EXHIBIT 1
$125,000,000
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
6.75% Subordinated Notes due 2043
(Subordinated Deferrable Interest Notes Due 2043)
Underwriting Agreement
February 21, 2003
UBS WARBURG LLC
As Representative of the several
Underwriters named on Schedule I hereto
In care of UBS Warburg LLC
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Dear Sirs:
National Rural Utilities Cooperative Finance Corporation, a District
of Columbia cooperative association (the "Company"), proposes to issue
$125,000,000 principal amount of its 6.75% Subordinated Notes due 2043
(Subordinated Deferrable Interest Notes Due 2043) (the "Securities"), to be
issued under and secured by an Indenture dated as of October 15, 1996, between
the Company and U.S. Bank Trust National Association, as successor trustee (the
"Trustee"). Such Indenture, as it may be amended from time to time, is
hereinafter called the "Indenture". The Securities are more fully described in
the Registration Statement and in the Prospectus hereinafter mentioned. The
Securities will be issued in fully registered form only, in denominations of $25
and any integral multiple thereof.
You have advised us (i) that you and the other firms and
corporations named in Schedule I attached hereto (you and such firms and
corporations being hereinafter called the Underwriters, which term shall also
include any underwriter substituted as provided in Section 11 hereof), acting
severally and not jointly, are willing to purchase,
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on the terms and conditions hereinafter set forth, the respective principal
amounts of the Securities, aggregating $125,000,000 principal amount thereof,
specified in such Schedule I, and (ii) that you are authorized, on behalf of
yourselves and the other Underwriters, to enter into this Agreement.
1. Certain Representations and Warranties by the Company. The
Company represents and warrants to each Underwriter as follows:
(a) Registration Statement and Prospectus. The Company has filed
with the Securities and Exchange Commission (the "Commission")
Registration Statement No. 333-96507 and Registration Statement No.
333-98523, for the registration under the Securities Act of 1933 (the
"Securities Act"), of the Securities (including a prospectus relating
thereto) and may have filed one or more amendments thereto (including one
or more amended or supplemental prospectuses) and such registration
statements and any such amendment have become effective. The Company has
prepared and delivered to each Underwriter copies of a preliminary
prospectus supplement, including a prospectus, dated February 19, 2003
(together, the "Preliminary Prospectus"). A prospectus supplement relating
to the Securities, including a prospectus (together, the "Prospectus"),
has been prepared and will be filed pursuant to Rule 424 under the
Securities Act. The Company will not file any other amendment of such
registration statement or such Prospectus or any supplement to such
Prospectus on or after the date of this Agreement and prior to the date
and time of delivery of and payment for the Securities referred to in
Section 3 hereof (the "Closing Date"), except with your approval. Such
registration statements, including financial statements and exhibits, each
at the time it became effective, are hereinafter called the "Registration
Statement". Any reference in this Agreement to the Prospectus as amended
or supplemented shall include, without limitation, any prospectus filed
with the Commission pursuant to Rule 424 of the Commission under the
Securities Act which amends or supplements the Prospectus. Any reference
herein to the Registration Statement or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein
pursuant to Item 12
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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
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Prospectus or any amendment thereof or supplement thereto made in reliance
upon and in conformity with information furnished as herein stated or
otherwise furnished in writing to the Company by or on behalf of any
Underwriter through you for use in connection with the preparation of the
Registration Statement or the Prospectus or any such amendment or
supplement.
(c) Accountants. The accountants who have certified or shall certify
the financial statements filed and to be filed with the Commission as
parts of the Registration Statement and the Prospectus are independent
with respect to the Company as required by the Securities Act and rules
and regulations of the Commission thereunder.
(d) Due Incorporation. The Company has been duly incorporated and is
now, and on the Closing Date will be, a validly existing cooperative
association in good standing under the laws of the District of Columbia,
duly qualified and in good standing in each jurisdiction in which the
ownership or leasing of properties or the conduct of its business requires
it to be qualified (or the failure to be so qualified will not have a
material adverse effect upon the business or condition of the Company),
and the Company has the corporate power and holds all valid permits and
other required authorizations from governmental authorities necessary to
carry on its business as now conducted and as to be conducted on the
Closing Date and as contemplated by the Prospectus.
(e) Material Changes. Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, and
except as set forth therein, there has not been any material adverse
change in the condition, financial or other, or the results of operations
of the Company, whether or not arising from transactions in the ordinary
course of business.
(f) Litigation. On the date hereof, except as set forth in the
Prospectus, the Company does not have any litigation pending of a
character which in the opinion of counsel for the Company referred to in
Section 10(c) hereof could result in a judgment or decree having a
material adverse effect on the condition, financial or other, or the
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results of operations of the Company.
(g) Legality. On the Closing Date, the Securities will be duly and
validly authorized, and no further authorization, consent or approval of
the members and no further authorization or approval of the Board of
Directors of the Company or any committee thereof will be required for the
issuance and sale of the Securities as contemplated herein; and neither
such issuance or sale of the Securities nor the consummation of any other
of the transactions herein contemplated will result in a breach by the
Company of any terms of, or constitute a default under, any other
agreement or undertaking of the Company.
(h) No Stop Order. The Commission has not issued and, to the best
knowledge of the Company, is not threatening to issue any order preventing
or suspending the use of the Prospectus (as amended or supplemented, if
the Company shall have filed with the Commission any amendment thereof or
supplement thereto).
(i) Regulation. The Company is not required to be registered as an
investment company under the Investment Company Act of 1940 and is not
subject to regulation under the Public Utility Holding Company Act of
1935.
(j) New York Stock Exchange Listing. The Securities are expected to
be authorized for listing on the New York Stock Exchange, Inc., within a
30-day period after the initial delivery of the Securities.
2. Agreement to Purchase. Subject to the terms and conditions and
upon the representations and warranties herein set forth, the Company agrees to
sell to you and the other Underwriters, severally and not jointly, and you and
such other Underwriters, severally and not jointly, agree to purchase from the
Company, at $24.2125 per Security, the respective principal amounts of the
Securities set forth opposite the names of the respective Underwriters in
Schedule I hereto, aggregating $125,000,000 principal amount thereof.
3. Closing. Delivery of and payment for the Securities shall be made
at the office of Milbank, Tweed,
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Xxxxxx & XxXxxx LLP, 1 Chase Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, at 9:30
a.m., New York City time, on February 28, 2003, or such later date (not later
than March 7, 2003) as you, as Representative of the Underwriters, shall
designate, which date and time may be postponed by agreement between you, as
such Representative, and the Company or as provided in Section 11 hereof.
Delivery of the Securities shall be made to you, for the respective accounts of
the several Underwriters, against payment by the several Underwriters through
you of the purchase price thereof, to or upon the order of the Company by
certified or official bank check or checks payable, or wire transfers, in
immediately available funds. The Securities shall be delivered in global form
through the facilities of The Depository Trust Company.
4. Prospectuses. The Company has caused to be delivered to you, as
Representative of the Underwriters, copies of the Prospectus and has consented
to the use of such copies for the purposes permitted by the Securities Act. The
Company agrees to deliver to you, as Representative of the Underwriters, without
charge, from time to time during such period as in the opinion of Cravath,
Swaine & Xxxxx, counsel for the Underwriters, the Prospectus is required by law
to be delivered in connection with sales by an Underwriter or dealer, as many
copies of the Prospectus (and, in the event of any amendment of or supplement to
the Prospectus, of such amended or supplemented Prospectus) as you, as
Representative of the Underwriters, may reasonably request. If, at any time
during the period in which the Company is required to deliver copies of the
Prospectus, as provided in this Section 4, any event known to the Company
relating to or affecting the Company shall occur which should be set forth in an
amendment of or supplement to the Prospectus in order to make the statements in
the Prospectus not misleading in the light of the circumstances at the time it
is delivered to the purchaser, or it shall be necessary to amend or supplement
the Prospectus to comply with law or with the rules and regulations of the
Commission, the Company, at its expense, will forthwith prepare and furnish to
you for distribution to the Underwriters and dealers a reasonable number of
copies of an amendment or amendments of or a supplement or supplements to the
Prospectus which will so amend or supplement the Prospectus that, as amended or
supplemented, it will not contain an untrue statement of a material fact or omit
to state a material fact required to
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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
Securities to use the Prospectus, as from time to time amended or supplemented,
in connection with the sale of the Securities in accordance with applicable
provisions of the Securities Act and the applicable rules and regulations
thereunder for the period during which the Company is required to deliver copies
of the Prospectus as provided in this Section 4.
5. Commission Proceedings as to Registration Statement. The Company
agrees to advise you promptly, as Representative of the Underwriters, and to
confirm such advice in writing, (a) when any post-effective amendment of the
Registration Statement shall have become effective and when any further
amendment of or supplement to the Prospectus shall be filed with the Commission,
(b) of any request by the Commission for any amendment of the Registration
Statement or the Prospectus or for additional information and (c) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the initiation of any proceedings for that purpose.
The Company will use every reasonable effort to prevent the issuance of such a
stop order and, if any such order shall at any time be issued, to obtain the
withdrawal thereof at the earliest possible moment.
6. Blue Sky. The Company will diligently endeavor, when and as
requested by you, to qualify the Securities, or such portion thereof as you may
request, for offering and sale under the securities or blue sky laws of any
jurisdictions which you shall designate.
7. Earnings Statement. The Company agrees to make generally
available to its security holders, in accordance with Section 11(a) of the
Securities Act and Rule 158 thereunder, an earnings statement of the Company
(which need not be audited) in reasonable detail and covering a period of at
least twelve months beginning after the effective date of the Registration
Statement.
8. Expenses. The Company agrees to pay all fees and expenses in
connection with (a) the preparation, printing and filing of the Registration
Statement
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(including all exhibits to the Registration Statement), the Prospectus and any
amendments thereof and supplements thereto, and the furnishing of copies of each
thereof to the Underwriters (including costs of mailing and shipment), (b) the
issuance of the Securities, (c) the rating of the Securities by rating agencies,
(d) the delivery of the Securities to you in New York City for the respective
accounts of the several Underwriters and (e) the qualifying of the Securities as
provided in Section 6 hereof and the determination of the eligibility of the
Securities for investment under the laws of such jurisdictions as you may
designate (including fees and disbursements of counsel for the Underwriters in
connection therewith).
9. Indemnities.
(a) By the Company. The Company agrees to indemnify and hold
harmless each Underwriter, its directors and officers, and each person who
controls any Underwriter within the meaning of Section 15 of the
Securities Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under
the Securities Act, the Exchange Act or any other statute or common law,
and to reimburse the Underwriters and such controlling persons, as
incurred, for any legal or other expenses incurred by them in connection
with investigating any claims and defending any actions, insofar as such
losses, claims, damages, liabilities or actions arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any post-effective
amendment thereof, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary
Prospectus or the omission or alleged omission to state therein 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 or (iii) 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
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thereto), if used within the period during which the Underwriters are
authorized to use the Prospectus as provided in Section 4 hereof, or the
omission or alleged omission to state therein (if so used) a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the indemnity agreement contained in
this Section 9(a) shall not apply to any such losses, claims, damages,
liabilities or actions arising out of, or based upon, any such untrue
statement or alleged untrue statement, or any such omission or alleged
omission, if such statement or omission was made in reliance upon and in
conformity with information furnished as herein stated in Section 12 or
otherwise furnished in writing to the Company by or on behalf of any
Underwriter through you for use in connection with the preparation of the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto, or was contained in that part of the Registration
Statement constituting the Statement of Eligibility and Qualification
(Form T-1) under the Trust Indenture Act of the Trustee; provided,
further, that, with respect to any untrue statement or alleged untrue
statement made in, or omission or alleged omission from, the Prospectus,
the indemnity agreement contained in this Section 9(a) with respect to the
Prospectus shall not inure to the benefit of any Underwriter (or the
benefit of its directors or officers or any person controlling such
Underwriter) from whom the person asserting any such losses, claims,
damages or liabilities purchased the Securities which are the subject
thereof, if such person did not receive a copy of the Prospectus (or the
Prospectus as amended or supplemented if the Company shall have made any
amendments thereof or supplements thereto which shall have been furnished
to you, as Representative of the Underwriters, or to such Underwriter
prior to the time of the below-written confirmation), excluding the
documents incorporated therein by reference, at or prior to the written
confirmation of the sale of such Securities to such person in any case
where delivery of the Prospectus is required under the Securities Act and
the rules and regulations of the Commission thereunder and any untrue
statement or alleged untrue statement or omission or alleged omission was
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corrected in the Prospectus (or the Prospectus as amended or
supplemented).
(b) By the Underwriters. Each Underwriter agrees, in the manner and
to the same extent as set forth in Section 9(a) hereof, to indemnify and
hold harmless the Company, each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, the directors of
the Company and those officers of the Company who shall have signed the
Registration Statement, with respect to any statement in or omission from
the Registration Statement or any post-effective amendment thereof or the
Prospectus (as amended or supplemented, if so amended or supplemented), if
such statement or omission was made in reliance upon and in conformity
with information furnished as herein stated in Section 12 or otherwise
furnished in writing to the Company through you on behalf of such
Underwriter for use in connection with the preparation of the Registration
Statement or the Prospectus or any such amendment thereof or supplement
thereto.
(c) General. Each indemnified party will, within ten days after the
receipt of notice of the commencement of any action against such
indemnified party in respect of which indemnity may be sought from an
indemnifying party on account of an indemnity agreement contained in this
Section 9, notify the indemnifying party in writing of the commencement
thereof. The omission of any indemnified party so to notify an
indemnifying party of any such action shall not relieve the indemnifying
party from any liability which it may have to such indemnified party on
account of the indemnity agreement contained in this Section 9 or
otherwise. Except as provided in the next succeeding sentence, in case any
such action shall be brought against any indemnified party and it shall
notify an indemnifying party of the commencement thereof, such
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice in writing from
such indemnifying party to such indemnified party of its election so to
assume the defense thereof, such indemnifying party
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will not be liable to such indemnified party under this Section 9 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. Such indemnified party shall have the right to employ its
own counsel in any such action, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the
employment of such counsel has been authorized in writing by the
indemnifying party in connection with the defense of such action, (ii)
such indemnified party shall have been advised by such counsel that there
are material legal defenses available to it which are different from or
additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party) or (iii) the indemnifying
party shall not have assumed the defense of such action and employed
counsel therefor satisfactory to such indemnified party within a
reasonable time after notice of commencement of such action, in any of
which events such fees and expenses shall be borne by the indemnifying
party. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification may be sought
hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party
from all liability arising out of such action or claim and (ii) does not
include any statement as to, or an admission of, fault, culpability or a
failure to act, by or on behalf of any indemnified party. No indemnified
party shall effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification may be sought hereunder without
the consent of the indemnifying party (which consent shall not be
unreasonably withheld).
(d) Contribution. If the indemnification provided for in this
Section 9 shall for any reason be unavailable to an indemnified party
under Section 9(a)
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or 9(b) hereof in respect of any loss, claim, damage or liability or any
action in respect thereof, referred to therein, then each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute to
the amount paid or payable by such indemnified party as a result of such
loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other
from the offering of the Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company on the one
hand and the Underwriters on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one
hand and the Underwriters on the other with respect to such offering shall
be deemed to be in the same proportion as the total net proceeds from the
offering of the Securities (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received
by the Underwriters with respect to such offering, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault
of the Company on the one hand and the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section
9(d) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the
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loss, claim, damage or liability, or action in respect thereof, referred
to above in this Section 9(d) shall be deemed to include, for purposes of
this Section 9(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9(d), no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by it
and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations to
contribute as provided in this Section 9(d) are several in proportion to
their respective underwriting obligations and not joint.
(e) Survival of Indemnities. The respective indemnity and
contribution agreements of the Company and the Underwriters contained in
this Section 9, and the representations and warranties of the Company set
forth in Section 1 hereof, shall remain operative and in full force and
effect, regardless of any termination or cancelation of this Agreement or
any investigation made by or on behalf of any Underwriter or any such
controlling person or the Company or any such controlling person, director
or officer, and shall survive the delivery of the Securities, and any
successor of any Underwriter or of any such controlling person or of the
Company, and any legal representative of any such controlling person,
director or officer, as the case may be, shall be entitled to the benefit
of the respective indemnity and contribution agreements.
10. Conditions to Underwriters' Obligations. The several obligations
of the Underwriters hereunder are subject to the accuracy of and compliance with
the representations and warranties of the Company contained in Section 1 hereof,
as of the date hereof and as of the Closing Date, and to the following further
conditions:
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(a) Effectiveness of Registration Statement. No stop order
suspending the effectiveness of the Registration Statement or
qualification of the Indenture shall be in effect on the Closing Date, and
no proceedings for the issuance of such an order shall be pending or, to
the knowledge of the Company or you, threatened by the Commission on the
Closing Date.
(b) Opinion of Counsel for the Underwriters. You, as Representative
of the Underwriters, shall have received from Cravath, Swaine & Xxxxx an
opinion and letter, each dated the Closing Date and addressed to the
Underwriters, with respect to the issuance and sale of the Securities, the
form of the Registration Statement and of the Prospectus (other than the
financial statements and other information of a statistical, accounting or
financial nature included therein) and other related matters as you may
reasonably require, and the Company shall have furnished to such counsel
such documents as they request for the purpose of enabling them to pass
upon such matters.
(c) Opinion of Counsel for the Company. The Company shall have
furnished to you, as Representative of the Underwriters, on the Closing
Date, the opinion, addressed to the Underwriters and dated the Closing
Date, of Milbank, Tweed, Xxxxxx & XxXxxx LLP, counsel for the Company,
which opinion shall be satisfactory in form and scope to counsel for the
Underwriters, to the following effect:
(i) the Company has been duly incorporated and is validly existing
as a cooperative association in good standing under the laws of the
District of Columbia with corporate power to conduct its business as
described in the Registration Statement;
(ii) the issuance and sale of the Securities by the Company pursuant
to this Agreement have been duly and validly authorized by all
necessary corporate action; and no authorization, consent, order or
approval of, or filing or registration with, or exemption by, any
government or public body or authority (including, without
limitation, the Rural Utilities Service) of the United States or of
the State of New York or any department or
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subdivision thereof or to the best of such counsel's knowledge any
court, other than such as may be required under State securities or
blue sky laws and other than registration of the Securities under
the Securities Act and qualification of the Indenture under the
Trust Indenture Act, is required for the validity of the Securities
or for the issuance, sale and delivery of the Securities by the
Company pursuant to this Agreement or for the execution and delivery
of this Agreement by the Company;
(iii) the Indenture has been duly authorized by the Company, has
been duly qualified under the Trust Indenture Act, constitutes an
instrument valid and binding on the Company and enforceable in
accordance with its terms;
(iv) the Securities are in the forms provided for in the Indenture,
and, assuming due execution of the Securities on behalf of the
Company and authentication thereof by the Trustee, the Securities
constitute valid and binding obligations of the Company enforceable
in accordance with their terms and are entitled to the benefits of
the Indenture;
(v) this Agreement has been duly authorized, executed and delivered
by the Company and the performance of this Agreement and the
consummation of the transactions herein contemplated will not result
in a breach of any terms or provisions of, or constitute a default
under, the Articles of Incorporation or By-laws of the Company or
any indenture, deed of trust, note, note agreement or other
agreement or instrument known to such counsel, after due inquiry, to
which the Company is a party or by which the Company or any of its
properties is bound or affected;
(vi) the Securities and the Indenture conform in all material
respects to the descriptions thereof contained in the Registration
Statement;
(vii) the Registration Statement (and any post-effective amendment
thereof) has become and is effective under the Securities Act and
the
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Securities have become registered under the Securities Act, and, to
the best of the knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending
or contemplated, and the Registration Statement (and any
post-effective amendment thereof), the Prospectus and each amendment
thereof or supplement thereof (except for the financial statements
and other financial data included therein as to which such counsel
need express no opinion) when they became effective or were filed
with the Securities and Exchange Commission complied as to form in
all material respects with the requirements of the Securities Act,
the Exchange Act, the Trust Indenture Act and the rules and
regulations issued thereunder;
(viii) based upon such counsel's participation in the preparation of
the Registration Statement, the Prospectus and documents
incorporated by reference therein, such counsel's discussions with
certain officers and employees of the Company, such counsel's
conferences with representatives of the Company's independent
Certified Public Accountants and such counsel's representation of
the Company, and while such counsel does not pass on or assume any
responsibility for the accuracy, completeness or fairness thereof,
nothing has come to such counsel's attention that causes it to
believe that either the Registration Statement (or any
post-effective amendment thereof), as of the date it became
effective, or the Prospectus and each supplement thereto, as of the
date thereof and as of the Closing Date (except in each case for the
tax-related disclosure and the financial or statistical data
included therein, as to which such counsel expresses no view),
contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading and such counsel does not know of
any litigation or any governmental proceeding instituted or
threatened against the Company required to be disclosed in the
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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.
The foregoing opinion may contain qualifications to the effect that,
insofar as such opinion relates to the enforceability of the Securities
and the Indenture, the enforceability thereof may be limited by
bankruptcy, reorganization, insolvency, moratorium or other laws of
general application relating to or affecting the enforcement of creditors'
rights and by general principles of equity (regardless of whether
considered in a proceeding in equity or at law), including without
limitation (a) the possible unavailability of specific performance,
injunctive relief or any other equitable remedy and (b) concepts of
materiality, reasonableness, good faith and fair dealing. In addition, the
Company's obligations and the rights and remedies of the Trustee and the
holders of the Securities may be subject to possible limitations on the
exercise of remedial or procedural provisions contained in the Indenture
(provided that such limitations do not, in the opinion of such counsel,
make inadequate the remedies afforded thereby for the practical
realization of the substantive benefits provided for in the Securities and
the Indenture).
In rendering the foregoing opinion, Milbank, Tweed, Xxxxxx & XxXxxx
LLP may rely as to matters of the law of the District of Columbia upon the
opinion of Xxxx Xxx List, Esq., General Counsel of the Company, addressed
to the Underwriters and dated the Closing Date, satisfactory in form and
scope to counsel for the Underwriters. If Milbank, Tweed, Xxxxxx & XxXxxx
LLP shall so rely upon the opinion of
18
Xxxx Xxx List, Esq., (i) copies of the opinion so relied upon shall be
delivered to you, as Representative of the Underwriters, and to counsel
for the Underwriters and (ii) the opinion required by this Section 10(c)
shall also state that Milbank, Tweed, Xxxxxx & XxXxxx LLP has made an
independent investigation of the matters in its opinion covered by the
opinion so relied upon and that the Underwriters are justified in relying
upon such opinion.
(d) Opinion of Tax Counsel for the Company. The Company shall have
furnished to you, as Representative of the Underwriters, on the Closing
Date, the opinion, addressed to the Underwriters and dated the Closing
Date, of Hunton & Xxxxxxxx, which shall be satisfactory in form and scope
to counsel for the Underwriters, with respect to (i) the disclosure
contained in the Prospectus under the caption "U.S. Income Taxation"
insofar as such disclosure describes or summarizes matters of U.S. tax law
or constitutes conclusions of U.S. tax law and (ii) the treatment of the
Securities as debt instruments for U.S. Federal income tax purposes.
(e) Accountants' Letter. Ernst & Young LLP shall have furnished to
you, as Representative of the Underwriters, at or prior to the Closing
Date, a letter, addressed to the Underwriters and dated the Closing Date,
confirming that they are independent public accountants with respect to
the Company within the meaning of the Securities Act and are in compliance
with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission; and
stating, as of the date of such letter (or, with respect to matters
involving changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a date
not more than five days prior to the date of such letter), the conclusions
and findings of such firm with respect to the financial information and
other matters covered by its letter delivered to you, as Representative of
the Underwriters, concurrently with the execution of this Agreement and
confirming in all material respects the conclusions and findings set forth
in such prior letter or, if no such letter shall have been delivered to
you, the conclusions and findings of such firm, in
19
form and substance satisfactory to you, as Representative of the
Underwriters, with respect to such financial information and other matters
as you, as Representative of the Underwriters, shall reasonably request.
(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 his opinion, as
of the effective date of the Registration Statement, the Registration
Statement did not contain an untrue statement of a material fact and did
not omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the
Prospectus did not contain an untrue statement of a material fact and did
not omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, (ii) since the effective date of the Registration Statement no
event has occurred which should have been set forth in an amendment or
supplement to the Prospectus but which has not been so set forth, (iii)
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any material
adverse change in the condition, financial or other, or earnings of the
Company, whether or not arising from transactions in the ordinary course
of business, other than changes which the Registration Statement and the
Prospectus indicate might occur after the effective date of the
Registration Statement, (iv) the Company has no material contingent
obligations which are required to be disclosed in the Registration
Statement and the Prospectus and are not disclosed therein, (v) no stop
order suspending the effectiveness of the Registration Statement is in
effect on the Closing Date and no proceedings for the issuance of such an
order have been taken or to the knowledge of the Company are contemplated
by the Commission at or prior to the Closing Date, (vi) there are no
material legal proceedings to which the Company is a party or of which
property of the Company is the subject which are
20
required to be disclosed and which are not disclosed in the Registration
Statement and the Prospectus, (vii) there are no material contracts to
which the Company is a party which are required to be disclosed and which
are not disclosed in the Registration Statement or the Prospectus and
(viii) the representations and warranties of the Company herein are true
and correct as of the Closing Date.
(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 so
incorporated 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 Securities 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
21
or material limitation in trading in securities of the Company or
generally on The New York Stock Exchange; (ii) a banking moratorium on
commercial banking activities in New York declared by Federal or state
authorities; (iii) any outbreak of hostilities involving the United
States, any escalation of hostilities involving the United States, any
attack on the United States or any act of terrorism in which the United
States is involved, (iv) any major disruption in the settlement of
securities in the United States or any other relevant jurisdiction or a
declaration of a national emergency or war by the United States or (v)
such a material adverse change in general economic, political or financial
conditions domestically or internationally (or the effect of international
conditions on the financial markets in the United States or the effect of
conditions in the United States on the international financial markets
shall be such) the effect of which, in any such case described in clause
(iii) or (iv), is, in your judgment, to make it impracticable or
inadvisable to proceed with the public offering or delivery of the
Securities on the terms and in the manner contemplated in the Prospectus.
(j) Miscellaneous. The Company shall have taken, on or prior to the
Closing Date, all other action, if any, which it is stated in the
Registration Statement (or any post-effective amendment thereof) or the
Prospectus (as amended or supplemented, if so amended or supplemented)
that the Company will take prior to or concurrently with the issuance and
delivery of the Securities, and all agreements herein contained to be
performed on the part of the Company on or prior to the Closing Date shall
have been so performed.
(k) Other Documents. The Company shall have furnished to you and to
Cravath, Swaine & Xxxxx, counsel for the Underwriters, such further
certificates and documents as you or they may have reasonably requested
prior to the Closing Date.
If any of the conditions specified in this Section 10 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, this Agreement
and all obligations of the Underwriters hereunder may be canceled on, or at any
time prior to, the Closing Date by you, as
22
Representative of the Underwriters. Notice of such cancelation shall be given to
the Company in writing, or by telegraph, telephone or telex confirmed in
writing.
11. Substitution of Underwriters. If any one or more of the
Underwriters shall fail or refuse on the Closing Date to purchase and pay for
the Securities which it or they have agreed to purchase hereunder, then (a) if
the aggregate principal amount of the Securities which the defaulting
Underwriter or Underwriters so agreed to purchase shall not exceed $12,500,000,
the nondefaulting Underwriters shall be obligated to purchase the Securities
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
Securities which the defaulting Underwriter or Underwriters so agreed to
purchase shall exceed $12,500,000, either you, as Representative of the
Underwriters, or the Company shall have the right at any time prior to 9:30
a.m., New York City time, on the next business day after the Closing Date to
procure one or more of the other Underwriters, or any others, to purchase such
Securities from the Company, in such amounts as may be agreed upon and upon the
terms herein set forth. If within such specified time neither you, as such
representative, nor the Company shall have procured such other Underwriters or
any others to purchase the Securities agreed to be purchased by the defaulting
Underwriter or Underwriters, this Agreement shall terminate without liability on
the part of any nondefaulting Underwriter or of the Company. In the event of a
default by any Underwriter or Underwriters, as set forth in this Section 11, the
Closing Date may be postponed for such period, not exceeding seven days, as you,
as such Representative, shall determine in order that any required changes in
the Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken or termination of this Agreement
under this Section 11 shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
12. Information Furnished by Underwriters. The Company acknowledges
that (i) the list of Underwriters and their respective participation in the sale
of the Securities, (ii) the paragraph related to offering price, concessions and
reallowances and (iii) the paragraph related to stabilization, syndicate
covering transactions
23
and penalty bids, in each case under the heading "Underwriting" in the
prospectus supplement portion of the Prospectus, and the last paragraph under
the heading "Plan of Distribution" in the Prospectus, constitute the only
information furnished in writing by you, on behalf of the Underwriters, for
inclusion therein, and you, as Representative of the Underwriters, confirm that
such statements are correct.
13. Termination. This Agreement shall be subject to termination by
you, by notice given to the Company prior to delivery of and payment for the
Securities, if prior to such time any of the events described in Sections 10(g),
10(h) or 10(i) occurs.
14. Miscellaneous.
(a) Except as otherwise expressly provided in this Agreement, (i)
whenever notice is required by all the provisions of this Agreement to be
given to the Company, such notice shall be in writing addressed to the
Company at its office, Woodland Park, 0000 Xxxxxxxxxxx Xxx, Xxxxxxx,
Xxxxxxxx 00000, attention of the Governor, and (ii) whenever notice is
required by the provisions of this Agreement to be given to you, as
Representative of the Underwriters or of any of them, such notice shall be
in writing addressed to you care of UBS Warburg LLC, 000 Xxxxxxxxxx
Xxxxxxxxx, Xxxxxxxx, XX 00000, Attention: Fixed Income Syndicate (with a
copy to the office of the General Counsel).
(b) The Company agrees to furnish to you and to Cravath, Swaine &
Xxxxx, 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
24
and their respective successors and assigns, and, to the extent provided
in Section 9 hereof, any controlling person referred to in such Section 9
and the directors of the Company and those officers of the Company who
shall have signed the Registration Statement, and their respective legal
representatives, successors and assigns, and no other person shall acquire
or have any right under or by virtue of this Agreement. The term
"successor" or the term "successors and assigns" as used in this Agreement
shall not include any purchaser, as such purchaser, from any of the
Underwriters of the Securities.
(d) If this Agreement shall be canceled or terminated by the
Underwriters on any of the grounds referred to or specified in Section 10
hereof or because of any failure or refusal on the part of the Company to
comply with any of the terms or to fulfill any of the conditions of this
Agreement, the Company will reimburse the Underwriters severally for all
their out-of-pocket expenses (including the fees and disbursements of
their counsel) reasonably incurred by them in connection with the subject
matter of this Agreement.
(e) The term "business day" as used in this Agreement shall mean any
day on which the New York Stock Exchange, Inc., is open for trading.
(f) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT
OF LAW PROVISIONS.
(g) Section headings have been inserted in this Agreement as a
matter of convenience of reference only and it is agreed that such section
headings are not a part of this Agreement and will not be used in the
interpretation of any provision of this Agreement.
25
Please confirm that you are acting on behalf of yourself and the
other several Underwriters and that the foregoing correctly sets forth the
agreement between the Company and the several Underwriters.
Very truly yours,
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION,
by
_______________________
Name:
Title:
Acting on behalf of ourselves and the other several Underwriters named in
Schedule I attached to the foregoing letter, we hereby confirm as of the date
hereof that such letter correctly sets forth the agreement between the Company
and the several Underwriters:
UBS WARBURG LLC,
by
____________________________
Name:
Title:
26
SCHEDULE I
Underwriting Agreement dated February 21, 2003
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
6.75% Subordinated Notes due 2043
(Subordinated Deferrable Interest Notes Due 2043)
Principal
Amount of
Securities
to be
Underwriter Purchased
----------- ---------
UBS Warburg LLC.............................................................. $19,200,000
Xxxxxx Brothers Inc.......................................................... 19,200,000
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated..................................................... 19,200,000
Prudential Securities Incorporated........................................... 19,200,000
Wachovia Securities, Inc..................................................... 19,200,000
TD Waterhouse Investor Services, Inc......................................... 2,500,000
U.S. Bancorp Xxxxx Xxxxxxx Inc............................................... 2,500,000
ABN AMRO Incorporated........................................................ 750,000
X.X. Xxxxxxx & Sons, Inc..................................................... 750,000
Banc of America Securities LLC............................................... 750,000
BancOne Capital Markets, Inc................................................. 750,000
Bear, Xxxxxxx & Co. Inc...................................................... 750,000
CIBC World Markets Corp...................................................... 750,000
Comerica, Inc................................................................ 750,000
RBC Xxxx Xxxxxxxx Inc........................................................ 750,000
Deutsche Bank Securities Inc................................................. 750,000
Xxxxxxxxxx & Co. Inc......................................................... 750,000
Fidelity Capital Markets, a division of National Financial Services LLC...... 750,000
Xxxxxxx, Sachs & Co.......................................................... 750,000
H&R Block Financial Advisors, Inc............................................ 750,000
HSBC Securities (USA) Inc.................................................... 750,000
Xxxxxx Xxxxxxxxxx Xxxxx LLC.................................................. 750,000
J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc............................................. 750,000
X.X. Xxxxxx Securities Inc................................................... 750,000
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated......................................... 750,000
McDonald Investments Inc., a KeyCorp Company................................. 750,000
Mesirow Financial, Inc....................................................... 750,000
Quick & Xxxxxx, Inc.......................................................... 750,000
Xxxxx Fargo Xxx Xxxxxx LLC................................................... 750,000
Advest, Inc.................................................................. 375,000
27
Principal
Amount of
Securities
to be
Underwriter Purchased
----------- ---------
BB&T Capital Markets, a division of Xxxxx and Xxxxxxxxxxxx, Inc.............. 375,000
Xxxxxxxx & Partners, L.P..................................................... 375,000
X.X. Xxxx & Associates, Inc.................................................. 375,000
Xxxxxxx, Xxxxxx & Company.................................................... 375,000
X.X. Xxxxxxxx & Co........................................................... 375,000
Xxxxxxxxx & Company LLC...................................................... 375,000
Xxxxx Securities, Inc........................................................ 375,000
Xxxxxx, Xxxxx Xxxxx Inc...................................................... 375,000
Fifth Third Securities, Inc.................................................. 375,000
Xxxxx Xxxxxxxx & Xxxxx Inc................................................... 375,000
Xxxxxx Xxxxxx & Company, Inc................................................. 375,000
Pryor, McClendon, Counts & Co................................................ 375,000
Xxxxxxx Xxxxx & Associates, Inc.............................................. 375,000
Xxxxxx X. Xxxxx & Co. Inc.................................................... 375,000
Southwest Securities, Inc.................................................... 375,000
Suntrust Capital Markets, Inc................................................ 375,000
The Xxxxxxxx Capital Group, L.P.............................................. 375,000
Xxxxxxxx Capital Partners, L.P............................................... 375,000
Wedbush Xxxxxx Securities, Inc............................................... 375,000
Total................................................ $125,000,000
============
