants") to act as agent or agents for such owner in connection with the
book-entry system maintained by DTC, and DTC will record in book-entry form, in
accordance with instructions provided by such Participants, a credit balance
with respect to such beneficial owner in such Book-Entry Note in the account of
such Participants. The ownership interest of such beneficial owner (or such
indirect participant in DTC) in such Book-Entry Note will be recorded through
the records of such Participants or through the separate records of such
Participants and one or more indirect participants in DTC.
10
Transfers
Transfers of a Book-Entry Note will be accomplished by book
entries made by DTC and, in turn, by Participants (and in certain cases, one or
more indirect participants in DTC) acting on behalf of beneficial transferors
and transferees of such Note.
Exchanges
The Trustee may deliver to DTC and the CUSIP Service Bureau at
any time a written notice of consolidation specifying (i) the CUSIP numbers of
two or more outstanding Global Securities that represent (A) Fixed Rate
Book-Entry Notes having the same terms and for which interest has been paid to
the same date or (B) Floating Rate Book-Entry Notes having the same terms and
for which interest has been paid to the same date, (ii) a date, occurring at
least thirty days after such written notice is delivered and at least thirty
days before the next Interest Payment Date for such Book-Entry Notes, on which
such Global Securities shall be exchanged for a single replacement Global
Security and (iii) a new CUSIP number, obtained from the Company, to be assigned
to such replacement Global Security. Upon receipt of such a notice, DTC will
send to its participants (including the Trustee) a written reorganization notice
to the effect that such exchange will occur on such date. Prior to the specified
exchange date, the Trustee will deliver to the CUSIP Service Bureau a written
notice setting forth such exchange date and such new CUSIP number and stating
that, as of such exchange date, the CUSIP numbers of the Global Securities to be
exchanged will no longer be valid. On the specified exchange date, the Trustee
will exchange such Global Securities for a single Global Security bearing the
new CUSIP number and the CUSIP Numbers of the exchanged Global Securities will,
in accordance with CUSIP Service Bureau procedures, be canceled and not
immediately reassigned. Notwithstanding the foregoing, if the Global Securities
to be exchanged exceed $200,000,000 in aggregate principal amount, one Global
Security will be authenticated and issued to represent each $200,000,000 of
principal amount of the exchanged Global Securities and an additional Global
Security will be authenticated and issued to represent any remaining principal
amount of such Global Securities (see "Denominations" below).
Maturity
Each Book-Entry Note will mature on a date nine months or more
after the Settlement date for such Note.
Denominations
Book-Entry Notes will be issued in principal amounts of $1,000
or any integral multiple thereof. Global Securities will be denominated in
principal amounts not in excess of $200,000,000. If one or more Book-Entry Notes
having an aggregate principal amount in excess of $200,000,000 would, but for
the preceding sentence, be represented by a single Global Security, then one
Global Security will be authenticated and issued to represent each $200,000,000
principal amount of such Book-Entry Note or
11
Notes and an additional Global Security will be authenticated and issued to
represent any remaining principal amount of such Book-Entry Note or Notes. In
such a case, each of the Global Securities representing such Book-Entry Note or
Notes shall be assigned the same CUSIP number.
Interest
Interest, if any, on each Fixed Rate Book-Entry Note will
accrue from the original issue date for the first interest period or the last
date to which interest has been paid, if any, for each subsequent interest
period, on the Global Security representing such Book-Entry Note, and will be
calculated and paid in the manner described in such Book-Entry Note. Unless
otherwise specified therein, each payment of interest on a Fixed Rate Book-Entry
Note will include interest accrued to but excluding the Interest Payment Date or
to but excluding the date of Maturity. Interest on Fixed Rate Book-Entry Notes
(including interest for partial periods) will be calculated on the basis of a
360-day year of twelve 30-day months.
Interest payable at the date of Maturity of a Book-Entry Note
will be payable to the Person to whom the principal of such Note is payable.
Standard & Poor's Ratings Group may use the information received in the pending
deposit message described under Settlement Procedure "C" below in order to
include the amount of any interest payable and certain other information
regarding the related Global Security in the appropriate (daily or weekly) bond
report published by Standard & Poor's Ratings Group.
For special provisions relating to the Floating Rate Notes,
see Appendix A hereto.
Payments of Interest
Promptly after each Regular Record Date, the Paying Agent will
deliver to the Company and DTC a written notice setting forth, by CUSIP number,
the amount of interest to be paid on each Global Security on such Interest
Payment Date (other than an Interest Payment Date coinciding with Maturity) and
the total of such amounts. DTC will confirm the amount payable on each Global
Security on such Interest Payment Date by reference to the appropriate (daily or
weekly) bond reports published by Standard & Poor's Corporation. The Company
will pay to the Paying Agent the total amount of interest due on such Interest
Payment Date (other than at Maturity), and the Paying Agent will pay such amount
to DTC, at the times and in the manner set forth below under "Manner of
Payment." If any Interest Payment Date for a Book-Entry Note is not a Business
Day, the payment due on such day shall be made on the next succeeding Business
Day and no interest shall accrue on such payment for the period from and after
such Interest Payment Date.
Payment at Maturity
On or about the first Business Day of each month, the Paying
Agent will deliver to the Company and DTC a written list of principal and
interest to be paid on each
12
Global Security maturing in the following month (excluding principal on a
Book-Entry Note where the Company has exercised its option to extend the Stated
Maturity). The Company and DTC will confirm the amounts of such principal and
interest payments with respect to each such Global Security on or about the
fifth Business Day preceding the Maturity of such Global Security. On or before
Maturity, the Company will pay to the Paying Agent, the principal amount of such
Global Security, together with interest due at such Maturity. The Paying Agent
will pay such amount to DTC at the times and in the manner set forth below under
"Manner of Payment." If any Maturity of a Global Security representing
Book-Entry Notes is not a Business Day, the payment due on such day shall be
made on the next succeeding Business Day and no interest shall accrue on such
payment for the period from and after such Maturity. Promptly after payment to
DTC of the principal and interest due at Maturity of such Global Security, the
Paying Agent will cancel such Global Security in accordance with the Indenture
and so advise the Company.
Manner of Payment
The total amount of any principal and interest due on Global
Securities on any Interest Payment Date or at Maturity shall be paid by the
Company to the Paying Agent in immediately available funds no later than 9:30
A.M. (New York City time) on such date. The Company will make such payment on
such Global Securities by instructing the Paying Agent to withdraw funds from an
account maintained by the Company at the Paying Agent or by wire transfer to the
Paying Agent. The Company will confirm any such instructions in writing to the
Paying Agent. Prior to 10 A.M. (New York City time) on the date of Maturity or
as soon as possible thereafter, the Paying Agent will pay by separate wire
transfer (using Fedwire message entry instructions in a form previously
specified by DTC) to an account at the Federal Reserve Bank of New York
previously specified by DTC, in funds available for immediate use by DTC, each
payment of principal (together with interest thereon) due on a Global Security
on such date. On each Interest Payment Date (other than at Maturity), interest
payments shall be made to DTC, in funds available for immediate use by DTC, in
accordance with existing arrangements between the Paying Agent and DTC. On each
such date, DTC will pay, in accordance with its SDFS operating procedures then
in effect, such amounts in funds available for immediate use to the respective
Participants in whose names the Book-Entry Notes represented by such Global
Securities are recorded in the book-entry system maintained by DTC. Neither the
Company (as issuer) nor the Paying Agent (as trustee, security registrar or
paying agent) shall have any direct responsibility or liability for the payment
by DTC to such Participants of the principal of and interest on the Book-Entry
Notes.
Withholding Taxes
The amount of any taxes required under applicable law to be
withheld from any interest payment on a Book-Entry Note will be determined and
withheld by the Participant, indirect participant in DTC or other Person
responsible for forwarding payments and materials directly to the beneficial
owner of such Note.
13
Settlement
The receipt by the Company of immediately available funds in
payment for a Book-Entry Note and the authentication and issuance of the Global
Security representing such Book-Entry Note shall constitute "Settlement" with
respect to such Book-Entry Note and the date thereof shall be referred to as the
"Settlement Date". All orders for Book-Entry Notes accepted by the Company will
be settled on the fifth Business Day, or the third Business Day, should the U.S.
Securities and Exchange Commission so require, following the date of acceptance
by the Company pursuant to the timetable for Settlement set forth below unless
the Company and the purchaser agree to Settlement on another day which shall be
no earlier than the next Business Day following the date of acceptance.
Settlement Procedures
In the event of a purchase of Book-Entry Notes by an Agent, as
principal, appropriate Settlement details will be set forth in the applicable
Purchase Agreement to be entered into between such Agent and the Company
pursuant to the Agency Agreement.
Settlement Procedures with regard to each Book-Entry Note sold
by the Company through an Agent, as agent (the "Presenting Agent"), shall be as
follows:
A. The Presenting Agent will advise the Company by telephone
of the following Settlement information:
1. Principal amount.
2. Settlement Date.
3. Date of Maturity.
4. Interest rate:
(a) Fixed Rate Notes:
i) Interest Rate
ii) Interest Reset Dates
(b) Floating Rate Notes:
i) Interest Rate Basis
ii) Initial Interest Rate
iii) Spread or Spread Multiplier, if any
iv) Interest Reset Periods and Interest
Reset Dates
v) Index Maturity
vi) Maximum and Minimum Interest Rates,
if any
vii) Calculation Agent
14
viii) Calculation Date
ix) Interest Determination Dates
(c) Interest Payment Periods and Interest
Payment Dates.
(d) Regular Record Date.
5. If applicable, the date on or after which
the Book-Entry Notes are redeemable at the
option of the Company.
6. Presenting Agent's commission (to be paid in
the form of a discount from the proceeds
remitted to the Company upon Settlement).
7. Trade Date.
8. Net Proceeds to Company.
9. Extension of Maturity Option (including the
basis or formula, if any, for the setting of
the Interest Rate, or the Spread and/or
Spread Multiplier, as applicable).
10. Renewal of Note Provisions.
B. The Company will assign a CUSIP number to the Global
Security representing such Book-Entry Note and then advise the Trustee
by telephone (confirmed in writing at any time on the same date) or
electronic transmission of the information set forth in Settlement
Procedure "A" above, such CUSIP number and the name of the Presenting
Agent. The Company will confirm to the Trustee, by facsimile in the
form attached as Appendix B, that the terms of the Notes have been
approved by the Governor or the Chief Financial Officer of the Company.
The Company will also notify the Presenting Agent by telephone of such
CUSIP number as soon as practicable.
C. The Trustee will enter a pending deposit message through
DTC's Participant Terminal System providing the following Settlement
information to DTC (which shall route such information to Standard &
Poor's Ratings Group and Interactive Data Corporation) and the
Presenting Agent:
1. The information set forth in Settlement
Procedure "A".
2. Identification as a Fixed Rate Book-Entry
Note or a Floating Rate Book-Entry Note.
3. Initial Interest Payment Date for such
Book-Entry Note, number of days by which
such date succeeds the related Regular
Record Date (which, in the case of Floating
Rate Book-Entry Notes that reset weekly,
shall be the DTC
15
Record Date, which is the date five calendar
days immediately preceding the applicable
Interest Payment Date and, in the case of
all other Book-Entry Notes, shall be the
Regular Record Date as defined in the
Indenture) and amount of interest payable on
such Interest Payment Date.
4. The interest payment period.
5. CUSIP number of the Global Security
representing such Book-Entry Note.
6. Whether such Global Security will represent
any other Book-Entry Note (to the extent
known at such time).
7. Numbers of the participant accounts
maintained by DTC on behalf of the Trustee
and the Presenting Agent.
D. To the extent the Company has not already done so, the
Company will deliver to the Trustee a Global Security in a form that
has been approved by the Company, the Agents and the Trustee.
E. The Trustee will complete such Book-Entry Note, stamp the
appropriate legend, as instructed by DTC, if not already set forth
thereon, and authenticate the Global Security representing such
Book-Entry Note.
F. DTC will credit such Book-Entry Note to the Trustee's
participant account at DTC.
G. The Trustee will enter an SDFS deliver order through DTC's
Participant Terminal System instructing DTC to (i) debit such
Book-Entry Note to the Trustee's participant account and credit such
Book-Entry Note to the Presenting Agent's participant account and (ii)
debit the Presenting Agent's Settlement account and credit the
Trustee's Settlement account for an amount equal to the principal
amount of such Book-Entry Note less the Presenting Agent's commission.
The entry of such a deliver order shall constitute a representation and
warranty by the Trustee to DTC that (i) the Global Security
representing such Book-Entry Note has been issued and authenticated and
(ii) the Trustee is holding such Global Security pursuant to the
Medium-Term Note Certificate Agreement.
H. The Presenting Agent will enter an SDFS deliver order
through DTC's Participant Terminal System instructing DTC (i) to debit
such Book-Entry Note to the Presenting Agent's participant account and
credit such Book-Entry Note to the participant accounts of the
Participants with respect to such Book-Entry Note and (ii) to debit the
Settlement accounts of such Participants and credit the Settlement
account of the Presenting Agent for an amount equal to the principal
amount of such Book-Entry Note.
16
I. Transfers of funds in accordance with SDFS deliver orders
described in Settlement Procedures "G" and "H" will be settled in
accordance with SDFS operating procedures in effect on the Settlement
date.
J. The Trustee will, upon receipt of funds from the Agent in
accordance with Settlement Procedure "G", credit to an account of the
Company maintained at the Trustee funds available for immediate use in
the amount transferred to the Trustee in accordance with Settlement
Procedure "G".
K. The Trustee will send a copy of the Book-Entry Note by
first-class mail to the Company.
L. The Presenting Agent will confirm the purchase of such
Book-Entry Note to the purchaser either by transmitting to the
Participants with respect to such Book-Entry Note a confirmation order
or orders through DTC's institutional delivery system or by mailing a
written confirmation to such purchaser.
Settlement Procedures Timetable
For orders of Book-Entry Notes solicited by any Agent and
accepted by the Company for Settlement on the first Business Day after such
acceptance, Settlement Procedures "A" through "K" set forth above shall be
completed as soon as possible but not later than the respective times set forth
below:
Settlement
Procedure Time (New York)
--------- ----
A 11 A.M. on date of order
B 12 P.M. on date of order
C 2 P.M. on date of order
D 3 P.M. on date of order
E 9 A.M. on Settlement Date
F 10 A.M. on Settlement Date
G-H 2 P.M. on Settlement Date
I 4:45 P.M. on Settlement Date
J-K 5 P.M. on Settlement Date
If an order is to be settled more than one Business Day after
acceptance by the Company, Settlement Procedures "A", "B" and "C" may be
completed not later than 11:00 A.M., 12:00 Noon and 2:00 P.M., respectively, on
the Business Day after the date of acceptance. If the initial interest rate for
a Floating Rate Book-Entry Note has not been determined at the time that
Settlement Procedure "A" is completed, Settlement Procedures "B" and "C" shall
be completed as soon as such rate has been determined but not later than 12:00
Noon and 2:00 P.M., respectively, on the Business Day after the date of
acceptance. Settlement Procedure "I" is subject to extension in accordance with
any extension of Fedwire closing deadlines and in the other events specified in
SDFS operating procedures in effect on the Settlement Date.
17
If Settlement of a Book-Entry Note is rescheduled or canceled,
the Company will advise the Trustee and the Trustee will deliver to DTC, through
DTC's Participant Terminal System, a cancelation message to such effect by no
later than 2:00 P.M. on the Business Day immediately preceding the scheduled
Settlement Date.
Failure to Settle
If the Trustee fails to enter an SDFS deliver order with
respect to a Book-Entry Note pursuant to Settlement Procedure "G", the Trustee
may deliver to DTC, through DTC's Participant Terminal System, as soon as
practicable, a withdrawal message instructing DTC to debit such Book-Entry Note
to the Trustee's participant account. DTC will process the withdrawal message,
provided that the Trustee's participant account contains a principal amount of
the Global Security representing such Book-Entry Note that is at least equal to
the principal amount to be debited. If a withdrawal message is processed with
respect to all the Book-Entry Notes represented by a Global Security, the
Trustee will cancel such Global Security in accordance with the Indenture and so
advise the Company. The CUSIP number assigned to such Global Security shall, in
accordance with CUSIP Service Bureau procedures, be canceled and not immediately
reassigned. If a withdrawal message is processed with respect to one or more,
but not all, of the Book-Entry Notes represented by a Global Security, the
Trustee will exchange such Book-Entry Note for two Global Securities, one of
which shall represent such Book-Entry Notes and shall be canceled immediately
after issuance and the other of which shall represent the other Book-Entry Notes
previously represented by the surrendered Global Security and shall bear the
CUSIP number of the surrendered Global Security.
If the purchase price for any Book-Entry Note is not timely
paid to the Participants with respect to such Note by the beneficial purchaser
thereof (or a Person, including an indirect participant in DTC, acting on behalf
of such purchaser), such Participants and, in turn, the Presenting Agent may
enter SDFS deliver orders through DTC's Participant Terminal System reversing
the orders entered pursuant to Settlement Procedures "H" and "G", respectively.
Thereafter, the Trustee will deliver the withdrawal message and take the related
actions described in the preceding paragraph. The Company will reimburse the
Presenting Agent and the Trustee, as applicable, on an equitable basis for their
loss of the use of the funds during the period when the funds were credited to
the account of the Company (except that the Company shall not be required to
reimburse a party if such party's default hereunder or under the Agency
Agreement shall have caused such failure by the beneficial purchaser to make
timely payment of the purchase price),
Notwithstanding the foregoing, upon any failure to settle with
respect to a Book-Entry Note, DTC may take any actions in accordance with its
SDFS operating procedures then in effect. In the event of a failure to settle
with respect to one or more, but not all, of the Book-Entry Notes to have been
represented by a Global Security, the Trustee will provide, in accordance with
Settlement Procedure "E", for the authentication and issuance of a Global
Security representing the other Book-Entry Notes to have been represented by
such Global Security and will make appropriate entries in its records.
18
Trustee Not to Risk Funds
Nothing herein shall be deemed to require the Trustee to risk
or expend its own funds in connection with any payment to the Company, DTC, the
Agents or the purchaser, it being understood by all parties that payments made
by the Trustee to the Company, DTC, the Agents or the purchaser shall be made
only to the extent that funds are provided to the Trustee for such purpose.
PART III
Administrative Procedures for Book-Entry Notes
and Certificated Notes
Procedures for Establishing the Terms of the Notes
The Company and the Agents will discuss from time to time the
rates to be borne by the Notes that may be sold as a result of the solicitation
of offers by the Agents. Once an Agent has recorded any indication of interest
in Notes upon certain terms, and communicated with the Company, if the Company
plans to accept an offer to purchase Notes upon such terms, it will prepare a
sticker reflecting the terms of such Notes (if the interest rate, Stated
Maturity or other terms have changed) and, after approval from such Agent, will
arrange to have such sticker (together with the Prospectus if amended or
supplemented), electronically filed or transmitted by a means reasonably
calculated to result in filing with the Commission by the second Business Day
after the Company has accepted such offer (or by the Business Day prior to the
Settlement Date in the event the Settlement Date is the first or second Business
Day after such acceptance) and pursuant to Rule 424(b) of the Rules and
Regulations, and will supply an appropriate number of copies of the Prospectus,
as then amended or supplemented, and bearing such sticker, to the Agent that
presented such offer. No Settlements with respect to Notes upon such terms may
occur prior to such filing or such transmission and the Agents will not, prior
to such filing or such transmission, mail confirmations to customers who have
offered to purchase Notes upon such terms. After such filing or such
transmission, sales, mailing of confirmations and Settlements may occur with
respect to Notes upon such terms, subject to the provisions of "Delivery of
Prospectus" below.
If the Company decides to post rates and a decision has been
reached to change interest rates, the Company will promptly so notify each
Agent. Each Agent will forthwith suspend solicitation of purchases. At that
time, the Agents will recommend and the Company will establish rates to be so
posted. Following establishment of posted rates and prior to the filing or
transmission described in the following sentence, the Agents may record
indications of interest in purchasing Notes only at the posted rates. Once an
Agent has recorded any indication of interest in Notes at the posted rates and
communicated with the Company, if the Company plans to accept an offer at the
posted rate, it will prepare a sticker reflecting such posted rates and, after
approval from such Agent, will arrange to have such sticker (together with the
Prospectus if amended or supplemented), electronically filed or transmitted by a
means reasonably calculated to result in filing with the Commission by the
second Business Day after the Company has
19
accepted such offer (or by the Business Day prior to the Settlement Date in the
event the Settlement Date is the first or second Business Day after such
acceptance) and pursuant to Rule 424(b) of the Rules and Regulations, and will
supply an appropriate number of copies of the Prospectus, as then amended or
supplemented, to the Agent who presented such offer. No Settlements at the
posted rates may occur prior to such filing or such transmission and the Agents
will not, prior to such filing or such transmission, mail confirmations to
customers who have offered to purchase Notes at the posted rates. After such
filing or such transmission, sales, mailing of confirmations and Settlements may
resume, subject to the provisions of "Delivery of Prospectus" below.
Acceptance and Rejection of Offers
The Company shall have the sole right to accept offers to
purchase Notes from the Company and may reject any such offer in whole or in
part. Each Agent shall promptly communicate to the appropriate official of the
Company, orally or in writing, each reasonable offer to purchase Notes from the
Company received by it other than those rejected by such Agent. Each Agent shall
have the right, in its discretion reasonably exercised without advising the
Company, to reject any offers in whole or in part.
Suspension of Solicitation; Amendment or Supplement
If, during any period in which, in the opinion of counsel for
the Agents (provided, if the Agents are no longer soliciting (or have been
instructed not to solicit) purchases of Securities from the Company such opinion
is known to the Company), a prospectus relating to the Notes is required to be
delivered under the Act, any event known to the Company occurs as a result of
which the Prospectus would include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or if it
is necessary at any time to amend the Prospectus to comply with the Act or the
Rules and Regulations, the Company will notify the Agents promptly to suspend
solicitation of purchases of the Notes and the Agents shall suspend their
solicitations of purchases of Notes; and if the Company shall decide to amend or
supplement the Registration Statement or the Prospectus for purposes of offering
the Securities, it will promptly advise the Agents by telephone (with
confirmation in writing) and, except as otherwise provided in any relevant
Purchase Agreement, will promptly prepare and file with the Commission an
amendment or supplement which will correct such statement or omission or an
amendment, whether by filing such documents pursuant to the Act or the Exchange
Act, as may be necessary to correct such untrue statement or omission or to make
the Registration Statement or the Prospectus comply with such requirements and
to prepare and furnish to the Agents at its own expense such amendment or
supplement to the Registration Statement or the Prospectus as will correct such
Registration Statement or Prospectus; provided, however, that the Company shall
in any event promptly prepare, file and furnish an Agent with such an amendment
or supplement if such Agent shall then hold any Securities acquired from the
Company as principal (other than such Securities as such Agent shall have held
for a period of six months or more). Upon the Agents' receipt of such amendment
or supplement and
20
advice from the Company that solicitations may be resumed, the Agents will
resume solicitations of purchases of the Notes.
In addition, the Company may instruct the Agents to suspend
solicitation of offers to purchase at any time. Upon receipt of such
instructions the Agents will forthwith (but in any event within one Business
Day) suspend solicitation of offers to purchase from the Company until such time
as the Company has advised it that solicitation of offers to purchase may be
resumed and the Company has complied with Section 6 of the Agency Agreement to
the extent then required. If the Company decides to amend or supplement the
Registration Statement or the Prospectus relating to the Notes (other than to
change interest rates or maturities or similar changes and except in all cases
by filing a report on Form 8-K, pursuant to the Exchange Act, solely to add
exhibits to documents previously filed), it will promptly advise the Agents and
the Trustee and will furnish the Agents and the Trustee with copies of the
proposed amendment or supplement.
In the event that at the time the Agents, at the direction of
the Company, suspend solicitation of offers to purchase from the Company there
shall be any orders outstanding which have not been settled, the Company will
promptly advise the Agents and the Trustee whether such orders may be settled
and whether copies of the Prospectus as theretofore amended and/or supplemented
as in effect at the time of the suspension may be delivered in connection with
the Settlement of such orders. The Company will have the sole responsibility for
such decision and for any arrangements which may be made in the event that the
Company determines that such orders may not be settled or that copies of such
Prospectus may not be so delivered.
Delivery of Prospectus
A copy of the Prospectus as most recently amended or
supplemented on the date of delivery thereof must be delivered to a purchaser
prior to or together with the earliest of (i) any written offer of such Note,
(ii) confirmation of the purchase of such Note and (iii) payment for such Note
by its purchaser. The Company shall ensure that an Agent receives copies of the
Prospectus and each amendment or supplement thereto (including appropriate
pricing stickers as described in the section entitled "Procedures for
Establishing the Terms of the Notes" above) in such quantities and within such
time limits as will enable such Agent to deliver such confirmation or Note to a
purchaser as contemplated by these procedures and in compliance with the
preceding sentence. If, since the date of acceptance of a purchaser's offer, the
Prospectus shall have been supplemented solely to reflect any sale of Notes on
terms different from those agreed to between the Company and such purchaser or a
change in posted rates not applicable to such purchaser, such purchaser shall
not receive the Prospectus as supplemented by such new supplement, but shall
receive the Prospectus as supplemented to reflect the terms of the Notes being
purchased by such purchaser and otherwise as most recently amended or
supplemented on the date of delivery of the Prospectus. The Trustee will make
all such deliveries with respect to all Notes sold directly by the Company.
21
Confirmation
For each order to purchase a Note solicited by any Agent and
accepted by the Company, the Presenting Agent will issue a confirmation to the
purchaser (with a copy to the Company), including delivery and payment
instructions.
Advertising Costs
The Company will determine with the Agents the amount and
nature of advertising that may be appropriate in offering the Notes. The
"tombstone" advertisement and such other expenses agreed to by the Company and
Agents in connection with solicitation of offers to purchase Notes from the
Company will be paid by the Company.
Business Day
"Business Day" shall mean, for all purposes of these
Administrative Procedures, any day which is not a Saturday or Sunday and which
is not a day on which banking institutions are generally authorized or obligated
by law or executive order to close (i) in New York City, (ii) in the case of
Notes denominated in a Specified Currency, in the city designated in an
applicable supplement to the Prospectus as the principal financial center of the
country of such Specified Currency, and (iii) in the case of LIBOR Notes (as
defined in Appendix A), in New York City and London.
22
EXHIBIT C
PURCHASE AGREEMENT
, 200
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
Woodland Park
0000 Xxxxxxxxxxx Xxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
1. The undersigned agrees to purchase the following principal
amount of the Securities described in the Agency Agreement dated , 1999 (as it
may be supplemented or amended from time to time, the "Agency Agreement"):
Principal Amount: [$]
Currency:
Interest Rate: %
Discount: % of Principal Amount
Aggregate Price to
be paid to Company
(in immediately
available funds): [$]
Settlement Date:
Other Terms:
2. In the case of Securities issued in a foreign currency,
unless otherwise specified below, settlement and payments of principal and
interest will be in U.S. dollars based on the highest bid quotation in the City
of New York received by the Exchange Rate Agent (as defined in the Indenture
dated as of December 15, 1987, as supplemented by the First Supplemental
Indenture dated as of October 1, 1990, between National Rural Utilities
Cooperative Finance Corporation (the "Company") and U.S. Bank National
Association, as successor trustee) at approximately 11:00 A.M. New York City
time, on the second Business Day (as defined in the Procedures) preceding the
applicable payment date from three recognized foreign exchange dealers (one of
which may be the Exchange Rate Agent) for the purchase by the quoting dealer of
the Specified Currency for U.S. dollars for settlement on such payment date in
the aggregate amount of the Specified
23
Currency payable to all holders of Securities denominated in such Specified
Currency electing to receive U.S. dollar payments and at which the applicable
dealer commits to execute a contract. If such bid quotations are not available,
payments will be made in the Specified Currency.
3. Our obligation to purchase Securities hereunder is subject
to the continued accuracy on the above Settlement Date as if made on the
Settlement Date of your representations and warranties contained in the Agency
Agreement and to your performance and observance in all material respects of all
applicable covenants and agreements contained therein, including, without
limitation, your obligations pursuant to Section 7 thereof. Our obligation
hereunder is subject to the further conditions that:
(a) we shall receive (i) the opinions required to be delivered
pursuant to Sections 5(e) and 5(f) of the Agency Agreement, (ii) the certificate
required to be delivered pursuant to Section 5(g) of the Agency Agreement and
(iii) the letter required to be delivered pursuant to 5(h) of the Agency
Agreement, in each case dated as of the above Settlement Date;
(b) on or after the date hereof and prior to the Settlement
Date: (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; and
(c) on or after the date hereof and prior to the Settlement
Date, there shall not have occurred any of the following: (i) a suspension or
material limitation in trading in securities generally on the New York Stock
Exchange, (ii) a banking moratorium on commercial banking activities in New York
declared by Federal or state authorities or (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States the effect of which, in any
such case described in clause (iii), is, in our reasonable judgment, to make it
impracticable or inadvisable to proceed with the purchase of the Securities.
4. In further consideration of our agreement hereunder, you
agree that between the date hereof and the above Settlement Date, you will not
offer or sell, or enter into any agreement to sell, except to your members, any
debt securities of the Company of substantially the form of the Securities.
5. We may terminate this Agreement, immediately upon notice to
you, at any time prior to the above Settlement Date, if prior thereto any of the
events described in clauses (b) or (c) of paragraph 3 occurs. In the event of
such termination, no party shall have any liability to the other party hereto,
except as provided in Sections 4, 7 and 13 of the Agency Agreement.
24
6. Except as expressly designated, capitalized terms used
herein are defined in the Agency Agreement (including the exhibits thereto).
7. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF NEW YORK.
8. This Agreement may be executed in counterparts and the
executed counterparts shall together constitute a single instrument.
[Insert Name of Agent],
By ____________________
Title:
Accepted: ________ ___, 200_
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
By __________________________
Chief Financial Officer
25
EXHIBIT D
FORM OF AMENDMENT
AMENDMENT dated as of [ ] to the Agency
Agreement dated [ ], 1999, [and amended as of [ ],
among National Rural Utilities Cooperative Finance
Corporation (the "Company"), a District of Columbia
cooperative association, Xxxxxx Brothers Inc. (an
"Agent"), ABN AMRO Incorporated (an "Agent") Banc of
America Securities LLC (an "Agent"), Bank One Capital
Markets, Inc. (an "Agent"), Deutsche Bank Securities,
Inc. (an "Agent"), X.X. Xxxxxx Securities Inc. (an
"Agent"), Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated (an "Agent") Scotia Capital (USA) Inc.
(an "Agent") and UBS Securities LLC (an "Agent")
(such Agency Agreement [, as amended,] the
"Agreement").
WHEREAS, the parties hereto have entered into the Agreement;
WHEREAS, the Agreement initially contemplated the issuance and
sale by the Company from time to time of up to $[ ] aggregate principal amount
of its Medium-Term Notes, Series C (the "Securities");
[WHEREAS, the Agreement was amended as of [ ], to increase
the aggregate principal amount of the Securities permitted to be issued and sold
by the Company thereunder to $[ ] and the aggregate principal amount of the
Securities permitted to be sold on and after the date of such amendment to $[
];]
WHEREAS, the Company has issued and sold approximately $[ ]
aggregate principal amount of Securities pursuant to the Agreement and the
Indenture on and after [ ];
WHEREAS, immediately prior to this Amendment taking effect,
the Company's Registration Statement No. [ ] remains effective under the Act
relating to the Securities, with $[ ] aggregate principal amount of Securities
remaining unissued and unsold under such Registration Statement;
WHEREAS, the parties hereto desire to amend the Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
1. The Agreement is hereby amended to include in the
definition of "Registration Statement", as contemplated therein in Section 1(a),
Registration Statement No. [ ], previously filed with the Commission and
effective as of [ ], relating to the registration of $[ ] in aggregate
principal amount of Securities, and to revise the
26
definition of "Prospectus" to mean the prospectus supplement dated [ ],
relating to the Securities covered by the Agreement as amended by this
Amendment, together with the prospectus contained in such Registration
Statement.
2. The Agreement is hereby amended to increase the
aggregate principal amount of Securities which may be issued and sold from time
to time by the Company thereunder to $[ ] and the aggregate principal amount
of Securities which may be issued and sold from time to time thereunder on or
after the date hereof to $[ ].
[3. The Agreement is hereby amended to delete from the
definition of "Registration Statement", Registration Statement No. [ ], and
all amendments thereto and supplements thereof, all of the Securities
registrated thereby having been issued by the Company.]
4. This Amendment shall become effective only on the
satisfaction (or waiver by the Agents) of the conditions in Section 5 of the
Agreement with respect to the Closing Date for this Amendment.
Except as expressly amended hereby, the Agreement shall
continue in full force and effect in accordance with the provisions thereof as
in existence on the date hereof.
All capitalized terms not defined herein have the meanings
assigned to them in the Agreement.
IN WITNESS WHEREOF, the parties hereto have each caused this
Amendment to be fully executed as of the date first above written.
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION,
by
________________________
Name:
Title:
XXXXXX BROTHERS INC.,
by
________________________
Name:
Title:
27
ABN AMRO INCORPORATED,
by
________________________
Name:
Title:
BANC OF AMERICA SECURITIES LLC,
by
________________________
Name:
Title:
BANC ONE CAPITAL MARKETS, INC.,
by
________________________
Name:
Title:
DEUTSCHE BANK SECURITIES INC.,
by
________________________
Name:
Title:
X.X. XXXXXX SECURITIES INC.,
by
________________________
Name:
Title:
28
XXXXXXX LYNCH, PIERCE, XXXXXX &
XXXXX INCORPORATED
by
________________________
Name:
Title:
SCOTIA CAPITAL (USA) INC.,
by
________________________
Name:
Title:
UBS SECURITIES LLC,
by
________________________
Name:
Title:
29
APPENDIX A
APPENDIX A
Special Provisions Relating
to Floating Rate Notes
Interest Rate: Interest on Floating Rate Notes will be determined by
reference to an "Interest Rate Basis", which shall be the
"Commercial Paper Rate" ("Commercial Paper Rate Notes"),
"LIBOR" ("LIBOR Notes"), the "Treasury Rate" ("Treasury Rate
Notes"), the "Federal Funds Effective Rate" ("Fed Funds
Notes"), the "CD Rate" ("CD Rate Notes"), the "Prime Rate"
("Prime Rate Notes") or such other interest rate formula as
may be designated by the Company, based upon the Index
Maturity and adjusted by a Spread or Spread Multiplier, if
any, as specified in the applicable pricing supplement to the
Prospectus setting forth the terms of each issuance of Notes
(the "Pricing Supplement"). The "Index Maturity" is the
particular maturity of the type of instrument or obligation
from which the Interest Rate Basis is calculated (e.g., in the
case of commercial ---- paper, 30-day rather than 90-day
commercial paper). The "Spread" is the number of basis points
(100 basis points equals one percent) above or below the
Interest Rate Basis applicable, to such Floating Rate Note,
and the "Spread Multiplier" is the percentage of the Interest
Rate Basis applicable to the interest rate for such Floating
Rate Note. The Spread, Spread Multiplier, Index Maturity and
other variable terms as described below are subject to change
by the Company from time to time, but no such change will
affect any Floating Rate Note theretofore issued or as to
which an offer has been accepted by the Company. A Floating
Rate Note may also have either or both of the following: (i) a
maximum limit, or ceiling ("Maximum Interest Rate"), on the
rate of interest which may apply during any Interest Period
(as defined below); and (ii) a minimum limit, or floor
("Minimum Interest Rate"), on the rate of interest which may
apply during any Interest Period. In addition to any Maximum
Interest Rate which may be applicable to any Floating Rate
Note pursuant to the above provisions, the interest rate on
the Floating Rate Notes will in no event be higher than the
maximum rate permitted by New York law, as the same may be
modified by United States law of general application. Under
present New York law, the maximum rate of interest is 25% per
annum on a simple interest basis. The limit may not apply to
Floating Rate Notes in which $2,500,000 or more has been
invested.
The Calculation Agent appointed by the Company (the
"Calculation Agent") (initially Xxxxxx Brothers Inc.)
will,
30
upon request of a holder of Floating Rate Notes,
provide the interest rate then in effect and, if
determined, the interest rate which will become
effective as a result of a determination made with
respect to the most recent Interest Determination
Date (as defined below) with respect to such Floating
Rate Notes. The applicable Pricing Supplement will
specify for each Floating Rate Note the following
terms: Interest Rate Basis, rate of interest for the
initial Interest Period (the "Initial Interest
Rate"), date of issue, Interest Determination Dates,
Interest Reset Dates (as defined below), Interest
Payment Dates (as defined below), Regular Record Date
(as defined below), Index Maturity, maturity date,
Maximum Interest Rate and Minimum Interest Rate, if
any, and the Spread or Spread Multiplier, if any.
Interest Payment Except as set forth in the applicable
Dates: Pricing Supplement and except as provided below, interest will
be payable in the case of Floating Rate Notes with a daily,
weekly or monthly Interest Reset Date, on the third Wednesday
of each month or on the third Wednesday of March, June,
September and December of each year, as specified in the
applicable Pricing Supplement; in the case of Floating Rate
Notes with a quarterly Interest Reset Date, on the third
Wednesday of March, June, September and December of each year;
in the case of Floating Rate Notes with a semi-annual Interest
Reset Date, on the third Wednesday of two months of each year,
as specified in the applicable Pricing Supplement; and in the
case of Floating Rate Notes with an annual Interest Reset
Date, on the third Wednesday of one month of each year, as
specified in the applicable Pricing Supplement. If any
Interest Payment Date for any Floating Rate Note would
otherwise be a day that is not a Business Day (as defined
below) for such Floating Rate Note, the Interest Payment Date
for such Floating Rate Note shall be postponed to the next day
that is a Business Day for such Floating Rate Note, except
that in the case of a LIBOR Note, if such day falls in the
next calendar month, such Interest Payment Date shall be the
preceding day that is a London Business Day (as defined below)
with respect to such Note. Each date on which interest is
payable on a Floating Rate Note is referred to herein as an
"Interest Payment Date."
Interest Reset The rate of interest on each Floating
Dates: Rate Note will be reset daily, weekly, monthly, quarterly,
semi-annually or annually (each an "Interest Reset Date"), as
specified in the applicable Pricing Supplement. Except as set
forth in the applicable Pricing Supplement, the Interest Reset
Date will be, in the case of Floating Rate Notes which reset
daily, each Business
31
Day; in the case of Floating Rate Notes (other than Treasury
Rate Notes) which reset weekly, the Wednesday of each week; in
the case of Treasury Rate Notes which reset weekly, the
Tuesday of each week; in the case of Floating Rate Notes which
reset monthly, the third Wednesday of each month; in the case
of Floating Rate Notes which reset quarterly, the third
Wednesday of March, June, September and December; in the case
of Floating Rate Notes which reset semiannually, the third
Wednesday of two months of each year, as specified in the
applicable Pricing Supplement; and in the case of Floating
Rate Notes which reset annually, the third Wednesday of one
month of each year, as specified in the applicable Pricing
Supplement; provided, however, that (i) the interest rate in
effect from the date of issue to the first Interest Reset Date
with respect to a Floating Rate Note will be the Initial
Interest Rate (as set forth in the applicable Pricing
Supplement) and (ii) unless otherwise specified in the
applicable Pricing Supplement, the interest rate in effect for
the ten calendar days immediately prior to maturity or
redemption, if applicable, will be that in effect on the tenth
calendar day preceding such maturity or redemption. If any
Interest Reset Date for any Floating Rate Note would otherwise
be a day that is not a Business Day for such Floating Rate
Note, the Interest Reset Date for such Floating Rate Note
shall be postponed to the next day that is a Business Day for
such Floating Rate Note, except that in the case of a LIBOR
Note, if such Business Day is in the next succeeding calendar
month, such Interest Reset Date shall be the immediately
preceding Business Day.
Interest Determi- Except as set forth in the applicable
nation Dates: Pricing Supplement, the "Interest Determination Date"
pertaining to an Interest Reset Date for a Commercial Paper
Rate Note (the "Commercial Paper Interest Determination
Date"), a Fed Funds Note (the "Fed Funds Interest
Determination Date"), a CD Rate Note (the "CD Interest
Determination Date") or a Prime Rate Note (the "Prime Interest
Determination Date") will be the second Business Day preceding
such Interest Reset Date. The "Interest Determination Date"
pertaining to an Interest Reset Date for a LIBOR Note (the
"LIBOR Interest Determination Date") will be the second London
Business Day preceding such Interest Reset Date. The "Interest
Determination Date" pertaining to an Interest Reset Date for a
Treasury Rate Note (the "Treasury Interest Determination
Date") will be the day of the week in which such Interest
Reset Date falls on which Treasury bills would normally be
auctioned. Treasury bills are usually sold at auction on
Monday of each week, unless that day is a legal holiday, in
which case the auction is usually held on the following
Tuesday, except that such auction may be held on the preceding
Friday. If, as the result of a
32
legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Interest Determination Date
pertaining to the Interest Reset Date occurring in the next
succeeding week. If an auction date for Treasury bills shall
fall on any Interest Reset Date for a Treasury Rate Note, then
such Interest Reset Date shall instead be the first Business
Day immediately following such auction date.
Calculation The Calculation Date, where applicable, pertaining to any
Dates: Interest Determination Date will be the earlier of (i) the
tenth calendar day after such Interest Determination Date or
if any such day is not a Business Day, the next succeeding
Business Day or (ii) the Business Day preceding the applicable
Interest Payment Date or maturity, as the case may be.
All percentages resulting from any calculation on
Floating Rate Notes will be rounded to the nearest
one hundred-thousandth of a percentage point, with
five one millionths of a percentage point rounded
upwards (e.g., 9.876545% (or .09876545) would be
rounded to 9.87655% (or .0987655), and all dollar
amounts used in or resulting from such calculation on
Floating Rate Notes will be rounded to the nearest
cent or, in the case of Notes denominated other than
in United States dollars, the nearest unit (with
one-half cent or unit being rounded upward).
Commercial Paper Unless otherwise indicated in the
Rate: applicable Pricing Supplement, the "Commercial Paper Rate" for
each such Interest Reset Date will be determined as of the
Commercial Paper Interest Determination Date and will be the
Money Market Yield (as defined below) on such date of the rate
for commercial paper having the Index Maturity specified in
the applicable Pricing Supplement as published by the Board of
Governors of the Federal Reserve System in "Statistical
Release H.15(519), Selected Interest Rates" or any successor
publication selected by the Calculation Agent ("H.15(519)")
under the heading "Commercial Paper". In the event that such
rate is not published prior to 9:00 A.M., New York City time,
on the Calculation Date pertaining to such Commercial Paper
Interest Determination Date, then the Commercial Paper Rate
shall be the Money Market Yield on such Commercial Paper
Interest Determination Date of the rate for commercial paper
of the specified Index Maturity as published in the daily
update of H.15(519), available through the world wide web site
of the Board of Governors of the Federal Reserve System at
xxxx://xxx.xxx.xxx.xxx.xx/xxxxxxxx/x00/
33
update under the heading "Commercial
Paper--Nonfinancial" (with an Index Maturity of one
month or three months being deemed to be equivalent
to an Index Maturity of 30 days or 90 days
respectively), or any successor publication selected
by the Calculation Agent (the "H.15 Daily Update")
under the heading "Commercial Paper". If by 3:00
P.M., New York City time, on such Calculation Date
such rate is not published in either H.15(519) or
H.15 Daily Update, the Commercial Paper Rate for that
Commercial Paper Interest Determination Date shall be
calculated by the Calculation Agent and shall be the
Money Market Yield of the arithmetic mean of the
offered rates as of 11:00 A.M., New York City time,
on that Commercial Paper Interest Determination Date,
of three leading dealers of commercial paper in The
City of New York selected by the Calculation Agent
for commercial paper of the specified Index Maturity
placed for an industrial issuer whose bond rating is
"Aa", or the equivalent, from a nationally recognized
securities rating agency; provided, however, that if
the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence,
the Commercial Paper Rate with respect to such
Commercial Paper Interest Determination Date will be
the Commercial Paper Rate in effect on such
Commercial Paper Interest Determination Date.
Money Market Yield: "Money Market Yield" shall be a yield (expressed as a
percentage rounded upwards, if necessary, to the next
higher one hundred-thousandth of a percentage point)
calculated in accordance with the following formula:
Money Market Yield = D x 360 x 100
----------
360 - (DxM)
where "D" refers to the per annum rate for commercial
paper quoted on a bank discount basis and expressed
as a decimal, and "M" refers to the actual number of
days in the interest period for which interest is
being calculated.
LIBOR: Each LIBOR Note will bear interest at the interest
rate (calculated with reference to LIBOR and the
Spread and/or Spread Multiplier, if any) specified in
such LIBOR Note and in the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing
Supplement, "LIBOR" will be determined by the
34
Calculation Agent in accordance with the following
provisions:
(i) With respect to a LIBOR Interest Determination
Date, LIBOR will be, as specified in the applicable
Pricing Supplement, either: (a) the arithmetic mean
of the offered rates for deposits in the U.S. dollars
having the Index Maturity designated in the
applicable Pricing Supplement, commencing on the
second day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market
("London Business Day") immediately following such
LIBOR Interest Determination Date, that appear on the
Reuters Screen LIBO Page as of 11:00 A.M., London
time, on such LIBOR Interest Determination Date, if
at least two such offered rates appear on the Reuters
Screen LIBO Page ("LIBOR Reuters"), or (b) the rate
for deposits in U.S. dollars having the Index
Maturity designated in the applicable Pricing
Supplement, commencing on the second London Business
Day immediately following such LIBOR Interest
Determination Date, that appears on Telerate Page
3750 as of 11:00 A.M., London Time, on such LIBOR
Interest Determination Date ("LIBOR Telerate").
"Reuters Screen LIBO Page" means the display
designated as page "LIBO" on the Reuters Monitor
Money Rates Service (or such other page as may
replace page LIBO on that service for the purpose of
displaying London interbank offered rates of major
banks). "Telerate Page 3750" means the display
designated as page "3750" on the Telerate Service (or
such other page as may replace the 3750 page on that
service or such other service or services as may be
nominated by the British Bankers' Association for the
purpose of displaying London interbank offered rates
for U.S. dollar deposits). If neither LIBOR Reuters
nor LIBOR Telerate is specified in the applicable
Pricing Supplement, LIBOR will be determined as if
LIBOR Telerate had been specified. If fewer than two
offered rates appear on the Reuters Screen LIBO Page,
or if no rate appears on Telerate Page 3750, as
applicable, LIBOR in respect of such LIBOR Interest
Determination Date will be determined as if the
parties had specified the rate described in (ii)
below.
(ii) With respect to a LIBOR Interest Determination
Date on which fewer than two offered rates appear on
the Reuters Screen LIBO Page, as specified in (i) (a)
above, or on which no rate appears on Telerate Page
3750, as specified in (i) (b) above, as applicable,
LIBOR will be
35
determined on the basis of the rates at which
deposits in U.S. dollars having the Index Maturity
designated in the applicable Pricing Supplement are
offered at approximately 11:00 A.M., London time, on
such LIBOR Interest Determination Date by four major
banks in the London interbank market selected by the
Calculation Agent (the "Reference Banks") to prime
banks in the London interbank market, commencing on
the second London Business Day immediately following
such LIBOR Interest Determination Date and in a
principal amount equal to an amount of not less than
$1,000,000 that is representative for a single
transaction in such market at such time. The
Calculation Agent will request the principal London
office of each of the Reference Banks to provide a
quotation of its rate. If at least two such
quotations are provided, LIBOR in respect of such
LIBOR Interest Determination Date will be the
arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR in respect of such
LIBOR Interest Determination Date will be the
arithmetic mean of the rates quoted at approximately
11:00 A.M., New York City time, on such LIBOR
Interest Determination Date by three major banks in
The City of New York selected by the Calculation
Agent for loans in U.S. dollars to leading European
banks having the Index Maturity designated in the
applicable Pricing Supplement, commencing on the
second London Business Day immediately following such
LIBOR Interest Determination Date and in a principal
amount equal to an amount of not less than $1,000,000
that is representative for a single transaction in
such market at such time; provided, however, that if
the banks selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence,
LIBOR with respect to such LIBOR Interest
Determination Date will be the interest rate
otherwise in effect on such LIBOR Interest
Determination Date.
Treasury Rate: Unless otherwise indicated in the applicable Pricing
Supplement, the "Treasury Rate" for each such
Interest Reset Date will be determined as of the
Treasury Interest Determination Date and will be the
rate applicable to the most recent auction of direct
obligations of the United States ("Treasury bills")
having the Index Maturity specified in the applicable
Pricing Supplement, as such rate is published in
H.15(519) under the heading "U.S. Government
Securities--Treasury Bills--Auction Average
(Investment)" or, if not so published by 9:00 A.M.,
New York City time, on the Calculation Date
pertaining to such Treasury Interest
36
Determination Date, the auction average rate
(expressed as a bond equivalent on the basis of a
year of 365 or 366 days, as applicable, and applied
on a daily basis) as otherwise announced by the
United States Department of the Treasury. In the
event that the results of the auction of Treasury
bills having the specified Index Maturity are not
reported as provided by 3:00 P.M., New York City
time, on such Calculation Date, or if no such auction
is held in a particular week, then the Treasury Rate
shall be calculated by the Calculation Agent and
shall be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as
of approximately 3:30 P.M., New York City time, on
such Treasury Interest Determination Date, of three
leading primary United States government securities
dealers, selected by the Calculation Agent, for the
issue of Treasury bills with a remaining maturity
closest to the applicable Index Maturity; provided,
however, that if the dealers selected as aforesaid by
the Calculation Agent are not quoting as mentioned in
this sentence, the Treasury Rate with respect to such
Treasury Interest Determination Date will be the
Treasury Rate in effect on such Treasury Interest
Determination Date.
Fed Funds Rate: Unless otherwise indicated in the applicable Pricing
Supplement, "Fed Funds Rate" means, with respect to any Fed
Funds Interest Determination Date, the rate on such date for
Federal Funds as such rate shall be published in H.15(519)
under the heading "Federal Funds (Effective)" or, if not so
published by 9:00 A.M., New York City time, on the Calculation
Date pertaining to such Fed Funds Interest Determination Date,
the Fed Funds Rate will be the rate on such Fed Funds Interest
Determination Date as published in H.15 Daily Update under the
heading "Federal Funds (Effective)". If such rate is not
published by 3:00 P.M., New York City time, on such
Calculation Date, then the Fed Funds Rate on such Fed Funds
Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates
as of 9:00 A.M., New York City time, on such Fed Funds
Interest Determination Date for the last transaction in
overnight Federal Funds arranged by three leading brokers of
Federal Funds transactions in The City of New York selected by
the Calculation Agent; provided, however, that if the brokers
selected as aforesaid by the Calculation Agent are not quoting
as mentioned in this sentence, the Fed Funds Rate with respect
to such Fed Funds Interest Determination Date will be the Fed
Funds Rate in effect on such Fed Funds Interest Determination
Date.
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CD Rate: Unless otherwise indicated in the applicable Pricing
Supplement, the "CD Rate" for each such Interest
Reset Date will be determined as of the CD Interest
Determination Date and will be the rate on such date
for negotiable certificates of deposit having the
Index Maturity designated in the applicable Pricing
Supplement as published in H.15(519) under the
heading "CDs (Secondary Market)" or, if not so
published by 9:00 A.M., New York City time, on the
Calculation Date pertaining to such CD Interest
Determination Date, the CD Rate will be the rate on
such CD Interest Determination Date for negotiable
certificates of deposit of the Index Maturity
designated in the applicable Pricing Supplement as
published in H.15 Daily Update under the heading "CDs
(Secondary Market)". If such rate is not published by
3:00 P.M., New York City time, on such Calculation
Date, then the CD Rate on such CD Interest
Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of
the secondary market offered rates as of the opening
of business, New York City time, on such CD Interest
Determination Date, of three leading nonbank dealers
in negotiable U.S. dollar certificates of deposit in
The City of New York selected by the Calculation
Agent for negotiable certificates of deposit of major
United States money market banks (in the market for
negotiable certificates of deposit) with a remaining
maturity closest to the Index Maturity designated in
the Pricing Supplement in a denomination of
$5,000,000 or if greater, an amount that is
representative for a single transaction in the
relevant market at the time; provided, however, that
if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in
this sentence, the CD Rate with respect to such CD
Interest Determination Date will be the CD Rate in
effect on such CD Interest Determination Date.
Prime Rate: Each Prime Rate Note will bear interest at the interest rate
(calculated with reference to the Prime Rate and the Spread
and/or Spread Multiplier, if any) specified in such Prime Rate
Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing
Supplement, "Prime Rate" means, with respect to any
Prime Interest Determination Date, the rate set forth
in H.15(519) for such date opposite the caption "Bank
Prime Loan," or, if not so published by 9:00 A.M.,
New York City time, on the Calculation Date
pertaining to such Prime Interest Determination Date,
the Prime Rate will be
38
calculated by the Calculation Agent and will be the
arithmetic mean of the rates of interest publicly
announced by each bank named on the Reuters Screen
NYMF Page as such bank's prime rate or base lending
rate as in effect for such Prime Interest
Determination Date as quoted on the Reuters Screen
NYMF Page on such Prime Interest Determination Date,
or, if fewer than four such rates appear on the
Reuters Screen NYMF Page for such Prime Interest
Determination Date, the rate shall be the arithmetic
mean of the prime rates quoted on the basis of the
actual number of days in the year divided by 360 as
of the close of business on such Prime Interest
Determination Date by at least two of the three major
money center banks in The City of New York selected
by the Calculation Agent from which quotations are
requested. If fewer than two quotations are quoted as
aforesaid, the Prime Rate for such Prime Interest
Determination Date shall be calculated by the
Calculation Agent and shall be the arithmetic means
of the prime rates quoted in The City of New York on
such date by the appropriate number of substitute
banks or trust companies organized and doing business
under the laws of the Untied States, or any State
thereof, having total equity capital of at least $500
million and being subject to supervision or
examination by a federal or State authority, selected
by the Calculation Agent to quote such rate or rates;
provided, however, that if the Prime Rate is not
published in H.15(519) and the banks or trust
companies selected as aforesaid are not quoting as
mentioned in this sentence, the Prime Rate with
respect to such Prime Interest Determination Date
will be the interest rate otherwise in effect on such
Prime Interest Determination Date. "Reuters Screen
NYMF Page" means the display designated as page
"NYMF" on the Reuters Monitor Money Rates Service (or
such other page as may replace page NYMF on that
service for the purpose of displaying prime rates or
base lending rates of major United States banks).
Record Dates: Interest payments on Floating Rate Notes will be made on each
Interest Payment Date to the registered owners at the close of
business on the date 15 calendar days prior to such Interest
Payment Date (the "Regular Record Date"). If a Note is issued
between a Regular Record Date and an Interest Payment Date,
the first payment of Interest will occur on the Interest
Payment Date following the next Regular Record Date to the
registered holder on such next succeeding Regular Record Date.
Interest payable at maturity or upon redemption (whether or
not such maturity or redemption date is an Interest Payment
Date) will be paid to the
39
same person to whom principal is payable. Interest will begin
to accrue on the issue date of a Note for the first interest
period and from and including the most recent Interest Payment
Date to which interest has been paid for all subsequent
interest periods. Each payment of interest shall include
interest accrued from and including the most recent date in
respect of which interest has been paid or duly provided for,
or from and including the date of issue, through the day
before the Interest Payment Date (or maturity date) (an
"Interest Period"). In the case of Floating Rate Notes on
which the interest rate is reset daily or weekly, the interest
payments shall include interest accrued from but excluding the
most recent Regular Record Date in respect of which interest
has been paid or duly provided for, or from and including the
date of issue, to and including the Regular Record Date next
preceding the applicable Interest Payment Date, except that
the interest payment at the maturity date will include
interest accrued to such date.
Accrued Interest: Unless otherwise indicated in the applicable Pricing
Supplement, interest payments for Floating Rate Notes will
include interest accrued from and including the most recent
date in respect of which interest has been paid or duly
provided for, or from and including the date of issuance to
but excluding the next Interest Payment Date (or maturity
date); provided, however, that if the Interest Reset Dates
with respect to such Note are daily or weekly, interest
payable on any Interest Payment Date, other than interest
payable on any date on which principal for such Note is
payable, will include interest accrued from but excluding the
most recent Regular Record Date in respect of which interest
has been paid or duly provided for, or from and including the
date of issue, to and including the next preceding Regular
Record Date. Interest payments on Floating Rate Notes made at
maturity will include interest accrued to but excluding the
date of maturity. Accrued interest from the date of issue or
from the last date to which interest has been paid is
calculated by multiplying the face amount of a Note by an
accrued interest factor. This accrued interest factor is
computed by adding the interest factors calculated for each
day in the period for which accrued interest is being
calculated. The interest factor for each such day is computed
by dividing the interest rate applicable to such date by 360,
in the case of Commercial Paper Rate Notes, LIBOR Notes, Fed
Funds Notes, CD Rate Notes and Prime Rate Notes, or by the
actual number of days in the year, in the case of Treasury
Rate Notes.
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