<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
June 19, 1995
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
(Exact name of registrant as specified in its charter)
District of Columbia l-7102 52-0891669
-------------------- ------ ----------
(state or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) (Identification No.)
Woodland Park, 2201 Cooperative Way, Herndon, VA 22071-3025
------------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703)709-6700
---------------
------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits
The following exhibits are filed herewith:
1.1 An Agency Agreement dated June 19, 1996 between the Company
and the Agents named therein, relating to the distribution of
the Company's Medium-Term Notes, Series C, within the United
States.
10.1 Calculation Agent Agreement dated June 19, 1996 between the
Company and Lehman Brothers Inc., as Calculation Agent.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
NATIONAL RURAL UTILITIES COOPERATIVE
FINANCE CORPORATION
/s/ STEVEN L. LILLY
-------------------------------
Steven L. Lilly
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Dated: June 21, 1995
<PAGE> 1
EXHIBIT 1.1
EXECUTION COPY
U.S. $623,599,000 */
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
Medium-Term Notes, Series C
AGENCY AGREEMENT
June 19, 1996
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Headquarters
World Financial Center, North Tower
New York, New York 10281
Dear Sirs:
National Rural Utilities Cooperative Finance Corporation, a District
of Columbia cooperative association (the "Company"), confirms its agreement
with each of you (individually, an "Agent" and, collectively, the "Agents")
with respect to the issue and sale by the Company of up to U.S. $623,599,000 */
aggregate principal amount of its Medium-Term Notes, Series C (such Medium-Term
Notes, Series C, together with such additional Medium-Term Notes of the Company
as are added to this Agreement pursuant to an Amendment, the "Securities").
The Securities are to be issued from time to time pursuant to an Indenture,
dated as of December 15, 1987 (as supplemented by a First Supplemental
Indenture dated as of October 1, 1990, and as it may be supplemented or amended
from time to time, the "Indenture"), between the Company and Harris Trust and
Savings Bank, as successor trustee (the "Trustee").
- ----------------------------------
*/ Or the U.S. dollar equivalent in certain specified foreign currencies
or currency units.
<PAGE> 2
Subject to the terms and conditions stated herein and subject to the
reservation by the Company of the right to sell Securities directly on its own
behalf at any time, and to any person, and to designate or select additional
agents, the Company hereby appoints the Agents as the exclusive agents of the
Company for the purpose of soliciting or receiving offers to purchase the
Securities from the Company by others. This Agreement shall only apply to
sales of the Securities on original issuance and not to sales of any other
securities or evidences of indebtedness of the Company and only on the specific
terms set forth herein.
SECTION 1. Representations and Warranties. The Company represents
and warrants to each Agent as of the date hereof, as of each Closing Date (as
defined in Section 2(f) hereof) and as of the times referred to in Sections
6(a) and 6(b) hereof (each Closing Date and each such time being hereinafter
sometimes referred to as a "Representation Date"), as follows:
(a) Registration Statement and Prospectus. The Company has filed
with the Securities and Exchange Commission (the "Commission") Registration
Statements on Form S-3 Nos. 33-58445 and 333-05687 (and any registration
statements referred to in any Amendment (as defined in Section 12 hereof)) for
the registration under the Securities Act of 1933 (the "Act") of the Securities
(including a prospectus relating to the registration statements) and has filed
and may file one or more amendments thereto (including one or more amended or
supplemental prospectuses) and such registration statements and any such
amendments have become effective. Each such registration statement, including
financial statements and exhibits, at the time it became effective under the
Act, as amended and supplemented (including all documents incorporated therein
by reference), is hereinafter referred to as a "Registration Statement". A
prospectus supplement dated June 19, 1996, relating to the Securities and to
Registration Statement Nos. 33-58445 and 333-05687, including a prospectus, has
been prepared and will be filed pursuant to Rule 424 of the rules and
regulations of the Commission (the "Rules and Regulations") under the Act (such
prospectus and prospectus supplement (or, in the case of any Amendment, the
prospectus and prospectus supplement referred to therein) are herein referred
to as the "Prospectus"). Any reference in this Agreement to the Prospectus as
amended or supplemented shall include, without limitation, any prospectus filed
with the Commission pursuant to Rule 424 of the Rules and Regulations which
amends or supplements the Prospectus. Any reference herein to a Registration
Statement or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934 (the "Exchange Act")
on or before the effective date of such Registration Statement or the date of
the Prospectus, as the case may be; and any reference herein to the terms
"amend", "amendment" or "supplement" with respect to a Registration Statement
or the Prospectus shall be deemed to refer to and include the filing of
<PAGE> 3
6
any document under the Exchange Act after the effective date of such
Registration Statement, or the date of the Prospectus, as the case may be, and
deemed to be incorporated therein by reference.
(b) Accuracy of Registration Statements. Each Registration
Statement (and such Registration Statement as amended if any post-effective
amendment thereof shall have become effective) complies in all material
respects with the provisions of the Act and the Exchange Act and the Rules and
Regulations and does not contain an untrue statement of a material fact and
does not omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and the Prospectus
(and the Prospectus as amended or supplemented, if the Company shall have filed
with the Commission any amendment thereof or supplement thereto) fully complies
with the provisions of the Act and the Exchange Act and the Rules and
Regulations and does not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that none of the representations
and warranties in this paragraph (b) shall apply to (i) that part of any
Registration Statement which shall constitute the Statement of Eligibility
(Form T-1) under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), of the Trustee or (ii) statements in, or omissions from, any
Registration Statement or the Prospectus or any amendment thereof or supplement
thereto made in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of an Agent for use in connection with
the preparation of such Registration Statement or the Prospectus or any such
amendment or supplement.
(c) Accountants. The accountants who have certified or shall
certify the financial statements filed and to be filed with the Commission as
parts of any Registration Statement and the Prospectus are independent with
respect to the Company as required by the Act and the Rules and Regulations.
(d) Due Incorporation. The Company has been duly incorporated and
is a validly existing cooperative association in good standing under the laws
of the District of Columbia, duly qualified and in good standing in each
jurisdiction in which the ownership or leasing of properties or the conduct of
its business requires it to be qualified (or the failure to be so qualified
will not have a material adverse effect upon the business or condition of the
Company), and the Company has the corporate power and holds all valid permits
and other required authorizations from governmental authorities necessary to
carry
<PAGE> 4
7
on its business as now conducted and as to be conducted on the Closing Date and
any Representation Date, and as contemplated by the Prospectus.
(e) Material Changes. Since the respective dates as of which
information is given in each Registration Statement and the Prospectus, and
except as set forth in the Prospectus, there has not been any material adverse
change in the condition, financial or other, or the results of operations of
the Company, whether or not arising from transactions in the ordinary course of
business.
(f) Litigation. Except as set forth in the Prospectus, the Company
does not have any litigation pending of a character which in the opinion of
counsel for the Company referred to in Section 5(f) hereof could result in a
judgment or decree having a material adverse effect on the condition, financial
or other, or the results of operations of the Company.
(g) Legality. The Securities and the Indenture are duly and validly
authorized, and no further authorization, consent or approval of the members
and no further authorization or approval of the Board of Directors of the
Company or any committee thereof is required for the issuance and sale of the
Securities as contemplated herein; and neither such issuance or sale of
Securities nor the consummation of any other of the transactions herein
contemplated will conflict with, result in the creation or imposition of any
lien, charge or encumbrance upon any of the assets of the Company or will
result in a breach by the Company of any terms of, or constitute a default
under, any other agreement or undertaking of the Company; and except as
required by the Act, the Trust Indenture Act, the Exchange Act and applicable
state securities laws, no consent, authorization or order of, or filing or
registration with, any court or governmental agency is required for the
execution, delivery and performance by the Company of the transactions
contemplated by this Agreement, each applicable Purchase Agreement (as defined
in Section 11), if any, or the Indenture. The Securities and the Indenture
conform in all material respects to the descriptions thereof contained in the
Prospectus. Each Security delivered or sold hereunder will constitute, as of
such delivery or sale, the legal, valid and binding obligation of the Company
enforceable in accordance with its terms and will be entitled to the benefits
of the Indenture and the terms of such Security will have been approved by the
Governor or the Chief Financial Officer of the Company.
(h) No Stop Order. The Commission has not issued and, to the best
knowledge of the Company, is not threatening to issue
<PAGE> 5
8
any order preventing or suspending the use of the Prospectus (as amended or
supplemented, if the Company shall have filed with the Commission any amendment
thereof or supplement thereto).
(i) Regulation. The Company is not required to be registered as an
investment company under the Investment Company Act of 1940 and is not subject
to regulation under the Public Utility Holding Company Act of 1935.
SECTION 2. Solicitations as Agent. (a) On the basis of the
representations and warranties contained herein, but subject to the terms and
conditions herein set forth, each Agent agrees, as an agent of the Company, to
use its best efforts to solicit offers to purchase the Securities upon the
terms and conditions set forth in the Prospectus. Neither Agent shall
otherwise employ, pay or compensate any other person to solicit offers to
purchase the Securities or to perform any of its functions as Agent without the
prior written consent of the Company, which consent shall not be unreasonably
withheld, except that Lehman Brothers Inc. may solicit offers to purchase
Securities through its indirect wholly-owned subsidiary, Lehman Government
Securities Inc., which affiliate shall in such capacity be treated together
with Lehman Brothers Inc. as an Agent hereunder.
(b) The Company reserves the right, in its sole discretion, to
suspend solicitation by the Agents in their capacities as Agents of offers to
purchase the Securities from the Company commencing at any time for any period
of time or permanently. Upon receipt of at least one business day's prior
notice from the Company, the Agents will forthwith suspend solicitation of
offers to purchase Securities from the Company until such time as the Company
has advised the Agents that such solicitation may be resumed.
(c) Promptly upon the closing of the sale of any Securities sold by
the Company as a result of a solicitation made by an Agent, the Company agrees
to pay such Agent a commission in accordance with the schedule set forth in
Exhibit A hereto.
(d) The Agents are authorized to solicit offers to purchase the
Securities only in denominations of U.S. $1,000 **/ or any amount in excess
thereof which is an
- ----------------------------------
**/ Or the equivalent in the relevant foreign currency or currency unit
(rounded down to an integral multiple of units of the denomination specified in
the relevant supplement to the Prospectus), or such larger amount in integral
multiples of such
<PAGE> 6
9
integral multiple thereof, at a purchase price equal to 100% of the principal
amount thereof or such other amount as shall be specified by the Company. Each
Agent shall communicate to the Company, in accordance with the Procedures (as
defined below), each reasonable offer to purchase Securities received by it as
an Agent other than those rejected by such Agent. The Company shall have the
sole right to accept offers to purchase the Securities and may reject any such
offer in whole or in part. Each Agent shall have the right, in its discretion
reasonably exercised without advising the Company, to reject any offer to
purchase the Securities received by it, in whole or in part, and any such
rejection shall not be deemed a breach of its agreement contained herein.
(e) Administrative procedures respecting the sale of Securities (the
"Procedures") shall be agreed upon from time to time by the appropriate
representatives of each Agent and the Company. The Procedures initially shall
include those procedures set forth in Exhibit B hereto. Each Agent and the
Company agree to perform the respective duties and obligations specifically
provided to be performed by each of them herein and in the Procedures.
(f) The documents initially required to be delivered by Section 5
hereof and the documents required to be delivered by Section 5 hereof in
connection with each Amendment shall be delivered at the office of Milbank,
Tweed, Hadley & McCloy, One Chase Manhattan Plaza, New York, New York 10005,
not later than 10:00 A.M., New York City time, on the date of this Agreement,
or such Amendment, or at such later time as may be mutually agreed upon by the
Company and the Agents (each a "Closing Date").
SECTION 3. Covenants of the Company. The Company covenants and
agrees:
(a) to furnish promptly to each Agent and to its counsel, without
charge, a signed copy of each Registration Statement as filed with the
Commission and each amendment or supplement thereto, and a copy of each
Prospectus thereafter filed with the Commission, including all supplements
thereto and, upon request of such Agent, all documents incorporated therein by
reference and all consents and exhibits filed therewith;
(b) to deliver promptly to the Agents such number of the following
documents as they may request:
- --------------
units.
<PAGE> 7
10
(i) conformed copies of each Registration Statement (excluding
exhibits other than the computation of the ratio of earnings to fixed
charges, the Indenture and this Agreement);
(ii) each Prospectus; and
(iii) any documents incorporated by reference in the Prospectus;
and the Company authorizes each Agent to use such documents during the period
referred to in (c) below (subject to the limitations set forth therein) in
connection with the sale of the Securities in accordance with the applicable
provisions of the Act and the Rules and Regulations;
(c) if, during any period in which, in the opinion of counsel for the
Agents (provided, if the Agents are no longer soliciting (or have been
instructed to stop soliciting) purchases of Securities, such opinion is known
to the Company), a prospectus relating to the Securities is required to be
delivered under the Act, any event known to the Company occurs as a result of
which the Prospectus would include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or
if it is necessary at any time to amend the Prospectus to comply with the Act
or the Rules and Regulations, to notify the Agents promptly to suspend
solicitation of purchases of the Securities (and the Agents will do so); and if
the Company shall decide to amend or supplement a Registration Statement or the
Prospectus for purposes of offering the Securities, to promptly advise the
Agents by telephone (with confirmation in writing) and, except as otherwise
provided in any relevant Purchase Agreement, to promptly prepare and file with
the Commission an amendment or supplement, whether by filing such documents
pursuant to the Act or the Exchange Act, as may be necessary to correct such
untrue statement or omission or to make such Registration Statement or the
Prospectus comply with such requirements and to prepare and furnish to the
Agents at its own expense such amendment or supplement to such Registration
Statement or the Prospectus as will correct such Registration Statement or the
Prospectus; provided, however, that the Company shall in any event promptly
prepare, file and furnish an Agent with such an amendment or supplement if such
Agent shall then hold any Securities acquired from the Company as principal
(other than such Securities as such Agent shall have held for a period of six
months or more);
<PAGE> 8
11
(d) to timely file with the Commission during the period referred to
in the proviso to (c) above and during any time the Agents are permitted to
solicit offers as Agents as provided hereunder (i) any amendment or supplement
to a Registration Statement or any Prospectus that may, in the judgment of the
Company, be required by the Act or requested by the Commission and (ii) all
documents (and any amendments to previously filed documents) required to be
filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act;
(e) prior to filing with the Commission, during the period referred
to in the proviso to (c) above and during any time the Agents are permitted to
solicit offers as Agents as provided hereunder, (i) any amendment or supplement
to a Registration Statement, (ii) any amendment or supplement to the Prospectus
or (iii) upon request of either Agent, any document incorporated by reference
in any Registration Statement or any amendment of or supplement to any such
incorporated document, to furnish a copy thereof to the Agents and counsel for
the Agents;
(f) to advise the Agents immediately (i) when any post-effective
amendment to any Registration Statement relating to or covering the Securities
becomes effective and when any further amendment of or supplement to the
Prospectus shall be filed with the Commission, (ii) of any request or proposed
request by the Commission for an amendment or supplement to any Registration
Statement, to the Prospectus, to any document incorporated by reference in any
of the foregoing or for any additional information, (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of any
Registration Statement or any order directed to the Prospectus or any document
incorporated therein by reference or the initiation or threat of any stop order
proceeding or of any challenge to the accuracy or adequacy of any document
incorporated by reference in the Prospectus, (iv) of receipt by the Company of
any notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threat of any
proceeding for that purpose and (v) of the happening of any event which makes
untrue any statement of a material fact made in any Registration Statement or
the Prospectus as amended or supplemented or which requires the making of a
change in any such Registration Statement or the Prospectus as amended or
supplemented in order to make any material statement therein not misleading;
(g) if, during the period referred to in the proviso to (c) above and
during any time the Agents are permitted to solicit offers as Agents as
provided hereunder, the Commission shall issue a stop order suspending the
effectiveness of a Registration
<PAGE> 9
12
Statement, to make every reasonable effort to obtain the lifting of that order
at the earliest possible time;
(h) as soon as practicable, but not later than 18 months, after the
date of each acceptance by the Company of an offer to purchase Securities
hereunder, to make generally available to its security holders an earnings
statement covering a period of at least 12 months beginning after the later of
(i) the effective date of the most recent Registration Statement, (ii) the
effective date of the most recent post-effective amendment to the most recent
Registration Statement to become effective prior to the date of such acceptance
and (iii) the date of the Company's most recent Annual Report on Form 10-K
filed with the Commission prior to the date of such acceptance which will
satisfy the provisions of Section 11(a) of the Act (including, at the option of
the Company, Rule 158 of the Rules and Regulations under the Act);
(i) so long as any of the Securities are outstanding, to make
available to the Agents, not later than the time the Company makes the same
available to others, copies of all public reports or releases and all reports
and financial statements furnished by the Company to any securities exchange on
which the Securities are listed pursuant to requirements of or agreements with
such exchange or to the Commission pursuant to the Exchange Act or any rule or
regulation of the Commission thereunder;
(j) on or prior to the date on which the Company shall release to the
general public interim financial information, if any, with respect to each of
the first three quarters of any fiscal year, to make available such information
to each Agent and, except as otherwise provided in any relevant Purchase
Agreement, to cause the Prospectus to be amended or supplemented to set forth
or incorporate by reference such information, as well as such other information
and explanations as shall be necessary for an understanding of such amounts or
as shall be required by the Act or the Rules and Regulations; provided,
however, that if on the date of such release the Agents shall not be engaged or
shall have been instructed not to engage in solicitation of purchases of the
Securities as Agents of the Company, and shall not then hold any Securities
acquired from the Company as principal (other than such Securities as shall
have been held for a period of six months or more), the Company shall not be
obligated so to amend or supplement the Prospectus until such time as
solicitation of purchases of the Securities shall with the Company's consent be
resumed or the Company shall subsequently enter into a new Purchase Agreement
with one of you;
<PAGE> 10
13
(k) on or prior to the date on which the Company shall release to the
general public financial information included in or derived from the audited
financial statements of the Company for the preceding fiscal year, to make
available such information to each Agent and to cause each Registration
Statement and the Prospectus to be amended or supplemented, initially to set
forth capsule financial information with respect to the results of operations
of the Company for such year and corresponding information for the prior year,
as well as such other information and explanations as shall be necessary for an
understanding of such amounts or as shall be required by the Act or the Rules
and Regulations, and, on or before the date that the Company's Annual Report on
Form 10-K is filed with the Commission, to cause each Registration Statement
and the Prospectus to be amended to set forth or incorporate such audited
financial statements and the report or reports of independent accountants with
respect thereto, as well as such other information and explanations as shall be
necessary for an understanding of such financial statements or as shall be
required by the Act or the Rules and Regulations; provided, however, that if on
the date of such release the Agents shall not be engaged or shall have been
instructed not to engage in solicitation of purchases of the Securities as
Agents of the Company, and shall not then hold any Securities acquired from the
Company as principal (other than such Securities as shall have been held for a
period of six months or more), the Company shall not be obligated so to amend
or supplement the Prospectus until such time as solicitation of purchases of
the Securities shall with the Company's consent be resumed or the Company shall
subsequently enter into a new Purchase Agreement with one of you; and
(l) to endeavor, in cooperation with the Agents, to qualify the
Securities for offering and sale under the securities laws of such
jurisdictions as either Agent may designate, and to maintain such
qualifications in effect for as long as may be required for the distribution of
the Securities; and to file such statements and reports as may be required by
the laws of each jurisdiction in which the Securities have been qualified as
above provided; provided that the Company shall not be required to register or
qualify as a foreign corporation nor, except as to matters relating to the
offer and sale of the Securities, take any action which would subject it to
service of process generally in any jurisdiction.
SECTION 4. Payment of Expenses. The Company will pay (i) the costs
incident to the authorization, issuance and delivery of the Securities and any
taxes (other than transfer taxes) payable in that connection, (ii) the costs
incident to the preparation, printing and filing under the Act of each
<PAGE> 11
14
Registration Statement and any amendments and exhibits thereto, (iii) the costs
incident to the preparation, printing and filing of any document and any
amendments and exhibits thereto required to be filed by the Company under the
Exchange Act, (iv) the costs of distributing each Registration Statement, as
originally filed, and each amendment and post-effective amendment thereof
(including exhibits), the Prospectus, any supplement or amendment to the
Prospectus and any documents incorporated by reference in any of the foregoing
documents, (v) the fees and disbursements of the Trustee and its counsel, (vi)
the costs and fees in connection with the listing of the Securities on any
securities exchange, (vii) the cost of any filings with the National
Association of Securities Dealers, Inc., (viii) the fees and disbursements of
counsel to the Company, (ix) the fees paid to rating agencies in connection
with the rating of the Securities, (x) the fees and expenses of qualifying the
Securities under the securities laws of the several jurisdictions as provided
in Section 3(l) hereof and of preparing and printing a Blue Sky Memorandum and
a memorandum concerning the legality of the Securities as an investment
(including fees and expenses of counsel for the Agents in connection
therewith), (xi) the cost of the "tombstone" advertisement and such other
advertising expenses agreed to by the Company and Agents in connection with the
solicitation of offers to purchase Securities, and (xii) all other costs and
expenses incident to the performance of the Company's obligations under this
Agreement (including any Purchase Agreement). In addition, subject to the
provisions of Section 7, the Company agrees to reimburse the Agents for the
fees and disbursements of their legal counsel (except that the Company shall
not be liable for the fees and disbursements of more than one separate firm of
attorneys).
Except as specifically provided in this Section and herein, the
Agents agree to pay all their costs and expenses.
SECTION 5. Conditions of Obligations. The obligation of the Agents,
as agents of the Company, under this Agreement to solicit offers to purchase
the Securities, as well as the obligation of either Agent to purchase
Securities pursuant to any Purchase Agreement, is subject to the accuracy, on
each Representation Date, of the representations and warranties of the Company
contained herein, to the accuracy of the statements of the Company's officers
made in any certificate furnished pursuant to the provisions hereof to the
extent then relevant, to the performance by the Company in all material
respects of its obligations hereunder, and to each of the following additional
terms and conditions:
<PAGE> 12
15
(a) No stop order suspending the effectiveness of any Registration
Statement, or any part thereof, nor any order directed to any document
incorporated by reference in the Prospectus shall have been issued and no stop
order proceeding shall have been initiated or threatened by the Commission and
no challenge by the Commission shall be pending to the accuracy or adequacy of
any document incorporated by reference in the Prospectus; any request of the
Commission for inclusion of additional information in any Registration
Statement or the Prospectus or otherwise shall have been withdrawn or complied
with; and after the date of any Purchase Agreement (and prior to the closing
date for the Securities referred to therein) the Company shall not have filed
with the Commission any amendment or supplement to any Registration Statement
or the Prospectus (or any document incorporated by reference therein) without
the consent of the Agent or Agents party thereto.
(b) No order suspending the sale of the Securities in any
jurisdiction designated by an Agent pursuant to Section 3(l) hereof shall have
been issued, and no proceeding for that purpose shall have been initiated or
threatened.
(c) The Agents shall not have discovered and disclosed to the
Company that any Registration Statement or the Prospectus, as amended or
supplemented, contains an untrue statement of a fact which, in the opinion of
counsel for the Agents, is material or omits to state a fact which, in the
opinion of such counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(d) The form and validity of the Indenture, the form and validity of
the Securities, the legality and sufficiency of the authorization of the
issuance and sale of the Securities hereunder, and all corporate proceedings
and other legal matters incident to the foregoing, and the form of each
Registration Statement and of the Prospectus (other than financial statements
and other financial data), shall have been approved as of each Closing Date by
Cravath, Swaine & Moore, counsel for the Agents.
(e) At each Closing Date, the Agents shall have received the
opinion, addressed to the Agents and dated such Closing Date, of John Jay List,
Esq., General Counsel of the Company, in form and scope satisfactory to the
Agents and their counsel, to the effect that:
(i) the Company has been duly incorporated and is validly existing as
a cooperative association under the laws of the District of Columbia with
corporate power to conduct its business as described in each Registration
Statement;
<PAGE> 13
16
(ii) the issuance and sale of the Securities by the Company pursuant
to this Agreement (and, if the opinion is being given pursuant to Section
6(c) hereof on account of the Company having entered into a Purchase
Agreement, the applicable Purchase Agreement) have been duly and validly
authorized by all necessary corporate action (subject to the approval of
the terms of each Security by the Governor or the Chief Financial Officer
of the Company); and no authorization, consent, order or approval of, or
filing or registration with, or exemption by, any government or public
body or authority of the District of Columbia or any department or
subdivision thereof is required for the validity of the Securities or for
the issuance, sale and delivery of the Securities by the Company pursuant
to this Agreement and any Purchase Agreement or for the execution and
delivery of this Agreement, any Purchase Agreement and the Indenture by
the Company (except that such counsel need not express an opinion as to
whether offers or sales by Agents require qualification or registration
under the securities laws of the District of Columbia);
(iii) the Indenture has been duly authorized by the Company and
constitutes an instrument valid and binding on the Company and enforceable
in accordance with its terms;
(iv) the Securities, assuming they are in a form conforming to the
specimens thereof examined by such counsel, and assuming due execution of
the Securities on behalf of the Company and authentication thereof by the
Trustee and issuance thereof in accordance with the terms of the Indenture
and delivery thereof against payment therefor in accordance with the terms
of this Agreement (and any Purchase Agreement) and subject to the approval
of the terms of each Security by the Governor or the Chief Financial
Officer of the Company, will constitute valid and binding obligations of
the Company enforceable in accordance with their terms and will be
entitled to the benefits of the Indenture;
(v) this Agreement has been duly authorized, executed, and delivered
by the Company and the performance of this Agreement and the consummation
of the transactions herein contemplated will not result in a breach of any
terms or provisions of, or constitute a default under, the Articles of
Incorporation or By-Laws of the Company or any indenture, deed of trust,
note, note agreement or other agreement or instrument known to such
counsel, after due inquiry, to which the Company is a party or by which
the Company or any of its properties is bound or affected;
<PAGE> 14
17
(vi) no consent, approval, authorization or order of any court or
governmental agency, authority or body of the District of Columbia is
required for the consummation of the transactions contemplated in this
Agreement (including any Purchase Agreement) (except that such counsel
need not express an opinion as to whether offers or sales by Agents
require qualification or registration under the securities laws of the
District of Columbia); and
(vii) there is no tax of the District of Columbia or the Commonwealth
of Virginia applicable to the execution of the Indenture.
Such counsel shall state that nothing has come to the attention of
such counsel causing him to believe, based upon such counsel's participation in
the preparation of each Registration Statement or otherwise, that any
Registration Statement (or any post-effective amendment thereof) or the
Prospectus (as amended or supplemented, if amended or supplemented) contains an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading as of the
effective date of each respective Registration Statement and as of the
effective date of any such amendment or supplement and as of such Closing Date,
and such counsel does not know of any litigation or any governmental proceeding
instituted or threatened against the Company required to be disclosed in any
Registration Statement or the Prospectus and which is not disclosed therein.
Insofar as such opinion relates to the enforceability of the
Securities and the Indenture, such counsel may state that the enforceability
thereof may be limited by bankruptcy, reorganization, insolvency, moratorium or
other similar laws of general application relating to or affecting the
enforcement of creditors' rights and may be limited by laws with respect to or
affecting the remedies provided for in the Securities and the Indenture
(provided that such laws do not, in the opinion of such counsel, make
inadequate the remedies afforded thereby for the realization of the benefits
provided for in the Securities and the Indenture).
Such counsel may also state that provisions of the Indenture or this
Agreement that permit the Trustee, the Agents, or any of the noteholders to
take action or make determinations, or provide for indemnities or similar
undertakings of the Company in favor of the Trustee, the Agents, or any of the
noteholders or for limitations on their liability to the Company or other
persons, may be subject to requirements that such action be taken
<PAGE> 15
18
or such determinations be made, or that any action or inaction by the Trustee,
the Agents, or any of the noteholders that may give rise to a claim under such
indemnities or similar undertakings or to such liability be taken or not taken,
on a reasonable basis and in good faith.
(f) At each Closing Date, the Agents shall have received the
opinion, addressed to the Agents and dated such Closing Date, of Milbank,
Tweed, Hadley & McCloy, counsel to the Company, in form and scope satisfactory
to the Agents and their counsel, to the effect that:
(i) the Company has been duly incorporated and is validly existing as
a cooperative association in good standing under the laws of the District
of Columbia with corporate power to conduct its business as described in
the Prospectus;
(ii) the issuance and sale of the Securities by the Company pursuant
to this Agreement (and, if the opinion is being given pursuant to Section
6(c) hereof on account of the Company having entered into a Purchase
Agreement, the applicable Purchase Agreement) have been duly and validly
authorized by all necessary corporate action (subject to the approval of
the terms of each Security by the Governor or the Chief Financial Officer
of the Company); and no authorization, consent, order or approval of, or
filing or registration with, or exemption by, any governmental or public
body or authority (including, without limitation, the Rural Utilities
Service) of the United States or of the State of New York or any
department or subdivision thereof, or, to the best knowledge of such
counsel, any court, other than such as may be required under State
securities or blue sky laws and other than registration of the Securities
under the Act and qualification of the Indenture under the Trust Indenture
Act, is required for the validity of the Securities or for the issuance,
sale and delivery of the Securities by the Company pursuant to this
Agreement (including any Purchase Agreement) or for the execution and
delivery of this Agreement (including any Purchase Agreement) and the
Indenture by the Company;
(iii) the Indenture has been duly authorized by the Company, has been
duly qualified under the Trust Indenture Act and constitutes an instrument
valid and binding on the Company and enforceable in accordance with its
terms;
(iv) the Securities, assuming they are in a form conforming to the
specimens thereof examined by such
<PAGE> 16
19
counsel, and assuming due execution of the Securities on behalf of the
Company and authentication thereof by the Trustee and issuance thereof in
accordance with the terms of the Indenture and delivery thereof against
payment therefor in accordance with the terms of this Agreement (and any
Purchase Agreement) and subject to the approval of the terms each Security
by the Governor or the Chief Financial Officer of the Company, will
constitute valid and binding obligations of the Company enforceable in
accordance with their terms and will be entitled to the benefits of the
Indenture;
(v) this Agreement (including any Purchase Agreement) has been duly
authorized, executed and delivered by the Company and the performance of
this Agreement (including any Purchase Agreement) and the consummation of
the transactions herein contemplated will not result in a breach of any
terms or provisions of, or constitute a default under, the Articles of
Incorporation or By-Laws of the Company or any indenture, deed of trust,
note, note agreement or other agreement or instrument known to such
counsel, after due inquiry, to which the Company is a party or by which
the Company or any of its properties is bound or affected;
(vi) the Securities and the Indenture conform in all material
respects to the descriptions thereof contained in each Registration
Statement; and the statements made in the Prospectus under the caption
"Description of Securities" and in the prospectus supplement dated June
19, 1996, under the caption "Description of the Medium-Term Notes" (and
the comparable provisions of any supplement to the Prospectus approved by
the Agents), insofar as they purport to summarize the provisions of
documents or agreements specifically referred to therein, fairly present
the information called for with respect thereto by Form S-3;
(vii) each Registration Statement (and any posteffective amendment
thereof) has become and is effective under the Act and the Securities have
become registered under the Act, and, to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of any Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated, and each Registration Statement
(and any post-effective amendment thereof) and the Prospectus and each
amendment thereof or supplement thereto (except for the financial
statements and other financial data included therein as to which such
counsel need express no opinion) when they became effective or were filed
with the Securities and Exchange Commission complied as to form in all
material respects with
<PAGE> 17
20
the requirements of the Act, the Exchange Act, the Trust Indenture Act and
the rules and regulations issued thereunder;
(viii) the Company is not required to be registered as an investment
company under the Investment Company Act of 1940;
(ix) the Company is not subject to regulation under the Public
Utility Holding Company Act of 1935; and
(x) the Company is not a public utility as defined in the Federal
Power Act.
Such counsel shall state that based upon such counsel's participation
in the preparation of each Registration Statement, the Prospectus and documents
incorporated by reference therein, such counsel's discussions with certain
officers and employees of the Company, such counsel's conferences with
representatives of the Company's independent certified public accountants and
such counsel's representation of the Company, nothing has come to the attention
of such counsel causing it to believe that such Registration Statement (or any
post-effective amendment thereof) or the Prospectus (as amended or
supplemented, if amended or supplemented) contains an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading as of the effective date of such
Registration Statement and as of the effective date of any such amendment or
supplement and as of such Closing Date (it being understood that such counsel
need express no opinion concerning financial or statistical data included
therein) and such counsel does not know of any litigation or any governmental
proceeding instituted or threatened against the Company required to be
disclosed in any Registration Statement or the Prospectus and which is not
disclosed therein.
Such counsel shall also state that to the best knowledge of such
counsel, no order directed to any document incorporated by reference in the
Prospectus has been issued and no challenge has been made by any regulatory
agency to the accuracy or adequacy of any such document.
Insofar as such opinion relates to the enforceability of the
Securities and the Indenture, such counsel may state that the enforceability
thereof may be limited by bankruptcy, reorganization, insolvency, moratorium or
other similar laws of general application relating to or affecting the
enforcement of creditors' rights and may be limited by laws with respect to or
affecting the remedies provided for in the Securities and the
<PAGE> 18
21
Indenture (provided that such laws do not, in the opinion of such counsel, make
inadequate the remedies afforded thereby for the realization of the benefits
provided for in the Securities and the Indenture).
Such counsel may also state that provisions of the Indenture or this
Agreement that permit the Trustee, the Agents, or any of the noteholders to
take action or make determinations, or provide for indemnities or similar
undertakings of the Company in favor of the Trustee, the Agents, or any of the
noteholders or for limitations on their liability to the Company or other
persons, may be subject to requirements that such action be taken or such
determinations be made, or that any action or inaction by the Trustee, the
Agents, or any of the noteholders that may give rise to a claim under such
indemnities or similar undertakings or to such liability be taken or not taken,
on a reasonable basis and in good faith.
In rendering the foregoing opinion, Milbank, Tweed, Hadley & McCloy
may rely as to matters of the law of the District of Columbia upon the opinion
of John Jay List, Esq., General Counsel of the Company, addressed to the Agents
and dated such Closing Date, satisfactory in form and scope to counsel for the
Agents. If Milbank, Tweed, Hadley & McCloy shall so rely upon the opinion of
John Jay List, Esq., (i) copies of the opinion so relied upon (to the extent
such opinion is different than the opinion required by Section 5(e)) shall be
delivered to you and to counsel for the Agents and (ii) the opinion required by
this Section 5(f) shall also state that Milbank, Tweed, Hadley & McCloy has
made an independent investigation of the matters in its opinion covered by the
opinion so relied upon and that the Agents are justified in relying upon such
opinion.
(g) The Company shall have furnished to the Agents on each Closing
Date a certificate, dated such Closing Date, of its President, Governor, Vice
President or Chief Financial Officer stating that: (i) the representations,
warranties and agreements of the Company in Section 1 hereof are true and
correct as of such Closing Date; the Company has complied in all material
respects with all its agreements contained herein; and the conditions set forth
in Sections 5(a) and 5(b) hereof have been fulfilled, (ii) in his opinion, as
of the effective date of each Registration Statement, such Registration
Statement did not contain an untrue statement of a material fact and did not
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, and, as of the effective date of the most recent
Registration Statement, the Prospectus did not contain an untrue statement of a
material
<PAGE> 19
22
fact and did not omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, (iii) since the
effective date of the most recent Registration Statement, no event has occurred
which should have been set forth in an amendment or supplement to the
Prospectus but which has not been so set forth, (iv) since the respective dates
as of which information is given in the most recent Registration Statement and
the Prospectus, as amended or supplemented, there has not been any material
adverse change in the condition, financial or other, or earnings of the
Company, whether or not arising from transactions in the ordinary course of
business, (v) the Company has no material contingent obligations which are
required to be disclosed in any Registration Statement or the Prospectus and
are not disclosed therein, (vi) no stop order suspending the effectiveness of
any Registration Statement is in effect on such Closing Date and no proceedings
for the issuance of such an order have been taken or to the knowledge of the
Company are contemplated by the Commission on or prior to such Closing Date,
(vii) there are no material legal proceedings to which the Company is a party
or of which property of the Company is the subject which are required to be
disclosed in any Registration Statement or the Prospectus and are not disclosed
therein and (viii) there are no material contracts to which the Company is a
party which are required to be disclosed in the Registration Statement or the
Prospectus and are not disclosed therein.
(h) Arthur Andersen LLP (or successor independent public accountants
with respect to the Company within the meaning of the Act and the Rules and
Regulations) shall have furnished to the Agents, at or prior to each Closing
Date, a letter, addressed to the Agents and dated such Closing Date, confirming
that they are independent public accountants with respect to the Company within
the meaning of the Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission; and stating, as of the date of such letter (or, with respect
to matters involving changes or developments since the respective dates as of
which specified financial information is given in the Prospectus, as of a date
not more than five days prior to the date of such letter), the conclusions and
findings of such firm with respect to the financial information and other
matters covered by its letter delivered to the Agents concurrently with the
execution of this Agreement and confirming in all material respects the
conclusions and findings set forth in such prior letter or, if no such letter
shall have been delivered to you, the conclusions and findings of such firm, in
form and substance satisfactory to the Agents with respect to such financial
<PAGE> 20
23
information and other matters as the Agents shall reasonably request.
(i) There shall not have occurred (i) any suspension or material
limitation (other than limitations on hours or days of trading) in trading in
securities generally on the New York Stock Exchange or any establishment of
minimum prices on such exchange, (ii) any banking moratorium declared by either
Federal or New York State authorities or (iii) any outbreak of hostilities
involving the United States or escalation of hostilities involving the United
States or a declaration of a national emergency or war by the United States.
(j) Prior to each Closing Date, the Company shall have furnished to
the Agents and to Cravath, Swaine & Moore, counsel to the Agents, such further
certificates and documents as the Agents or counsel to the Agents may have
reasonably requested prior to such Closing Date.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement and all obligations of the Agents hereunder may be canceled on, or at
any time prior to, any Closing Date by the Agents. Notice of such cancelation
shall be given to the Company in writing, or by telegraph, telephone or telex
confirmed in writing.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are on the date of delivery in the form and
scope satisfactory to counsel for the Agents.
SECTION 6. Additional Covenants of the Company. The Company
covenants and agrees that:
(a) Each acceptance by it of an offer for the purchase of Securities
shall be deemed to be an affirmation to the Agent which procured the offer that
the representations and warranties of the Company contained in this Agreement
and in any certificate theretofore given to the Agents pursuant hereto (to the
extent relevant to such purchase) are true and correct at the time of such
acceptance, and an undertaking that such representations and warranties will be
true and correct at the time for delivery to the purchaser or his agent of the
Securities relating to such acceptance as though made at and as of each such
time (and it is understood that such representations and warranties shall
relate to each Registration Statement and the Prospectus as amended or
supplemented to each such time).
<PAGE> 21
24
(b) Each time that any Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or supplement
providing solely for a change in the interest rates or maturities of the
Securities or a change in the principal amount of Securities remaining to be
sold or similar changes) or the Company files with the Commission any document
incorporated by reference into the Prospectus (except in all cases by filing a
report on Form 8-K, pursuant to the Exchange Act, solely to add exhibits to
documents previously filed), the Company shall, concurrently with such
amendment, supplement or filing, furnish the Agents with a certificate of the
President, Governor or Chief Financial Officer of the Company in form
satisfactory to the Agents to the effect that the statements contained in the
certificate referred to in Section 5(g) hereof which was last furnished to the
Agents are true and correct at the time of such amendment, supplement or
filing, as the case may be, as though made at and as of such time (except that
such statements shall be deemed to relate to such Registration Statement and
the Prospectus as amended and supplemented to such time) or, in lieu of such
certificate, a certificate of the same tenor as the certificate referred to in
said Section 5(g) modified as necessary to relate to such Registration
Statement and the Prospectus as amended and supplemented to the time of
delivery of such certificate; provided, that, except if the Agents shall then
hold any Securities acquired from the Company as principal (other than such
Securities as shall have been held for a period of six months or more), no
certificate need be given during any period in which the Agents have been
instructed to or have suspended the solicitation and receipt of offers to
purchase Securities but shall be required to be given before the Agents shall
again be obligated to solicit offers to purchase the Securities.
(c) Each time that any Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or supplement
providing solely for a change in the interest rates or maturities of the
Securities or a change in the principal amount of Securities remaining to be
sold or similar changes) or the Company files with the Commission any document
incorporated by reference into the Prospectus (except in all cases by filing a
report on Form 8-K, pursuant to the Exchange Act, solely to add exhibits to
documents previously filed), the Company shall, concurrently with such
amendment, supplement or filing, furnish the Agents and their counsel with
written opinions of (i) the General Counsel of the Company and (ii) Milbank,
Tweed, Hadley & McCloy, counsel to the Company, addressed to the Agents and
dated the date of delivery of such opinions, in form satisfactory to the
Agents, of the same tenor as the respective opinions referred to in Sections
5(e) and 5(f) hereof, but modified, as necessary, to relate to such
<PAGE> 22
25
Registration Statement and the Prospectus as amended or supplemented to the
time of delivery of such opinions; provided, however, that in lieu of such
opinions, either of such counsel may furnish the Agents with letters to the
effect that the Agents may rely on such prior opinions to the same extent as
though they were dated the date of such letter authorizing reliance (except
that statements in such prior opinions shall be deemed to relate to such
Registration Statement and the Prospectus as amended or supplemented to the
time of delivery of such letters authorizing reliance); provided further,
that, except if the Agents shall then hold any Securities acquired from the
Company as principal (other than such Securities as each Agent shall have held
for a period of six months or more), no opinion need be given during any period
in which the Agents have been instructed to or have suspended the solicitation
and receipt of offers to purchase Securities but shall be required to be given
before the Agents shall again be obligated to solicit offers to purchase the
Securities.
(d) Each time that any Registration Statement or the Prospectus
shall be amended or supplemented to include additional financial information
with respect to the Company or the Company files with the Commission any
document incorporated by reference into the Prospectus which contains
additional financial information the Company shall cause Arthur Andersen LLP
(or successor independent public accountants with respect to the Company within
the meaning of the Act and the Rules and Regulations) to furnish the Agents,
concurrently with such amendment, supplement or filing, a letter, addressed
jointly to the Company and the Agents and dated the date of delivery of such
letter, in form and substance reasonably satisfactory to the Agents, of the
same tenor as the letter referred to in Section 5(h) hereof but modified to
relate to such Registration Statement and the Prospectus, as amended and
supplemented to the date of such letter, with such changes as may be necessary
to reflect changes in the financial statements and other information derived
from the accounting records of the Company; provided, however, that if any
Registration Statement or the Prospectus is amended or supplemented solely to
include financial information with respect to the Company as of and for a
fiscal quarter, Arthur Andersen LLP (or successor independent public
accountants with respect to the Company within the meaning of the Act and the
Rules and Regulations) may limit the scope of such letter to the unaudited
financial statements included in such amendment or supplement unless there is
contained therein any other accounting, financial or statistical information
with respect to the Company that, in the reasonable judgment of the Agents,
should be covered by such letter, in which event such letter shall also cover
such other information; provided further that,
<PAGE> 23
26
except if the Agents shall then hold any Securities acquired from the Company
as principal (other than such Securities as shall have been held for a period
of six months or more), no letter need be given during any period in which the
Agents have been instructed to or have suspended the solicitation and receipt
of offers to purchase Securities but shall be required to be given before the
Agents shall again be obligated to solicit offers to purchase the Securities.
(e) On request from time to time by either Agent, the Company will
advise the Agents of the amount of Securities sold (which for this purpose
shall include medium-term notes having terms substantially similar to the terms
of the Securities but constituting one or more separate series of securities
for purposes of the Indenture and sold outside the United States pursuant to
any other agreement), and the amount remaining registered under the Securities
Act and authorized for issuance and sale hereunder.
SECTION 7. Indemnification and Contribution. (a) The Company shall
indemnify and hold harmless the Agents (for purposes of this Section 7, the
"Agents" shall be deemed to include the Agents and all subsidiaries and
affiliates of the Agents to the extent such subsidiaries and affiliates are
agents of the Company in accordance with the provisions of Section 2(a)) and
each person, if any, who controls either Agent within the meaning of the Act
from and against any loss, claim, damage or liability, joint or several, to
which such Agent or controlling person may become subject, under the Act, the
Exchange Act or other federal or state statutory law or regulation or common
law, and to reimburse the Agents and such controlling persons for any legal or
other expenses incurred by them in connection with investigating any claims and
defending any actions, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or any
post-effective amendment thereof or the Prospectus (as amended or supplemented,
if the Company shall have filed with the Commission any amendment thereof or
supplement thereto), if used within the period during which the Agent claiming
indemnification is authorized to use the Prospectus as provided hereunder, or
arises out of, or is based upon, the omission or alleged omission to state
therein (if so used, in the case of such Prospectus) a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or action
arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in such
<PAGE> 24
27
Registration Statement or any post-effective amendment thereof or the
Prospectus (as amended and supplemented) in reliance upon and in conformity
with written information furnished to the Company by the Agent claiming
indemnification specifically for inclusion therein or contained in that part of
such Registration Statement constituting the Statement of Eligibility (Form
T-1) under the Trust Indenture Act of the Trustee; and provided further that as
to any Prospectus (as amended and supplemented) this indemnity agreement shall
not inure to the benefit of either Agent or any person controlling such Agent
on account of any loss, claim, damage, liability or action arising from the
sale of Securities to any person by such Agent if such Agent failed to send or
give a copy of the Prospectus (or the Prospectus as amended or supplemented if
the Company shall have made any amendments thereof or supplements thereto which
shall have been furnished to such Agent prior to the time of the below-written
confirmation) to that person at or prior to the time written confirmation of
the sale of such Securities was sent to such person, and the untrue statement
or alleged untrue statement of a material fact or omission or alleged omission
to state a material fact in such Prospectus was corrected in such Prospectus or
amendment or supplement, unless such failure resulted from non-compliance by
the Company with Section 3(b) hereof. For purposes of the second proviso to
the immediately preceding sentence, the term "Prospectus (or the Prospectus as
amended or supplemented if the Company shall have made any amendments thereof
or supplements thereto)" shall not be deemed to include the documents
incorporated therein by reference and under no circumstances shall either Agent
be obligated to send or give any document incorporated by reference or any
supplement or amendment to any document incorporated by reference in the
Prospectus to any person. The foregoing indemnity agreement is in addition to
any liability which the Company may otherwise have to either Agent or
controlling person.
(b) Each Agent shall indemnify and hold harmless the Company, each
of its directors, each of its officers who signed any Registration Statement
and any person who controls the Company within the meaning of the Act from and
against any loss, claim, damage or liability, joint or several, and any action
in respect thereof, to which the Company or any such director, officer or
controlling person may become subject, under the Act, the Exchange Act or
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement of a material fact
contained in such Registration Statement or any post-effective amendment
thereof or the Prospectus (or any amendment thereof or supplement thereto), or
arises out of, or is based upon, the
<PAGE> 25
28
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Agent
specifically for inclusion therein, and shall reimburse the Company or any such
director, officer or controlling person for any legal and other expenses
reasonably incurred by such indemnified party in investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action.
The foregoing indemnity agreement is in addition to any liability which either
Agent may otherwise have to the Company or any of its directors, officers or
controlling persons. The statements with respect to the manner of distribution
of the Securities by the Agents and with respect to the Agents set forth (i) on
the table (including the footnotes) and in the last paragraph on the cover page
of the Prospectus Supplement dated June 19, 1996 (to the Prospectus dated June
17, 1996), (ii) in the first paragraph on page 2 of such Prospectus Supplement
and of the Prospectus and (iii) under the heading "Plan of Distribution" in
such Prospectus Supplement and in the Prospectus (and the comparable provisions
of any other supplement to the Prospectus approved by the Agents) constitute
the only information furnished in writing by the Agents for inclusion in the
Registration Statements and the Prospectus, and the Agents confirm that such
statements are correct.
(c) Each indemnified party will, promptly after the receipt of
notice of the commencement of any action against such indemnified party in
respect of which indemnity may be sought from an indemnifying party on account
of an indemnity agreement contained in this Section 7, notify the indemnifying
party in writing of the commencement thereof. The omission of any indemnified
party so to notify an indemnifying party of any such action shall not relieve
the indemnifying party from any liability (to the extent not prejudiced by such
delay) which it may have to such indemnified party on account of the indemnity
agreement contained in this Section 7 or otherwise. Except as provided in the
next succeeding sentence, in case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of the commencement
thereof, such indemnifying party will be entitled to participate therein and,
to the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party, and after notice in writing from such indemnifying
party to such indemnified party of its election so to assume the defense
thereof, such indemnifying party will not be liable to such
<PAGE> 26
29
indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. Such indemnified party
shall have the right to employ its own counsel in any such action, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of such counsel has been authorized in writing by the
indemnifying party in connection with the defense of such action, (ii) such
indemnified party shall have been advised by such counsel that there are
material legal defenses available to it which are different from or additional
to those available to the indemnifying party (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf
of such indemnified party) or (iii) the indemnifying party shall not have
assumed the defense of such action and employed counsel therefor satisfactory
to such indemnified party within a reasonable time after notice of commencement
of such action, in any of which events such fees and expenses shall be borne by
the indemnifying party, provided that (x) the indemnifying party shall not, in
connection with any one such action, or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses with respect
to any period during the pendency of such action or similar or related actions
of more than one separate firm of attorneys (except where local counsel is
necessary in connection with such action or similar or related actions) for all
indemnified parties so named, designated in writing by such Agent or the Agents
if the indemnifying party is the Company or by the Company if the indemnifying
party is either Agent or the Agents, and (y) the firm of attorneys so
designated may be changed from time to time with respect to different periods
during the pendency of such action or similar or related actions. The
indemnifying party shall not be liable for any settlement of any action or
claim effected without its consent, which consent shall not be unreasonably
withheld.
(d) If the indemnification provided for in this Section 7 shall for
any reason be unavailable to an indemnified party under Section 7(a) or 7(b)
hereof in respect of any loss, claim, damage or liability, or any action in
respect thereof, referred to therein, then each indemnifying party shall, in
lieu of indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, (i) in such proportion as shall be
appropriate to reflect the relative benefits received by the Company on the one
hand and the indemnified or indemnifying Agent or Agents on the other from the
offering of the Securities or (ii) if the allocation provided by
<PAGE> 27
30
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
indemnified or indemnifying Agent or Agents on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and either Agent on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Securities (before deducting expenses) received by the Company bears to
the total commissions received by such Agent with respect to such offering.
The relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or such
Agent, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Agents agree that it would not be just and equitable if
contributions pursuant to this Section 7(d) were to be determined by pro rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 7(d)
shall be deemed to include, for purposes of this Section 7(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7(d), neither Agent shall be required to contribute
any amount in excess of the amount by which the total price at which the
Securities sold through such Agent and distributed to the public were offered
to the public exceeds the amount of any damages which such Agent has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. No person shall be obligated to contribute hereunder any
amounts in payment for any settlement of any action or claim effected without
such person's consent, which consent shall not be unreasonably withheld.
SECTION 8. Status of Each Agent. In soliciting offers to purchase
the Securities from the Company pursuant to this Agreement (other than offers
to purchase pursuant to Section 11),
<PAGE> 28
31
each Agent is acting solely as agent for the Company and not as principal.
Each Agent will make reasonable efforts to assist the Company in obtaining
performance by each purchaser whose offer to purchase Securities from the
Company has been solicited by such Agent and accepted by the Company but such
Agent shall have no liability to the Company in the event any such purchase is
not consummated for any reason. If the Company shall default (which default
shall include, but is not limited to, the Company having told an Agent not to
settle any order which the Company has accepted) in its obligations to deliver
Securities to a purchaser whose offer it has accepted, the Company shall hold
each Agent harmless against any loss, claim or damage arising from or as a
result of such default by the Company, provided such default is not
attributable to the fault of such Agent.
SECTION 9. Representations and Warranties to Survive Delivery. All
representations and warranties of the Company contained in this Agreement, or
contained in certificates of officers of the Company submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of the
termination or cancellation of this Agreement or any investigation made by or
on behalf of either Agent or any person controlling such Agent or by or on
behalf of the Company, and shall survive each delivery of and payment for any
of the Securities.
SECTION 10. Termination. This Agreement may be terminated for any
reason, at any time, by any party hereto upon the giving of one day's written
notice of such termination to the other parties hereto, provided, however, if
such terminating party is an Agent, such termination shall be effective only
with respect to such terminating party. The provisions of Sections 3(c), 3(h),
4, 7, 8, 9, 13 and 14 hereof shall survive any such termination.
SECTION 11. Purchases as Principal. From time to time either Agent
(including Lehman Government Securities Inc. on behalf of Lehman Brothers Inc.)
may agree with the Company to purchase Securities from the Company as
principal, in which case such purchase shall be made in accordance with the
terms of a separate agreement (a "Purchase Agreement") to be entered into
between such Agent and the Company in the form attached hereto as Exhibit C. A
Purchase Agreement, to the extent set forth therein, may incorporate by
reference specified provisions of this Agreement.
SECTION 12. Amendments to Add Securities. From time to time, the
Company and the Agents may enter into amendments to this Agreement (any such
amendment shall be herein referred to as
<PAGE> 29
32
an "Amendment") for the purpose of increasing the aggregate principal amount of
Securities to which this Agreement shall relate. Such Amendment may be in the
form attached hereto as Exhibit D.
SECTION 13. Notices. Except as otherwise provided herein, all
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if received or transmitted by any standard form
of telecommunication.
Notices to the Agents shall be directed to them as follows:
Lehman Brothers Inc.
3 World Financial Center, 12th Floor
New York, New York 10285
Attention: Medium Term Note Department
Merrill Lynch, Pierce, Fenner & Smith Incorporated
World Headquarters
World Financial Center
North Tower, 23rd Floor
New York, New York 10281
Attention: Product Management-Medium Term Notes
Notices to the Company shall be directed to it as follows:
National Rural Utilities Cooperative
Finance Corporation
Woodland Park
2201 Cooperative Way
Herndon, Virginia 22071
Attention: Chief Financial Officer
SECTION 14. Binding Effect; Benefits. This Agreement shall be
binding upon each Agent, the Company and their respective successors. This
Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except that (a) the representations, warranties, indemnities and
agreements of the Company contained in this Agreement shall also be deemed to
be for the benefit of any entity or entities deemed to be an "Agent" for the
purposes of Section 7 and the person or persons, if any, who control either
Agent within the meaning of Section 15 of the Act, and (b) the indemnity
agreements of the Agents contained in Section 7 hereof shall be deemed to be
for the benefit of directors of the Company, officers of the Company who have
signed a Registration Statement and any persons
<PAGE> 30
33
controlling the Company. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this
Section, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein. No purchaser of Securities
shall be deemed to be a successor by reason merely of such purchase.
SECTION 15. Miscellaneous. (a) The term "business day" as used in
this Agreement shall mean any day which is not a Saturday or Sunday, which in
New York City is not a day on which banking institutions are generally
authorized or obligated by law to close and on which the New York Stock
Exchange, Inc. is open for trading.
(b) Section headings have been inserted in this Agreement as a
matter of convenience of reference only and it is agreed that such section
headings are not a part of this Agreement and will not be used in the
interpretation of any provision of this Agreement.
SECTION 16. Governing Law; Counterparts. This Agreement shall be
governed by and construed in accordance with the laws of New York. This
Agreement may be executed in counterparts and the executed counterparts shall
together constitute a single instrument.
If the foregoing correctly sets forth our agreement, please indicate
your acceptance hereof in the space provided for that purpose below.
Very truly yours,
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE
CORPORATION,
by
---------------------
<PAGE> 31
34
CONFIRMED AND ACCEPTED, as of
the date first above written:
LEHMAN BROTHERS INC.,
by
------------------------
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED,
by
------------------------
<PAGE> 32
EXHIBIT A
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
Medium-Term Notes, Series C
Schedule of Payments
The Company agrees to pay each Agent a commission equal to the
following percentage of the aggregate principal amount of Securities or
percentage of the aggregate Dollar Equivalent of the Foreign Currency or Dollar
Equivalent of the Currency Unit (as defined in the Indenture) of the principal
amount of Securities placed by such Agent, as the case may be:
<TABLE>
<CAPTION>
Term Commission Rate
---- ---------------
<S> <C>
9 months to less than 1 year 0.125%
1 year to less than 18 months 0.150%
18 months to less than 2 years 0.200%
2 years to less than 3 years 0.250%
3 years to less than 4 years 0.350%
4 years to less than 5 years 0.450%
5 years to less than 7 years 0.500%
7 years to less than 10 years 0.550%
10 years to less than 15 years 0.600%
15 years to less than 30 years 0.625%
30 years or more To be negotiated at time of sale
</TABLE>
<PAGE> 33
EXHIBIT B
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
Medium-Term Notes, Series C
Administrative Procedures
Medium-Term Notes, Series C, with maturities of nine months or more
from date of issue (the "Notes") are to be offered on a continuing basis by
National Rural Utilities Cooperative Finance Corporation (the "Company").
Lehman Brothers Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
agents (each an "Agent" and, collectively, the "Agents"), have agreed to use
their best efforts to solicit offers to purchase the Notes. The Notes are
being sold pursuant to an Agency Agreement between the Company and the Agents
dated June 19, 1996 (as it may be supplemented or amended from time to time,
the "Agency Agreement"), to which these administrative procedures are attached
as an exhibit. The Company has also reserved the right to sell Notes directly
on its own behalf. The Notes will be issued pursuant to an Indenture, dated as
of December 15, 1987 (as supplemented by a First Supplemental Indenture dated
as of October 1, 1990 and as it may be supplemented or amended from time to
time, the "Indenture"), between the Company and Harris Trust and Savings Bank,
as successor trustee (the "Trustee"). The Notes will rank equally with all
other unsecured and unsubordinated indebtedness of the Company and will have
been registered with the Securities and Exchange Commission (the "Commission").
Unless otherwise defined herein, terms defined in the Agency Agreement or
Indenture shall have the same meaning when used in this exhibit.
Each Note will be represented by either a Global Security (as defined
hereinafter) delivered to the Trustee as agent for The Depository Trust Company
("DTC"), and recorded in the book-entry system maintained by DTC (a "Book-Entry
Note") or a certificate delivered to the Holder thereof or a Person designated
by such Holder (a "Certificated Note"). Only Notes denominated and payable in
U.S. dollars may be issued as Book-Entry Notes. Owners of beneficial interests
in Book-Entry Notes will be entitled to delivery of Certificated Notes only
under the limited circumstances described in the Indenture.
Administrative responsibilities, document control and record-keeping
functions to be performed by the Company will be performed by its Treasurer or
Chief Financial
<PAGE> 34
37
Officer. Administrative procedures for the offering are explained below.
Book-Entry Notes will be issued in accordance with the administrative
procedures set forth in Part II and Part III hereof and the Letter of
Representations of the Company and the Trustee to DTC dated June 19, 1996, as
amended or supplemented from time to time (the "Letter of Representations"),
and Certificated Notes will be issued in accordance with the administrative
procedures set forth in Part I and Part III hereof. Notes for which interest
is calculated on the basis of a fixed interest rate, which may be zero, are
referred to herein as "Fixed Rate Notes." Notes for which interest is
calculated on the basis of a floating interest rate are referred to herein as
"Floating Rate Notes." To the extent the procedures set forth below conflict
with the provisions of the Notes, the Indenture, the Letter of Representations
or the Agency Agreement, the relevant provisions of the Notes, the Indenture,
the Letter of Representations and the Agency Agreement shall control.
PART I
Administrative Procedures for Certificated Notes
Price to Public
Each Certificated Note will be issued at 100% of principal amount,
unless otherwise determined by the Company.
Date of Issuance
Each Certificated Note will be dated and issued as of the date of its
authentication by the Trustee.
Maturities
Each Certificated Note will mature on a Business Day (as defined in
Part III below) selected by the purchaser and agreed upon by the Company, with
maturities of nine months or more from the date of issuance.
<PAGE> 35
38
Registration
Certificated Notes will be issued only in fully registered form.
Bank of Montreal Trust Company (the "Paying Agent") will serve as registrar and
transfer agent in connection with the Certificated Notes.
Denominations
The Certificated Notes will be issued and payable in U.S. dollars in
the denomination of $1,000 or any integral multiple thereof unless otherwise
determined by the Company.
The Company may determine, upon agreement with a purchaser of
Certificated Notes, that such Certificated Notes will be denominated and
payable in a foreign currency or currency unit to be specified in a supplement
to the Prospectus ("Specified Currency"). In such case, unless otherwise
specified in such supplement, the authorized denominations of such Certificated
Notes will be the equivalent, as determined by the noon (New York City time)
buying rate for such Specified Currency for cable transfers quoted in New York
City as certified for customs purposes by the Federal Reserve Bank of New York
(the "Market Exchange Rate") on the Business Day immediately preceding the
Settlement Date (as defined below) for such Certificated Notes, of U.S. $1,000
(rounded down to an integral multiple of units of specified denominations of
such Specified Currency). If such rates are not available for any reason, the
Market Exchange Rate will be determined in accordance with the alternative
provision for determining the Market Exchange Rate pursuant to Section 311(i)
of the Indenture.
Interest Payments
Each Fixed Rate Certificated Note will bear interest from its issue
date (the "Original Issue Date") at the annual rate stated on the face thereof,
payable on January 15 and July 15 of each year (the "Interest Payment Dates"),
commencing (unless otherwise specified in the applicable supplement to the
Prospectus) on the first Interest Payment Date after issuance, and at Stated
Maturity or upon redemption, if applicable. Interest on each Certificated Note
will be calculated and paid on the basis of a 360-day year of twelve 30-day
months (unless otherwise specified in the applicable supplement to the
Prospectus).
<PAGE> 36
39
Interest will be payable to the Person in whose name such Certificated Note is
registered at the close of business on the January 1 or July 1 (the "Regular
Record Dates") next preceding the respective Interest Payment Date; provided,
however, that (i) if an Original Issue Date falls between a Regular Record Date
and an Interest Payment Date, the first payment of interest will occur on the
Interest Payment Date following the next Regular Record Date and (ii) interest
payable at Maturity will be payable to the Person to whom principal shall be
payable (whether or not such Maturity is an Interest Payment Date). Any
payment of principal and interest on such Certificated Note required to be paid
on an Interest Payment Date or at Stated Maturity or upon redemption, if
applicable, which is not a Business Day shall be postponed to the next day
which is a Business Day. All interest payments (excluding interest payments
made at Stated Maturity or upon redemption, if applicable) will be made by
check mailed to the Person entitled thereto as provided above. Notwithstanding
the foregoing, a holder of $10,000,000 or more in aggregate principal amount of
Certificated Notes of like tenor and terms shall be entitled to receive such
payments of interest by wire transfer in immediately available funds, but only
if appropriate instructions have been received in writing by the Paying Agent
on or prior to the applicable Regular Record Date for any such payment of
interest.
On the fifth Business Day immediately preceding each Interest Payment
Date, the Trustee will furnish the Company with the total amount (to the extent
known to the Trustee on such date) of the interest payments to be made on such
Interest Payment Date. The Trustee (or any duly selected paying agent) will
provide monthly to the Company's finance department a list of the principal and
interest to be paid on Certificated Notes maturing in the next succeeding
month. To the extent provided in the Indenture, the Company will provide to
the Paying Agent not later than the payment date sufficient moneys to pay in
full all principal and interest payments due on such payment date. The Paying
Agent will assume responsibility for withholding taxes on interest paid as
required by law.
For special provisions relating to the Floating Rate Notes, see
Appendix A hereto. Special provisions relating to Certificated Notes
denominated in a Specified Currency may be agreed upon by the Company and the
Agents at a later time (the "Specified Currency Provisions").
<PAGE> 37
40
Settlement
The receipt of immediately available funds in U.S. dollars by the
Company in payment for a Certificated Note (less the applicable commission) and
the authentication and issuance of such Certificated Note shall, with respect
to such Certificated Note, constitute "Settlement" and the date thereof shall
be referred to as the "Settlement Date". All offers to purchase Certificated
Notes accepted by the Company will be settled from one to five Business Days,
or one to three Business Days, should the U.S. Securities and Exchange
Commission so require, from the date of acceptance by the Company pursuant to
the timetable for Settlement set forth below unless the Company and the
purchaser agree to Settlement on a different date; provided, however, that the
Company will so notify the Trustee (which notice with respect to a Certificated
Note denominated in a Specified Currency will not be less than five Business
Days prior to the Settlement Date) of any such different date on or before the
Business Day immediately prior to the Settlement Date.
Settlement Procedures
In the event of a purchase of Certificated Notes by an Agent, as
principal, appropriate Settlement details will be set forth in the applicable
Purchase Agreement to be entered into between such Agent and the Company
pursuant to the Agency Agreement.
Settlement procedures with regard to each Certificated Note sold
through an Agent, as agent (the "Presenting Agent"), shall be as follows:
A. The Presenting Agent will advise the Company, and after the
Company has accepted the offer, the Trustee, in writing by telex,
facsimile or other electronic transmission, of the following Settlement
information:
1. Exact name in which Certificated Note is to be registered
("Registered Owner").
2. Exact address of the Registered Owner and address for
payment of principal and interest, if any.
<PAGE> 38
41
3. Taxpayer identification number of the Registered Owner.
4. Principal amount of the Certificated Note (and, if multiple
Certificated Notes are to be issued, denominations
thereof).
5. If the Certificated Notes are to be denominated in a
Specified Currency, whether principal and interest is to be
paid in U.S. dollars or the Specified Currency.
6. Settlement Date.
7. Date of Maturity.
8. Interest rate:
(a) Fixed Rate Notes:
i) Interest Rate
ii) Interest Reset Dates
(b) Floating Rate Notes:
i) Interest Rate Basis
ii) Initial Interest Rate
iii) Spread or Spread Multiplier, if
any
iv) Interest Reset Periods and
Interest Reset Dates
v) Index Maturity
vi) Maximum and Minimum Interest
Rates, if any
vii) Calculation Agent
viii) Calculation Date
ix) Interest Determination Dates
(c) Interest Payment Periods and
Interest Payment Dates
(d) Regular Record Date.
<PAGE> 39
42
9. If applicable, the date on or after which the Certificated
Notes are redeemable at the option of the Company.
10. Wire transfer information (including overseas bank account
of the country of the Specified Currency, if any).
11. Presenting Agent's commission (to be paid in the form of a
discount from the proceeds remitted to the Company upon
Settlement).
12. Trade Date
13. Net Proceeds to Company
14. Extension of Maturity Option (including the basis or
formula, of any, for the setting of the Interest Rate or
Spread and/or Spread Multiplier, as applicable).
15. Renewal of Note Provisions.
B. The Company will confirm to the Trustee (i) by telephone, telex,
facsimile or other electronic transmission, the above Settlement
information and (ii) by facsimile in the form attached as Appendix B, that
the terms of the Notes have been approved by the Governor or the Chief
Financial Officer of the Company, and the Trustee will assign a
Certificated Note number to the transaction. If the Company rejects an
offer, the Company will promptly notify the Presenting Agent by telephone,
telex, facsimile or other electronic transmission.
C. The exchange rate agent, if any, appointed by the Company will
notify the Company, the Trustee and the Presenting Agent of the Market
Exchange Rate and the denominations of Certificated Notes which are to be
denominated and payable in a Specified Currency.
D. The Trustee will complete the preprinted 4-ply Certificated Note
packet, the form of which was previously approved by the Company, the
Agents and the Trustee.
<PAGE> 40
43
E. The Trustee will authenticate and deliver the Certificated Note
(with the attached white confirmation) and the yellow and blue stubs to
the Presenting Agent. The Presenting Agent will acknowledge receipt of
the Certificated Note by completing the yellow stub and returning it to
the Trustee.
F. The Presenting Agent will cause to be wire transferred to a bank
account designated by the Company immediately available funds in U.S.
dollars in the amount of the principal amount of the Certificated Note,
less the applicable commission.
G. The Presenting Agent will deliver the Certificated Note (with the
attached white confirmation) to the purchaser against payment in
immediately available funds in the amount of the principal amount of the
Certificated Note. The Presenting Agent will deliver to the purchaser a
copy of the most recent Prospectus applicable to the Certificated Note
with or prior to delivery of the Certificated Note and the confirmation
and payment by the purchaser for the Certificated Note. If instructed by
the purchaser to deliver the Certificated Note and confirmation to
different locations, the Certificated Note and the confirmation will each
be accompanied or preceded by the Prospectus applicable to the
Certificated Note being delivered.
H. The Presenting Agent will obtain the acknowledgement of receipt
for the Certificated Note and Prospectus by the purchaser through the
purchaser's completion of the blue stub.
I. The Trustee will mail the pink stub to the Company's Chief
Financial Officer or other appropriate official.
Settlement Procedures Timetable
For offers accepted by the Company, Settlement procedures "A" through
"I" set forth above shall be completed on or before the respective times set
forth below:
Settlement
Procedure Time (New York)
--------- ----
<PAGE> 41
44
<TABLE>
<S> <C>
A 4 P.M. on date of order (2 P.M. on date of order in the case of Certificated Notes with a Settlement Date on
the Business Day after the date of order)
B 5 P.M. on date of order (3 P.M. on date of order in the case of Certificated Notes with a Settlement Date on
the Business Day after the date of order)
C 10 A.M. on the Settlement Date
D-E 12:30 P.M. on the Settlement Date (1 P.M. on the Settlement Date in the case of Certificated Notes denominated in
a Specified Currency)
F 2 P.M. on the Settlement Date
G-H 3 P.M. on the Settlement Date
I 5 P.M. on the Business Day after the Settlement Date
</TABLE>
Fails
In the event that a purchaser of a Certificated Note shall either
fail to accept delivery of or make payment for Certificated Note on the date
fixed by the Company for Settlement, the Presenting Agent will immediately
notify the Trustee and the Company's Chief Financial Officer or other
appropriate official by telephone, confirmed in writing, of such failure and
return the Certificated Note to the Trustee. Upon the Trustee's receipt of the
Certificated Note from the Presenting Agent, the Company will promptly return
to the Presenting Agent an amount of immediately available funds in U.S.
dollars equal to any amount previously transferred to the Company in respect of
the Certificated Note pursuant to advances made by such Agent. Such returns
will be made on the Settlement Date, if possible, and in any event not later
than 12 noon (New York City time) on the Business Day following the Settlement
Date. The
<PAGE> 42
45
Company will reimburse the Presenting Agent on an equitable basis for its loss
of the use of the funds during the period when the funds were credited to the
account of the Company. Upon receipt of the Certificated Note in respect of
which the default occurred, the Trustee will mark the Certificated Note
"cancelled", make appropriate entries in its records and deliver the
Certificated Note to the Company with an appropriate debit advice. The
Presenting Agent will not be entitled to any commission with respect to any
Certificated Note which the purchaser does not accept or make payment for.
Redemption
Except as otherwise specified in an applicable supplement to the
Prospectus and on the Certificated Notes, the Certificated Notes will not be
redeemable prior to their Stated Maturity. If so specified in such a
supplement and on the Certificated Note, such Certificated Note will be subject
to redemption by the Company, at one or more redemption prices (expressed as a
percentage of the principal amount of such Certificated Note) applicable during
one or more redemption periods, together with interest accrued thereon on the
date fixed for redemption.
Notice of redemption shall be given in accordance with Section 1104
of the Indenture. In the event of redemption in part of any Certificated Note,
a new Certificated Note for the amount of the unredeemed portion shall be
issued in the name of the Holder upon cancellation of the redeemed Certificated
Note.
Maturity
Upon presentation of each Certificated Note at Stated Maturity
(unless the Company has exercised its option to extend the Stated Maturity of a
Certificated Note) or upon redemption the Trustee (or any duly appointed Paying
Agent) will pay the principal amount or redemption price thereof, together with
accrued interest due at Stated Maturity or the date of redemption. Such
payment shall be made in immediately available funds in U.S. dollars (except as
provided in any Specified Currency Provisions), provided that the Certificated
Note is presented to the Trustee (or any such Paying Agent) in time for the
Trustee (or such Paying Agent) to make payments in such funds in accordance
with its normal procedures. To the extent provided in the
<PAGE> 43
46
Indenture, the Company will provide the Trustee (and any such Paying Agent)
with funds available for immediate use for such purpose. Certificated Notes
presented at Stated Maturity or upon redemption will be cancelled by the
Trustee as provided in the Indenture.
<PAGE> 44
47
PART II
Administrative Procedures for
Book-Entry Notes
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will
perform the custodial, document control and administrative functions described
below, in accordance with its obligations under the Letter of Representations
and a Medium-Term Note Certificate Agreement between the Trustee and DTC dated
as of October 18, 1989 (the "Medium-Term Note Certificate Agreement"), a copy
of which is attached hereto, and its obligations as a participant in DTC,
including DTC's Same-Day Funds Settlement System ("SDFS").
Price to Public
Each Book-Entry Note will be issued at 100% of principal amount,
unless otherwise determined by the Company.
Date of Issuance
On any Settlement Date (as defined under "Settlement" below) for one
or more Book-Entry Notes, the Company will issue a single global security in
fully registered form without coupons (a "Global Security") representing up to
$200,000,000 principal amount of all such Book-Entry Notes that have the same
terms. Each Global Security will be dated and issued as of the date of its
authentication by the Trustee. Each Global Security will bear an original
issue date, which will be (i) with respect to an original Global Security (or
any portion thereof), the original issue date specified in such Global Security
and (ii) following a consolidation of Global Securities, with respect to the
Global Security resulting from such consolidation, the most recent Interest
Payment Date (as defined in the Indenture) to which interest has been paid or
duly provided for on the predecessor Global Securities, regardless of the date
of authentication of such resulting Global Security. No Global Security will
represent (i) both Fixed Rate Book-Entry Notes and Floating Rate Book-Entry
Notes or (ii) any Certificated Note.
<PAGE> 45
48
Identification Numbers
The Company has arranged with the CUSIP Service Bureau of Standard &
Poor's Corporation (the "CUSIP Service Bureau") for the reservation of a series
of CUSIP numbers, which series consists of approximately 900 CUSIP numbers and
relates to Global Securities representing Book-Entry Notes and book-entry
medium-term notes issued by the Company with other series designations. The
Company has obtained from the CUSIP Service Bureau a written list of such
reserved CUSIP numbers and has provided a copy of such list to DTC and the
Trustee. The Company will assign CUSIP numbers to Global Securities as
described below under Settlement Procedure "B". DTC will notify the CUSIP
Service Bureau periodically of the CUSIP numbers that the Company has assigned
to Global Securities. The Trustee will notify the Company at any time when
fewer than 100 of the reserved CUSIP numbers remain unassigned to Global
Securities, and, if it deems necessary, the Company will reserve additional
CUSIP numbers for assignment to Global Securities. Upon obtaining such
additional CUSIP numbers, the Company shall deliver a list of such addition
CUSIP numbers to the Trustee and DTC.
Registration
Global Securities will be issued only in fully registered form
without coupons. Each Global Security will be registered in the name of CEDE &
CO., as nominee for DTC, on the securities register for the Notes maintained
under the Indenture. The beneficial owner of a Book-Entry Note (or one or more
indirect participants in DTC designated by such owner) will designate one or
more participants in DTC (with respect to such Book-Entry Note, the
"Participants") to act as agent or agents for such owner in connection with the
book-entry system maintained by DTC, and DTC will record in book-entry form, in
accordance with instructions provided by such Participants, a credit balance
with respect to such beneficial owner in such Book-Entry Note in the account of
such Participants. The ownership interest of such beneficial owner (or such
indirect participant in DTC) in such Book-Entry Note will be recorded through
the records of such Participants or through the separate records of such
Participants and one or more indirect participants in DTC.
<PAGE> 46
49
Transfers
Transfers of a Book-Entry Note will be accomplished by book entries
made by DTC and, in turn, by Participants (and in certain cases, one or more
indirect participants in DTC) acting on behalf of beneficial transferors and
transferees of such Note.
Exchanges
The Trustee may deliver to DTC and the CUSIP Service Bureau at any
time a written notice of consolidation specifying (i) the CUSIP numbers of two
or more outstanding Global Securities that represent (A) Fixed Rate Book-Entry
Notes having the same terms and for which interest has been paid to the same
date or (B) Floating Rate Book-Entry Notes having the same terms and for which
interest has been paid to the same date, (ii) a date, occurring at least thirty
days after such written notice is delivered and at least thirty days before the
next Interest Payment Date for such Book-Entry Notes, on which such Global
Securities shall be exchanged for a single replacement Global Security and
(iii) a new CUSIP number, obtained from the Company, to be assigned to such
replacement Global Security. Upon receipt of such a notice, DTC will send to
its participants (including the Trustee) a written reorganization notice to the
effect that such exchange will occur on such date. Prior to the specified
exchange date, the Trustee will deliver to the CUSIP Service Bureau a written
notice setting forth such exchange date and such new CUSIP number and stating
that, as of such exchange date, the CUSIP numbers of the Global Securities to
be exchanged will no longer be valid. On the specified exchange date, the
Trustee will exchange such Global Securities for a single Global Security
bearing the new CUSIP number and the CUSIP Numbers of the exchanged Global
Securities will, in accordance with CUSIP Service Bureau procedures, be
canceled and not immediately reassigned. Notwithstanding the foregoing, if the
Global Securities to be exchanged exceed $200,000,000 in aggregate principal
amount, one Global Security will be authenticated and issued to represent each
$200,000,000 of principal amount of the exchanged Global Securities and an
additional Global Security will be authenticated and issued to represent any
remaining principal amount of such Global Securities (see "Denominations"
below).
<PAGE> 47
50
Maturity
Each Book-Entry Note will mature on a date nine months or more after
the Settlement date for such Note.
Denominations
Book-Entry Notes will be issued in principal amounts of $1,000 or any
integral multiple thereof. Global Securities will be denominated in principal
amounts not in excess of $200,000,000. If one or more Book-Entry Notes having
an aggregate principal amount in excess of $200,000,000 would, but for the
preceding sentence, be represented by a single Global Security, then one Global
Security will be authenticated and issued to represent each $200,000,000
principal amount of such Book-Entry Note or Notes and an additional Global
Security will be authenticated and issued to represent any remaining principal
amount of such Book-Entry Note or Notes. In such a case, each of the Global
Securities representing such Book-Entry Note or Notes shall be assigned the
same CUSIP number.
Interest
Interest, if any, on each Fixed Rate Book-Entry Note will accrue from
the original issue date for the first interest period or the last date to which
interest has been paid, if any, for each subsequent interest period, on the
Global Security representing such Book-Entry Note, and will be calculated and
paid in the manner described in such Book-Entry Note. Unless otherwise
specified therein, each payment of interest on a Fixed Rate Book-Entry Note
will include interest accrued to but excluding the Interest Payment Date or to
but excluding the date of Maturity. Interest on Fixed Rate Book-Entry Notes
(including interest for partial periods) will be calculated on the basis of a
360-day year of twelve 30-day months.
Interest payable at the date of Maturity of a Book-Entry Note will be
payable to the Person to whom the principal of such Note is payable. Standard
& Poor's Ratings Group may use the information received in the pending deposit
message described under Settlement Procedure "C" below in order to include the
amount of any interest payable and certain other information regarding the
<PAGE> 48
51
related Global Security in the appropriate (daily or weekly) bond report
published by Standard & Poor's Ratings Group.
For special provisions relating to the Floating Rate Notes, see
Appendix A hereto.
Payments of Interest
Promptly after each Regular Record Date, the Paying Agent will
deliver to the Company and DTC a written notice setting forth, by CUSIP number,
the amount of interest to be paid on each Global Security on such Interest
Payment Date (other than an Interest Payment Date coinciding with Maturity) and
the total of such amounts. DTC will confirm the amount payable on each Global
Security on such Interest Payment Date by reference to the appropriate (daily
or weekly) bond reports published by Standard & Poor's Corporation. The
Company will pay to the Paying Agent the total amount of interest due on such
Interest Payment Date (other than at Maturity), and the Paying Agent will pay
such amount to DTC, at the times and in the manner set forth below under
"Manner of Payment." If any Interest Payment Date for a Book-Entry Note is not
a Business Day, the payment due on such day shall be made on the next
succeeding Business Day and no interest shall accrue on such payment for the
period from and after such Interest Payment Date.
Payment at Maturity
On or about the first Business Day of each month, the Paying Agent
will deliver to the Company and DTC a written list of principal and interest to
be paid on each Global Security maturing in the following month (excluding
principal on a Book-Entry Note where the Company has exercised its option to
extend the Stated Maturity). The Company and DTC will confirm the amounts of
such principal and interest payments with respect to each such Global Security
on or about the fifth Business Day preceding the Maturity of such Global
Security. On or before Maturity, the Company will pay to the Paying Agent, the
principal amount of such Global Security, together with interest due at such
Maturity. The Paying Agent will pay such amount to DTC at the times and in the
manner set forth below under "Manner of Payment." If any Maturity of a Global
Security representing Book-Entry Notes is not a Business Day, the payment due
on such day shall be made on the next succeeding Business Day and no interest
shall accrue on such payment
<PAGE> 49
52
for the period from and after such Maturity. Promptly after payment to DTC of
the principal and interest due at Maturity of such Global Security, the Paying
Agent will cancel such Global Security in accordance with the Indenture and so
advise the Company.
Manner of Payment
The total amount of any principal and interest due on Global
Securities on any Interest Payment Date or at Maturity shall be paid by the
Company to the Paying Agent in immediately available funds no later than 9:30
A.M. (New York City time) on such date. The Company will make such payment on
such Global Securities by instructing the Paying Agent to withdraw funds from
an account maintained by the Company at the Paying Agent or by wire transfer to
the Paying Agent. The Company will confirm any such instructions in writing to
the Paying Agent. Prior to 10 A.M. (New York City time) on the date of
Maturity or as soon as possible thereafter, the Paying Agent will pay by
separate wire transfer (using Fedwire message entry instructions in a form
previously specified by DTC) to an account at the Federal Reserve Bank of New
York previously specified by DTC, in funds available for immediate use by DTC,
each payment of principal (together with interest thereon) due on a Global
Security on such date. On each Interest Payment Date (other than at Maturity),
interest payments shall be made to DTC, in funds available for immediate use by
DTC, in accordance with existing arrangements between the Paying Agent and DTC.
On each such date, DTC will pay, in accordance with its SDFS operating
procedures then in effect, such amounts in funds available for immediate use to
the respective Participants in whose names the Book-Entry Notes represented by
such Global Securities are recorded in the book-entry system maintained by DTC.
Neither the Company (as issuer) nor the Paying Agent (as trustee, security
registrar or paying agent) shall have any direct responsibility or liability
for the payment by DTC to such Participants of the principal of and interest on
the Book-Entry Notes.
Withholding Taxes
The amount of any taxes required under applicable law to be withheld
from any interest payment on a Book-Entry Note will be determined and withheld
by the Participant, indirect participant in DTC or other Person responsible for
<PAGE> 50
53
forwarding payments and materials directly to the beneficial owner of such
Note.
Settlement
The receipt by the Company of immediately available funds in payment
for a Book-Entry Note and the authentication and issuance of the Global
Security representing such Book-Entry Note shall constitute "Settlement" with
respect to such Book-Entry Note and the date thereof shall be referred to as
the "Settlement Date". All orders for Book-Entry Notes accepted by the Company
will be settled on the fifth Business Day, or the third Business Day, should
the U.S. Securities and Exchange Commission so require, following the date of
acceptance by the Company pursuant to the timetable for Settlement set forth
below unless the Company and the purchaser agree to Settlement on another day
which shall be no earlier than the next Business Day following the date of
acceptance.
Settlement Procedures
In the event of a purchase of Book-Entry Notes by an Agent, as
principal, appropriate Settlement details will be set forth in the applicable
Purchase Agreement to be entered into between such Agent and the Company
pursuant to the Agency Agreement.
Settlement Procedures with regard to each Book-Entry Note sold by the
Company through an Agent, as agent (the "Presenting Agent"), shall be as
follows:
A. The Presenting Agent will advise the Company by telephone of the
following Settlement information:
1. Principal amount.
2. Settlement Date.
3. Date of Maturity.
4. Interest rate:
(a) Fixed Rate Notes:
i) Interest Rate
ii) Interest Reset Dates
<PAGE> 51
54
(b) Floating Rate Notes:
i) Interest Rate Basis
ii) Initial Interest Rate
iii) Spread or Spread Multiplier, if
any
iv) Interest Reset Periods and
Interest Reset Dates
v) Index Maturity
vi) Maximum and Minimum Interest
Rates, if any
vii) Calculation Agent
viii) Calculation Date
ix) Interest Determination Dates
(c) Interest Payment Periods and
Interest Payment Dates.
(d) Regular Record Date.
5. If applicable, the date on or after which the Book-Entry
Notes are redeemable at the option of the Company.
6. Presenting Agent's commission (to be paid in the form of a
discount from the proceeds remitted to the Company upon
Settlement).
7. Trade Date.
8. Net Proceeds to Company.
9. Extension of Maturity Option (including the basis or
formula, if any, for the setting of the Interest Rate, or
the Spread and/or Spread Multiplier, as applicable).
10. Renewal of Note Provisions.
B. The Company will assign a CUSIP number to the Global Security
representing such Book-Entry Note and then advise the Trustee by telephone
(confirmed in writing at any time on the same date) or electronic
transmission of the information set forth in Settlement Procedure "A"
above, such CUSIP number and the name of
<PAGE> 52
55
the Presenting Agent. The Company will confirm to the Trustee, by
facsimile in the form attached as Appendix B, that the terms of the Notes
have been approved by the Governor or the Chief Financial Officer of the
Company. The Company will also notify the Presenting Agent by telephone
of such CUSIP number as soon as practicable.
C. The Trustee will enter a pending deposit message through DTC's
Participant Terminal System providing the following Settlement information
to DTC (which shall route such information to Standard & Poor's Ratings
Group and Interactive Data Corporation) and the Presenting Agent:
1. The information set forth in Settlement Procedure "A".
2. Identification as a Fixed Rate Book-Entry Note or a
Floating Rate Book-Entry Note.
3. Initial Interest Payment Date for such Book-Entry Note,
number of days by which such date succeeds the related
Regular Record Date (which, in the case of Floating Rate
Book-Entry Notes that reset weekly, shall be the DTC Record
Date, which is the date five calendar days immediately
preceding the applicable Interest Payment Date and, in the
case of all other Book-Entry Notes, shall be the Regular
Record Date as defined in the Indenture) and amount of
interest payable on such Interest Payment Date.
4. The interest payment period.
5. CUSIP number of the Global Security representing such
Book-Entry Note.
6. Whether such Global Security will represent any other
Book-Entry Note (to the extent known at such time).
<PAGE> 53
56
7. Numbers of the participant accounts maintained by DTC on
behalf of the Trustee and the Presenting Agent.
D. To the extent the Company has not already done so, the Company
will deliver to the Trustee a Global Security in a form that has been
approved by the Company, the Agents and the Trustee.
E. The Trustee will complete such Book-Entry Note, stamp the
appropriate legend, as instructed by DTC, if not already set forth
thereon, and authenticate the Global Security representing such Book-Entry
Note.
F. DTC will credit such Book-Entry Note to the Trustee's
participant account at DTC.
G. The Trustee will enter an SDFS deliver order through DTC's
Participant Terminal System instructing DTC to (i) debit such Book-Entry
Note to the Trustee's participant account and credit such Book-Entry Note
to the Presenting Agent's participant account and (ii) debit the
Presenting Agent's Settlement account and credit the Trustee's Settlement
account for an amount equal to the principal amount of such Book-Entry
Note less the Presenting Agent's commission. The entry of such a deliver
order shall constitute a representation and warranty by the Trustee to DTC
that (i) the Global Security representing such Book-Entry Note has been
issued and authenticated and (ii) the Trustee is holding such Global
Security pursuant to the Medium-Term Note Certificate Agreement.
H. The Presenting Agent will enter an SDFS deliver order through
DTC's Participant Terminal System instructing DTC (i) to debit such
Book-Entry Note to the Presenting Agent's participant account and credit
such Book-Entry Note to the participant accounts of the Participants with
respect to such Book-Entry Note and (ii) to debit the Settlement accounts
of such Participants and credit the Settlement account of the Presenting
Agent for an amount equal to the principal amount of such Book-Entry Note.
I. Transfers of funds in accordance with SDFS deliver orders
described in Settlement Procedures "G"
<PAGE> 54
57
and "H" will be settled in accordance with SDFS operating procedures in
effect on the Settlement date.
J. The Trustee will, upon receipt of funds from the Agent in
accordance with Settlement Procedure "G", credit to an account of the
Company maintained at the Trustee funds available for immediate use in the
amount transferred to the Trustee in accordance with Settlement Procedure
"G".
K. The Trustee will send a copy of the Book-Entry Note by
first-class mail to the Company.
L. The Presenting Agent will confirm the purchase of such Book-Entry
Note to the purchaser either by transmitting to the Participants with
respect to such Book-Entry Note a confirmation order or orders through
DTC's institutional delivery system or by mailing a written confirmation
to such purchaser.
Settlement Procedures Timetable
For orders of Book-Entry Notes solicited by any Agent and accepted by
the Company for Settlement on the first Business Day after such acceptance,
Settlement Procedures "A" through "K" set forth above shall be completed as
soon as possible but not later than the respective times set forth below:
<TABLE>
<CAPTION>
Settlement
Procedure Time (New York)
--------- ----
<S> <C>
A 11 A.M. on date of order
B 12 P.M. on date of order
C 2 P.M. on date of order
D 3 P.M. on date of order
E 9 A.M. on Settlement Date
F 10 A.M. on Settlement Date
G-H 2 P.M. on Settlement Date
I 4:45 P.M. on Settlement Date
J-K 5 P.M. on Settlement Date
</TABLE>
If an order is to be settled more than one Business Day after
acceptance by the Company, Settlement Procedures "A", "B" and "C" may be
completed not later than 11:00 A.M., 12:00 Noon and 2:00 P.M., respectively, on
the Business Day after the date of acceptance. If the initial
<PAGE> 55
58
interest rate for a Floating Rate Book-Entry Note has not been determined at
the time that Settlement Procedure "A" is completed, Settlement Procedures "B"
and "C" shall be completed as soon as such rate has been determined but not
later than 12:00 Noon and 2:00 P.M., respectively, on the Business Day after
the date of acceptance. Settlement Procedure "I" is subject to extension in
accordance with any extension of Fedwire closing deadlines and in the other
events specified in SDFS operating procedures in effect on the Settlement Date.
If Settlement of a Book-Entry Note is rescheduled or canceled, the
Company will advise the Trustee and the Trustee will deliver to DTC, through
DTC's Participant Terminal System, a cancelation message to such effect by no
later than 2:00 P.M. on the Business Day immediately preceding the scheduled
Settlement Date.
Failure to Settle
If the Trustee fails to enter an SDFS deliver order with respect to a
Book-Entry Note pursuant to Settlement Procedure "G", the Trustee may deliver
to DTC, through DTC's Participant Terminal System, as soon as practicable, a
withdrawal message instructing DTC to debit such Book-Entry Note to the
Trustee's participant account. DTC will process the withdrawal message,
provided that the Trustee's participant account contains a principal amount of
the Global Security representing such Book-Entry Note that is at least equal to
the principal amount to be debited. If a withdrawal message is processed with
respect to all the Book-Entry Notes represented by a Global Security, the
Trustee will cancel such Global Security in accordance with the Indenture and
so advise the Company. The CUSIP number assigned to such Global Security
shall, in accordance with CUSIP Service Bureau procedures, be canceled and not
immediately reassigned. If a withdrawal message is processed with respect to
one or more, but not all, of the Book-Entry Notes represented by a Global
Security, the Trustee will exchange such Book-Entry Note for two Global
Securities, one of which shall represent such Book-Entry Notes and shall be
canceled immediately after issuance and the other of which shall represent the
other Book-Entry Notes previously represented by the surrendered Global
Security and shall bear the CUSIP number of the surrendered Global Security.
<PAGE> 56
59
If the purchase price for any Book-Entry Note is not timely paid to
the Participants with respect to such Note by the beneficial purchaser thereof
(or a Person, including an indirect participant in DTC, acting on behalf of
such purchaser), such Participants and, in turn, the Presenting Agent may enter
SDFS deliver orders through DTC's Participant Terminal System reversing the
orders entered pursuant to Settlement Procedures "H" and "G", respectively.
Thereafter, the Trustee will deliver the withdrawal message and take the
related actions described in the preceding paragraph. The Company will
reimburse the Presenting Agent and the Trustee, as applicable, on an equitable
basis for their loss of the use of the funds during the period when the funds
were credited to the account of the Company (except that the Company shall not
be required to reimburse a party if such party's default hereunder or under the
Agency Agreement shall have caused such failure by the beneficial purchaser to
make timely payment of the purchase price),
Notwithstanding the foregoing, upon any failure to settle with
respect to a Book-Entry Note, DTC may take any actions in accordance with its
SDFS operating procedures then in effect. In the event of a failure to settle
with respect to one or more, but not all, of the Book-Entry Notes to have been
represented by a Global Security, the Trustee will provide, in accordance with
Settlement Procedure "E", for the authentication and issuance of a Global
Security representing the other Book-Entry Notes to have been represented by
such Global Security and will make appropriate entries in its records.
Trustee Not to Risk Funds
Nothing herein shall be deemed to require the Trustee to risk or
expend its own funds in connection with any payment to the Company, DTC, the
Agents or the purchaser, it being understood by all parties that payments made
by the Trustee to the Company, DTC, the Agents or the purchaser shall be made
only to the extent that funds are provided to the Trustee for such purpose.
PART III
Administrative Procedures for Book-Entry Notes
and Certificated Notes
<PAGE> 57
60
Procedures for Establishing the Terms of the Notes
The Company and the Agents will discuss from time to time the rates
to be borne by the Notes that may be sold as a result of the solicitation of
offers by the Agents. Once either Agent has recorded any indication of
interest in Notes upon certain terms, and communicated with the Company, if the
Company plans to accept an offer to purchase Notes upon such terms, it will
prepare a sticker reflecting the terms of such Notes (if the interest rate,
Stated Maturity or other terms have changed) and, after approval from such
Agent, will arrange to have such sticker (together with the Prospectus if
amended or supplemented), electronically filed or transmitted by a means
reasonably calculated to result in filing with the Commission by the second
Business Day after the Company has accepted such offer (or by the Business Day
prior to the Settlement Date in the event the Settlement Date is the first or
second Business Day after such acceptance) and pursuant to Rule 424(b) of the
Rules and Regulations, and will supply an appropriate number of copies of the
Prospectus, as then amended or supplemented, and bearing such sticker, to the
Agent that presented such offer. No Settlements with respect to Notes upon
such terms may occur prior to such filing or such transmission and the Agents
will not, prior to such filing or such transmission, mail confirmations to
customers who have offered to purchase Notes upon such terms. After such
filing or such transmission, sales, mailing of confirmations and Settlements
may occur with respect to Notes upon such terms, subject to the provisions of
"Delivery of Prospectus" below.
If the Company decides to post rates and a decision has been reached
to change interest rates, the Company will promptly so notify each Agent. Each
Agent will forthwith suspend solicitation of purchases. At that time, the
Agents will recommend and the Company will establish rates to be so posted.
Following establishment of posted rates and prior to the filing or transmission
described in the following sentence, the Agents may record indications of
interest in purchasing Notes only at the posted rates. Once either Agent has
recorded any indication of interest in Notes at the posted rates and
communicated with the Company, if the Company plans to accept an offer at the
posted rate, it will prepare a sticker reflecting such posted rates and, after
approval from such Agent, will arrange to have such sticker (together with the
Prospectus if amended or supplemented), electronically filed or transmitted by
a means
<PAGE> 58
61
reasonably calculated to result in filing with the Commission by the second
Business Day after the Company has accepted such offer (or by the Business Day
prior to the Settlement Date in the event the Settlement Date is the first or
second Business Day after such acceptance) and pursuant to Rule 424(b) of the
Rules and Regulations, and will supply an appropriate number of copies of the
Prospectus, as then amended or supplemented, to the Agent who presented such
offer. No Settlements at the posted rates may occur prior to such filing or
such transmission and the Agents will not, prior to such filing or such
transmission, mail confirmations to customers who have offered to purchase
Notes at the posted rates. After such filing or such transmission, sales,
mailing of confirmations and Settlements may resume, subject to the provisions
of "Delivery of Prospectus" below.
Acceptance and Rejection of Offers
The Company shall have the sole right to accept offers to purchase
Notes from the Company and may reject any such offer in whole or in part. Each
Agent shall promptly communicate to the appropriate official of the Company,
orally or in writing, each reasonable offer to purchase Notes from the Company
received by it other than those rejected by such Agent. Each Agent shall have
the right, in its discretion reasonably exercised without advising the Company,
to reject any offers in whole or in part.
Suspension of Solicitation; Amendment or Supplement
If, during any period in which, in the opinion of counsel for the
Agents (provided, if the Agents are no longer soliciting (or have been
instructed not to solicit) purchases of Securities from the Company such
opinion is known to the Company), a prospectus relating to the Notes is
required to be delivered under the Act, any event known to the Company occurs
as a result of which the Prospectus would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act or the Rules and Regulations, the Company will notify
the Agents promptly to suspend solicitation of purchases of the Notes and the
Agents shall suspend their solicitations of purchases of Notes; and if the
Company shall decide to amend or supple-
<PAGE> 59
62
ment the Registration Statement or the Prospectus for purposes of offering the
Securities, it will promptly advise the Agents by telephone (with confirmation
in writing) and, except as otherwise provided in any relevant Purchase
Agreement, will promptly prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or an amendment,
whether by filing such documents pursuant to the Act or the Exchange Act, as
may be necessary to correct such untrue statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements and to
prepare and furnish to the Agents at its own expense such amendment or
supplement to the Registration Statement or the Prospectus as will correct such
Registration Statement or Prospectus; provided, however, that the Company shall
in any event promptly prepare, file and furnish an Agent with such an amendment
or supplement if such Agent shall then hold any Securities acquired from the
Company as principal (other than such Securities as such Agent shall have held
for a period of six months or more). Upon the Agents' receipt of such
amendment or supplement and advice from the Company that solicitations may be
resumed, the Agents will resume solicitations of purchases of the Notes.
In addition, the Company may instruct the Agents to suspend
solicitation of offers to purchase at any time. Upon receipt of such
instructions the Agents will forthwith (but in any event within one Business
Day) suspend solicitation of offers to purchase from the Company until such
time as the Company has advised it that solicitation of offers to purchase may
be resumed and the Company has complied with Section 6 of the Agency Agreement
to the extent then required. If the Company decides to amend or supplement the
Registration Statement or the Prospectus relating to the Notes (other than to
change interest rates or maturities or similar changes and except in all cases
by filing a report on Form 8-K, pursuant to the Exchange Act, solely to add
exhibits to documents previously filed), it will promptly advise the Agents and
the Trustee and will furnish the Agents and the Trustee with copies of the
proposed amendment or supplement.
In the event that at the time the Agents, at the direction of the
Company, suspend solicitation of offers to purchase from the Company there
shall be any orders outstanding which have not been settled, the Company will
promptly advise the Agents and the Trustee whether such
<PAGE> 60
63
orders may be settled and whether copies of the Prospectus as theretofore
amended and/or supplemented as in effect at the time of the suspension may be
delivered in connection with the Settlement of such orders. The Company will
have the sole responsibility for such decision and for any arrangements which
may be made in the event that the Company determines that such orders may not
be settled or that copies of such Prospectus may not be so delivered.
Delivery of Prospectus
A copy of the Prospectus as most recently amended or supplemented on
the date of delivery thereof must be delivered to a purchaser prior to or
together with the earliest of (i) any written offer of such Note, (ii)
confirmation of the purchase of such Note and (iii) payment for such Note by
its purchaser. The Company shall ensure that an Agent receives copies of the
Prospectus and each amendment or supplement thereto (including appropriate
pricing stickers as described in the section entitled "Procedures for
Establishing the Terms of the Notes" above) in such quantities and within such
time limits as will enable such Agent to deliver such confirmation or Note to a
purchaser as contemplated by these procedures and in compliance with the
preceding sentence. If, since the date of acceptance of a purchaser's offer,
the Prospectus shall have been supplemented solely to reflect any sale of Notes
on terms different from those agreed to between the Company and such purchaser
or a change in posted rates not applicable to such purchaser, such purchaser
shall not receive the Prospectus as supplemented by such new supplement, but
shall receive the Prospectus as supplemented to reflect the terms of the Notes
being purchased by such purchaser and otherwise as most recently amended or
supplemented on the date of delivery of the Prospectus. The Trustee will make
all such deliveries with respect to all Notes sold directly by the Company.
Confirmation
For each order to purchase a Note solicited by any Agent and accepted
by the Company, the Presenting Agent will issue a confirmation to the purchaser
(with a copy to the Company), including delivery and payment instructions.
Advertising Costs
<PAGE> 61
64
The Company will determine with the Agents the amount and nature of
advertising that may be appropriate in offering the Notes. The "tombstone"
advertisement and such other expenses agreed to by the Company and Agents in
connection with solicitation of offers to purchase Notes from the Company will
be paid by the Company.
Business Day
"Business Day" shall mean, for all purposes of these Administrative
Procedures, any day which is not a Saturday or Sunday and which is not a day on
which banking institutions are generally authorized or obligated by law or
executive order to close (i) in New York City, (ii) in the case of Notes
denominated in a Specified Currency, in the city designated in an applicable
supplement to the Prospectus as the principal financial center of the country
of such Specified Currency, (iii) in the case of Notes denominated in ECU, in
Brussels and (iv) in the case of LIBOR Notes (as defined in Appendix A), in New
York City and London.
<PAGE> 62
EXHIBIT C
PURCHASE AGREEMENT
, 199
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
Woodland Park
2201 Cooperative Way
Herndon, Virginia 22071
Attention: Chief Financial Officer
The undersigned agrees to purchase the following principal amount of
the Securities described in the Agency Agreement dated June 19, 1996 (as it may
be supplemented or amended from time to time, the "Agency Agreement"):
<TABLE>
<S> <C>
Principal Amount: [$]
Currency:
Interest Rate: %
Discount: % of Principal Amount
Aggregate Price to
be paid to Company
(in immediately
available funds): [$]
Settlement Date:
Other Terms:
</TABLE>
In the case of Securities issued in a foreign currency or currency
unit, unless otherwise specified below, settlement and payments of principal
and interest will be in U.S. dollars based on the highest bid quotation in the
City of New York received by the Exchange Rate Agent (as defined in the
Indenture dated as of December 15, 1987, as supplemented by the First
Supplemental Indenture dated as of October 1, 1990, between National Rural
Utilities Cooperative Finance Corporation and Harris Trust and Savings Bank, as
successor trustee) at approximately 11:00 A.M. New
<PAGE> 63
66
York City time, on the second Business Day (as defined in the Procedures)
preceding the applicable payment date from three recognized foreign exchange
dealers (one of which may be the Exchange Rate Agent) for the purchase by the
quoting dealer of the Specified Currency for U.S. dollars for settlement on
such payment date in the aggregate amount of the Specified Currency payable to
all holders of Securities denominated in such Specified Currency electing to
receive U.S. dollar payments and at which the applicable dealer commits to
execute a contract. If such bid quotations are not available, payments will be
made in the Specified Currency.
Our obligation to purchase Securities hereunder is subject to the
continued accuracy of your representations and warranties contained in the
Agency Agreement and to your performance and observance in all material
respects of all applicable covenants and agreements contained therein,
including, without limitation, your obligations pursuant to Section 7 thereof.
Our obligation hereunder is subject to the further condition that we shall
receive (a) the opinions required to be delivered pursuant to Sections 5(e) and
5(f) of the Agency Agreement, (b) the certificate required to be delivered
pursuant to Section 5(g) of the Agency Agreement and (c) the letter required to
be delivered pursuant to 5(h) of the Agency Agreement, in each case dated as of
the above Settlement Date.
In further consideration of our agreement hereunder, you agree that
between the date hereof and the above Settlement Date, you will not offer or
sell, or enter into any agreement to sell, except to your members, any debt
securities of the Company of substantially the form of the Securities.
We may terminate this Agreement, immediately upon notice to you, at
any time prior to the above Settlement Date, if prior thereto (a) trading in
securities generally on the New York Stock Exchange is suspended, or minimum
prices are established on that Exchange, or (b) a banking moratorium is
declared by either Federal or New York State authorities, or (c) the United
States is or becomes engaged in any outbreak of hostilities, an escalation of
hostilities or a national emergency or war. In the event of such termination,
no party shall have any liability to the other party hereto, except as provided
in Sections 4, 7 and 13 of the Agency Agreement.
<PAGE> 64
67
Except as expressly designated, capitalized terms used herein are
defined in the Agency Agreement (including the exhibits thereto).
This Agreement shall be governed by and construed in accordance with the laws
of New York.
[Insert Name of Agent],
By
--------------------
Title:
Accepted: , 199
--------- -- -
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
By
--------------------------
Chief Financial Officer
<PAGE> 65
EXHIBIT D
FORM OF AMENDMENT
AMENDMENT dated as of [ ] to the Agency Agreement
dated June 19, 1996, [as amended [ ] among National
Rural Utilities Cooperative Finance Corporation (the "Company"),
a District of Columbia cooperative association, Lehman Brothers
Inc. (an "Agent") and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (an "Agent") (such Agency Agreement [, as amended,]
the "Agreement").
WHEREAS, the parties hereto have entered into the Agreement;
WHEREAS, the Agreement initially contemplated the issuance from time
to time of up to $623,599,000 aggregate principal amount of the Company's
Securities;
[WHEREAS, pursuant to prior Amendments, the Company and the Agents
have agreed to add $[ ] aggregate principal amount of Securities to the
Agreement;]
WHEREAS, the Company has issued and sold approximately $[ ]
aggregate principal amount of Securities pursuant to the Agreement and the
Indenture;
WHEREAS, immediately prior to this Amendment taking effect, the
Company's Registration Statement No. [ ] remains effective under the Act
relating to the Securities, with $[ ] aggregate principal amount of
Securities remaining unissued and unsold under such Registration Statement;
WHEREAS, the parties hereto desire to amend the Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
1. The Agreement is hereby amended to include in the definition of
"Registration Statement", as contemplated therein in Section 1(a), Registration
Statement No.
<PAGE> 66
69
[ ], previously filed with the Commission and effective as of [ ],
relating to the registration of $[ ] in aggregate principal amount of
the Company's Securities, and to revise the definition of "Prospectus" to mean
the prospectus supplement dated [ ], relating to the Securities
covered by the Agreement as amended by this Amendment, together with the
prospectus contained in such Registration Statement.
[2. The Agreement is hereby amended to delete from the definition of
"Registration Statement", Registration Statement No. [ ], and all
amendments thereto and supplements thereof, all of the Securities registrated
thereby having been issued by the Company.]
3. The Agreement is hereby amended to increase the aggregate
principal amount of the Company's Securities which may be issued and sold from
time to time by the Company thereunder to $[ ] and the aggregate
principal amount of Securities which may be issued and sold from time to time
thereunder on or after the date hereof to $[ ].
4. This Amendment shall become effective only on the satisfaction
(or waiver by the Agents) of the conditions in Section 5 of the Agreement with
respect to the Closing Date for this Amendment.
Except as expressly amended hereby, the Agreement [, as previously
amended,] shall continue in full force and effect in accordance with the
provisions thereof as in existence on the date hereof.
All capitalized terms not defined herein have the meanings assigned
to them in the Agreement.
IN WITNESS WHEREOF, the parties hereto have each caused this
Amendment to be fully executed as of the date first above written.
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
by
---------------------------
Name:
<PAGE> 67
70
Title:
LEHMAN BROTHERS INC.
by
---------------------------
Name:
Title:
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
by
---------------------------
Name:
Title:
<PAGE> 68
APPENDIX A
APPENDIX A
Special Provisions Relating
to Floating Rate Notes
Interest Rate: Interest on Floating Rate Notes will be determined by
reference to an "Interest Rate Basis", which shall be the
"Commercial Paper Rate" ("Commercial Paper Rate Notes"),
"LIBOR" ("LIBOR Notes"), the "Treasury Rate" ("Treasury
Rate Notes"), the "Federal Funds Effective Rate" ("Fed
Funds Notes"), the "CD Rate" ("CD Rate Notes"), the "Prime
Rate" ("Prime Rate Notes") or such other interest rate
formula as may be designated by the Company, based upon the
Index Maturity and adjusted by a Spread or Spread
Multiplier, if any, as specified in the applicable pricing
supplement to the Prospectus setting forth the terms of
each issuance of Notes (the "Pricing Supplement"). The
"Index Maturity" is the particular maturity of the type of
instrument or obligation from which the Interest Rate Basis
is calculated (e.g., in the case of commercial paper,
30-day rather than 90-day commercial paper). The "Spread"
is the number of basis points (100 basis points equals one
percent) above or below the Interest Rate Basis applicable,
to such Floating Rate Note, and the "Spread Multiplier" is
the percentage of the Interest Rate Basis applicable to the
interest rate for such Floating Rate Note. The Spread,
Spread Multiplier, Index Maturity and other variable terms
as described below are subject to change by the Company
from time to time, but no such change will affect any
Floating Rate Note theretofore issued or as to which an
offer has been accepted by the Company. A Floating Rate
Note may also have either or both of the following: (i) a
maximum limit, or ceiling ("Maximum Interest Rate"), on the
rate of interest which may apply during any Interest Period
(as defined below); and (ii) a minimum limit, or floor
("Minimum Interest Rate"), on the rate of interest which
may apply during any Interest Period. In addition to any
Maximum Interest Rate which may be applicable to any
Floating Rate
<PAGE> 69
72
Note pursuant to the above provisions, the interest rate on
the Floating Rate Notes will in no event be higher than the
maximum rate permitted by New York law, as the same may be
modified by United States law of general application.
Under present New York law, the maximum rate of interest is
25% per annum on a simple interest basis. The limit may
not apply to Floating Rate Notes in which $2,500,000 or
more has been invested.
The Calculation Agent appointed by the Company (the
"Calculation Agent") (initially Lehman Brothers Inc.) will,
upon request of a holder of Floating Rate Notes, provide
the interest rate then in effect and, if determined, the
interest rate which will become effective as a result of a
determination made with respect to the most recent Interest
Determination Date (as defined below) with respect to such
Floating Rate Notes. The applicable Pricing Supplement
will specify for each Floating Rate Note the following
terms: Interest Rate Basis, rate of interest for the
initial Interest Period (the "Initial Interest Rate"), date
of issue, Interest Determination Dates, Interest Reset
Dates (as defined below), Interest Payment Dates (as
defined below), Regular Record Date (as defined below),
Index Maturity, maturity date, Maximum Interest Rate and
Minimum Interest Rate, if any, and the Spread or Spread
Multiplier, if any.
Interest Payment Except as set forth in the applicable
Dates: Pricing Supplement and except as provided below, interest
will be payable in the case of Floating Rate Notes with a
daily, weekly or monthly Interest Reset Date, on the third
Wednesday of each month or on the third Wednesday of March,
June, September and December of each year, as specified in
the applicable Pricing Supplement; in the case of Floating
Rate Notes with a quarterly Interest Reset Date, on the
third Wednesday of March, June, September and December of
each year; in the case of Floating Rate Notes with a
semi-
<PAGE> 70
73
annual Interest Reset Date, on the third Wednesday of
two months of each year, as specified in the applicable
Pricing Supplement; and in the case of Floating Rate Notes
with an annual Interest Reset Date, on the third Wednesday
of one month of each year, as specified in the applicable
Pricing Supplement. If any Interest Payment Date for any
Floating Rate Note would otherwise be a day that is not a
Business Day (as defined below) for such Floating Rate
Note, the Interest Payment Date for such Floating Rate Note
shall be postponed to the next day that is a Business Day
for such Floating Rate Note, except that in the case of a
LIBOR Note, if such day falls in the next calendar month,
such Interest Payment Date shall be the preceding day that
is a London Business Day (as defined below) with respect to
such Note. Each date on which interest is payable on a
Floating Rate Note is referred to herein as an "Interest
Payment Date."
Interest Reset The rate of interest on each Floating Rate Note will be
Dates: reset daily, weekly, monthly, quarterly, semi-annually or
annually (each an "Interest Reset Date"), as specified in
the applicable Pricing Supplement. Except as set forth in
the applicable Pricing Supplement, the Interest Reset Date
will be, in the case of Floating Rate Notes which reset
daily, each Business Day; in the case of Floating Rate
Notes (other than Treasury Rate Notes) which reset weekly,
the Wednesday of each week; in the case of Treasury Rate
Notes which reset weekly, the Tuesday of each week; in the
case of Floating Rate Notes which reset monthly, the third
Wednesday of each month; in the case of Floating Rate Notes
which reset quarterly, the third Wednesday of March, June,
September and December; in the case of Floating Rate Notes
which reset semiannually, the third Wednesday of two months
of each year, as specified in the applicable Pricing
Supplement; and in the case of Floating Rate Notes which
reset annually, the third Wednesday of one month of
<PAGE> 71
74
each year, as specified in the applicable Pricing
Supplement; provided, however, that (i) the interest rate
in effect from the date of issue to the first Interest
Reset Date with respect to a Floating Rate Note will be the
Initial Interest Rate (as set forth in the applicable
Pricing Supplement) and (ii) unless otherwise specified in
the applicable Pricing Supplement, the interest rate in
effect for the ten calendar days immediately prior to
maturity or redemption, if applicable, will be that in
effect on the tenth calendar day preceding such maturity
or redemption. If any Interest Reset Date for any Floating
Rate Note would otherwise be a day that is not a Business
Day for such Floating Rate Note, the Interest Reset Date
for such Floating Rate Note shall be postponed to the next
day that is a Business Day for such Floating Rate Note,
except that in the case of a LIBOR Note, if such Business
Day is in the next succeeding calendar month, such Interest
Reset Date shall be the immediately preceding Business Day.
Interest Determi- Except as set forth in the applicable
nation Dates: Pricing Supplement, the "Interest Determination Date"
pertaining to an Interest Reset Date for a Commercial Paper
Rate Note (the "Commercial Paper Interest Determination
Date"), a Fed Funds Note (the "Fed Funds Interest
Determination Date"), a CD Rate Note (the "CD Interest
Determination Date") or a Prime Rate Note (the "Prime
Interest Determination Date") will be the second Business
Day preceding such Interest Reset Date. The "Interest
Determination Date" pertaining to an Interest Reset Date
for a LIBOR Note (the "LIBOR Interest Determination Date")
will be the second London Business Day preceding such
Interest Reset Date. The "Interest Determination Date"
pertaining to an Interest Reset Date for a Treasury Rate
Note (the "Treasury Interest Determination Date") will be
the day of the week in which such Interest Reset Date falls
on which Treasury bills would normally be auctioned.
<PAGE> 72
75
Treasury bills are usually sold at auction on Monday of
each week, unless that day is a legal holiday, in which
case the auction is usually held on the following Tuesday,
except that such auction may be held on the preceding
Friday. If, as the result of a legal holiday, an auction
is so held on the preceding Friday, such Friday will be the
Treasury Interest Determination Date pertaining to the
Interest Reset Date occurring in the next succeeding week.
If an auction date for Treasury bills shall fall on any
Interest Reset Date for a Treasury Rate Note, then such
Interest Reset Date shall instead be the first Business Day
immediately following such auction date.
Calculation Dates: The Calculation Date, where applicable, pertaining to any
Interest Determination Date will be the earlier of (i) the
tenth calendar day after such Interest Determination Date
or if any such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day preceding
the applicable Interest Payment Date or maturity, as the
case may be.
All percentages resulting from any calculation on Floating
Rate Notes will be rounded to the nearest one
hundred-thousandth of a percentage point, with five one
millionths of a percentage point rounded upwards (e.g.,
9.876545% (or .09876545) would be rounded to 9.87655% (or
.0987655), and all dollar amounts used in or resulting from
such calculation on Floating Rate Notes will be rounded to
the nearest cent or, in the case of Notes denominated other
than in United States dollars, the nearest unit (with
one-half cent or unit being rounded upward).
Commercial Paper Unless otherwise indicated in the applicable Pricing
Rate: Supplement, the "Commercial Paper Rate" for each such
Interest Reset Date will be determined as of the Commercial
Paper Interest Determination Date and will be the Money
Market Yield (as
<PAGE> 73
76
defined below) on such date of the rate for commercial
paper having the Index Maturity specified in the applicable
Pricing Supplement as published by the Board of Governors
of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates" or any successor
publication selected by the Calculation Agent ("H.15(519)")
under the heading "Commercial Paper". In the event that
such rate is not published prior to 9:00 A.M., New York
City time, on the Calculation Date pertaining to such
Commercial Paper Interest Determination Date, then the
Commercial Paper Rate shall be the Money Market Yield on
such Commercial Paper Interest Determination Date of the
rate for commercial paper of the specified Index Maturity
as published by the Federal Reserve Bank of New York in its
daily statistical release, "Composite 3:30 P.M. Quotations
for U.S. Government Securities", or any successor
publication selected by the Calculation Agent ("Composite
Quotations") under the heading "Commercial Paper". If by
3:00 P.M., New York City time, on such Calculation Date
such rate is not published in either H.15(519) or Composite
Quotations, the Commercial Paper Rate for that Commercial
Paper Interest Determination Date shall be calculated by
the Calculation Agent and shall be the Money Market Yield
of the arithmetic mean of the offered rates as of 11:00
A.M., New York City time, on that Commercial Paper Interest
Determination Date, of three leading dealers of commercial
paper in The City of New York selected by the Calculation
Agent for commercial paper of the specified Index Maturity
placed for an industrial issuer whose bond rating is "AA",
or the equivalent, from a nationally recognized securities
rating agency; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence, the Commercial Paper
Rate with respect to such Commercial Paper Interest
Determination Date will be the
<PAGE> 74
77
Commercial Paper Rate in effect on such Commercial Paper
Interest Determination Date.
Money Market Yield: "Money Market Yield" shall be a yield (expressed as a
percentage rounded upwards, if necessary, to the next
higher one hundred-thousandth of a percentage point)
calculated in accordance with the following formula:
Money Market Yield = D x 360 x 100
-----------
360 - (DxM)
where "D" refers to the per annum rate for commercial paper
quoted on a bank discount basis and expressed as a decimal,
and "M" refers to the actual number of days in the interest
period for which interest is being calculated.
LIBOR: Each LIBOR Note will bear interest at the interest rate
(calculated with reference to LIBOR and the Spread and/or
Spread Multiplier, if any) specified in such LIBOR Note and
in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing
Supplement, "LIBOR" will be determined by the Calculation
Agent in accordance with the following provisions:
(i) With respect to a LIBOR Interest Determination Date,
LIBOR will be, as specified in the applicable Pricing
Supplement, either: (a) the arithmetic mean of the offered
rates for deposits in the U.S. dollars having the Index
Maturity designated in the applicable Pricing Supplement,
commencing on the second day on which dealings in deposits
in U.S. dollars are transacted in the London interbank
market ("London Business Day") immediately following such
LIBOR Interest Determination Date, that appear on the
Reuters Screen LIBO Page as of 11:00 A.M., London time, on
such LIBOR Interest Determination Date, if at least two
such offered rates appear on the Reuters
<PAGE> 75
78
Screen LIBO Page ("LIBOR Reuters"), or (b) the rate for
deposits in U.S. dollars having the Index Maturity
designated in the applicable Pricing Supplement, commencing
on the second London Business Day immediately following
such LIBOR Interest Determination Date, that appears on
Telerate Page 3750 as of 11:00 A.M., London Time, on such
LIBOR Interest Determination Date ("LIBOR Telerate").
"Reuters Screen LIBO Page" means the display designated as
page "LIBO" on the Reuters Monitor Money Rates Service (or
such other page as may replace page LIBO on that service
for the purpose of displaying London interbank offered
rates of major banks). "Telerate Page 3750" means the
display designated as page "3750" on the Telerate Service
(or such other page as may replace the 3750 page on that
service or such other service or services as may be
nominated by the British Bankers' Association for the
purpose of displaying London interbank offered rates for
U.S. dollar deposits). If neither LIBOR Reuters nor LIBOR
Telerate is specified in the applicable Pricing Supplement,
LIBOR will be determined as if LIBOR Telerate had been
specified. If fewer than two offered rates appear on the
Reuters Screen LIBO Page, or if no rate appears on Telerate
Page 3750, as applicable, LIBOR in respect of such LIBOR
Interest Determination Date will be determined as if the
parties had specified the rate described in (ii) below.
(ii) With respect to a LIBOR Interest Determination Date
on which fewer than two offered rates appear on the Reuters
Screen LIBO Page, as specified in (i) (a) above, or on
which no rate appears on Telerate Page 3750, as specified
in (i) (b) above, as applicable, LIBOR will be determined
on the basis of the rates at which deposits in U.S. dollars
having the Index Maturity designated in the applicable
Pricing Supplement are offered at approximately 11:00 A.M.,
London time, on such LIBOR Interest Determination Date by
four major banks in the London
<PAGE> 76
79
interbank market selected by the Calculation Agent (the
"Reference Banks") to prime banks in the London interbank
market, commencing on the second London Business Day
immediately following such LIBOR Interest Determination
Date and in a principal amount equal to an amount of not
less than $1,000,000 that is representative for a single
transaction in such market at such time. The Calculation
Agent will request the principal London office of each of
the Reference Banks to provide a quotation of its rate. If
at least two such quotations are provided, LIBOR in respect
of such LIBOR Interest Determination Date will be the
arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR in respect of such LIBOR
Interest Determination Date will be the arithmetic mean of
the rates quoted at approximately 11:00 A.M., New York City
time, on such LIBOR Interest Determination Date by three
major banks in The City of New York selected by the
Calculation Agent for loans in U.S. dollars to leading
European banks having the Index Maturity designated in the
applicable Pricing Supplement, commencing on the second
London Business Day immediately following such LIBOR
Interest Determination Date and in a principal amount equal
to an amount of not less than $1,000,000 that is
representative for a single transaction in such market at
such time; provided, however, that if the banks selected as
aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, LIBOR with respect to such
LIBOR Interest Determination Date will be the interest rate
otherwise in effect on such LIBOR Interest Determination
Date.
Treasury Rate: Unless otherwise indicated in the applicable Pricing
Supplement, the "Treasury Rate" for each such Interest
Reset Date will be determined as of the Treasury Interest
Determination Date and will be the rate applicable to the
most recent auction of direct obligations of the United
States
<PAGE> 77
80
("Treasury bills") having the Index Maturity specified in
the applicable Pricing Supplement, as such rate is
published in H.15(519) under the heading "U.S. Government
Securities--Treasury Bills--Auction Average (Investment)"
or, if not so published by 9:00 A.M., New York City time,
on the Calculation Date pertaining to such Treasury
Interest Determination Date, the auction average rate
(expressed as a bond equivalent on the basis of a year of
365 or 366 days, as applicable, and applied on a daily
basis) as otherwise announced by the United States
Department of the Treasury. In the event that the results
of the auction of Treasury bills having the specified Index
Maturity are not reported as provided by 3:00 P.M., New
York City time, on such Calculation Date, or if no such
auction is held in a particular week, then the Treasury
Rate shall be calculated by the Calculation Agent and shall
be a yield to maturity (expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M.,
New York City time, on such Treasury Interest Determination
Date, of three leading primary United States government
securities dealers, selected by the Calculation Agent, for
the issue of Treasury bills with a remaining maturity
closest to the applicable Index Maturity; provided,
however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this
sentence, the Treasury Rate with respect to such Treasury
Interest Determination Date will be the Treasury Rate in
effect on such Treasury Interest Determination Date.
Fed Funds Rate: Unless otherwise indicated in the applicable Pricing
Supplement, "Fed Funds Rate" means, with respect to any Fed
Funds Interest Determination Date, the rate on such date
for Federal Funds as such rate shall be published
<PAGE> 78
81
in H.15(519) under the heading "Federal Funds (Effective)"
or, if not so published by 9:00 A.M., New York City time,
on the Calculation Date pertaining to such Fed Funds
Interest Determination Date, the Fed Funds Rate will be the
rate on such Fed Funds Interest Determination Date as
published in Composite Quotations under the heading
"Federal Funds/Effective Rate". If such rate is not
published by 3:00 P.M., New York City time, on such
Calculation Date, then the Fed Funds Rate on such Fed Funds
Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the
rates as of 9:00 A.M., New York City time, on such Fed
Funds Interest Determination Date for the last transaction
in overnight Federal Funds arranged by three leading
brokers of Federal Funds transactions in The City of New
York selected by the Calculation Agent; provided, however,
that if the brokers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this
sentence, the Fed Funds Rate with respect to such Fed Funds
Interest Determination Date will be the Fed Funds Rate in
effect on such Fed Funds Interest Determination Date.
CD Rate: Unless otherwise indicated in the applicable Pricing
Supplement, the "CD Rate" for each such Interest Reset Date
will be determined as of the CD Interest Determination Date
and will be the rate on such date for negotiable
certificates of deposit having the Index Maturity
designated in the applicable Pricing Supplement as
published in H.15(519) under the heading "CDs (Secondary
Market)" or, if not so published by 9:00 A.M., New York
City time, on the Calculation Date pertaining to such CD
Interest Determination Date, the CD Rate will be the rate
on such CD Interest Determination Date for negotiable
certificates of deposit of the Index Maturity designated in
the applicable Pricing Supplement as published in Composite
Quotations under the heading "Certificates of Deposit". If
such rate is not published by
<PAGE> 79
82
3:00 P.M., New York City time, on such Calculation Date,
then the CD Rate on such CD Interest Determination Date
will be calculated by the Calculation Agent and will be the
arithmetic mean of the secondary market offered rates as of
the opening of business, New York City time, on such CD
Interest Determination Date, of three leading nonbank
dealers in negotiable U.S. dollar certificates of deposit
in The City of New York selected by the Calculation Agent
for negotiable certificates of deposit of major United
States money market banks (in the market for negotiable
certificates of deposit) with a remaining maturity closest
to the Index Maturity designated in the Pricing Supplement
in a denomination of $5,000,000 or if greater, an amount
that is representative for a single transaction in the
relevant market at the time; provided, however, that if the
dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the CD Rate with
respect to such CD Interest Determination Date will be the
CD Rate in effect on such CD Interest Determination Date.
Prime Rate: Each Prime Rate Note will bear interest at the interest
rate (calculated with reference to the Prime Rate and the
Spread and/or Spread Multiplier, if any) specified in such
Prime Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing
Supplement, "Prime Rate" means, with respect to any Prime
Interest Determination Date, the rate set forth in
H.15(519) for such date opposite the caption "Bank Prime
Loan," or, if not so published by 9:00 A.M., New York City
time, on the Calculation Date pertaining to such Prime
Interest Determination Date, the Prime Rate will be
calculated by the Calculation Agent and will be the
arithmetic mean of the rates of interest publicly announced
by each bank named on the Reuters Screen NYMF Page as such
<PAGE> 80
83
bank's prime rate or base lending rate as in effect for
such Prime Interest Determination Date as quoted on the
Reuters Screen NYMF Page on such Prime Interest
Determination Date, or, if fewer than four such rates
appear on the Reuters Screen NYMF Page for such Prime
Interest Determination Date, the rate shall be the
arithmetic mean of the prime rates quoted on the basis of
the actual number of days in the year divided by 360 as of
the close of business on such Prime Interest Determination
Date by at least two of the three major money center banks
in The City of New York selected by the Calculation Agent
from which quotations are requested. If fewer than two
quotations are quoted as aforesaid, the Prime Rate for such
Prime Interest Determination Date shall be calculated by
the Calculation Agent and shall be the arithmetic means of
the prime rates quoted in The City of New York on such date
by the appropriate number of substitute banks or trust
companies organized and doing business under the laws of
the Untied States, or any State thereof, having total
equity capital of at least $500 million and being subject
to supervision or examination by a federal or State
authority, selected by the Calculation Agent to quote such
rate or rates; provided, however, that if the Prime Rate is
not published in H.15(519) and the banks or trust companies
selected as aforesaid are not quoting as mentioned in this
sentence, the Prime Rate with respect to such Prime
Interest Determination Date will be the interest rate
otherwise in effect on such Prime Interest Determination
Date. "Reuters Screen NYMF Page" means the display
designated as page "NYMF" on the Reuters Monitor Money
Rates Service (or such other page as may replace page NYMF
on that service for the purpose of displaying prime rates
or base lending rates of major United States banks).
Record Dates: Interest payments on Floating Rate Notes will be made on
each Interest Payment Date to the
<PAGE> 81
84
registered owners at the close of business on the date 15
calendar days prior to such Interest Payment Date (the
"Regular Record Date"). If a Note is issued between a
Regular Record Date and an Interest Payment Date, the first
payment of Interest will occur on the Interest Payment Date
following the next Regular Record Date to the registered
holder on such next succeeding Regular Record Date.
Interest payable at maturity or upon redemption (whether or
not such maturity or redemption date is an Interest Payment
Date) will be paid to the same person to whom principal is
payable. Interest will begin to accrue on the issue date of
a Note for the first interest period and from and including
the most recent Interest Payment Date to which interest has
been paid for all subsequent interest periods. Each payment
of interest shall include interest accrued from and
including the most recent date in respect of which interest
has been paid or duly provided for, or from and including
the date of issue, through the day before the Interest
Payment Date (or maturity date) (an "Interest Period"). In
the case of Floating Rate Notes on which the interest rate
is reset daily or weekly, the interest payments shall
include interest accrued from but excluding the most recent
Regular Record Date in respect of which interest has been
paid or duly provided for, or from and including the date
of issue, to and including the Regular Record Date next
preceding the applicable Interest Payment Date, except that
the interest payment at the maturity date will include
interest accrued to such date.
Accrued Interest: Unless otherwise indicated in the applicable Pricing
Supplement, interest payments for Floating Rate Notes will
include interest accrued from and including the most recent
date in respect of which interest has been paid or duly
provided for, or from and including the date of issuance to
but excluding the next Interest Payment Date (or
<PAGE> 82
85
maturity date); provided, however, that if the Interest
Reset Dates with respect to such Note are daily or weekly,
interest payable on any Interest Payment Date, other than
interest payable on any date on which principal for such
Note is payable, will include interest accrued from but
excluding the most recent Regular Record Date in respect of
which interest has been paid or duly provided for, or from
and including the date of issue, to and including the next
preceding Regular Record Date. Interest payments on
Floating Rate Notes made at maturity will include interest
accrued to but excluding the date of maturity. Accrued
interest from the date of issue or from the last date to
which interest has been paid is calculated by multiplying
the face amount of a Note by an accrued interest factor.
This accrued interest factor is computed by adding the
interest factors calculated for each day in the period for
which accrued interest is being calculated. The interest
factor for each such day is computed by dividing the
interest rate applicable to such date by 360, in the case
of Commercial Paper Rate Notes, LIBOR Notes, Fed Funds
Notes, CD Rate Notes and Prime Rate Notes, or by the actual
number of days in the year, in the case of Treasury Rate
Notes.
<PAGE> 1
87
EXHIBIT 10.1
EXECUTION COPY
U.S. $623,599,000
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
Medium-Term Notes, Series C
CALCULATION AGENT AGREEMENT
This AGREEMENT dated June 19, 1996, between National Rural
Utilities Cooperative Finance Corporation, a District of
Columbia cooperative association (hereinafter called the
"Issuer"), whose principal office is at Woodland Park, 2201
Cooperative Way, Herndon, Virginia 22071, and Lehman Brothers
Inc., a Delaware corporation (hereinafter sometimes called the
"Calculation Agent" which term shall, unless the context shall
otherwise require, include its successors and assignees), whose
principal office is at 3 World Financial Center, New York, New
York 10285-0900.
WHEREAS (A) The Issuer proposes to issue from time to time an
aggregate principal amount of up to $623,599,000 of Medium-Term Notes, Series C
(the "Notes") entitled to the benefits of the Indenture dated as of December
15, 1987 (as supplemented by the First Supplemental Indenture dated as of
October 1, 1990 and as it may be supplemented or amended from time to time, the
"Indenture"), between the Issuer and Harris Trust and Savings Bank, as
successor Trustee;
(B) Each Note will bear interest at either (a) a fixed rate or (b) a
floating rate determined by reference to an interest rate formula (the
"Floating Rate Notes");
NOW IT IS HEREBY AGREED THAT,
1. Terms defined in the "Description of Securities" and "Description
of the Medium-Term Notes" shall bear the same meanings herein unless the
context otherwise requires. The "Description of Securities" means the terms
and conditions of the Notes as set forth in the Prospectus, dated June 17,
1996, as supplemented by a Prospectus Supplement, dated June 19, 1996, relating
to the Notes. The "Description of the Medium-Term Notes" means the terms and
conditions of the Notes as set forth
<PAGE> 2
in the Prospectus Supplement, dated June 19, 1996, relating to the Notes. Such
Prospectus Supplement will be supplemented or amended by one or more Pricing
Supplements (each a "Supplement") setting forth additional terms and conditions
of the Notes.
2. The Issuer hereby appoints Lehman Brothers Inc. as Calculation
Agent for the Notes, upon the terms and subject to the conditions herein
mentioned, and Lehman Brothers Inc. hereby accepts such appointment. The
Calculation Agent shall act as an agent of the Issuer for the purpose of
determining the interest rate of the Floating Rate Notes in accordance with the
Description of the Medium-Term Notes and the provisions of this Agreement.
3. The Calculation Agent shall calculate the applicable interest
rates for the Floating Rate Notes in accordance with the provisions set forth
in the Prospectus Supplement relating to the Notes dated June 19, 1996, under
the heading "Description of Medium-Term Notes--Floating Rate Notes" which
provisions are incorporated by reference herein as if set forth in full in this
Agreement.
4. In no event shall the interest rate be less than the floor, if
any, or more than the ceiling, if any, designated in the applicable Supplement.
5. The Calculation Agent will, as soon as practicable after (i) 3:00
p.m., New York City time, on the Calculation Date pertaining to each Interest
Determination Date relating to Commercial Paper Rate Notes, Fed Funds Rate
Notes, CD Rate Notes and Treasury Rate Notes or (ii) 11:00 a.m., London time,
on each Interest Determination Date relating to LIBOR Notes, determine (and
notify the Issuer and the Trustee of) the interest rate applicable during the
next succeeding interest period (if the interest rate cannot be determined in
accordance with the provisions set forth in the Prospectus Supplement relating
to the Notes dated June 19, 1996, in clause (i) under the heading "Description
of the Medium-Term Notes--Floating Rate Notes--LIBOR", the Calculation Agent
agrees to determine (and notify the Issuer and Trustee of) the interest rate in
accordance with the provisions in clause (ii) of such heading).
6. As soon as determined after each Interest Determination Date, the
Calculation Agent will cause to be forwarded to the Issuer, the Trustee and the
Paying Agent information regarding the interest rates and the interest periods
for each interest period and the relevant Interest Payment Date.
7. The Issuer will pay such compensation as shall be agreed upon and
the expenses, including reasonable counsel fees, properly incurred by the
Calculation Agent in connection with its
<PAGE> 3
89
duties hereunder, upon receipt of such invoices as the Issuer shall reasonably
require.
8. The Issuer will indemnify the Calculation Agent against any
losses, liabilities, costs, claims, actions or demands which it may incur or
sustain or which may be made against it in connection with its appointment or
the exercise of its powers and duties hereunder as well as the reasonable
costs, including the expenses and fees of counsel in defending any claim,
action or demand, except such as may result from the negligence, wilful default
or bad faith of the Calculation Agent or any of its employees. The Calculation
Agent shall incur no liability and shall be indemnified and held harmless by
the Issuer for, or in respect of, any actions taken or suffered to be taken in
good faith by the Calculation Agent in reliance upon (i) the written opinion or
advice of counsel or (ii) written instructions from the Issuer.
9. The Calculation Agent accepts its obligations herein (and agrees
to act in good faith in the performance of its obligations) set forth upon the
terms and conditions hereof, including the following, to all of which the
Issuer agrees:
(i) in acting under this Agreement and in connection with the Notes,
the Calculation Agent, acting as agent for the Issuer, does not assume any
obligation towards, or any relationship of agency or trust for or with,
any of the holders of the Notes;
(ii) unless herein otherwise specifically provided, any order,
certificate, notice, request or communication from the Issuer made or
given under any provision of this Agreement shall be sufficient if signed
by any person whom the Calculation Agent reasonably believes to be a duly
authorized officer of the Issuer;
(iii) the Calculation Agent shall be obligated to perform only such
duties as are set forth specifically herein and any duties necessarily
incidental thereto; and
(iv) the Calculation Agent shall be protected and shall incur no
liability for or in respect of any action taken or omitted to be taken by
it in reliance upon anything contained in a Floating Rate Note, the
Description of Securities, the Description of the Medium-Term Notes or one
or more Prospectus Supplements.
<PAGE> 4
90
10. (A) The Issuer agrees to notify the Calculation Agent at least
five London Business Days prior to the issuance of any LIBOR Note. The
Calculation Agent agrees to select four Reference Banks prior to the issuance
of the first LIBOR Note by the Issuer; to make all appropriate arrangements for
such banks to act as Reference Banks; and to notify the Issuer, the Trustee and
each of the Agents as to the names and addresses of such Reference Banks. The
Calculation Agent covenants that, for so long as it is required so to do in
accordance with the applicable Description of the Medium-Term Notes it shall
ensure that there shall at all times be four Reference Banks. Forthwith upon
any change in the identity of the Reference Banks the Calculation Agent shall
notify the Issuer, the Trustee and the Agents of such change. If fewer than
two Reference Banks are quoting, the Calculation Agent agrees to select three
major banks in The City of New York in accordance with the applicable
Description of the Medium-Term Notes. The Calculation Agent shall not be
responsible to the Issuer or any third party for any failure of the Reference
Banks to fulfill their duties or meet their obligations as Reference Banks or
as a result of the Calculation Agent having acted (except in the event of
negligence, wilful default or bad faith) on any certificate given by any
Reference Bank which subsequently may be found to be incorrect.
(B) If necessary, in accordance with the provisions set forth in the
Prospectus Supplement relating to the Notes dated June 19, 1996, under the
Heading "Description of the Medium-Term Notes--Floating Rate Notes-Prime Rate",
the Calculation Agent agrees to select a substitute major bank or trust company
(meeting the requirements specified under such heading). The Calculation Agent
shall not be responsible to the Issuer or any third party for the failure of
such bank or trust company to fulfill any duty or obligation contemplated under
such heading.
(C) Except as provided below, the Calculation Agent may at any time
resign as Calculation Agent by giving written notice to the Issuer and the
Trustee of such intention on its part, specifying the date on which its desired
resignation shall become effective, provided that such notice shall be given
not less than two months prior to the said effective date unless the Issuer and
the Trustee otherwise agree in writing. Except as provided below, the
Calculation Agent may be removed by the filing with it of an instrument in
writing signed by the Issuer specifying such removal and the date when it shall
become effective (such
<PAGE> 5
91
effective date being at least 20 days after said filing). Such resignation or
removal shall take effect upon:
(i) the appointment by the Issuer as hereinafter provided of a
successor Calculation Agent approved by the Trustee, which shall be a
responsible financial firm or institution having an established place of
business in The City of New York;
(ii) the acceptance of such appointment by such successor Calculation
Agent; and
(iii) the giving of notice of such appointment to the holders of the
Notes, provided that if the Calculation Agent fails duly to establish the
amount of interest for any interest period, such removal will take effect
immediately upon such appointment of, and acceptance thereof by, a
successor Calculation Agent approved by the Trustee and qualified as
aforesaid, in which event notice of such appointment shall be given to the
holders of the Notes as soon as practicable thereafter. Upon its
resignation or removal becoming effective, the retiring Calculation Agent
shall be entitled to the payment of its compensation and the reimbursement
of all expenses incurred by such retiring Calculation Agent pursuant to
paragraph 7 hereof.
(D) If at any time the Calculation Agent shall resign or be removed,
or shall become incapable of acting or shall be adjudged bankrupt or insolvent,
or liquidated or dissolved, or an order is made or an effective resolution is
passed to wind up the Calculation Agent, or if the Calculation Agent shall file
a voluntary petition in bankruptcy or make an assignment for the benefit of its
creditors, or shall consent to the appointment of a receiver, administrator or
other similar official of all or any substantial part of its property, or shall
admit in writing its inability to pay or meet its debts as they mature, or if a
receiver, administrator or other similar official of the Calculation Agent or
of all or any substantial part of its property shall be appointed, or if any
order of any court shall be entered approving any petition filed by or against
the Calculation Agent under the provisions of any applicable bankruptcy or
insolvency law, or if any public officer shall take charge or control of the
Calculation Agent or its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then a successor Calculation Agent, approved by
the Trustee, shall be appointed by the Issuer by an instrument in writing filed
with the successor Calculation Agent. Upon the
<PAGE> 6
92
appointment as aforesaid of a successor Calculation Agent and acceptance by the
latter of such appointment and (except in cases of removal for failure to
establish the amount of interest) the giving of notice to the holders of the
Notes, the former Calculation Agent shall cease to be Calculation Agent
hereunder.
(E) Any successor Calculation Agent appointed hereunder shall execute
and deliver to its predecessor and the Issuer an instrument, in the form
acceptable to the Trustee, accepting such appointment hereunder, and thereupon
such successor Calculation Agent, without any further act, deed or conveyance,
shall become vested with all the authority, rights, powers, trusts, immunities,
duties and obligations of such predecessor with like effect as if originally
named as the Calculation Agent hereunder, and such predecessor shall thereupon
become obliged to transfer and deliver, and such successor Calculation Agent
shall be entitled to receive, copies of any relevant records maintained by such
predecessor Calculation Agent.
(F) Any corporation into which the Calculation Agent may be merged
or converted or any corporation with which the Calculation Agent may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Calculation Agent shall be a party shall, to the
extent permitted by applicable law and provided that it shall be a responsible
financial firm or institution having an established place of business in The
City of New York, be the successor Calculation Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. Notice of any such merger, conversion or
consolidation shall forthwith be given to the Issuer and the Trustee.
11. Any notice required to be given hereunder shall be delivered in
person, sent by letter or telex or communicated by telephone (subject, in the
case of communication by telephone, to confirmation dispatched within two
business days by letter or telex), in the case of the Issuer, to it at Woodland
Park, 2201 Cooperative Way, Herndon, Virginia 22071, Attention: Chief
Financial Officer; in the case of the Calculation Agent, to it at 3 World
Financial Center, New York, New York 10285, Attention: Medium-Term Note
Department; and in the case of the Trustee, to it c/o Bank of Montreal Trust
Company, 77 Water Street, 4th Floor, New York, New York 10005, Attention:
Corporate Trustee Administration Department or, in any case, to any other
address of which the party receiving notice shall have notified the party
giving such notice in writing.
<PAGE> 7
93
12. This Agreement may be amended only by a writing duly executed
and delivered by each of the parties signing below.
13. The provisions of this Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
14. This Agreement may be executed in counterparts and the executed
counterparts shall together constitute a single instrument.
IN WITNESS WHEREOF, this Agreement has been executed and delivered as
of the day and year first above written.
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION,
by
-----------------------
LEHMAN BROTHERS INC.,
by
-----------------------
