EXHIBIT 1
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
$500,000,000 6.50% Notes, due 2007
$1,500,000,000 7.25% Notes, due 2012
$1,000,000,000 8.00% Notes, due 2032
Underwriting Agreement
February 28, 2002
Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx, 0xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
As Representatives of the several Underwriters
Ladies and Gentlemen:
National Rural Utilities Cooperative Finance Corporation, a
District of Columbia cooperative association (the "Company"), proposes to
issue $500,000,000 principal amount of its 6.50% Notes due 2007 (the "2007
Notes"), $1,500,000,000 principal amount of its 7.25% Notes due 2012 (the
"2012 Notes") and $1,000,000,000 principal amount of its 8.00% Notes due 2032
(the "2032 Notes" and, together with the 2007 Notes and 2012 Notes, the
"Notes"), to be issued under and secured by an Indenture dated as of December
15, 1987, as supplemented by a First Supplemental Indenture dated as of
October 1, 1990, between the Company and State Street Bank and Trust Company,
as successor trustee (the "Trustee"). Such Indenture, as amended by any
supplemental indenture, is hereinafter called the "Indenture". The Notes are
more fully described in the Registration Statement and in the Prospectus
hereinafter mentioned. The Notes will be issued in fully registered form only,
in denominations of $1,000 and any integral multiple thereof.
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You have advised us (i) that you and any other firms and
corporations named in Schedule I attached hereto (you and such firms and
corporations being hereinafter called the Underwriters, which term shall also
include any underwriter substituted as provided in Section 14 hereof), acting
severally and not jointly, are willing to purchase, on the terms and
conditions hereinafter set forth, the respective principal amounts of each
issue of the Notes specified in such Schedule I, and (ii) that you are
authorized, on behalf of yourselves and the other Underwriters, to enter into
this Agreement. Terms used but not otherwise defined herein shall have the
meanings assigned to them in the Indenture.
1. Certain Representations and Warranties by the Company. The
Company represents and warrants to each Underwriter as follows:
(a) Registration Statement and Prospectus. The Company has
filed with the Securities and Exchange Commission (the "Commission")
Registration Statement No. 333-62048 and Registration Statement No. 333-73768
for the registration under the Securities Act of 1933 (the "Securities Act")
of the Notes (including a prospectus relating thereto) and may have filed one
or more amendments thereto (including one or more amended or supplemental
prospectuses) and such registration statements and any such amendments have
become effective. The Company has also filed with the Commission an
abbreviated registration statement pursuant to Rule 462(b) of the Securities
Act to increase the size of the offering (a "Rule 462(b) Registration
Statement"), which became effective upon filing. A prospectus supplement
relating to the Notes, including a prospectus (together, the "Prospectus"),
has been prepared and will be filed pursuant to Rule 424 under the Securities
Act. The Company will not file any other amendment of such registration
statements or such prospectus or any supplement to such prospectus on or after
the date of this Agreement and prior to the date and time of delivery of and
payment for the Notes referred to in Section 3 hereof (the "Closing Date"),
except with your approval. Such registration statements, including financial
statements and exhibits, at the time they became effective, together with the
462(b) Registration Statement are hereinafter called the "Registration
Statement". Any reference in this Agreement to the Prospectus as amended or
supplemented shall include, without limitation, any prospectus filed with the
Commission pursuant to Rule 424 of the Commission under the Securities Act
which amends or supplements the Prospectus. Any reference herein to the
Registration Statement or the Prospectus shall be deemed to refer to and
include the
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documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934 (the "Exchange
Act") on or before the effective date of the Registration Statement or the
date of such Prospectus, as the case may be; and any reference herein to the
terms "amend", "amendment" or "supplement" with respect to the Registration
Statement or the Prospectus shall be deemed to refer to and include the filing
of any document under the Exchange Act after the effective date of the
Registration Statement, or the date of any Prospectus, as the case may be, and
deemed to be incorporated therein by reference.
(b) Accuracy of Registration Statement. At all times subsequent
to the date of this Agreement up to and including the Closing Date, and when
any post-effective amendment thereof shall become effective, the Registration
Statement (and the Registration Statement as amended if any post-effective
amendment thereof shall have become effective) will comply in all material
respects with the provisions of the Securities Act and the Exchange Act and
the rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact and will not omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and, at all times subsequent to the date of this Agreement up to
and including the Closing Date, the Prospectus (and the Prospectus as amended
or supplemented, if the Company shall have filed with the Commission any
amendment thereof or supplement thereto) will fully comply with the provisions
of the Securities Act and the Exchange Act and the rules and regulations of
the Commission thereunder and will not contain an untrue statement of a
material fact and will not omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that none of the representations and warranties in this paragraph (b) shall
apply to (i) that part of the Registration Statement which shall constitute
the Statement of Eligibility and Qualification (Form T-1) under the Trust
Indenture Act of 1939 (the "Trust Indenture Act") of the Trustee or (ii)
statements in, or omissions from, the Registration Statement or the Prospectus
or any amendment thereof or supplement thereto made in reliance upon and in
conformity with information furnished as herein stated or otherwise furnished
in writing to the Company by or on behalf of any Underwriter through you for
use in connection with the preparation of the Registration Statement or the
Prospectus or any such amendment or supplement.
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(c) Accountants. The accountants who have certified or shall
certify the financial statements filed and to be filed with the Commission as
parts of the Registration Statement and the Prospectus are independent with
respect to the Company as required by the Securities Act and rules and
regulations of the Commission thereunder.
(d) Due Incorporation. The Company has been duly incorporated
and is now, and on the Closing Date will be, a validly existing cooperative
association in good standing under the laws of the District of Columbia, duly
qualified and in good standing in each jurisdiction in which the ownership or
leasing of properties or the conduct of its business requires it to be
qualified (or the failure to be so qualified will not have a material adverse
effect upon the business or condition of the Company), and the Company has the
corporate power and holds all valid permits and other required authorizations
from governmental authorities necessary to carry on its business as now
conducted and as to be conducted on the Closing Date and as contemplated by
the Prospectus.
(e) Material Changes. Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, and
except as set forth therein, there has not been any material adverse change in
the condition, financial or other, or the results of operations of the
Company, whether or not arising from transactions in the ordinary course of
business.
(f) Litigation. On the date hereof, except as set forth in the
Prospectus, the Company does not have any litigation pending of a character
which in the opinion of counsel for the Company referred to in Section 13(c)
hereof could result in a judgment or decree having a material adverse effect
on the condition, financial or other, or the results of operations of the
Company.
(g) Legality. On the Closing Date, the Notes will be duly and
validly authorized, and no further authorization, consent or approval of the
members and no further authorization or approval of the Board of Directors of
the Company or any committee thereof will be required for the issuance and
sale of the Notes as contemplated herein; and neither such issuance or sale of
the Notes nor the consummation of any other of the transactions herein
contemplated will result in a breach by the Company of any terms of, or
constitute a default under, any other agreement or undertaking of the Company.
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(h) No Stop Order. The Commission has not issued and, to the
best knowledge of the Company, is not threatening to issue any order
preventing or suspending the use of the Prospectus (as amended or
supplemented, if the Company shall have filed with the Commission any
amendment thereof or supplement thereto).
(i) Regulation. The Company is not required to be registered as
an investment company under the Investment Company Act of 1940 and is not
subject to regulation under the Public Utility Holding Company Act of 1935.
2. Agreement to Purchase. Subject to the terms and conditions
and upon the representations and warranties herein set forth, the Company
agrees to sell to you and any other Underwriters, severally and not jointly,
and you and such other Underwriters, severally and not jointly, agree to
purchase from the Company at a purchase price of 99.551% of the principal
amount, in the case of the 2007 Notes, 99.153% of the principal amount, in the
case of the 2012 Notes, and 99.014% of the principal amount, in the case of
the 2032 Notes, the principal amount of Notes set forth opposite the names of
the Underwriters in Schedule I hereto.
3. Closing. Delivery of and payment for the Notes shall be
made at the office of Milbank Tweed Hadley & XxXxxx LLP, 0 Xxxxx Xxxxxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 9:30 a.m., New York City time, on March 7,
2002, or such later date (not later than March 14, 2002) as you, as
Representatives of the Underwriters, shall designate, which date and time may
be postponed by agreement between you, as such Representatives, and the
Company or as provided in Section 14 hereof. Delivery of the Notes shall be
made to you, for the respective accounts of the several Underwriters, against
payment by the several Underwriters through you of the purchase price thereof,
to or upon the order of the Company by certified or official bank check or
checks payable, or wire transfers, in immediately available funds. The Notes
shall be delivered in definitive global form through the facilities of The
Depository Trust Company ("DTC").
4. Prospectuses. The Company has caused to be delivered to
you, as Representatives of the Underwriters, copies of the Prospectus and has
consented to the use of such copies for the purposes permitted by the
Securities Act. The Company agrees to deliver to you, as Representatives of
the Underwriters, without charge, from time to time during such period as in
the opinion of Xxxxxxx, Swaine & Xxxxx, counsel for the Underwriters, the
Prospectus as required by law to be delivered in connection
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with sales by an Underwriter or dealer, as many copies of the Prospectus (and,
in the event of any amendment of or supplement to the Prospectus, of such
amended or supplemented Prospectus) as you, as Representatives of the
Underwriters, may reasonably request. If, at any time during the period in
which the Company is required to deliver copies of the Prospectus, as provided
in this Section 4, any event known to the Company relating to or affecting the
Company shall occur which should be set forth in an amendment of or supplement
to the Prospectus in order to make the statements in the Prospectus not
misleading in the light of the circumstances at the time it is delivered to
the purchaser, or it shall be necessary to amend or supplement the Prospectus
to comply with law or with the rules and regulations of the Commission, the
Company, at its expense, will forthwith prepare and furnish to you for
distribution to the Underwriters and dealers a reasonable number of copies of
an amendment or amendments of or a supplement or supplements to the Prospectus
which will so amend or supplement the Prospectus that, as amended or
supplemented, it will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements in the Prospectus not misleading in the light of
the circumstances when it is delivered to a purchaser, and will comply with
law and with such rules and regulations. The Company authorizes the
Underwriters and all dealers effecting sales of the Notes to use the
Prospectus, as from time to time amended or supplemented, in connection with
the sale of the Notes in accordance with applicable provisions of the
Securities Act and the applicable rules and regulations thereunder for the
period during which the Company is required to deliver copies of the
Prospectus as provided in this Section 4.
5. Commission Proceedings as to Registration Statement. The
Company agrees to advise you promptly, as Representatives of the Underwriters,
and to confirm such advice in writing (a) when any post-effective amendment of
the Registration Statement shall have become effective and when any further
amendment of or supplement to the Prospectus shall be filed with the
Commission, (b) of any request by the Commission for any amendment of the
Registration Statement or the Prospectus or for additional information and (c)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the initiation of any
proceedings for that purpose. The Company will use every reasonable effort to
prevent the issuance of such a stop order and, if any such order shall at any
time be issued, to obtain the withdrawal thereof at the earliest possible
moment.
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6. Blue Sky. The Company will diligently endeavor, when and
as requested by you, to qualify the Notes, or such portion thereof as you may
request, for offering and sale under the securities or blue sky laws of any
jurisdictions which you shall designate.
7. Earnings Statement. The Company agrees to make generally
available to its security holders, in accordance with Section 11(a) of the
Securities Act and Rule 158 thereunder, an earnings statement of the Company
(which need not be audited) in reasonable detail and covering a period of at
least twelve months beginning after the effective date of the Registration
Statement.
8. Listing. The Company will use its best efforts to (a)
comply in all material respects with the listing requirements of the
Luxembourg Stock Exchange and (b) complete the listing of the Notes to be sold
by the Company on such exchange prior to the Closing Date.
9. Clearance and Settlement. The Company will cooperate with
the Underwriters to permit the Notes to be eligible for clearance and
settlement through DTC, Clearstream Banking and Euroclear Bank S.A./N.V.
10. Expenses. The Company agrees to pay all fees and expenses
in connection with (a) the preparation, printing and filing of the
Registration Statement (including all exhibits to the Registration Statement),
the Prospectus and any amendments thereof and supplements thereto, and the
furnishing of copies of each thereof to the Underwriters (including costs of
mailing and shipment), (b) the issuance of the Notes, (c) the rating of the
Notes by rating agencies, (d) the delivery of the Notes to you in New York
City for the respective accounts of the several Underwriters, (e) the
qualifying of the Notes as provided in Section 6 hereof and the determination
of the eligibility of the Notes for investment under the laws of such
jurisdictions as you may designate (including fees of not more than $10,000
and disbursements of counsel for the Underwriters in connection therewith),
(f) the costs incident to the listing of the Notes on the Luxembourg Stock
Exchange and (g) any fees of a book-entry depositary, listing agent, paying
agent or transfer agent.
11. Offering Restrictions. Each of the Underwriters represents
and agrees as follows:
(a) United Kingdom. It:
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(i) has not offered or sold and, prior to the expiry of
a period of six months from the issue date of the Notes, will
not offer or sell any Notes to persons in the United Kingdom
except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within
the meaning of the Public Offers of Securities Regulations
1995;
(ii) has only communicated or caused to be communicated
and will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity
(within the meaning of the Financial Services and Markets Act
of 2001 ("FSMA")) received by it in connection with the issue
or sale of any Notes in circumstances in which section 21(1) of
the FSMA does not apply to the issuer; and
(iii) has complied with and will comply with all
applicable provisions of the FSMA with respect to anything done
by it in relation to the Notes in, from or otherwise involving
the United Kingdom.
(b) The Netherlands. It and each of its affiliates has not
publicly promoted and will not publicly promote the offer or sale of
the Notes by conducting a generalized advertising or cold-calling
campaign within or outside The Netherlands.
(c) Japan. It and each of its affiliates has not offered or
sold, and will not offer or sell directly or indirectly, any of the
Notes in or to residents of Japan or to any persons for reoffering or
resale, directly or indirectly, in Japan or to any resident of Japan,
except pursuant to an exemption from the registration requirements of
the Securities and Exchange Law of Japan (the "SEL") available
thereunder and otherwise in compliance with the SEL and the other
relevant laws, regulations and guidelines of Japan.
12. Indemnities.
(a) By the Company. The Company agrees to indemnify and hold
harmless each Underwriter and each person who controls any Underwriter within
the meaning of
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Section 15 of the Securities Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or any other statute or common law,
and to reimburse the Underwriters and such controlling persons, as incurred,
for any legal or other expenses incurred by them in connection with
investigating any claims and defending any actions, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any post-effective amendment thereof, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus (as amended or supplemented, if the Company shall
have filed with the Commission any amendment thereof or supplement thereto), if
used within the period during which the Underwriters are authorized to use the
Prospectus as provided in Section 4 hereof, or the omission or alleged omission
to state therein (if so used) a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the indemnity agreement contained in this Section 12(a) shall not apply to
any such losses, claims, damages, liabilities or actions arising out of, or
based upon, any such untrue statement or alleged untrue statement, or any such
omission or alleged omission, if such statement or omission was made in
reliance upon and in conformity with information furnished as herein stated in
Section 15 or otherwise furnished in writing to the Company by or on behalf of
any Underwriter through you for use in connection with the preparation of the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto, or was contained in that part of the Registration Statement
constituting the Statement of Eligibility and Qualification (Form T-1) under
the Trust Indenture Act of the Trustee; provided, further, that, with respect
to any untrue statement or alleged untrue statement made in, or omission or
alleged omission from, the Prospectus, the indemnity agreement contained in
this Section 12(a) with respect to the Prospectus shall not inure to the
benefit of any Underwriter (or the benefit of any person controlling such
Underwriter) from whom the person asserting any such losses, claims, damages or
liabilities purchased the Notes which are the subject thereof, if such person
did not receive a copy of the Prospectus (or the Prospectus as amended or
supplemented if the Company shall have made any amendments thereof or
supplements thereto which shall have
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been furnished to you, as Representatives of the Underwriters, or to such
Underwriter prior to the time of the below-written confirmation), excluding the
documents incorporated therein by reference, at or prior to the written
confirmation of the sale of such Notes to such person in any case where
delivery of the Prospectus is required under the Securities Act and the rules
and regulations of the Commission thereunder and any untrue statement or
alleged untrue statement or omission or alleged omission was corrected in the
Prospectus (or the Prospectus as amended or supplemented).
(b) By the Underwriters. Each Underwriter agrees, in the manner
and to the same extent as set forth in Section 12(a) hereof, to indemnify and
hold harmless the Company, each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, the directors of the
Company and those officers of the Company who shall have signed the
Registration Statement, with respect to any statement in or omission from the
Registration Statement or any post-effective amendment thereof or the
Prospectus (as amended or supplemented, if so amended or supplemented), if
such statement or omission was made in reliance upon and in conformity with
information furnished as herein stated in Section 15 or otherwise furnished in
writing to the Company through you on behalf of such Underwriter for use in
connection with the preparation of the Registration Statement or the
Prospectus or any such amendment thereof or supplement thereto.
(c) General. Each indemnified party will, within ten days after
the receipt of notice of the commencement of any action against such
indemnified party in respect of which indemnity may be sought from an
indemnifying party on account of an indemnity agreement contained in this
Section 12, notify the indemnifying party in writing of the commencement
thereof. The omission of any indemnified party so to notify an indemnifying
party of any such action shall not relieve the indemnifying party from any
liability which it may have to such indemnified party on account of the
indemnity agreement contained in this Section 12 or otherwise. Except as
provided in the next succeeding sentence, in case any such action shall be
brought against any indemnified party and it shall notify an indemnifying
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
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thereof, such indemnifying party will not be liable to such indemnified party
under this Section 12 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. Such indemnified party shall have the right
to employ its own counsel in any such action, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
employment of such counsel has been authorized in writing by the indemnifying
party in connection with the defense of such action, (ii) such indemnified
party shall have been advised by such counsel that there are material legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of
such indemnified party) or (iii) the indemnifying party shall not have assumed
the defense of such action and employed counsel therefor satisfactory to such
indemnified party within a reasonable time after notice of commencement of
such action, in any of which events such fees and expenses shall be borne by
the indemnifying party. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification may be sought
hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include any
statement as to, or an admission of, fault, culpability or a failure to act,
by or on behalf of any indemnified party. No indemnified party shall effect
the settlement or compromise of, or consent of the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification may be sought hereunder without the consent of the
indemnifying party (which consent shall not be unreasonably withheld).
(d) Contribution. If the indemnification provided for in this
Section 12 shall for any reason be unavailable to an indemnified party under
Section 12(a) or 12(b) hereof in respect of any loss, claim, damage or
liability or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the
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Company on the one hand and the Underwriters on the other from the offering of
the Notes or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Underwriters on the
other with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other with respect to such
offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Notes (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions
received by the Underwriters with respect to such offering, in each case as
set forth in the table on the cover page of the Prospectus. The relative fault
of the Company on the one hand and the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Underwriters, the intent of the parties and their relative knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 12(d) were to be
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does
not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 12(d) shall be deemed to include, for purposes of this Section 12(d),
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 12(d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Notes underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The
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Underwriters' obligations to contribute as provided in this Section 12(d) are
several in proportion to their respective underwriting obligations and not
joint.
(e) Survival of Indemnities. The respective indemnity and
contribution agreements of the Company and the Underwriters contained in this
Section 12, and the representations and warranties of the Company set forth in
Section 1 hereof, shall remain operative and in full force and effect,
regardless of any termination or cancelation of this Agreement or any
investigation made by or on behalf of any Underwriter or any such controlling
person or the Company or any such controlling person, director or officer, and
shall survive the delivery of the Notes, and any successor of any Underwriter
or of any such controlling person or of the Company, and any legal
representative of any such controlling person, director or officer, as the
case may be, shall be entitled to the benefit of the respective indemnity and
contribution agreements.
13. Conditions to Underwriters' Obligations. The several
obligations of the Underwriters hereunder are subject to the accuracy of and
compliance with the representations and warranties of the Company contained in
Section 1 hereof, as of the date hereof and as of the Closing Date, and to the
following further conditions:
(a) Effectiveness of Registration Statement. No stop order
suspending the effectiveness of the Registration Statement or
qualification of the Indenture shall be in effect on the Closing Date,
and no proceedings for the issuance of such an order shall be pending
or, to the knowledge of the Company or you, threatened by the
Commission on the Closing Date.
(b) Opinion of Counsel for the Underwriters. You, as
Representatives of the Underwriters, shall have received from Cravath,
Swaine & Xxxxx an opinion and letter, each dated the Closing Date and
addressed to the Underwriters, with respect to the issuance and sale
of the Notes, the form of the Registration Statement and of the
Prospectus (other than the financial statements and other information
of a statistical, accounting or financial nature included therein) and
other related matters as you may reasonably require, and the Company
shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(c) Opinion of Counsel for the Company. The Company shall have
furnished to you, as Representatives
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of the Underwriters, on the Closing Date, the opinion, addressed to
the Underwriters and dated the Closing Date, of Milbank, Tweed, Xxxxxx
& XxXxxx LLP, counsel for the Company, which opinion shall be
satisfactory in form and scope to counsel for the Underwriters, to the
following effect:
(i) the Company has been duly incorporated and is
validly existing as a cooperative association in good standing
under the laws of the District of Columbia with corporate power
to conduct its business as described in the Registration
Statement;
(ii) the issuance and sale of the Notes by the Company
pursuant to this Agreement have been duly and validly
authorized by all necessary corporate action; and no
authorization, consent, order or approval of, or filing or
registration with, or exemption by, any government or public
body or authority (including, without limitation, the Rural
Utilities Service) of the United States, of the State of New
York or any department or subdivision thereof or to the best of
such counsel's knowledge any court, other than such as may be
required under State securities or blue sky laws and other than
registration of the Notes under the Securities Act and
qualification of the Indenture under the Trust Indenture Act,
is required for the validity of the Notes or for the issuance,
sale and delivery of the Notes by the Company pursuant to this
Agreement or for the execution and delivery of this Agreement
by the Company;
(iii) the Indenture has been duly authorized by the
Company, has been duly qualified under the Trust Indenture Act
and constitutes an instrument valid and binding on the Company
and enforceable in accordance with its terms;
(iv) the Notes are in the forms provided for in the
Indenture, and, assuming due execution of the Notes on behalf
of the Company and authentication thereof by the Trustee, the
Notes constitute valid and binding obligations of the Company
enforceable in accordance with their terms and are entitled to
the benefits of the Indenture;
(v) this Agreement has been duly authorized, executed
and delivered by the Company and the
15
performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach of
any terms or provisions of, or constitute a default under, the
Articles of Incorporation or By-laws of the Company or any
indenture, deed of trust, note, note agreement or other
agreement or instrument known to such counsel, after due
inquiry, to which the Company is a party or by which the
Company or any of its properties is bound or affected;
(vi) the Notes and the Indenture conform in all material
respects to the descriptions thereof contained in the
Registration Statement;
(vii) the Registration Statement (and any post-effective
amendment thereof) has become and is effective under the
Securities Act and the Notes have become registered under the
Securities Act, and, to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or are pending or
contemplated, and the Registration Statement (and any
post-effective amendment thereof), the Prospectus and each
amendment thereof or supplement thereof (except for the
financial statements and other financial data included therein
as to which such counsel need express no opinion) when they
became effective or were filed with the Securities and Exchange
Commission complied as to form in all material respects with
the requirements of the Securities Act, the Exchange Act, the
Trust Indenture Act and the rules and regulations issued
thereunder;
(viii) based upon such counsel's participation in the
preparation of the Registration Statement, the Prospectus and
documents incorporated by reference therein, such counsel's
discussions with certain officers and employees of the Company,
such counsel's conferences with representatives of the
Company's independent Certified Public Accountants and such
counsel's representation of the Company, and while such counsel
does not pass on or assume any responsibility for the accuracy,
completeness or fairness thereof, nothing has come to such
counsel's attention that causes it to believe that either the
Registration Statement (or any post-effective amendment
thereof) as of the
16
date it became effective, or the Prospectus and each supplement
thereto as of the Closing Date (except in each case for the
financial or statistical data included therein, as to which
such counsel expresses no view) contains an untrue statement of
a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading, and such counsel does not know of any
litigation or any governmental proceeding instituted or
threatened against the Company required to be disclosed in the
Registration Statement or Prospectus and which is not disclosed
therein;
(ix) the Company is not required to be registered as an
investment company under the Investment Company Act of 1940;
(x) the Company is not subject to regulation under the
Public Utility Holding Company Act of 1935; and
(xi) the Company is not a public utility as defined in
the Federal Power Act and is not a natural gas company as
defined in the Natural Gas Act.
Insofar as the foregoing opinion relates to the enforceability
of the Notes and the Indenture, the enforceability thereof may be
limited by bankruptcy, reorganization, insolvency, moratorium or other
laws of general application relating to or affecting the enforcement
of creditors' rights and by general principals of equity (regardless
of whether considered in a proceeding in equity or at law), including
without limitation (a) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (b)
concepts of materiality, reasonableness, good faith and fair dealing.
In addition, the Company's obligations and the rights and remedies of
the Trustee and the holders of the Notes may be subject to possible
limitations on the exercise of remedial or procedural provisions
contained in the Indenture (provided that such limitations do not, in
the opinion of such counsel, make inadequate the remedies afforded
thereby for the practical realization of the substantive benefits
provided for in the Notes and the Indenture).
17
In rendering the foregoing opinion, Milbank, Xxxxx, Xxxxxx &
XxXxxx LLP may rely as to matters of the law of the District of
Columbia upon the opinion of Xxxx Xxx Xxxx, Esq., General Counsel of
the Company, addressed to the Underwriters and dated the Closing Date,
satisfactory in form and scope to counsel for the Underwriters. If
Milbank, Tweed, Xxxxxx & XxXxxx LLP shall so rely upon the opinion of
Xxxx Xxx Xxxx, Esq., (i) copies of the opinion so relied upon shall be
delivered to you, as Representatives of the Underwriters, and to
counsel for the Underwriters and (ii) the opinion required by this
Section 13(c) shall also state that Milbank, Tweed, Xxxxxx & XxXxxx
LLP has made an independent investigation of the matters in its
opinion covered by the opinion so relied upon and that the
Underwriters are justified in relying upon such opinion.
(d) Opinion of Special Tax Counsel for the Company. The Company
shall have furnished to you, as Representatives of the Underwriters,
on the Closing Date, the opinion, addressed to the Underwriters and
dated the Closing Date, of Xxxxxx & Xxxxxxxx, which shall be
satisfactory in form and scope to counsel for the Underwriters, with
respect to the disclosure contained in the Prospectus under the
caption "U.S. Taxation" insofar as such disclosure describes or
summarizes matters of U.S. tax law or constitutes conclusions of U.S.
tax law.
(e) Accountants' Letter. Xxxxxx Xxxxxxxx LLP shall have
furnished to you, as Representatives of the Underwriters, at or prior
to the Closing Date, a letter, addressed to the Underwriters and dated
the Closing Date, confirming that they are independent public
accountants with respect to the Company within the meaning of the
Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission; and stating, as of the date of such
letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information
is given in the Prospectus, as of a date not more than five days prior
to the date of such letter), the conclusions and findings of such firm
with respect to the financial information and other matters covered by
its letter delivered to you, as Representatives of the Underwriters,
concurrently with the execution of this Agreement and confirming in
all material respects the conclusions and findings set forth in such
prior letter
18
or, if no such letter shall have been delivered to you, the
conclusions and findings of such firm, in form and substance
satisfactory to you, as Representatives of the Underwriters, with
respect to such financial information and other matters as you, as
Representatives of the Underwriters, shall reasonably request.
(f) Officer's Certificate. You shall have received, on the
Closing Date, a certificate of the Company dated the Closing Date,
signed on its behalf by the President, the Governor or a Vice
President of the Company, to the effect that the signer of such
certificate has examined the Registration Statement and the Prospectus
and that (i) in such person's opinion, as of the effective date of the
Registration Statement, the Registration Statement did not contain an
untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus did not contain
an untrue statement of a material fact and did not omit to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, (ii)
since the effective date of the Registration Statement no event has
occurred which should have been set forth in an amendment or
supplement to the Prospectus but which has not been so set forth,
(iii) since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any
material adverse change in the condition, financial or other, or
earnings of the Company, whether or not arising from transactions in
the ordinary course of business, other than changes which the
Registration Statement and the Prospectus indicate might occur after
the effective date of the Registration Statement, (iv) the Company has
no material contingent obligations which are required to be disclosed
in the Registration Statement and the Prospectus and are not disclosed
therein, (v) no stop order suspending the effectiveness of the
Registration Statement is in effect on the Closing Date and no
proceedings for the issuance of such an order have been taken or to
the knowledge of the Company are contemplated by the Commission at or
prior to the Closing Date, (vi) there are no material legal
proceedings to which the Company is a party or of which property of
the Company is the subject which are required to be disclosed and
which are not disclosed in the Registration Statement and the
Prospectus, (vii) there are no material contracts to which the
19
Company is a party which are required to be disclosed and which are
not disclosed in the Registration Statement or the Prospectus and
(viii) the representations and warranties of the Company herein are
true and correct as of the Closing Date.
(g)(i) The Company shall not have sustained since the date of
the latest audited financial statements included or incorporated by
reference in the Prospectus, exclusive of any amendment or supplement
thereto after the date hereof, any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus or (ii) since such date there shall not
have been any change in the members' equity or long-term debt of the
Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, member's equity or results of
operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is, in your judgment, so
material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Notes on the
terms and in the manner contemplated in the Prospectus.
(h) On or after the date hereof: (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) of the
Rules and Regulations and (ii) no such organization shall have
publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the Company's
debt securities.
(i) On or after the date hereof, there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities of the Company or generally on the New York
Stock Exchange or the Luxembourg Stock Exchange, (ii) a banking
moratorium on commercial banking activities in New York declared by
Federal or state authorities, (iii) 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
20
terrorism in which the United States is involved, (iv) any major
disruption in the settlement of securities in the United States or any
other relevant jurisdiction or a declaration of a national emergency
or war by the United States or (v) such a material adverse change in
general economic, political or financial conditions domestically or
internationally (or the effect of international conditions on the
financial markets in the United States or the effect of conditions in
the United States on international financial markets shall be such)
the effect of which, in any such case described in clause (iii) or
(iv), is, in your judgment, to make it impracticable or inadvisable to
proceed with the public offering or delivery of the Notes on the terms
and in the manner contemplated in the Prospectus.
(j) On or prior to the Closing Date, the Company shall have
used its best efforts to obtain listing of the Notes on the Luxembourg
Stock Exchange.
(k) Miscellaneous. The Company shall have taken, on or prior to
the Closing Date, all other action, if any, which it is stated in the
Registration Statement (or any post-effective amendment thereof) or
the Prospectus (as amended or supplemented, if so amended or
supplemented) that the Company will take prior to or concurrently with
the issuance and delivery of the Notes, and all agreements herein
contained to be performed on the part of the Company on or prior to
the Closing Date shall have been so performed.
(l) Other Documents. The Company shall have furnished to you
and to Cravath, Swaine & Xxxxx such further certificates and documents
as you or they may have reasonably requested prior to the Closing
Date.
If any of the conditions specified in this Section 13 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, this
Agreement and all obligations of the Underwriters hereunder may be canceled
on, or at any time prior to, the Closing Date by you, as Representatives of
the Underwriters. Notice of such cancelation shall be given to the Company in
writing, or by telegraph, telephone or telex confirmed in writing.
14. Substitution of Underwriters. If any one or more of the
Underwriters shall fail or refuse on the Closing Date to purchase and pay for
the Notes which it or they have agreed to purchase hereunder, then (a) if the
aggregate principal amount of the Notes which the defaulting
21
Underwriter or Underwriters so agreed to purchase shall not exceed
$300,000,000, the nondefaulting Underwriters shall be obligated to purchase
the Notes from the Company, in proportion to their respective obligations
hereunder and upon the terms herein set forth, or (b) if the aggregate
principal amount of the Notes which the defaulting Underwriter or Underwriters
so agreed to purchase shall exceed $300,000,000, either you, as
Representatives of the Underwriters, or the Company shall have the right at
any time prior to 9:30 a.m., New York City time, on the next business day
after the Closing Date to procure one or more of the other Underwriters, or
any others, to purchase such Notes from the Company, in such amounts as may be
agreed upon and upon the terms herein set forth. If within such specified time
neither you, as such Representatives, nor the Company shall have procured such
other Underwriters or any others to purchase the Notes agreed to be purchased
by the defaulting Underwriter or Underwriters, this Agreement shall terminate
without liability on the part of any nondefaulting Underwriter or of the
Company. In the event of a default by any Underwriter or Underwriters, as set
forth in this Section 14, the Closing Date may be postponed for such period,
not exceeding seven days, as you, as such Representatives, shall determine in
order that any required changes in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. Any
action taken or termination of this Agreement under this Section 14 shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
15. Information Furnished by Underwriters. The Company
acknowledges that (i) the table of Underwriters and their respective
participation in the sale of the Notes, (ii) the first paragraph under the
table of underwriters related to offering price, concessions and reallowances
and (iii) the second paragraph under the table of underwriters related to
stabilization, syndicate covering transactions and penalty bids under the
heading "Underwriting" in the prospectus supplement portion of the Prospectus,
and the last two paragraphs under the heading "Plan of Distribution" in the
Prospectus, constitute the only information furnished in writing by you, on
behalf of the Underwriters, for inclusion therein, and you, as Representatives
of the Underwriters, confirm that such statements are correct.
16. Termination. This Agreement shall be subject to termination
by you, by notice given to the Company prior to delivery of and payment for
the Notes, if prior to such time any of the events described in Sections
13(g), 13(h) or 13(i) occurs.
22
17. Miscellaneous.
(a) Except as otherwise expressly provided in this Agreement,
(i) whenever notice is required by all the provisions of this Agreement to be
given to the Company, such notice shall be in writing addressed to the Company
at its office, Woodland Park, 0000 Xxxxxxxxxxx Xxx, Xxxxxxx, Xxxxxxxx 00000,
attention of the Governor, and (ii) whenever notice is required by the
provisions of this Agreement to be given to you, as Representatives of the
Underwriters or of any of them, such notice shall be in writing addressed to
both the office of Xxxxxx Brothers Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention of the Fixed Income Syndicate (with a copy to the
General Counsel) and the office of X.X. Xxxxxx Securities Inc., 000 Xxxx
Xxxxxx, 0xx xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of the Transaction
Execution Group (fax: (000)000-0000).
(b) The Company agrees to furnish to you and to Cravath, Xxxxxx
& Xxxxx, without charge, a signed copy of the Registration Statement and each
amendment thereof, including all financial statements and all exhibits thereto
(except such financial statements and exhibits as are incorporated therein by
reference and which shall have been previously furnished to you), and to
furnish to each of the other Underwriters, without charge, a copy of the
Registration Statement and each amendment thereof, including all financial
statements (except such financial statements as are incorporated therein by
reference) but without exhibits.
(c) This Agreement is made solely for the benefit of the
several Underwriters and the Company and their respective successors and
assigns, and, to the extent provided in Section 12 hereof, any controlling
person referred to in such Section 12 and the directors of the Company and
those officers of the Company who shall have signed the Registration
Statement, and their respective legal representatives, successors and assigns,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successor" or the term "successors and assigns" as used
in this Agreement shall not include any purchaser, as such purchaser, from any
of the Underwriters of the Notes.
(d) If this Agreement shall be canceled or terminated by the
Underwriters on any of the grounds referred to or specified in Section 13
hereof or because of any failure or refusal on the part of the Company to
comply with any of the terms or to fulfill any of the conditions of this
Agreement, the Company will reimburse the Underwriters
23
severally for all their out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by them in connection with
the subject matter of this Agreement.
(e) The term "business day" as used in this Agreement shall
mean any day on which the New York Stock Exchange, Inc., is open for trading.
(f) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS.
(g) Section headings have been inserted in this Agreement as a
matter of convenience of reference only and it is agreed that such section
headings are not a part of this Agreement and will not be used in the
interpretation of any provision of this Agreement.
24
Please confirm that you are acting on behalf of yourself and
the other several Underwriters and that the foregoing correctly sets forth the
agreement between the Company and the several Underwriters.
Very truly yours,
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION,
by
/s/ Xxxxxx X. Xxxxx
-------------------------
Name: Xxxxxx X. Xxxxx
Title: Sr. Vice President &
Chief Financial Officer
Acting on behalf of ourselves and the other several Underwriters named in
Schedule I attached hereto, we hereby confirm as of the date hereof that this
letter correctly sets forth the agreement between the Company and the several
Underwriters:
XXXXXX BROTHERS INC.,
by
/s/ Xxxxxxx Xxxx
----------------------------
Name: Xxxxxxx Xxxx
Title: Managing Director
X.X. XXXXXX SECURITIES INC.,
by
/s/ Xxxxxx X. Xxxxxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Vice President
SCHEDULE I
Underwriting Agreement dated February 28, 2002
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
Principal Principal Principal
Amount of Amount of Amount of
6.50% Notes 7.25% Notes 8.00% Notes
due 2007 due 2012 due 2032
To Be To Be To Be
Underwriter Purchased Purchased Purchased
----------- --------- --------- ---------
Xxxxxx Brothers Inc. .......................... $220,000,000 $660,000,000 $440,000,000
X.X. Xxxxxx Securities Inc. ................... 220,000,000 660,000,000 440,000,000
ABN AMRO Incorporated.......................... 15,000,000 45,000,000 30,000,000
UBS Warburg LLC ............................... 15,000,000 45,000,000 30,000,000
Banc of America Securities LLC ................ 10,000,000 30,000,000 20,000,000
Banc One Capital Markets, Inc. ................ 5,000,000 15,000,000 10,000,000
Scotia Capital (USA) Inc. ..................... 5,000,000 15,000,000 10,000,000
TD Securities (USA) Inc. ...................... 5,000,000 15,000,000 10,000,000
First Union Securities, Inc. .................. 5,000,000 15,000,000 10,000,000
Total..................................... $500,000,000 $1,500,000,000 $1,000,000,000
============= ============== ==============
