-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, G4OYkekFUwMK65FprGAMZ3rZb93MWsWqkmouBLb/cfVEkld8+ucEGUTJ6NbvO2uh yRYUCAIu0QjGsZw7ub7cFg== 0000950133-95-000189.txt : 19950414 0000950133-95-000189.hdr.sgml : 19950406 ACCESSION NUMBER: 0000950133-95-000189 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 8 REFERENCES 429: 033-50463 FILED AS OF DATE: 19950405 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/ CENTRAL INDEX KEY: 0000070502 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS BUSINESS CREDIT INSTITUTION [6159] IRS NUMBER: 520891669 STATE OF INCORPORATION: DC FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 033-58445 FILM NUMBER: 95527170 BUSINESS ADDRESS: STREET 1: 2201 COOPERATIVE WAY CITY: HERNDON STATE: VA ZIP: 22071-3025 BUSINESS PHONE: 7037096700 MAIL ADDRESS: STREET 1: 2201 COOPERATIVE WAY CITY: HERNDON STATE: VA ZIP: 22071-3025 S-3 1 FORM S-3 FOR NRU/CFC 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 5, 1995 REGISTRATION NO. 33- ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION (Exact name of registrant as specified in charter) DISTRICT OF COLUMBIA 52-089-1669 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization)
2201 COOPERATIVE WAY HERNDON, VIRGINIA 22071 (703) 709-6700 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) JOHN JAY LIST, GENERAL COUNSEL NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION 2201 COOPERATIVE WAY HERNDON, VIRGINIA 22071 (703) 709-6700 (Name, address, including zip code, and telephone number, including area code, of agent for service) COPIES TO: MARK L. WEISSLER THOMAS R. BROME MILBANK, TWEED, HADLEY & MCCLOY CRAVATH, SWAINE & MOORE 1 CHASE MANHATTAN PLAZA 825 EIGHTH AVENUE NEW YORK, NEW YORK 10005 NEW YORK, NEW YORK 10019
------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to time after the effective date of this registration statement as determined by market conditions. IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED PURSUANT TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX. / / IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF 1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX. /X/ CALCULATION OF REGISTRATION FEE
================================================================================================================== PROPOSED PROPOSED TITLE OF EACH MAXIMUM MAXIMUM AMOUNT OF CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION TO BE REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE(2) FEE - ------------------------------------------------------------------------------------------------------------------ Debt Securities and/or Warrants to Purchase Debt Securities............ $400,000,000 100% $400,000,000 $137,932 ==================================================================================================================
(1) Expressed as the principal amount of Debt Securities, or in the case of Original Issue Discount Securities, the offering price thereof. (2) Estimated solely for purposes of calculating the registration fee. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. PURSUANT TO RULE 429 OF THE COMMISSION UNDER THE SECURITIES ACT OF 1933, THE WITHIN PROSPECTUS RELATES TO DEBT SECURITIES REGISTERED HEREBY AND TO DEBT SECURITIES PREVIOUSLY REGISTERED BY REGISTRATION STATEMENT NO. 33-50463. ================================================================================ 2 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. APRIL 5, 1995 SUBJECT TO COMPLETION PROSPECTUS NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION DEBT SECURITIES AND/OR WARRANTS TO PURCHASE DEBT SECURITIES ------------------------ National Rural Utilities Cooperative Finance Corporation ("CFC" or the "Company") intends to issue from time to time debt securities (the "Securities") each of which will be a direct, unsecured obligation of the Company and which will be offered to the public on terms determined by market conditions at the time of sale, and/or Warrants to purchase Securities (the "Warrants"). The Company may sell Securities and Warrants for proceeds up to $453,040,000, or the equivalent thereof if any of the Securities or Warrants are denominated in a foreign currency or a currency unit, (i) directly to purchasers, (ii) through agents designated from time to time or (iii) through underwriters or a group of underwriters which may include Lehman Brothers Inc. and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated. The Securities may be issued in registered form without coupons, in a form registered as to principal only with or without coupons, in bearer form with or without coupons or any combination thereof. In addition, all or a portion of the Securities may be issued in temporary or definitive global form. Securities in bearer form are offered only to non-United States persons and to offices located outside the United States of certain United States financial institutions. See "Limitations on Issuance of Bearer Securities". The Securities and Warrants may be sold for U.S. dollars, foreign currencies or foreign currency units, and the principal (including any premium) and any interest on the Securities may be payable in U.S. dollars, foreign currencies or foreign currency units. The Securities may be issued in one or more series with the same or various maturities at or above par or with an original issue discount. The specific designation, aggregate principal amount, currency, currencies or currency unit or units in which the principal, premium, if any, or interest, if any, is payable, authorized denominations, purchase price, maturity, rate (or method of calculation) and time of payment of any interest, any redemption terms, any listing on a securities exchange, or other specific terms of the Securities in respect of which this Prospectus is being delivered ("Offered Securities") are set forth in the accompanying Prospectus Supplement and in a supplement thereto relating to the specific Offered Securities (together, the "Prospectus Supplement"), together with the terms of offering of the Offered Securities. With regard to the Warrants, if any, in respect of which this Prospectus is being delivered, the Prospectus Supplement sets forth a description of the Offered Securities for which each Warrant is exercisable and the offering price, if any, exercise price, duration and other terms of such Warrant. Warrants may be sold in units with Securities or in separate offerings, as specified in a Prospectus Supplement. For a discussion of certain United States Federal income tax consequences, see "United States Taxation". A discussion of certain other United States Federal tax matters applicable to the Offered Securities may be set forth in the Prospectus Supplement relating to the Offered Securities. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES OR WARRANTS UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT. ------------------------ THE DATE OF THIS PROSPECTUS IS APRIL , 1995 3 IN CONNECTION WITH AN OFFERING, THE UNDERWRITERS FOR SUCH OFFERING, IF ANY, MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE OFFERED SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. --------------------- AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports and other information with the Securities and Exchange Commission (the "Commission"). Such reports and other information can be inspected at the office of the Commission, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, as well as at the Regional Offices of the Commission at 7 World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661-2511. Copies can also be obtained by mail from the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549 at the prescribed rates. In addition, certain of the Company's securities are listed on, and reports and other information concerning the Company can also be inspected at, the New York Stock Exchange, 20 Broad Street, New York, NY 10005. --------------------- DOCUMENTS INCORPORATED BY REFERENCE The following documents heretofore filed by the Company with the Commission pursuant to the Exchange Act are incorporated by reference in this Prospectus. 1. The Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1994. 2. The Company's Quarterly Reports on Form 10-Q for the quarters ended August 31, 1994, November 30, 1994 and February 28, 1995. 3. The Company's Current Reports on Form 8-K dated June 14, 1994, September 9, 1994, September 16, 1994 and February 28, 1995. All documents subsequently filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the offering of the Securities, shall be deemed to be incorporated in this Prospectus by reference and to be a part hereof from the respective date of filing of each such document. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will furnish without charge upon written or oral request by any person, including any beneficial owner, to whom this Prospectus is delivered a copy of any or all of the documents referred to above which have been or may be incorporated in this Prospectus by reference, other than exhibits to such documents unless such exhibits are specifically incorporated by reference into the information that this Prospectus incorporates. Requests for such copies should be directed to Steven L. Lilly, Senior Vice President and Chief Financial Officer, National Rural Utilities Cooperative Finance Corporation, Woodland Park, 2201 Cooperative Way, Herndon, VA 22071. Telephone requests may be directed to (703) 709-6700. --------------------- NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN AS CONTAINED IN THIS PROSPECTUS OR THE PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF, OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SINCE ITS DATE. 2 4 THE COMPANY National Rural Utilities Cooperative Finance Corporation ("CFC" or the "Company") was incorporated as a private, not-for-profit cooperative association under the laws of the District of Columbia in 1969. The principal purpose of CFC is to provide its members with a source of financing to supplement the loan program of the Rural Utilities Service ("RUS") (formerly the Rural Electrification Administration) of the United States Department of Agriculture. CFC makes loans primarily to its rural utility system members ("Utility Members") to enable them to acquire, construct and operate electric distribution, generation, transmission and related facilities. CFC also makes loans to service organization members ("Service Members") to finance office buildings, equipment, related facilities and services provided by them to the rural utility systems. CFC has also provided guarantees for tax-exempt financing of pollution control facilities and other properties constructed or acquired by its members, and in addition has provided loans or guarantees through National Cooperative Services Corporation ("NCSC") in connection with certain lease transactions of its members. Also, through Rural Telephone Finance Cooperative ("RTFC"), a controlled affiliate of CFC established in 1987, CFC provides financing to rural telephone and telecommunications companies and their affiliates. In addition, through Guaranty Funding Cooperative, ("GFC"), a controlled affiliate of CFC established in 1991, CFC provides financing for members to refinance their debt to the Federal Financing Bank of the United States Treasury ("FFB"). CFC's offices are located at Woodland Park, 2201 Cooperative Way, Herndon, VA 22071 and its telephone number is (703) 709-6700. CFC's 1,039 members as of May 31, 1994, included 899 Utility Members, virtually all of which are consumer-owned cooperatives, 71 Service Members and 69 associate members. The Utility Members included 833 distribution systems and 66 generation and transmission ("Power Supply") systems operating in 46 states and U.S. territories. At December 31, 1993, CFC's member systems served approximately 12.4 million consumers, representing service to an estimated 32.5 million ultimate users of electricity, and owned approximately $62.6 billion (before depreciation of $17.9 billion) in total utility plant. CFC's long-term loans to Utility Members generally have 35-year maturities. They are made primarily in conjunction with concurrent RUS loans and are generally secured ratably with RUS's loans by a common mortgage on substantially all the Utility Member's property (including revenues). Interest rates on these loans are either fixed or variable. Fixed rates are offered weekly based on CFC's overall cost of long-term capital and may be obtained for any period from one to 30 years. Variable rates are adjusted monthly in line with changes in CFC's cost of short-term funds. CFC makes short-term unsecured line-of-credit loans and secured intermediate-term loans with up to five-year maturities. Rates on these loans may be adjusted semi-monthly in line with changes in CFC's short-term cost of funds. The intermediate-term loans are generally made to Power Supply systems in connection with the planning and construction of new generating plants and transmission facilities. CFC also makes loans to telecommunication systems through RTFC. Such loans are long-term fixed or variable rate loans with maturities not exceeding 15 years and short-term loans. CFC's guarantees are senior obligations ranking on a par with its other senior debt. Even if the system defaults in payment of the guaranteed obligations, the debt cannot be accelerated as long as CFC pays the debt service under its guarantee as due. The system is generally obligated to reimburse CFC on demand for amounts paid on the guarantee, and this obligation is usually secured by a mortgage (often joint with RUS) on the system's property or, in the case of a lease transaction, on the leased property. Holders of $1,214.6 million of the guaranteed pollution control debt (at May 31, 1994) have the right at certain times to tender their bonds for remarketing, and, if they cannot otherwise be remarketed, CFC has committed to purchase bonds so tendered. By policy, CFC maintains an allowance for loan and guarantee losses at a level believed to be adequate in relation to the quality and size of its loans and guarantees outstanding. At May 31, 1994, the allowance was $188.2 million. At May 31, 1994, CFC's ten largest borrowers, which were all Power Supply members, had outstanding loans totaling $461.6 million (excluding $394.1 million of loans guaranteed by RUS), which represented approximately 7.5% of CFC's total loans outstanding. As of May 31, 1994, outstanding guarantees for these same ten largest borrowers totaled $2,117.7 million, which represented 79.2% of CFC's total guarantees outstanding, including guarantees of the maximum amounts of lease obligations at such date. On that date, no 3 5 member had loans and guarantees outstanding in excess of 10% of the aggregate amount of CFC's outstanding loans and guarantees; however, one of the ten largest borrowers, Deseret Generation & Transmission Co-operative ("Deseret"), was in financial difficulty. At May 31, 1994, Deseret accounted for 1.8% of loans outstanding (excluding loans guaranteed by RUS) and 12.6% of guarantees outstanding and represented 26.8% of total Members' Equity, Members' Subordinated Certificates and the allowance for loan and guarantee losses. Fixed charge coverage ratio (unaudited):
NINE MONTHS ENDED FEBRUARY YEAR ENDED MAY 31, 28, ---------------------------------------- 1995 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- ---- 1.17.. 1.13 1.16 1.14 1.14 1.11
Margins used to compute the fixed charge coverage ratio represent net margins before extraordinary loss resulting from redemption premiums on bonds plus fixed charges. The fixed charges used in the computation of the fixed charge coverage ratio consist of interest and amortization of bond discount and bond issuance expenses. The ratio for the nine months ended February 28, 1995 may not be representative of the ratio for the full fiscal year ending May 31, 1995. USE OF PROCEEDS Except as may be otherwise provided in a Prospectus Supplement, the net proceeds from the sale of the Securities will be added to the general funds of the Company and will be available for making loans to members, the repayment of short-term borrowings, the refinancing of existing long-term debt and for other corporate purposes. The Company expects to incur additional indebtedness from time to time, the amount and terms of which will depend upon the volume of its business, general market conditions and other factors. DESCRIPTION OF SECURITIES The following description of the Securities summarizes certain general terms and provisions of the Securities to which any Prospectus Supplement may relate. The particular terms of the Securities and the extent, if any, to which such general provisions may apply to any series of Securities will be described in the Prospectus Supplement relating to such series. The Securities are to be issued under an Indenture dated as of December 15, 1987, as supplemented by a First Supplemental Indenture dated as of October 1, 1990 between the Company and Harris Trust and Savings Bank, as successor Trustee (as so supplemented, the "Indenture"). The Indenture does not limit the aggregate principal amount of Securities which may be issued thereunder. The statements under this heading are subject to the detailed provisions of the Indenture and the Securities. Whenever particular provisions of the Indenture and the Securities or terms defined therein are referred to, such provisions or definitions are incorporated by reference herein as a part of the statements made and the statements are qualified in their entirety by such reference. GENERAL The Securities may be issued in fully registered form without coupons ("Registered Securities"), or in a form registered as to principal only with or without coupons or in bearer form with or without coupons ("Bearer Securities") or any combination thereof. Securities may also be issued in temporary or definitive global bearer form. Unless otherwise specified in the Prospectus Supplement accompanying the Offered Securities, the Securities will be only Registered Securities. The Securities denominated in U.S. dollars will be issued, unless otherwise set forth in the Prospectus Supplement accompanying the Offered Securities, in denominations of $1,000 or an integral multiple thereof for Registered Securities, and in denominations of $5,000 or an integral multiple thereof for Bearer Securities. The Securities will be direct, unsecured obligations of the Company. 4 6 If any of the Securities are sold for any foreign currency or currency unit or if principal of (or premium, if any) or any interest on any of the Securities is payable in any foreign currency or currency unit, the restrictions, elections, tax consequences, specific terms and other information with respect to such issue of Securities and such foreign currency or currency unit will be set forth in the Prospectus Supplement relating thereto. The Securities may be issued in one or more series with the same or various maturities at or above par or with an original issue discount. Offered Securities bearing no interest or interest at a rate which at the time of issuance is below market rates ("Original Issue Discount Securities") will be sold at a discount (which may be substantial) below their stated principal amount. See "United States Taxation--U.S. Holders--Original Issue Discount" for a discussion of certain Federal income tax considerations with respect to any such Original Issue Discount Securities. Reference is made to the Prospectus Supplement for the following terms of the Offered Securities: (i) the title and the limit, if any, on the aggregate principal amount of Offered Securities; (ii) the percentage of their principal amount at which the Offered Securities will be sold; (iii) the date or dates on which the Offered Securities will mature; (iv) the rate or rates (which may be fixed or variable) per annum, if any, at which the Offered Securities will bear interest or the method of determining such rate or rates; (v) the date or dates from which such interest, if any, shall accrue and the date or dates at which such interest, if any, will be payable; (vi) the place where the principal of (and premium, if any) and the interest, if any, on the Offered Securities will be payable; (vii) the terms for redemption for early payment, if any, including any mandatory or optional sinking fund or analogous provision; (viii) the principal amount of the Offered Securities which are Original Issue Discount Securities payable upon declaration of acceleration of the maturity of the Offered Securities; (ix) the means of satisfaction and discharge of the Indenture with respect to the Offered Securities; (x) any deletions or modifications of or additions to the Events of Default or covenants of the Company; (xi) the currency, currencies or currency unit or units for which the Offered Securities may be purchased and the currency, currencies or currency unit or units in which the payment of principal of (and premium, if any) and interest, if any, on such Offered Securities will be made and, if the Company or the Holders of Offered Securities may elect for such payment in a currency, currencies or currency unit or units other than that in which the Offered Securities are stated to be payable, then the period or periods within which, and the terms and conditions upon which, such election may be made and, if the amount of such payments may be determined with reference to an index based on a currency, currencies or currency unit or units, other than that in which the Offered Securities are stated to be payable, then the manner in which such amounts shall be determined; (xii) whether the Offered Securities will be issued in registered form without coupons, in a form registered as to principal only with or without coupons, in bearer form with or without coupons, including temporary and definitive global form, or any combination thereof and the circumstances, if any, upon which such Offered Securities may be exchanged for Offered Securities issued in a different form; (xiii) whether and under what circumstances the Company will pay additional amounts to any Holder of Offered Securities who is not a United States person (as defined under "United States Taxation") in respect of any tax, assessment or governmental charge required to be withheld or deducted and, if so, whether the Company will have the option to redeem rather than pay additional amounts; (xiv) whether the covenants described below under "Restriction on Indebtedness" will not apply to the Offered Securities; and (xv) any other terms of the Offered Securities not inconsistent with the Indenture. (Section 301) EXCHANGE, REGISTRATION AND TRANSFER Unless otherwise specified in the applicable Prospectus Supplement, Registered Securities of any series will be exchangeable for other Registered Securities of the same series and of a like aggregate principal amount and tenor of different authorized denominations. In addition, if Securities of any series are issuable as both Registered Securities and Bearer Securities, at the option of the Holder upon request confirmed in writing, and subject to the terms of the Indenture, Bearer Securities (with all unmatured coupons, except as provided below, and all matured coupons in default) of such series will be exchangeable into Registered Securities of the same series of any authorized denominations and of a like aggregate principal amount and tenor. Bearer Securities with coupons appertaining thereto surrendered in exchange for Registered Securities between a Regular Record Date or a Special Record Date and the relevant date for payment of interest must be surrendered without the coupon relating to such date for payment of interest and interest will not be payable in respect of the Registered Security issued in 5 7 exchange for such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the terms of the Indenture. Bearer Securities will not be issued in exchange for Registered Securities. No service charge will be made for any registration of transfer or exchange of the Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge in connection therewith. (Section 305) Unless otherwise specified in the applicable Prospectus Supplement, Securities may be presented for exchange as provided above, and Registered Securities may be presented for registration of transfer (with the form of transfer endorsed thereon duly executed), at the office of the Security Registrar or at the office of any transfer agent designated by the Company for such purpose with respect to any series of Securities and referred to in an applicable Prospectus Supplement. Such transfer or exchange will be effected upon the Security Registrar or such transfer agent, as the case may be, being satisfied with the documents of title and identity of the person making the request. The Company has appointed Bank of Montreal Trust Company as Security Registrar. (Section 305) If a Prospectus Supplement refers to any transfer agents (in addition to the Security Registrar) initially designated by the Company with respect to any series of Securities, the Company may at any time rescind the designation of any such transfer agent or approve a change in the location through which any such transfer agent acts, except that, if Securities of a series are issuable solely as Registered Securities, the Company will be required to maintain a transfer agent in each Place of Payment for such series and, if Securities of a series are issuable as Bearer Securities, the Company will be required to maintain (in addition to the Security Registrar) a transfer agent in a Place of Payment for such series. The Company may at any time designate additional transfer agents with respect to any series of Securities. (Section 1002) In the event of any redemption in part, the Company will not be required to: (i) issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15 days before any selection of Securities of that series to be redeemed and ending at the close of business on (a) if Securities of the series are issuable only as Registered Securities, the day of mailing of the relevant notice of redemption and (b) if Securities of the series are issuable only as Bearer Securities, the day of the first publication of the relevant notice of redemption or, if Securities of the series are also issuable as Registered Securities and there is no publication, the day of mailing of the relevant notice of redemption; (ii) register the transfer of or exchange any Registered Security, or portion thereof, called for redemption, except the unredeemed portion of any Registered Security being redeemed in part; or (iii) exchange any Bearer Security called for redemption, except to exchange such Bearer Security for a Registered Security of that series and like tenor which is simultaneously surrendered for redemption. (Section 305) PAYMENT AND PAYING AGENTS Unless otherwise indicated in an applicable Prospectus Supplement, payment of principal of (and premium, if any) and any interest on Registered Securities will be made at the office of such Paying Agent or Paying Agents as the Company may designate from time to time, except that at the option of the Company payment of any interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. (Section 301) Unless otherwise indicated in an applicable Prospectus Supplement, payment of any installment of interest on Registered Securities will be made to the Person in whose name such Registered Security is registered at the close of business on the Regular Record Date for such interest. (Section 307) Unless otherwise indicated in an applicable Prospectus Supplement, the office of Bank of Montreal Trust Company in the Borough of Manhattan, The City of New York will be designated as the Company's sole Paying Agent for payments with respect to Offered Securities that are issuable solely as Registered Securities and as the Company's Paying Agent in the Borough of Manhattan, The City of New York, for payments with respect to Offered Securities. Any Paying Agents outside the United States and any other Paying Agents in the United States initially designated by the Company for the Offered Securities will be named in an applicable Prospectus Supplement. The Company may at any time designate additional Paying Agents or rescind the designation of any Paying Agent or approve a change in the office through which any Paying Agent acts, except that, unless otherwise indicated in an applicable Prospectus Supplement, if Securities of a series are issuable solely as Registered Securities, the Company will be required to maintain a Paying Agent in each Place of Payment for 6 8 such series and, if Securities of a series are issuable as Bearer Securities, the Company will be required to maintain (i) a Paying Agent in the Borough of Manhattan, The City of New York, for payments with respect to any Registered Securities of the series (and for payments with respect to Bearer Securities of the series in certain circumstances) and (ii) a Paying Agent in a Place of Payment located outside the United States where Bearer Securities of such series and any coupons appertaining thereto may be presented and surrendered for payment. (Section 1002) All moneys paid by the Company to a Paying Agent for the payment of principal of (and premium, if any) or any interest on any Security or coupon that remains unclaimed at the end of two years after such principal, premium or interest shall have become due and payable will be repaid to the Company and the Holder of such Security or coupon will thereafter, as an unsecured general creditor, look only to the Company for payment thereof. (Section 1003) RESTRICTION ON INDEBTEDNESS The Company may not incur any Superior Indebtedness or make any optional prepayment on any Capital Term Certificate if, as a result, the principal amount of Superior Indebtedness outstanding, less a principal amount thereof equal to the principal amount of Government or Government Insured Obligations (as defined in the Indenture) held by the Company, thereafter or on any future date would exceed 20 times the sum of the Members' equity in the Company at the time of determination plus the principal amount of Capital Term Certificates outstanding at the time of determination or at such given future date, as the case may be. The principal amounts of Superior Indebtedness and Capital Term Certificates to be outstanding on any future given date will be computed after giving effect to maturities and sinking fund requirements. (Section 1007) "Superior Indebtedness" means all indebtedness of the Company (including all guarantees by the Company of indebtedness of others) except Capital Term Certificates. A "Capital Term Certificate" is defined for the purposes of the Indenture as a note of the Company substantially in the form of the capital term certificates of the Company outstanding on the date of the Indenture and any other indebtedness having substantially similar provisions as to subordination. As of May 31, 1994, the Company had $6,772,325,000 outstanding of Superior Indebtedness and within the restrictions of the Indenture was permitted to have outstanding an additional $22,904,195,000 of Superior Indebtedness. CONSOLIDATION, MERGER AND SALE OF ASSETS The Indenture provides that the Company, without the consent of the Holders of any of the Outstanding Securities, may consolidate with or merge into any other corporation or transfer its assets substantially as an entirety to any Person provided that: (i) the successor is a corporation organized under the laws of any domestic jurisdiction; (ii) the successor corporation assumes the Company's obligations under the Indenture and the Securities issued thereunder; (iii) immediately after giving effect to the transaction, no Event of Default (as defined below under "Events of Default, Notice and Waiver") and no event that, after notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing; and (iv) certain other conditions are met. (Section 801) MODIFICATION OF THE INDENTURE The Indenture provides that the Company and the Trustee may, without the consent of any Holders of Securities, enter into supplemental indentures for the purposes, among other things, of adding to the Company's covenants, adding additional Events of Default, establishing the form or terms of Securities of any series, changing or eliminating any restriction on the manner or place of payment of principal of or interest on Bearer Securities or, provided such action shall not adversely affect the interests of the Holders of any series of Securities in any material respect, curing ambiguities or inconsistencies in the Indenture or making other provisions with respect to matters arising under the Indenture. (Section 901) The Indenture contains provisions permitting the Company, with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of all affected series (acting as one class), to execute supplemental indentures adding any provisions to or changing or eliminating any of the provisions of the 7 9 Indenture or modifying the rights of the Holders of the Securities of such series, except that no such supplemental indenture may, without the consent of the Holders of all the Outstanding Securities affected thereby, among other things: (i) change the maturity of the principal of, or any installment of principal of or interest on, any of the Securities; (ii) reduce the principal amount thereof (or any premium thereon) or the rate of interest, if any, thereon; (iii) reduce the amount of the principal of Original Issue Discount Securities payable on any acceleration of maturity; (iv) change the currency, currencies or currency unit or units in which any of the Securities or any premium or interest thereon is payable; (v) change any obligation of the Company to maintain an office or agency in the places and for the purposes required by the Indenture; (vi) impair the right to institute suit for the enforcement of any payment on or after the applicable maturity date; (vii) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of the Holders of which is required for any such supplemental indenture or for any waiver of compliance with certain provisions of, or of certain defaults under, the Indenture; or (viii) with certain exceptions, to modify the provisions for the waivers of certain covenants and defaults and any of the foregoing provisions. (Section 902) WAIVER OF CERTAIN COVENANTS The Indenture provides that the Company may omit to comply with certain restrictive covenants (including that described above under "Restriction on Indebtedness") if the Holders of not less than a majority in principal amount of all series of Outstanding Securities affected thereby (acting as one class) waive compliance with such restrictive covenants. (Section 1009) EVENTS OF DEFAULT, NOTICE AND WAIVER An Event of Default in respect of any series of Securities (unless it is either inapplicable to a particular series or has been modified or deleted with respect to any particular series) is defined in the Indenture to be: (i) a default for 30 days in the payment of any installment of interest upon any of the Securities of such series when due; (ii) a default in the payment of principal of (or premium, if any, on) any of the Securities of such series when due; (iii) a default in the deposit of any sinking fund payment when the same becomes due by the terms of the Securities of such series; (iv) a default in the performance, or breach, of the covenant of the Company described above under "Restrictions on Indebtedness" which shall not have been remedied for a period of 60 days after such default has become known to an officer of the Company; (v) a default by the Company in the performance, or breach, of any of its other covenants or warranties in the Indenture which shall not have been remedied for a period of 60 days after notice from the Trustee thereunder or the Holder of not less than 25% in principal amount of the Outstanding Securities of such series; (vi) certain events of bankruptcy, insolvency or reorganization of the Company; and (vii) such other events as may be specified for each series. (Section 501) The Indenture provides that if an Event of Default specified therein in respect of any series of Outstanding Securities shall have happened and be continuing, either the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of such series may declare the principal (or, if such Securities are Original Issue Discount Securities, such portion of the principal amount as may be specified by the terms of such Securities) of all of the Outstanding Securities of such series to be immediately due and payable. (Section 502) The Indenture provides that the Holders of not less than a majority in principal amount of the Outstanding Securities of any series may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that such Trustee may act in any way that is not inconsistent with such directions and may decline to act if any such direction is contrary to law or to the Indenture or would involve such Trustee in personal liability. (Section 507) The Indenture provides that the Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all of the Outstanding Securities of such series waive any past default with respect to such series and its consequences, except a default (i) in the payment of the principal of (or premium, if any) or any interest on any of the Securities of such series or (ii) in respect of a covenant or provision which, under the terms of the Indenture, cannot be modified or amended without the consent of the Holders of all of the Outstanding Securities of such series affected thereby. (Section 508) 8 10 The Indenture contains provisions entitling the Trustee, subject to the duty during an Event of Default in respect of any series of Securities to act with the required standard of care, to be indemnified by the Holders of the Securities of such series before proceeding to exercise any right or power at the request of the Holders of the Securities of such series. (Sections 601 and 603) The Indenture provides that the Trustee will, within 90 days after the occurrence of a default in respect of any series of Securities, give to the Holders of the Securities of such series notice of all uncured and unwaived defaults known to it; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or any interest on, or any sinking fund or purchase fund installment with respect to, any of the Securities of such series, the Trustee will be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the interest of the Holders of the Securities of such series; and provided, further, that such notice shall not be given until at least 60 days after the occurrence of an Event of Default regarding the performance, or breach, of any covenant or warranty of the Company other than for the payment of the principal of (or premium, if any) or any interest on, or any sinking fund installment with respect to, any of the Securities of such series. The term default for the purpose of this provision only means any event that is, or after notice or lapse of time, or both, would become, an Event of Default with respect to the Securities of such series. (Section 602) The Indenture requires the Company to file annually with the Trustee a certificate, executed by two officers of the Company, indicating whether the Company is in default under the Indenture. (Section 1008) MEETINGS The Indenture contains provisions for convening meetings of the Holders of Securities of a series if Securities of that series are issuable as Bearer Securities. (Section 1201) A meeting may be called at any time by the Trustee, and also, upon request, by the Company or the Holders of at least 10% in principal amount of the Outstanding Securities of such series, in any such case upon notice given in accordance with "Notices" below. (Section 1202) Persons entitled to vote a majority in principal amount of the Outstanding Securities of a series shall constitute a quorum at a meeting of Holders of Securities of such series, except that in the absence of a quorum, a meeting, called by the Company or the Trustee shall be adjourned for a period of not less than 10 days, and in the absence of a quorum at any such adjourned meeting, the meeting shall be further adjourned for a period of not less than 10 days, at which further adjourned meeting persons entitled to vote 25% in aggregate principal amount of the Outstanding Securities of such series shall constitute a quorum. Except for any consent which must be given by the Holder of each Outstanding Security affected thereby, as described above under "Modification of the Indenture", and subject to the provisions described in the last sentence under this subheading, any resolution presented at a meeting or adjourned meeting duly reconvened at which a quorum is present may be adopted by the affirmative vote of the lesser of (i) the Holders of a majority in principal amount of the Outstanding Securities of that series and (ii) 66 2/3% in aggregate principal amount of Outstanding Securities of such series represented and voting at the meeting; provided, however, that any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other action which may be made, given or taken by the Holders of a specified percentage, which is less than a majority, in principal amount of Outstanding Securities of a series may be adopted at a meeting or adjourned meeting duly reconvened at which a quorum is present by the affirmative vote of the lesser of (i) the Holders of such specified percentage in principal amount of the Outstanding Securities of that series and (ii) a majority in principal amount of Outstanding Securities of such series represented and voting at the meeting. Any resolution passed or decision taken at any meeting of Holders of Securities of any series duly held in accordance with the Indenture will be binding on all Holders of Securities of that series and the related coupons. With respect to any consent, waiver or other action which the Indenture expressly provides may be given by the Holders of a specified percentage of Outstanding Securities of all series affected thereby (acting as one class), only the principal amount of Outstanding Securities of any series represented at a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid and voting in favor of such action shall be counted for purposes of calculating the aggregate principal amount of Outstanding Securities of all series affected thereby favoring such action. (Section 1204) 9 11 NOTICES Except as otherwise provided in the Indenture, notices to Holders of Bearer Securities will be given by publication at least once in a daily newspaper in The City of New York and London and in such other city or cities as may be specified in such Bearer Securities and will be mailed to such Persons whose names and addresses were previously filed with the Trustee, within the time prescribed for the giving of such notice. Notices to Holders of Registered Securities will be given by mail to the address of such Holders as they appear in the Security Register. (Section 106) TITLE Title to any Bearer Security (including any Bearer Security in temporary or definitive global bearer form) and any coupons appertaining thereto will pass by delivery. The Company, the Trustee and any agent of the Company or the Trustee may treat the bearer of any Bearer Security and the bearer of any coupon and the registered owner of any Registered Security as the absolute owner thereof (whether or not such Security or coupon shall be overdue and notwithstanding any notice to the contrary) for the purpose of making payment and for all other purposes. (Section 308) REPLACEMENT OF SECURITIES AND COUPONS Any mutilated Security and any Security with a mutilated coupon appertaining thereto will be replaced by the Company at the expense of the Holder upon surrender of such mutilated Security or Security with a mutilated coupon to the Trustee. Securities or coupons that become destroyed, stolen or lost will be replaced by the Company at the expense of the Holder upon delivery to the Trustee of evidence of the destruction, loss or theft thereof satisfactory to the Company and the Trustee; in the case of any coupon which becomes destroyed, stolen or lost, such coupon will be replaced (upon surrender to the Trustee of the Security with all appurtenant coupons not destroyed, stolen or lost) by issuance of a new Security in exchange for the Security to which such coupon appertains. In the case of a destroyed, lost or stolen Security or coupon an indemnity satisfactory to the Trustee and the Company may be required at the expense of the Holder of such Security or coupon before a replacement Security will be issued. (Section 306) SATISFACTION AND DISCHARGE; DEFEASANCE At the request of the Company, the Indenture will cease to be in effect as to the Company (except for certain obligations to register the transfer or exchange of Securities and hold moneys for payment in trust) with respect to the Securities when all such Securities have been cancelled by the Trustee, or, in the case of Securities and coupons not delivered to the Trustee for cancellation, (i) such Securities or coupons have become due and payable, will become due and payable at their stated maturity within one year, or are to be called for redemption within one year, and, in each case, the Company has deposited with the Trustee, in trust, money, and, in the case of Securities and coupons denominated in U.S. dollars, U.S. Government Obligations (as defined in the Indenture) or, in the case of Securities and coupons denominated in a foreign currency, Foreign Government Securities (as defined in the Indenture), which through the payment of interest thereon and principal thereof in accordance with their terms will provide money in an amount sufficient to pay in the currency, currencies or currency units or units in which the Offered Securities are payable all the principal of, and interest on, the Offered Securities on the dates such payments are due in accordance with the terms of the Offered Securities, or (ii) such Securities or coupons are deemed paid and discharged in the manner described in the next paragraph. (Section 401) Unless the Prospectus Supplement relating to the Offered Securities provides otherwise, the Company at its option (a) will be Discharged (as such term is defined in the Indenture) from any and all obligations in respect of the Offered Securities (except for certain obligations to register the transfer or exchange of Securities, replace stolen, lost or mutilated Securities and coupons, maintain paying agencies and hold moneys for payment in trust) or (b) need not comply with certain restrictive covenants of the Indenture (including those described above under "Restriction on Indebtedness"), in each case after the Company deposits with the Trustee, in trust, money, and, in the case of Securities and coupons denominated in U.S. dollars, U.S. Government Obligations or, 10 12 in the case of Securities and coupons denominated in a foreign currency, Foreign Government Securities, which through the payment of interest thereon and principal thereof in accordance with their terms will provide money in an amount sufficient to pay in the currency, currencies or currency unit or units in which the Offered Securities are payable all the principal of, and interest on, the Offered Securities on the dates such payments are due in accordance with the terms of the Offered Securities. Among the conditions to the Company's exercising any such option, the Company is required to deliver to the Trustee an opinion of counsel to the effect that the deposit and related defeasance would not cause the Holders of the Offered Securities to recognize income, gain or loss for United States federal income tax purposes and that the Holders will be subject to United States federal income tax in the same amounts, in the same manner and at the same times as would have been the case if such deposit and related defeasance has not occurred. (Section 403) At the request of the Company, the Trustee will deliver or pay to the Company any U.S. Government Obligations, Foreign Government Securities or money deposited, for the purposes described in the preceding two paragraphs, with the Trustee by the Company and which, in the opinion of a nationally-recognized firm of independent public accountants, are in excess of the amount thereof which would then have been required to be deposited for such purposes. In addition, the Trustee, in exchange for, simultaneously, other U.S. Government Obligations, Foreign Government Securities or money, will deliver or pay to the Company, at the Company's request, U.S. Government Obligations, Foreign Government Securities or money deposited with the Trustee for the purposes described in the preceding two paragraphs, provided that, in the opinion of a nationally-recognized firm of independent public accountants, immediately after such exchange the obligations, securities or money then held by the Trustee will be in such amount as would then have been required to be deposited with the Trustee for such purposes. (Section 403) GOVERNING LAW The Indenture, the Securities and the coupons will be governed by, and construed in accordance with, the laws of the State of New York. (Section 113) THE TRUSTEE Harris Trust and Savings Bank, Chicago, Illinois is the Trustee under the Indenture. DESCRIPTION OF WARRANTS The following statements with respect to the Warrants are summaries of, and subject to, the detailed provisions of one or more separate Warrant Agreements (each a "Warrant Agreement") between the Company and one or more banking institutions or trust companies as Warrant Agents (each a "Warrant Agent"). A form of Warrant Agreement will be filed as an exhibit to the Registration Statement prior to the issuance of any Warrant. GENERAL Warrants, evidenced by Warrant Certificates (the "Warrant Certificates"), may be issued under a Warrant Agreement independently or together with any Offered Securities and may be attached to or separate from such Offered Securities. If Warrants are offered, the Prospectus Supplement will describe the terms of the Warrants, including the following: (i) the offering price, if any, including the currency, currencies or currency unit or units in which such price will be payable; (ii) the designation, aggregate principal amount and terms of the Offered Securities purchasable upon exercise of the Warrants; (iii) if applicable, the designation and terms of the Offered Securities with which the Warrants are issued and the number of Warrants issued with each such Offered Security; (iv) if applicable, the date on and after which the Warrants and the related Offered Securities will be separately transferable; (v) the principal amount of Offered Securities purchasable upon exercise of one Warrant and the price or prices at which, and the currency, currencies or currency unit or units in which such principal amount of Offered Securities may be purchased upon exercise; (vi) the date on which the right to exercise the Warrants shall commence and the date on which such right shall expire; (vii) United States Federal income tax 11 13 consequences; (viii) whether the Warrants represented by the Warrant Certificates will be issued in registered or unregistered form or both; and (ix) any other terms of the Warrants. Warrant Certificates, if any, may be exchanged for new Warrant Certificates of different denominations and may (if in registered form) be presented for registration of transfer at the corporate trust office of the Warrant Agent, which will be listed in the Prospectus Supplement, or at such other office as may be set forth therein. Warrantholders do not have any of the rights of Holders of Offered Securities (except to the extent that the consent of Warrantholders may be required for certain modifications of the terms of the Indenture) and are not entitled to payments of principal (or premium, if any), or interest, if any, on such Offered Securities. EXERCISE OF WARRANTS Warrants may be exercised by surrendering the Warrant Certificate, if any, at the corporate trust office or other designated office of the Warrant Agent, with the form of election to purchase on the reverse side of the Warrant Certificate, if any, properly completed and executed, and by payment in full of the exercise price, as set forth in the Prospectus Supplement. Upon exercise of Warrants, the Warrant Agent will, as soon as practicable, deliver the Offered Securities issuable upon the exercise of the Warrants in authorized denominations in accordance with the instructions of the exercising Warrantholder and at the sole cost and risk of such holder. If less than all of the Warrants evidenced by the Warrant Certificate, if any, are exercised, a new Warrant Certificate will be issued for the remaining amount of unexercised Warrants, if sufficient time exists prior to the expiration date. LIMITATIONS ON ISSUANCE OF BEARER SECURITIES Under U.S. federal tax laws, certain limitations on offers, sales and delivery apply to Bearer Securities. These limitations, as well as additional information regarding the U.S. federal income tax consequences in respect of a Bearer Security, will be set forth in any Prospectus Supplement providing for the issuance of Bearer Securities. UNITED STATES TAXATION The following is a summary of the principal U.S. federal income tax consequences of the acquisition, ownership and disposition of Registered Securities. The summary reflects present law, which is subject to prospective and retroactive changes. It is not intended as tax advice, and it does not describe all of the tax considerations that may be relevant to a prospective purchaser. The summary addresses only original purchasers of the Securities that hold the Securities as capital assets. It does not address U.S. federal income tax issues relevant to purchasers subject to special rules, such as banks, securities dealers, life insurance companies, controlled foreign corporations, persons holding Securities in connection with a hedge or persons having a functional currency other than the U.S. dollar. The summary does not consider the tax consequences of Securities with terms other than those described in this Prospectus. PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR TAX ADVISERS ABOUT THE TAX CONSEQUENCES OF AN INVESTMENT IN THE SECURITIES UNDER THE LAWS OF THE UNITED STATES AND OTHER JURISDICTIONS WHERE PURCHASERS ARE SUBJECT TO TAXATION. For the purposes of this discussion, "U.S. Holder" means (i) a beneficial owner of the Securities that is a citizen or resident of the United States, a corporation or partnership organized in or under the laws of the United States, or an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source or (ii) any other beneficial owner as to which income from the Securities is effectively connected with the conduct of a trade or business within the United States. The term "Non-U.S. Holder" refers to any beneficial owner of the Securities other than a U.S. Holder. 12 14 U.S. HOLDERS PAYMENTS OF INTEREST Interest on a Security generally will be taxable to a U.S. Holder as ordinary interest income at the time of receipt or accrual in accordance with the U.S. Holder's method of accounting for U.S. federal income tax purposes. Special rules for the interest on Securities with original issue discount are described below. ORIGINAL ISSUE DISCOUNT The following is a summary of the U.S. federal income tax consequences to U.S. Holders of the purchase, ownership and disposition of Securities issued with original issue discount ("OID"). The following summary is based on sections 1271 through 1273 and section 1275 of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), and on certain final regulations of the U.S. Department of Treasury issued in 1994 (the "Final OID Regulations") interpreting these provisions. Additionally, the summary includes a discussion of proposed regulations issued in December 1994 relating principally to contingent payment debt instruments issued with OID (the "Proposed OID Regulations"). General. A U.S. Holder of a Security issued at a discount with a maturity of more than one year after the date of issue must include original issue discount in income over the term of the Security. The U.S. Holder generally must include in gross income for the taxable year the sum of the daily portions of original issue discount that accrue on the Security for each day during the year on which such holder held the Security. Accordingly, a U.S. Holder will be required to include amounts attributable to original issue discount in income before receiving cash attributable to that income. A Security has original issue discount for U.S. federal income tax purposes to the extent that the Security's stated redemption price at maturity exceeds its issue price. The issue price of a Security is the initial offering price at which a substantial amount of the Securities is sold to the public (excluding bond houses, brokers or similar persons). The stated redemption price of a Security is the total of all payments due on the Security other than payments of "qualified stated interest." A Security is not treated as issued at a discount, however, if the discount is less than 1/4 of 1 percent of the Security's stated redemption price at maturity multiplied by the number of complete years to maturity ("de minimis original issue discount"). A Security that bears interest for any accrual period at a rate below the rate for the remaining term of the Security (e.g., a Security with a "teaser rate") also will not be treated as issued at a discount solely on account of that feature if the foregone interest is less than 1/4 of 1 percent of the Security's adjusted stated redemption price multiplied by the number of complete years to maturity. Qualified stated interest is interest that is payable unconditionally in cash or in property (other than debt of the issuer) at least annually at either (a) a single fixed rate that appropriately takes into account the length of the interval between payments or (b) the current values of (i) a single "qualified floating rate," (ii) a single qualified floating rate followed by a second qualified floating rate, (iii) a single fixed rate followed by a single qualified floating rate or (iv) a single "objective rate" (each a "Variable Rate"). A qualified floating rate is any floating rate the variations in which reasonably can be expected to measure contemporaneous variations in the cost of newly-borrowed funds (e.g., LIBOR). An objective rate is a rate, other than a qualified floating rate, determined by a single formula that is fixed throughout the term of the Security and is based on (i) one or more qualified floating rates (e.g., a multiple of a qualified floating rate or the inverse of a qualified floating rate), (ii) one or more rates each of which would be a qualified floating rate for a Security denominated in a currency other than the currency in which the Security is denominated, (iii) the yield or the changes in the price of one or more items of actively traded personal property (other than stock or debt of the Company or a related party), (iv) a combination of rates described above in (i), (ii), or (iii), or (v) other rates designated from time to time by the Internal Revenue Service. The Proposed OID Regulations provide that an objective rate is any rate, other than a qualified floating rate, that is determined using a single fixed formula and that is based on objective financial or economic information. A rate will not be considered an objective rate, however, if it is reasonably expected that the average value of the rate during the first half of the Security's term will be either significantly less than or significantly greater than the average value of the rate during the final half of the Security's term. A fixed rate for an initial period of less than one year followed by a qualified floating rate or an objective rate together constitute a 13 15 single qualified floating objective rate if the value of the qualified floating rate or objective rate on the issue date is intended to approximate the fixed rate. To determine the daily portions of original issue discount, original issue discount accruing during an accrual period is divided by the number of days in the period. The amount of original discount accruing during an accrual period is determined by using a constant yield to maturity method. The accrued amount for any period is the excess of (i) the product of the Security's adjusted issue price at the beginning of the accrual period and its yield to maturity (determined on the basis of compounding at the close of each accrual period and appropriately adjusted for the length of the accrual period) over (ii) the amount of any qualified stated interest payments allocable to the accrual period. The adjusted issue price of a Security at the beginning of any accrual period generally equals the issue price of the Security increased by the aggregate amount of original issue discount that accrued on that Security in all prior accrual periods and reduced by the amount of payments in prior accrual periods other than payments of qualified stated interest. A U.S. Holder of a Security issued at a discount that purchases the Security for more than the Security's adjusted issue price but less than the Security's stated redemption price at maturity may reduce the daily portions of original issue discount includible in gross income by daily portions of the acquisition premium paid for the Security. Variable Rate Securities. Special rules apply to the U.S. Holder of a Security that bears interest at a Variable Rate (a "Variable Rate Security"). In general, to compute the accrual of OID on a Variable Rate Security, the Final OID Regulations convert the Variable Rate Security into a fixed rate debt instrument and then apply the general rules discussed above to the deemed fixed rate debt instrument. If a Variable Rate Security provides for stated interest at either a single qualified floating rate or objective rate that is unconditionally payable at least annually, (a) all stated interest with respect to the Variable Rate Security is treated as qualified stated interest and (b) the amount of OID, if any, is determined under the rules applicable to fixed rate debt instruments discussed above by assuming that the Variable Rate is a fixed rate equal to (i) in the case of a qualified floating rate or qualified inverse floating rate, the value, as of the issue date of the Variable Rate Security, of the qualified floating rate or the qualified inverse floating rate, or (ii) in the case of an objective rate (other than a qualified inverse floating rate), a fixed rate that reflects the yield that is reasonably expected for the Variable Rate Security. If the Variable Rate Security does not provide for stated interest as described in the preceding paragraph, to determine the amounts of interest and OID accruals an "equivalent fixed rate debt instrument" must be constructed. The equivalent fixed rate debt instrument has terms that are identical to those provided under the Variable Rate Security, except that the equivalent fixed rate debt instrument provides for fixed rate substitutes in lieu of the qualified floating rates or objective rate provided under the Variable Rate Security. The fixed rate substitute (a) for each qualified floating rate is the value of each such rate as of the issue date of the Variable Rate Security (with appropriate adjustment for any differences in intervals between interest adjustment dates), (b) for a qualified inverse floating rate is the value of the qualified inverse floating rate as of the issue date of the Variable Rate Security and (c) for an objective rate (other than a qualified inverse floating rate) is a fixed rate that reflects the yield that is reasonably expected for the Variable Rate Security. The amounts of qualified stated interest and OID, if any, are determined for the equivalent fixed rate debt instrument under the rules applicable to fixed rate debt instruments as described above and are taken into account as if the holder of the Security held the equivalent fixed rate debt instrument. Qualified stated interest or OID allocable to an accrual period is increased (or decreased) if the interest actually accrued or paid during an accrual period exceeds (or is less than) the interest assumed to be accrued or paid during the accrual period under the equivalent fixed rate debt instrument. This increase or decrease is an adjustment to qualified stated interest of the accrual period if the equivalent fixed rate debt instrument provides for qualified stated interest and the increase or decrease is reflected in the amount actually paid during the accrual period. Otherwise, this increase or decrease is an adjustment to OID for the accrual period. If the Variable Rate Security provides for interest at a qualified floating rate or qualified inverse floating rate and also provides for stated interest at a single fixed rate (other than a single fixed rate for an initial period of less than one year that is intended to approximate the value of the qualified floating or objective rate), in constructing the equivalent fixed rate debt instrument, such a Variable Rate Security is treated as if it provided for a qualified floating rate (or qualified inverse floating rate, as the case may be) instead of the fixed rate, which qualified floating (or inverse floating) rate is such that the Variable Rate Security would have the same fair market 14 16 value as of its issue date. The foregoing rules do not apply, and a Security is treated as a Contingent Payment Security (defined below), if its issue price exceeds the total of noncontingent principal payments by more than the lesser of (i) the product of .015, the total noncontingent principal payments and the number of complete years to maturity (or a lesser amount if principal is payable in installments) and (ii) 15 percent of the total noncontingent principal payments. Optional Redemption. For purposes of determining the yield of a Security, the Company will be presumed to exercise any right to redeem a Security before its stated maturity or to extend the maturity of a Security if exercise would reduce the yield on the Security. Likewise, the holder will be presumed to exercise any right to require the redemption of a Security or to extend the maturity of the Security if exercise would increase the yield on the Security. If the Security is not actually redeemed on the date when the option was presumed to have been exercised, the Security will be treated only for purposes of determining yield as having been reissued at a price equal to that Security's adjusted issue price on that date with a term based on the original final maturity of the Security. Short-Term Securities. U.S. Holders that do not use the accrual method of accounting for tax purposes generally will not be required to recognize original issue discount on Securities maturing within one year of original issuance until they receive payments on the Securities. Taxpayers on the accrual method, regulated investment companies, common trust funds, and certain others, however, must accrue original issue discount on such short-term Securities on a straight-line basis unless they elect to accrue the discount on a constant yield basis with daily compounding. The original issue discount on a short-term Security is the amount by which the total principal and interest payments on the Security exceed its issue price. U.S. Holders may elect to include discount on such short-term Securities into income based on acquisition discount rather than original issue discount. Acquisition discount is the excess of a Security's stated redemption price at maturity over the U.S. Holder's basis in the Security. Gain recognized on the sale or exchange of a short-term Security by a U.S. Holder that has not accrued discount on the Security will be ordinary income to the extent attributable to accrued interest and original issue discount. Such a holder also must defer deductions for net interest expense on any borrowing attributable to the short-term Security to the extent that the expense does not exceed accrued but unrecognized interest and original issue discount (or acquisition discount) on the Security. ANTI-ABUSE RULE The Internal Revenue Service can apply or depart from the rules contained in the Final OID Regulations as necessary or appropriate to achieve a reasonable result where a principal purpose in structuring a Security or applying the otherwise applicable rules is to achieve a result that is unreasonable in light of the purposes of the applicable statutes (which generally are intended to achieve the clear reflection of income for both sellers and purchasers of the Securities). MARKET DISCOUNT A U.S. Holder that purchases a Security at a market discount generally will be required to treat payments other than qualified stated interest payments as ordinary income to the extent of the accrued market discount and to treat gain on the sale of the Security as ordinary income to the extent of the accrued market discount not previously included in income. See "Sale or Exchange of Securities" below. Market discount is the amount by which the stated redemption price at maturity (or, in the case of a Security with original issue discount, the revised issue price) exceeds the purchaser's basis in the Security immediately after acquisition. A Security is not treated as purchased at a market discount, however, if the discount is less than 1/4 of 1 percent of the stated redemption price at maturity (or the revised issue price) multiplied by the number of complete years remaining to maturity ("de minimis market discount"). (The revised issue price of a Security is its initial issue price increased by the amount of original issue discount includible in the gross income of previous holders.) Market discount on a Security will accrue, at the election of the holder, either ratably or at a constant yield to maturity. The U.S. Holder may elect to take market discount into income as it accrues. Under certain circumstances, the 15 17 U.S. Holder may be required to defer deductions for interest expense attributable to debt incurred or continued to purchase a Security with market discount. PREMIUM A U.S. Holder that purchases a Security for more than its stated redemption price at maturity may elect to amortize the bond premium. If a U.S. Holder makes such an election, the amount of interest on the Security otherwise to be included in the U.S. Holder's income will be reduced each year by the amount of amortizable bond premium allocable to such year on a constant yield to maturity basis (except to the extent regulations may provide otherwise). Amortized bond premium will reduce the U.S. Holder's basis in the Security. An election to amortize bond premium will apply to certain other debt instruments that the U.S. Holder acquired at a premium, and the election may have different tax consequences depending on when the debt instruments were issued or acquired. It also is not entirely clear how amortizable bond premium would be computed for obligations with contingent interest payments. A U.S. Holder should consult its tax adviser before making an election to amortize bond premium. INTEREST ELECTION A U.S. Holder may elect, in the taxable year in which the U.S. Holder acquires a Security, to treat all interest on any Security as OID and calculate the amount includible in gross income under the constant yield method described above. For purposes of this election, interest includes stated interest, acquisition discount, OID, de minimis OID, market discount, de minimis market discount and unstated interest, as adjusted by any amortizable bond premium or acquisition premium. If a U.S. Holder makes this election for a Security with market discount or amortizable bond premium, the election is treated as an election under the market discount or amortizable bond premium provisions, described above, and the electing U.S. Holder will be required to amortize bond premium or include market discount in income currently for all of its other debt instruments with market discount or amortizable bond premium acquired during such tax year and in any subsequent tax year. The election, once made, may not be revoked without the consent of the Internal Revenue Service. U.S. Holders should consult with their own tax advisers before making this election. SALE OR EXCHANGE OF SECURITIES Except to the extent that gain or loss is attributable to accrued but unpaid interest or accrued market discount, a U.S. Holder generally will recognize capital gain or loss upon a sale, exchange or complete retirement of a Security equal to the difference between the amount realized and the U.S. Holder's adjusted basis in the Security. The gain or loss will be long-term if the Security has been held for more than one year. The adjusted basis of a Security generally will equal its initial cost increased by any original issue discount, market discount or acquisition discount with respect to the Security previously included in the U.S. Holder's gross income and reduced by the payments previously received on the Security, other than payments of qualified stated interest, and by any amortized premium. The tax consequences of the partial redemption of a Security will depend upon the price at which the U.S. Holder purchased the Security. A U.S. Holder that purchased a Security at a de minimis market discount or purchased a Security for more than its revised issue price, but less than its principal amount, will recognize capital gain equal to the difference between the principal prepayment and the U.S. Holder's adjusted basis in the prepaid portion of the Security. If a U.S. Holder purchased a Security at a market discount, (i) the principal prepayment will be included in ordinary income to the extent of the accrued market discount (and it is possible that amounts allocable to unaccrued market discount will be recognized as capital gain) and (ii) any principal prepayment exceeding the revised issue price allocable to the prepaid portion of the Security will be capital gain. If a U.S. Holder purchased a Security for more than its stated principal amount and has not elected to amortize bond premium, the U.S. Holder will recognize a capital loss equal to any amount by which the U.S. Holder's adjusted basis in the prepaid portion of the Security exceeds the amount of the principal prepayment. If the U.S. Holder has elected to amortize bond premium, all or part of such excess might be deductible as amortizable bond premium rather than as capital loss. Any capital gain or loss will be long-term if the Security has been held for more than one year. It is possible that capital gain realized by holders of one or more classes of Securities could be considered 16 18 gain realized upon the disposition of property that was part of a "conversion transaction." A "conversion transaction" is any transaction in which substantially all of the expected return is attributable to the time value of the U.S. Holder's net investment, if (i) the U.S. Holder entered the contract to sell the Security substantially contemporaneously with acquiring the Security, (ii) the Security is part of a straddle, (iii) the Security is marketed or sold as producing capital gains, or (iv) the transaction is specified in Treasury regulations that have not yet been issued. If the sale or other disposition of the Security is part of a conversion transaction, all or any portion of the gain realized upon the sale or other disposition of the Securities would be treated as ordinary income instead of capital gain. FOREIGN CURRENCY SECURITIES The tax treatment of Securities the interest or principal on which may be determined by reference to one or more foreign currencies will depend on the application of special rules to the particular terms of the Securities. The tax considerations relevant to such Securities will be described in an applicable Prospectus Supplement, and each prospective purchaser should consult its tax adviser about such matters. CONTINGENT PAYMENT SECURITIES The Proposed OID Regulations contain special rules for determining the timing and amount of OID to be accrued in respect of Securities providing for one or more contingent payments ("Contingent Payment Securities"). For this purpose, a Security is not a Contingent Payment Security if it (i) is a Variable Rate Security, (ii) provides for alternate payment schedules upon the occurrence of contingencies or (iii) is a foreign currency debt instrument. Under the Proposed OID Regulations, U.S. Holders generally would be required to take contingent interest payments on Contingent Payment Securities into income on a yield to maturity basis in accordance with a schedule of projected payments provided by the Company to U.S. Holders and would make annual adjustments to income to account for the difference between actual payments received and projected payment amounts accrued. The Proposed OID Regulations have a prospective effective date and would not apply to a Security issued at any time prior to sixty days after the regulations are published in final form. Additional disclosure will be provided for in a Prospectus Supplement in connection with any offering of Contingent Payment Securities. Prospective purchasers should consult their own tax advisers regarding the Proposed OID Regulations in connection with ownership of a Security that provides for contingent payments. NON-U.S. HOLDERS Interest received by a Non-U.S. Holder is exempt from U.S. federal income tax unless the holder actually or constructively owns at least 10% of the total combined voting power of the Company's stock or the holder is for U.S. income tax purposes a controlled foreign corporation related to the Company through stock ownership. However, "contingent interest" paid to a Non-U.S. Holder will be subject to a 30% tax (unless an applicable tax treaty eliminates or reduces the rate of the tax and the Non-U.S. Holder complies with the requirements for obtaining that reduction or elimination of the tax). For this purpose, contingent interest is an amount of interest determined by reference to (i) receipts, sales, or other cash flows of the Company or a related person, (ii) income or profits of the Company or a related person, (iii) any change in the value of any property of the Company or a related person, or (iv) any dividend, partnership distribution, or similar payment made by the Company or a related person. To qualify for that exemption, a Non-U.S. Holder must provide a statement signed under penalties of perjury certifying that the holder is not a U.S. person for U.S. tax purposes and providing the holder's name and address. The Internal Revenue Service currently is considering modifications to the certification procedures required to qualify for the exemption. Gain from the sale or other disposition of a Security by a Non-U.S. Holder is not subject to U.S. federal income tax unless the Non-U.S. Holder is an individual who is present in the United States for at least 183 days during the taxable year of the disposition and certain other conditions are met. Securities held by a Non-U.S. Holder will not be subject to the U.S. federal estate tax unless the holder actually or constructively owns at least 10% of the total combined voting power of the Company's stock. 17 19 INFORMATION REPORTING AND BACKUP WITHHOLDING A 31% backup withholding of federal income tax and certain information reporting requirements may apply to certain payments made on the Securities and to the proceeds from the disposition of a Security if the holder is not a corporation, a financial institution or otherwise entitled to an exemption. U.S. Holders that provide a correct taxpayer identification number and Non-U.S. Holders that provide the statement described above to establish an exemption from withholding tax generally are exempt from backup withholding. Amounts withheld under the backup withholding rules can be claimed as a refund or taken as a credit against the holder's U.S. federal income tax liability on a properly filed annual income tax return. PLAN OF DISTRIBUTION The Company may sell the Securities and/or Warrants being offered hereby (i) directly to purchasers, (ii) through agents or (iii) through underwriters or a group of underwriters which may include Lehman Brothers Inc. and/or Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated. Offers to purchase Offered Securities and/or Warrants may be solicited directly by the Company or by agents designated by the Company from time to time. Unless otherwise indicated in the Prospectus Supplement, any such agent will be acting on a best-efforts basis for the period of its appointment. Agents may be entitled under agreements which may be entered into with the Company to indemnification by the Company against certain civil liabilities, including liabilities under the Securities Act of 1933, as amended (the "Act"). If an underwriter or underwriters are utilized in the sale, the Company will enter into an underwriting agreement with such underwriters at the time of sale to them and the names of the underwriters and the terms of the transaction will be set forth in the Supplement, which will be used by the underwriters to make resales of the Offered Securities and/or Warrants in respect of which this Prospectus is delivered to the public. The underwriters may be entitled, under the underwriting agreement, to indemnification by the Company against certain liabilities, including liabilities under the Act. The agents and underwriters may be deemed to be underwriters and any discounts, commissions or concessions received by them from the Company or any profit on the resale of Offered Securities and/or Warrants by them may be deemed to be underwriting discounts and commissions under the Act. Any such person who may be deemed to be an underwriter and any such compensation received from the Company will be described in the Prospectus Supplement. If so indicated in the Prospectus Supplement, the Company will authorize agents and underwriters to solicit offers by certain institutions to purchase Offered Securities and/or Warrants from the Company at the public offering price set forth in the Prospectus Supplement pursuant to delayed delivery contracts ("Contracts") providing for payment and delivery on the date stated in the Prospectus Supplement. Each Contract will be for an amount not less than, and unless the Company otherwise agrees the aggregate principal amount of Offered Securities and/or Warrants sold pursuant to Contracts will be not less nor more than, the respective amounts stated in the Prospectus Supplement. Institutions with whom Contracts, when authorized, may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions, and other institutions, but will in all cases be subject to the approval of the Company. Contracts will not be subject to any conditions except that the purchase by an institution of the Offered Securities and/or Warrants covered by its Contract shall not at the time of delivery be prohibited under the laws of any jurisdiction in the United States to which such institution is subject. A commission indicated in the Prospectus Supplement will be granted to agents and underwriters soliciting purchases of Offered Securities pursuant to Contract accepted by the Company. Agents and underwriters will have no responsibility in respect of the delivery or performance of Contracts. The place and time of delivery for the Offered Securities and Warrants in respect of which this Prospectus is delivered are set forth in the Supplement. Each underwriter, dealer and agent participating in the distribution of any Offered Securities which are issuable in bearer form will agree that it will not offer, sell or deliver, directly or indirectly, Offered Securities in 18 20 bearer form in the United States or its possessions or to United States persons (other than qualifying financial institutions) in connection with the original issuance of the Offered Securities. See "Limitations on Issuance of Bearer Securities". The Offered Securities may not be offered or sold directly or indirectly in Great Britain other than to persons whose ordinary business it is to buy or sell shares or debentures (except in circumstances which do not constitute an offer to the public within the meaning of the Companies Act of 1985), and this Prospectus and any Prospectus Supplement or any other offering material relating to the Offered Securities may not be distributed in or from Great Britain other than to persons whose business involves the acquisition and disposal, or the holding, of securities whether as principal or as agent. All Offered Securities will be a new issue of securities with no established trading market. Any underwriters to whom Offered Securities are sold by the Company for public offering and sale may make a market in such Offered Securities, but such underwriters will not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given as to the liquidity of the trading market for any Offered Securities. Certain of the underwriters or agents and their associates may engage in transactions with and perform services for the Company in the ordinary course of business. LEGAL OPINIONS The validity of the Securities offered hereby will be passed upon for the Company by Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York, and for the agents or underwriters, if any, by Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New York. EXPERTS The audited financial statements included in the Company's Annual Report on Form 10-K for the year ended May 31, 1994 incorporated by reference in this Prospectus have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are incorporated herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. 19 21 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The expenses in connection with the issuance and distribution of the securities covered hereby, other than underwriting commissions, are, subject to further contingencies, estimated to be as follows: Registration Statement Filing Fee................................. $137,932 Printing.......................................................... 100,000 Legal Fees and Expenses........................................... 100,000 Blue Sky Fees and Expenses........................................ 15,000 Accounting Fees................................................... 15,000 Fees of Trustee................................................... 15,000 Miscellaneous..................................................... 7,068 -------- Total................................................... $390,000 ========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 29-1104(9) of the District of Columbia Cooperative Association Act provides that an association such as the Registrant shall have the capacity "to exercise . . . any power granted to ordinary business corporations, save those powers inconsistent with this chapter." Section 29-304(16) of the District of Columbia Business Corporation Act permits any corporation: "To indemnify any and all of its directors or officers or former directors or officers or any person who may have served at its request as a director or officer of another corporation in which it owns shares of capital stock or of which it is a creditor against expenses actually and necessarily incurred by them in connection with the defense of any action, suit, or proceeding in which they, or any of them, are made parties, or a party, by reason of being or having been directors or officers or a director or officer of the corporation, or of such other corporation, except in relation to matters as to which any such director or officer or former director or officer or person shall be adjudged in such action, suit, or proceeding to be liable for negligence or misconduct in the performance of duty. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled, under any bylaw, agreement, vote of stockholders, or otherwise." The Board of Directors of CFC has resolved to indemnify all CFC directors, officers and employees in accordance with the terms of the first sentence of the above Section. The Bylaws of CFC also provide for indemnification of all CFC directors, officers and employees as set forth above. II-1 22 ITEM 16. LIST OF EXHIBITS 1.1 -- Debt Securities and/or Warrants to Purchase Debt Securities Underwriting Agreement Basic Provisions has been filed as exhibit 1.1 to Post-Effective Amendment No. 1 to Registration No. 33-2194 filed December 18, 1987 and is incorporated herein by reference. An Underwriting Agreement with respect to each particular offering of Securities registered hereunder will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference. 1.2 -- An Agency Agreement between the Company and the agents named therein, relating to distribution of the Company's Medium-Term Notes, Series C, within the United States will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference. 1.3 -- A form of Placement Agency Agreement between the Company and the agents named therein relating to the distribution, if any, of the Company's Medium-Term Notes outside the United States will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference prior to the use of such agreement. 4.1 -- Indenture between the Company and Chemical Bank, as Trustee. Incorporated by reference to Exhibit 4.1 to Amendment No. 1 to Registration Statement on Form S-3 filed on October 12, 1990 (Registration No. 33-34927). 4.2 -- First Supplemental Indenture between the Company and Chemical Bank, as Trustee. 4.3 -- Instrument of Resignation, Appointment and Acceptance among the Company, Chemical Bank, Harris Trust and Savings Bank and Harris Trust Company of New York dated as of October 1, 1993. Incorporated by reference to Exhibit 4.3 to Registration Statement on Form S-3 filed on October 1, 1993 (Registration No. 33-50463). 4.4 -- Form of Fixed Rate Medium-Term Note (for offerings within the United States). 4.5 -- Form of Floating Rate Medium-Term Note (for offerings within the United States). 4.6 -- A form of Fixed or Floating Rate Registered Medium-Term Note (for offerings outside the United States) will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference prior to the issuance of any such Note. 4.7 -- A form of Fixed or Floating Rate Bearer Medium-Term Note (for offerings outside the United States) will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference prior to the issuance of any such Note. 4.8 -- A form of Temporary Global Bearer Fixed or Floating Rate Medium-Term Note (for offerings outside the United States) will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference prior to the issuance of any such Note. 4.9 -- A form of Definitive Global Bearer Fixed or Floating Rate Medium-Term Note (for offerings outside the United States) will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference prior to the issuance of any such Note. 4.10 -- A form of Warrant Agreement between the Company and one or more banking institutions or trust companies as Warrant Agents will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference prior to the issuance of any Warrants. 5 -- Opinion and consent of Milbank, Tweed, Hadley & McCloy. An opinion and consent of Milbank, Tweed, Hadley & McCloy respecting Warrants will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference prior to the issuance of any Warrants. 8 -- Opinion of Milbank, Tweed, Hadley & McCloy. Included as part of Exhibit 5. 12 -- Schedule of computation of ratio of margins to fixed charges. 23.1 -- Consent of Arthur Andersen LLP. 23.2 -- Consent of Milbank, Tweed, Hadley & McCloy. Included as part of Exhibit 5. 24 -- Power of Attorney (included on signature pages). 25 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Harris Trust and Savings Bank, as Trustee.
II-2 23 ITEM 17. UNDERTAKINGS. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement (other than as provided in the proviso and instructions to Item 512(a) of Regulation S-K): (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 15 above or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in such Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-3 24 THE REGISTRANT AND EACH PERSON WHOSE SIGNATURE APPEARS BELOW HEREBY AUTHORIZES EACH OF SHELDON C. PETERSEN, STEVEN L. LILLY AND JOHN JAY LIST (THE "AGENTS") TO FILE ONE OR MORE AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS) TO THE REGISTRATION STATEMENT WHICH AMENDMENTS MAY MAKE SUCH CHANGES IN THE REGISTRATION STATEMENT AS SUCH AGENT DEEMS APPROPRIATE AND THE REGISTRANT AND EACH SUCH PERSON HEREBY APPOINTS EACH SUCH AGENT AS ATTORNEY-IN-FACT TO EXECUTE IN THE NAME AND ON BEHALF OF THE REGISTRANT AND EACH SUCH PERSON, INDIVIDUALLY AND IN EACH CAPACITY STATED BELOW, ANY SUCH AMENDMENTS TO THE REGISTRATION STATEMENT. SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE COUNTY OF FAIRFAX, COMMONWEALTH OF VIRGINIA, ON THE 5TH DAY OF APRIL, 1995. NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION By: /s/ SHELDON C. PETERSEN ------------------------------------ SHELDON C. PETERSEN Governor and Chief Executive Officer PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE - ---------------------------------------- ---------------------------- ---------------------- /s/ SHELDON C. PETERSEN Governor and Chief - ---------------------------------------- Executive Officer SHELDON C. PETERSEN /s/ STEVEN L. LILLY Senior Vice President and - ---------------------------------------- Chief Financial Officer STEVEN L. LILLY /s/ ANGELO M. SALERA Controller (Principal - ---------------------------------------- Accounting Officer) ANGELO M. SALERA /s/ J. CHRIS CARIKER President and Director April 5, 1995 - ---------------------------------------- J. CHRIS CARIKER /s/ GARRY BYE Vice President and - ---------------------------------------- Director GARRY BYE /s/ RALPH L. LOVELESS Secretary-Treasurer and - ---------------------------------------- Director RALPH L. LOVELESS
II-4 25
SIGNATURE TITLE DATE - ---------------------------------------- ---------------------------- ---------------------- /s/ JOHN C. ANDERSON Director - ---------------------------------------- JOHN C. ANDERSON /s/ ROBERT J. BAUMAN Director - ---------------------------------------- ROBERT J. BAUMAN /s/ BILL BERTRAM Director - ---------------------------------------- BILL BERTRAM /s/ HAROLD I. DYCUS Director - ---------------------------------------- HAROLD I. DYCUS Director - ---------------------------------------- GLENN ENGLISH /s/ NADINE GRIFFIN Director - ---------------------------------------- NADINE GRIFFIN /s/ BENSON HAM Director - ---------------------------------------- BENSON HAM /s/ RALPH HARMEYER Director - ---------------------------------------- RALPH HARMEYER /s/ GORDON J. HUDSON Director - ---------------------------------------- GORDON J. HUDSON /s/ DAVID HUTCHENS Director April 5, 1995 - ---------------------------------------- DAVID HUTCHENS /s/ GEORGE W. KLINE Director - ---------------------------------------- GEORGE W. KLINE /s/ PAUL J. LIESS Director - ---------------------------------------- PAUL J. LIESS Director - ---------------------------------------- ROBERT MCCLURG /s/ R. LAYNE MORRILL Director - ---------------------------------------- R. LAYNE MORRILL /s/ GERARD P. PAOLUCCI Director - ---------------------------------------- GERARD P. PAOLUCCI /s/ TERRY PITCHFORD Director - ---------------------------------------- TERRY PITCHFORD /s/ HENRY UMSCHEID Director - ---------------------------------------- HENRY UMSCHEID /s/ ROBERT O. WILLIAMS Director - ---------------------------------------- ROBERT O. WILLIAMS /s/ ELDWIN WIXSON Director - ---------------------------------------- ELDWIN WIXSON
II-5 26 EXHIBIT INDEX
SEQUENTIALLY EXHIBIT NUMBERED NUMBER DESCRIPTION PAGE - ------- ------------------------------------------------------------------------- ------------- 1.1 -- Debt Securities and/or Warrants to Purchase Debt Securities Underwriting Agreement Basic Provisions has been filed as exhibit 1.1 to Post-Effective Amendment No. 1 to Registration No. 33-2194 filed December 18, 1987 and is incorporated herein by reference. An Underwriting Agreement with respect to each particular offering of Securities registered hereunder will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference. 1.2 -- An Agency Agreement between the Company and the agents named therein, relating to distribution of the Company's Medium-Term Notes, Series C, within the United States will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference. 1.3 -- A form of Placement Agency Agreement between the Company and the agents named therein relating to the distribution, if any, of the Company's Medium-Term Notes outside the United States will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference prior to the use of such agreement. 4.1 -- Indenture between the Company and Chemical Bank, as Trustee. Incorporated by reference to Exhibit 4.1 to Amendment No. 1 to Registration Statement on Form S-3 filed on October 12, 1990 (Registration No. 33-34927). 4.2 -- First Supplemental Indenture between the Company and Chemical Bank, as Trustee. 4.3 -- Instrument of Resignation, Appointment and Acceptance among the Company, Chemical Bank, Harris Trust and Savings Bank and Harris Trust Company of New York dated as of October 1, 1993. Incorporated by reference to Exhibit 4.3 to Registration Statement on Form S-3 filed on October 1, 1993 (Registration No. 33-50463). 4.4 -- Form of Fixed Rate Medium-Term Note (for offerings within the United States). 4.5 -- Form of Floating Rate Medium-Term Note (for offerings within the United States). 4.6 -- A form of Fixed or Floating Rate Registered Medium-Term Note (for offerings outside the United States) will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference prior to the issuance of any such Note. 4.7 -- A form of Fixed or Floating Rate Bearer Medium-Term Note (for offerings outside the United States) will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference prior to the issuance of any such Note. 4.8 -- A form of Temporary Global Bearer Fixed or Floating Rate Medium-Term Note (for offerings outside the United States) will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference prior to the issuance of any such Note. 4.9 -- A form of Definitive Global Bearer Fixed or Floating Rate Medium-Term Note (for offerings outside the United States) will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference prior to the issuance of any such Note. 4.10 -- A form of Warrant Agreement between the Company and one or more banking institutions or trust companies as Warrant Agents will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference prior to the issuance of any Warrants. 5 -- Opinion and consent of Milbank, Tweed, Hadley & McCloy. An opinion and consent of Milbank, Tweed, Hadley & McCloy respecting Warrants will be filed as an exhibit to a current report on Form 8-K and incorporated herein by reference prior to the issuance of any Warrants. 8 -- Opinion of Milbank, Tweed, Hadley & McCloy. Included as part of Exhibit 5. 12 -- Schedule of computation of ratio of margins to fixed charges. 23.1 -- Consent of Arthur Andersen LLP. 23.2 -- Consent of Milbank, Tweed, Hadley & McCloy. Included as part of Exhibit 5. 24 -- Power of Attorney (included on signature pages). 25 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Harris Trust and Savings Bank, as Trustee.
EX-4.2 2 FIRST SUPP. INDENTURE BETWEEN CO. & CHEMICAL BANK 1 EXHIBIT 4.2 - -------------------------------------------------------------------------------- NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION to CHEMICAL BANK, Trustee. ------------- First Supplemental Indenture ------------- Dated as of October 1, 1990 ------------- Supplemental to the Indenture dated as of December 15, 1987 - -------------------------------------------------------------------------------- 2 FIRST SUPPLEMENTAL INDENTURE, dated as of October 1, 1990, between NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, a District of Columbia cooperative association (herein called the "Company"), having its principal executive office at 2201 Cooperative Way, Herndon, Virginia 22071, and CHEMICAL BANK, a corporation duly organized and existing under the laws of the State of New York, as Trustee (herein called the "Trustee"), having its corporate trust office at 55 Water Street, New York, New York 10041. RECITALS OF THE COMPANY WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture, dated as of December 15, 1987 (the "Indenture"), providing for the issuance from time to time of its unsecured debentures, notes and other evidences of indebtedness (herein and therein called the "Securities"), to be issued in one or more series as in the Indenture provided; and WHEREAS, Sections 901(5) and 901(8) of the Indenture provide, among other things, that the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into an indenture supplemental to the Indenture (a) in the case of Section 901(5), to cure any ambiguity, to correct or supplement any provision therein which may be inconsistent with any other provision therein, or to make any other provisions with respect to matters or questions arising under the Indenture; provided that such action shall not adversely affect the interests of the Holders of Securities of any series in any material respect, and (b) in the case of Section 901(8), for the purpose of changing or eliminating any provision of the Indenture, provided that such change or elimination shall not be effective as to any Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; and WHEREAS, prior to the date hereof, the Company has issued and sold Securities in the form of its Medium-Term Notes, Series A, pursuant to the Indenture and such Securities have been heretofore issuable only in fully registered form; and WHEREAS, the Company desires and has requested the Trustee to join with it in the execution and delivery of this First Supplemental Indenture for the purpose of amending the Indenture in order to permit the Company to elect that any series of Securities issued after the execution hereof be issued in fully registered form and represented by either (i) a Depositary Security (as hereinafter defined) registered in the name of a Depositary (as hereinafter defined) or its nominee or (ii) a certificate in definitive form; and 3 - 2 - WHEREAS, the Company has furnished the Trustee with (a) an Opinion of Counsel pursuant to Section 903 of the Indenture stating that the execution of this First Supplemental Indenture is authorized or permitted by the Indenture, (b) an Officers' Certificate stating that all conditions precedent provided for in the Indenture with respect to this First Supplemental Indenture have been complied with, and (c) a copy of the resolutions of its Board of Directors, certified by its Secretary or an Assistant Secretary-Treasurer, pursuant to which this First Supplemental Indenture has been authorized; and WHEREAS, all things necessary to make this First Supplemental Indenture a valid agreement of the Company, in accordance with its terms, have been done. AGREEMENT NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of any series thereof, as follows: ARTICLE ONE Amendments of the Indenture SECTION 101. Section 101 of the Indenture is amended to include therein the following provisions: (a) After the definition of Defaulted Interest: "'Depositary' means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more Depositary Securities, the Person designated as Depositary for such series by the Company pursuant to Section 301, until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" shall mean or include each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "Depositary" as used with respect to the Securities of any such series shall mean the Depositary with respect to the Securities of that series." (b) After the definition of Fully Registered Security: 4 - 3 - "'Depositary Security' means a Registered Security evidencing all or part of a series of Securities, issued to the Depositary for such series or its nominee in accordance with Section 303, registered in the name of such Depositary or nominee and bearing the legend specified in Section 204." SECTION 102. A new Section 204 is added, to read in its entirety as follows: "Section 204. Form of Legend for Depositary Securities. Any Depositary Security authenticated and delivered hereunder shall bear a legend in substantially the following form: 'This Security is a Depositary Security within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depositary or nominee of a Depositary. This Security is exchangeable for Securities registered in the name of a Person other than the Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any nominee of the Depositary to a successor Depositary or a nominee of such successor Depositary) may be registered except in such limited circumstances.'" SECTION 103. The word "and" is deleted at the end of Section 301(19) of the Indenture, Section 301(20) of the Indenture is renumbered Section 301(21) and a new Section 301(20) is added, to read in its entirety as follows: "(20) whether the Securities of the series shall be issued upon original issuance in whole or in part in the form of one or more Depositary Securities and, in such case, (a) the Depositary with respect to such Depositary Security or Securities; and (b) the circumstances under which any such Depositary Security may be exchanged for Securities registered in the name of, and any transfer of such Depositary Security may be registered to, a Person other than such Depositary or its nominee, if other than as set forth in Section 305; and" SECTION 104. The following paragraphs are added immediately following the last paragraph of Section 303 of the Indenture: 5 - 4 - "If the Company shall establish pursuant to Section 301(20) that the Securities of any series are to be issued in whole or in part in the form of one or more Depositary Securities, then the Company shall execute and the Trustee shall, in accordance with this Section 303 and the Company Order with respect to such series, authenticate and deliver one or more Depositary Securities in temporary or definitive form that (i) shall represent and shall be denominated in an aggregate amount equal to the aggregate principal amount of the Outstanding Securities of such series to be represented by such Depositary Security or Securities, (ii) shall be registered in the name of the Depositary for such Depositary Security or Securities or the nominee of such Depositary, (iii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's or such nominee's instruction and (iv) shall bear the legend specified in Section 204. Each Depositary designated pursuant to Section 301(20) for a Depositary Security in registered form shall, at the time of its designation and at all times while it serves as Depositary, be a clearing agency registered under the Securities Exchange Act of 1934, as amended." SECTION 105. The following paragraphs are added immediately following the last paragraph of Section 305 of the Indenture: "Notwithstanding any other provision of this Indenture, any Security authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, any Depositary Security shall also be a Depositary Security and bear the legend specified in Section 204 except for any Registered Security in definitive form authenticated and delivered in exchange for, or upon registration of transfer of, a Depositary Security pursuant to the following two paragraphs. If at any time the Depositary for the Securities of any series notifies the Company that it is unwilling or unable to continue as Depositary for the Securities of such series or if at any time the Depositary for the Securities of such series shall no longer be eligible under Section 303, the Company shall appoint a successor Depositary with respect to the Securities of such series. If a successor Depositary for the Securities of such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company's election pursuant to Section 301(20) shall no longer be effective with respect to the Securities of such series and 6 - 5 - the Company shall execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Securities of such series, shall authenticate and deliver, Registered Securities of such series in definitive form in an aggregate principal amount equal to the aggregate principal amount of the Depositary Security or Securities representing such series in exchange for such Depositary Security or Securities. The Company may at any time and in its sole discretion determine that the Securities of any series issued in the form of one or more Depositary Securities shall no longer be represented by such Depositary Security or Securities. In such event, the Company shall execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Securities of such series, shall authenticate and deliver, Registered Securities of such series in definitive form in an aggregate principal amount equal to the aggregate principal amount of the Depositary Security or Securities representing such series in exchange for such Depositary Security or Securities. Upon the exchange of a Depositary Security for Registered Securities in definitive form, such Depositary Security shall be canceled by the Trustee. Registered Securities issued in exchange for a Depositary Security pursuant to this Section 305 shall be registered in such names and in such authorized denominations as the Depositary for such Depositary Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Registered Securities to the Persons in whose names such Securities are so registered." SECTION 106. The following paragraph is added immediately following the last paragraph of Section 308 of the Indenture: "No holder of any beneficial interest in any Depositary Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Depositary Security, and such Depositary may be treated by the Company, the Trustee, and any agent of the Company or the Trustee as the owner of such Depositary Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary as Holder of any Security." 7 - 6 - SECTION 107. The following paragraph is added immediately following the last paragraph of Section 501 of the Indenture: "Upon receipt by the Trustee of any Notice of Default pursuant to this Section 501, (i) with respect to Securities of a series all or part of which is represented by a Depositary Security, the Trustee shall establish a record date, which record date shall be at the close of business on the day the Trustee receives such Notice of Default, and (ii) with respect to any other series of Securities issued after October 16, 1990, the Trustee may, but shall not be obligated to, establish a record date, in each case for the purpose of determining Holders of Outstanding Securities of such series entitled to join in such Notice of Default. The Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to join in such Notice of Default, whether or not such Holders remain Holders after such record date; provided, that unless Holders of at least the requisite principal amount (which amount is 25% in the case of subclause (5) of this Section) of the Outstanding Securities of such series, or their proxies, shall have joined in such Notice of Default prior to the day which is 90 days after such record date, such Notice of Default and the Act of Holders, or their proxies, joining in such Notice of Default shall automatically and without further action by any Holders be cancelled and of no effect. Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, from giving, (i) after expiration of such 90-day period, a new Notice of Default to the same effect as that cancelled pursuant to the proviso to the preceding sentence, or (ii) during any such 90-day period in respect of any Notice of Default with respect to a prospective Event of Default with respect to Securities of such series, an additional Notice of Default with respect to any other prospective Event of Default (other than a prospective Event of Default as to which such a 90-day period has not expired) with respect to Securities of such series, in either of which events a new record date shall or may, as the case may be, be established pursuant to the provisions of this Section 501 in respect of such new or additional Notice of Default." SECTION 108. The following paragraph is added immediately following the last paragraph of Section 502 of the Indenture: "Upon receipt by the Trustee of any written notice declaring such an acceleration, or rescission and annulment thereof, (i) with respect to Securities of a series all or 8 - 7 - part of which is represented by a Depositary Security, the Trustee shall establish a record date, which record date shall be at the close of business on the day the Trustee receives such notice, and (ii) with respect to any other series of Securities issued after October 16, 1990, the Trustee may, but shall not be obligated to, establish a record date, in each case for the purpose of determining Holders of Outstanding Securities of such series entitled to join in such notice. The Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to join in such notice, whether or not such Holders remain Holders after such record date; provided, that unless such declaration of acceleration, or rescission and annulment, as the case may be, shall have become effective by virtue of the requisite percentage having joined in such notice prior to the day which is 90 days after such record date, such notice of declaration of acceleration, or rescission and annulment, as the case may be, and the Act of Holders, or their proxies, joining in such notice shall automatically and without further action by any Holders be cancelled and of no effect. Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, of Securities of any series from giving, (i) after expiration of such 90-day period a new written notice of declaration of acceleration, or rescission and annulment thereof, as the case may be, to the same effect as that cancelled pursuant to the proviso to the preceding sentence, or (ii) during any such 90-day period in respect of any written notice of declaration of acceleration or rescission and annulment thereof, as the case may be, with respect to any Event of Default with respect to Securities of such series, an additional written notice of declaration of acceleration, or rescission and annulment thereof, as the case may be, with respect to any other Event of Default (other than an Event of Default as to which such a 90-day period has not expired) with respect to Securities of such series, in either of which events a new record date shall or may, as the case may be, be established pursuant to the provisions of this Section 502 in respect of such new or additional written notice." SECTION 109. The following paragraph is added immediately following paragraph (3) of Section 507 of the Indenture: "Upon receipt by the Trustee of any written notice directing the time, method or place of conducting any such proceeding or exercising any such trust or power, (i) with respect to Securities of a series all or part of which is represented by a Depositary Security, the Trustee shall 9 - 8 - establish a record date, which record date shall be at the close of business on the day the Trustee receives such notice, and (ii) with respect to any other series of Securities issued after October 16, 1990, the Trustee may, but shall not be obligated to, establish a record date, in each case for the purpose of determining Holders of Outstanding Securities of such series entitled to join in such notice. The Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to join in such notice, whether or not such Holders remain Holders after such record date; provided, that unless the Holders of a majority in principal amount of the Outstanding Securities of such series shall have joined in such notice prior to the date which is 90 days after such record date, such notice and the Act of Holders, or their proxies, joining in such notice shall automatically and without further action by any Holders be cancelled and of no effect. Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, from giving, (i) after expiration of such 90 day period, a new notice to the same effect as that cancelled pursuant to the proviso to the preceding sentence, or (ii) during any such 90-day period in respect of any notice, a new notice giving directions contrary to or otherwise different from such notice in either of which events a new record date shall or may, as the case may be, be established pursuant to the provisions of this Section 507 in respect of such new notice." SECTION 110. The following sentence is added to the end of Section 1107 of the Indenture: "provided, that if a Depositary Security is so surrendered, such new Security so issued shall be a new Depositary Security in a denomination equal to the unredeemed portion of the principal of the Depositary Security so surrendered." ARTICLE TWO Sundry Provisions SECTION 201. Instruments to be Read Together. This First Supplemental Indenture is an indenture supplemental to and in implementation of the Indenture, and the Indenture and this First Supplemental Indenture shall henceforth be read together. 10 - 9 - SECTION 202. Confirmation. The Indenture as amended and supplemented by this First Supplemental Indenture is in all respects confirmed and preserved. SECTION 203. Terms Defined. All terms defined elsewhere in the Indenture have the same meanings in this First Supplemental Indenture. SECTION 204. Execution in Counterparts. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 205. Effectiveness. The provisions of this First Supplemental Indenture will take effect immediately upon its execution and delivery by the Trustee. SECTION 206. Governing Law. This First Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York. SECTION 207. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, By /s/Truman Brandt ------------------------------ Attest: /s/Richard B. Bulman - -------------------- CHEMICAL BANK, as Trustee, By /s/T.J. Foley ------------------------------ Attest: /s/P.J.McGoran - ---------------------- 11 - 10 - DISTRICT OF COLUMBIA,) ss.: On the 3Oth day of August, 1990, before me personally came Truman Brandt, to me known, who, being by me duly sworn, did depose and say that he is Finance Officer of NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION the cooperative association described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed and said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. /s/Mary H. Schmidt ------------------------- Notary Public STATE OF NEW YORK,) ss.: COUNTY OF NEW YORK,) On the 15th day of October, 1990, before me personally came T.J. Foley, to me known, who, being by me duly sworn, did depose and say that he is Vice President of CHEMICAL BANK, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. /s/Louis Bodi ---------------------------- Notary Public EX-4.4 3 FORM OF FIXED RATE MTN 1 EXHIBIT 4.4 [This Security is a Depositary Security within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depositary or nominee of a Depositary. This Security is exchangeable for Securities registered in the name of a Person other than the Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any nominee of the Depositary to a successor Depositary or a nominee of such successor Depositary) may be registered except in such limited circumstances. Unless this certificate is presented by an authorized representative of The Depositary Trust Company (55 Water Street, New York, New York) to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depositary Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.] REGISTERED REGISTERED PRINCIPAL AMOUNT: NO. FXR U.S. $ NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION MEDIUM-TERM NOTE, SERIES C (FIXED RATE) CUSIP ORIGINAL ISSUE DATE: STATED MATURITY DATE: INTEREST RATE: REDEMPTION DATE(S): REDEMPTION PERIOD(S) AND PRICE(S): REPAYMENT DATE(S): REPAYMENT PRICE(S): INITIAL MATURITY DATE: RENEWAL TERMS: (IF ANY) FINAL MATURITY DATE: EXTENSION TERMS: (IF ANY) OTHER PROVISIONS: OPTIONAL RESET DATE(S): (IF ANY) 2 2 NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, a District of Columbia cooperative association (herein called the "Company", which term includes any successor Person under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to , or registered assigns, the principal sum of U.S. DOLLARS, on the Stated Maturity Date set forth above, and to pay interest thereon from the Original Issue Date set forth above or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semiannually in arrears on January 15 and July 15 in each year, commencing on the first such Interest Payment Date next succeeding the Original Issue Date and at Maturity (as defined below), at the per annum Interest Rate set forth above, until the principal hereof is paid or made available for payment. The interest so payable and punctually paid or duly provided for on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the January 1 or July 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date; provided, however, that if the Original Issue Date falls between a Regular Record Date and an Interest Payment Date, the first payment of interest will be paid on the Interest Payment Date following the next succeeding Regular Record Date to the person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on such next succeeding Regular Record Date; and provided further that interest payable on the Stated Maturity Date or, if applicable, upon redemption or repayment (such Stated Maturity Date, redemption date or repayment date, a "Maturity") (whether or not such Maturity Date is an Interest Payment Date) shall be payable to the Person to whom principal shall be payable. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of (and premium, if any) and interest on this Security will be made [at the office or agency of the Company as may be designated by it for such purpose in the Borough of Manhattan, The City of New York in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company, payment of interest may be made by United States dollar check mailed to the address of the Person entitled 3 3 thereto as such address shall appear in the Security Register. Notwithstanding the foregoing, a holder of $10,000,000 or more in aggregate principal amount of Securities of like tenor and terms shall be entitled to receive such payment 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 such payment of interest] [by wire transfer to the account designated by the Depositary]. The Company has initially designated Bank of Montreal Trust Company as its Paying Agent for the Securities in the Borough of Manhattan, The City of New York. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent, by manual signature of an authorized signatory, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, TRUSTEE'S CERTIFICATE OF AUTHENTICATION By ----------------------------------- Governor This is one of the Securities of the series designated therein issued under the within-mentioned Indenture. Dated: Harris Trust and Savings --------------------------------- Bank, as Trustee Assistant Secretary-Treasurer Attest: ------------------------------- Assistant Secretary-Treasurer By ---------------------------- Authorized Signatory 4 NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION MEDIUM-TERM NOTE, SERIES C This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture dated as of December 15, 1987, as supplemented by a First Supplemental Indenture dated as of October 1, 1990 (the Indenture as so supplemented being herein called the "Indenture"), between the Company and Harris Trust and Savings Bank, as successor trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof, which series is unlimited in aggregate principal amount. Each Security of this series shall be dated the date of its authentication by the Trustee. Each Security of this series shall also bear an Original Issue Date, as specified on the face hereof, and such Original Issue Date shall remain the same for all Securities subsequently issued upon transfer, exchange or substitution of such original Security (or such subsequently issued Securities) regardless of their dates of authentication. Unless one or more Redemption Dates are specified on the face hereof, this Security shall not be redeemable at the option of the Company before the Stated Maturity specified on the face hereof. If one or more Redemption Dates (or ranges of Redemption Dates) are so specified, this Security is subject to redemption on any such date (or during any such range) at the option of the Company, upon notice by first-class mail, postage prepaid, mailed not less than 30 days nor more than 60 days prior to the Redemption Date specified in such notice, at the applicable Redemption Price specified on the face hereof (expressed as a percentage of the principal amount of this Security), together in the case of any such redemption with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is prior to the Redemption Date will be payable to the Holder of this Security, or one or more Predecessor Securities, of record at the close of business on the relevant Regular or Special Record Dates, all as provided in the Indenture. The Company may elect to redeem less than the entire principal amount hereof, provided that the principal amount, if any, of this Security that remains outstanding after such redemption is an Authorized Denomination as defined herein. In the event of any redemption in part, the Company will not be required to (i) issue, register the transfer of, or exchange any Security during a period of 15 days next preceding the day of the first mailing of the notice of redemption of Securities selected for redemption or (ii) register the transfer or exchange of any Security, or any portion thereof, called for redemption, except the unredeemed portion of any Security being redeemed in part. 5 2 Unless one or more Repayment Dates is specified above, this Security shall not be repayable at the option of the Holder on any date prior to the Stated Maturity specified above. If one or more Repayment Dates (or ranges of Repayment Dates) are so specified, this Security is subject to repayment on any such date (or during any such range) at the option of the Holder at a price equal to 100% of the principal amount hereof or, if this Security is a Discounted Security (as specified on the face hereof), the applicable Repayment Price specified on the face hereof (expressed as a percentage of the principal amount of this Security), together in the case of any such repayment with accrued interest to the Repayment Date, but interest installments whose Stated Maturity is prior to the Repayment Date will be payable to the Holder of this Security, or one or more Predecessor Securities, of record at the close of business on the relevant Regular or Special Record Dates, all as provided in the Indenture. For this Security to be repaid at the option of the Holder, the Paying Agent must receive, at least 30 days but not more than 60 days prior to the Repayment Date on which this Security is to be repaid, (a) appropriate wire transfer instructions and (b) either (i) this Security with the form entitled "Option to Elect Repayment" below duly completed or (ii) a telegram, telex, facsimile transmission or a letter from a member of a national securities exchange, or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States setting forth the name of the Holder of this Security, the portion of principal amount of this Security, the principal amount of this Security to be repaid, the certificate number or a description of the tenor and terms of this Security, a statement that the option to elect repayment is being exercised thereby and a guarantee that this Security, together with the duly completed form entitled "Option to Elect Repayment" on this Security, will be received by the Paying Agent not later than the fifth Business Day after the date of such telegram, telex, facsimile transmission or letter, provided, however, that such Security and form duly completed are received by the Paying Agent by such fifth Business Day. Exercise of the repayment option by the Holder shall be irrevocable, except a Holder who has tendered this Security for repayment pursuant to a Reset Notice or an Extension Notice (each as defined in the Prospectus Supplement related hereto). The repayment option with respect to this Security may be exercised by the Holder for less than the entire principal amount hereof, provided that the principal amount, if any, of this Security that remains outstanding after such repayment must be an authorized denomination as defined herein. The Company will not be required to register the transfer or exchange of any Security following the receipt of a notice to repay a Security as described above. All questions as to the validity, eligibility (including time of receipt) and acceptance of any Security for repayment will be determined by the Trustee, whose determination will be final, binding and non-appealable. In the event of redemption or repayment of this Security in part only, a new Security or Securities of this series and of like tenor and for a principal amount equal to the unredeemed or unrepaid portion will be delivered to the registered Holder upon the cancellation hereof. 6 3 If so specified above, the Stated Maturity of this Security may be extended at the option of the Company, in the manner set forth below (unless otherwise provided on the face hereof), for the period or periods specified above (each an "Extension Period") up to but not beyond the date (the "Final Maturity Date") set forth above: (a) The Company may exercise such option by notifying the Paying Agent of such exercise at least 45 but no more than 60 days prior to the Stated Maturity in effect prior to such exercise (the "Original Stated Maturity"). If the Company exercises such option, the Paying Agent will mail by first-class mail, postage prepaid, to the Holder of this Security no later than 40 days prior to the Original Stated Maturity a notice setting forth (i) the election of the Company to extend the Stated Maturity, (ii) the new Stated Maturity (which shall then be considered the Stated Maturity for all purposes of this Security), (iii) the interest rate applicable to the Extension Period and (iv) the provisions, if any, for redemption during such Extension Period, including the date or dates on which or the period or periods during which and the price or prices at which such redemption may occur during the Extension Period. Upon the Paying Agent's transmittal of the Extension Notice, the Original Stated Maturity of this Security shall be extended automatically, and, except as modified by the Extension Notice and as described in the next paragraph, this Security will have the same terms as prior to the transmittal of such Extension Notice. (b) Notwithstanding the foregoing, not later than 20 days prior to the Original Stated Maturity of this Security the Company may, at its option, revoke the interest rate provided for in the Extension Notice and establish an interest rate that is higher than the interest rate provided for in the Extension Notice for the Extension Period by mailing or causing the Paying Agent to transmit notice, by first class mail, postage prepaid, of such higher interest rate to the Holder of this Security. Such notice shall be irrevocable. All Securities with respect to which the Stated Maturity is extended will bear such higher interest rate for the Extension Period. (c) If the Company elects to extend the Stated Maturity of this Security, the Holder hereof will have the option to elect repayment of this Security by the Company on the Original Stated Maturity at a price equal to the principal amount hereof plus interest accrued to such date. In order for this Security to be so repaid on the Original Stated Maturity, the Holder hereof must follow the procedures set forth above for optional repayment, except that the period for delivery of this Security or notification to the Paying Agent shall be at least 25 but not more than 35 days prior to the Original Stated Maturity and except that, if the Holder hereof has tendered this Security for repayment pursuant to an Extension Notice, such Holder may, by written notice to the Paying Agent, revoke such tender for 7 4 repayment until the close of business on the tenth day prior to the Original Stated Maturity. If so specified above, this Security may be renewed by the Holder of the Security on an Interest Payment Date (specified above) occurring in or prior to the twelfth month following the Original Issue Date (the "Initial Maturity Date") in accordance with the procedures described below: (a) On the Interest Payment Date occurring in the sixth month (unless a different interval (the "Special Election Interval") is specified above) prior to the Initial Maturity Date (as specified above) of a Renewable Note (the "Initial Renewal Date") and on the Interest Payment Date occurring in each sixth month (or in the last month of each Special Election Interval) after such Initial Renewal Date (each, together with the Initial Renewal Date, a "Renewal Date"), the term of this Security may be extended to the Interest Payment Date occurring in the twelfth month (or, if a Special Election Interval is specified the last month in a period equal to twice the Special Election Interval) after such Renewal Date, if the Holder of this Security elects to extend the term of this Security or any portion hereof as provided below. If the Holder of this Security does not elect to extend the term of any portion of the principal amount of this Security during the specified period prior to any Renewal Date, such portion will become due and payable on the Interest Payment Date occurring in the sixth month (or the last month in the Special Election Interval) after such Renewal Date (the "New Maturity Date"). (b) A Holder of this Security may elect to renew the term of this Security, or if specified above, any portion thereof, by delivering a notice to such effect to the Trustee (or any duly appointed Paying Agent) at the Corporate Trust Office not less than 15 nor more than 30 days prior to such Renewal Date (unless another period is specified above as the "Special Election Period"). Such election will be irrevocable and will be binding upon each subsequent Holder of this Security. An election to renew the term of this Security may be exercised with respect to less than the entire principal amount of this Security only if so specified above and only in such principal amount, or any integral multiple in excess thereof, as specified above. Notwithstanding the foregoing, the term of this Security may not be extended beyond the Stated Maturity specified above. (c) If the Holder of this Security does not elect to renew this Security, this Security must be presented to the Trustee (or any duly appointed Paying Agent) simultaneously with notice of such election (or, in the event notice of such election, together with a guarantee of delivery within five Business Days, is transmitted on behalf of the Holder hereof from a member of a national securities exchange, the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States, within five Business Days of the date of such notice). As soon as practicable following receipt of 8 5 this Security the Trustee (or any duly appointed Paying Agent) will issue in exchange of this Security in the name of the Holder hereof (i) a Security, in a principal amount equal to the principal amount of this Security for which the election to renew the term hereof was exercised, with terms identical to those specified on this Security (except for the Original Issue Date and the Initial Interest Rate and except that such Security will have a fixed, nonrenewable Stated Maturity on the New Maturity Date) and (ii) if such election is made with respect to less than the full principal amount of this Security, a replacement Security in a principal amount equal to the principal amount of this Security for which the election was made, with terms identical to this Security. If so specified above, the interest rate of this Note may be reset at the option of the Company on the date set forth on the face hereof (each an "Optional Reset Date") in accordance with the procedures described below: (a) The Company may exercise such option by notifying the Paying Agent of such exercise at least 45 but not more than 60 days prior to an Optional Reset Date set forth on the face hereof. If the Company exercises such option, the Paying Agent will mail by first-class mail, postage prepaid, to the Holder of this Security not later than 40 days prior to such Optional Reset Date a notice (the "Reset Notice") setting forth (i) the election of the Company to reset the interest rate of this Security, (ii) such new interest rate, and (iii) the provisions, if any, for redemption of this Security during the period from such Optional Reset Date to the next Optional Reset Date or, if there is no such next Optional Reset Date, to the Stated Maturity of this Security (each such period a "Subsequent Interest Period"), including the date or dates on which or the period or periods during which and the price or prices at which such redemption may occur during such Subsequent Interest Period. (b) Notwithstanding the foregoing, not later than 20 days prior to an Optional Reset Date of this Security, the Company may, at its option, revoke the interest rate provided for in the Reset Notice and establish a interest rate that is higher for the Subsequent Interest Period commencing on such Optional Reset Date by mailing or causing the Paying Agent to mail notice of such higher interest rate by first class mail, postage prepaid, to the Holder of this Security. Such notice shall be irrevocable. All Securities with respect to which the interest rate is reset on an Optional Reset Date will bear such higher interest rate. (c) If the Company elects to reset the interest rate of this Security, the Holder of this Security will have the option to elect repayment of this Security by the Company on any Optional Reset Date at a price equal to the principal amount hereof plus interest accrued to such Optional Reset Date. In order for this Security to be so 9 6 repaid on an Optional Reset Date, the Holder hereof must follow the procedures set forth above for optional repayment, except that the period for delivery of this Security or notification to the Paying Agent shall be a least 25 but not more than 35 days prior to such Optional Reset Date and except that, if the Holder hereof has tendered this Security for repayment pursuant to a Reset Notice, such Holder may, by written notice to the Paying Agent, revoke such tender for repayment until the close of business on the tenth day prior to such Optional Reset Date. Interest payments for this Security will include interest accrued from and including the most recent date to which interest has been paid or duly provided for (or from and including the Original Issue Date, if no interest has been paid with respect to this Security) to but excluding the Interest Payment Date or Maturity Date. If any Interest Payment Date or the Maturity falls on a day that is not a Business Day, the related payment of principal, premium, if any, or interest will be made on the next succeeding Business Day as if made on the date such payment was due, and no interest will accrue on the amount so payable for the period from and after such Interest Payment Date or Maturity, as the case may be. "Business Day" means any day that is not a Saturday or Sunday and that, in the City of New York, is not a day on which banking institutions generally authorized or obligated by or pursuant to law, regulation of executive order to close. Interest payments for this Security shall be computed and paid on the basis of a 360-day year of twelve 30-day months. The Company at its option, subject to the terms and conditions provided in the Indenture, (a) will be discharged from any and all obligations in respect of the Securities (except for certain obligations including obligations to register the transfer or exchange of Securities, replace stolen, lost or mutilated Securities, maintain paying agencies and hold moneys for payment in trust) or (b) need not comply with certain restrictive covenants of the Indenture after the Company deposits with the Trustee (or, in certain circumstances, 91 days after the Company deposits with the Trustee), pursuant to an escrow trust agreement, money or U.S. Government Obligations, or a combination of money and U.S. Government Obligations, which through the payment of interest thereon and principal thereof in accordance with their terms will provide money in an amount sufficient to pay all the principal of, and interest on, the Securities on the dates such payments are due in the currency, currencies or currency unit or units, in which such Securities are payable and in accordance with the terms of the Securities. If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and 10 7 obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of all series affected thereby (acting as one class). The Indenture also contains provisions permitting the Holders of not less than a majority in principal amount of the Outstanding Securities of all series affected thereby (acting as one class), on behalf of the Holders of all Securities of each such series, to waive compliance by the Company with certain provisions of the Indenture. The Indenture also provides that, regarding the Securities of any series, the Holders of not less than a majority in principal amount of the Outstanding Securities of such series may waive certain past defaults and their consequences on behalf of the Holders of all Securities of such series. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. As set forth in, and subject to, the provisions of the Indenture, no Holder of any Security of this series will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to this series, the Holders of not less than 25% in principal amount of the Outstanding Securities of this series shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as trustee, the Trustee shall not have received from the Holders of a majority in principal amount of the Outstanding Securities of this series a direction inconsistent with such request and the Trustee shall have failed to institute such proceeding within 60 days; provided, however, that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of (and premium, if any) or interest on this Security on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Security or the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, places and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency as may be designated by the Company in the Borough of Manhattan, The City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new 11 8 Securities of this series and of the tenor and terms, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form, without coupons, in denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor and terms of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and the Securities shall be governed by, and construed in accordance with, the laws of the State of New York. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. 12 9 -------------------- ABBREVIATIONS The following abbreviations, when used in the inscription of the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN Act ____Custodian____ TEN ENT - as tenants by the entireties (cust) (Minor) JT TEN - as joint tenants with right Under Uniform Gifts to of survivorship and not as Minors Act__________________ tenants in common (State) Additional abbreviations may also be used though not in the above list. 13 10 FOR VALUE RECEIVED, the undersigned hereby sell(s), assigns and transfer(s) unto Please insert social security or other identifying number of assignee / / - ------------------------------------------------------------------------------ PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ the within Security and all rights thereunder, hereby irrevocably constituting and appointing_____________________________________________________ Attorney to transfer said Security on the books of the Company, with full power of substitution in the premises. Dated: ------------------- ------------------------------------ Signature (The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever.) 14 11 OPTION TO ELECT REPAYMENT TO BE COMPLETED ONLY IF THIS SECURITY IS REPAYABLE AT THE OPTION OF THE HOLDER AND THE HOLDER ELECTS TO EXERCISE SUCH RIGHTS The undersigned hereby irrevocably requests and instructs the Company to repay the attached Security (or portion thereof specified below) pursuant to its terms at a price equal to 100% of the principal amount thereof together in the case of any such repayment with interest to the Repayment Date, to the undersigned at ___________________________________________________. For the Security to be repaid at the option of the Holder, the paying agent must receive as its corporate trust office, at least 30 days but not more than 60 days prior to the Repayment Date on which the Security is to be repaid, (i) the Security together with this "Option to Elect Repayment" form duly completed or (ii) a telegram, telex, facsimile transmission or a letter from a member of a national securities exchange, or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States setting forth the name of the Holder of the Security, the principal amount of the Security, the principal amount of the Security to be repaid, the certificate number or a description of the tenor and terms of the Security, a statement that the option to elect repayment is being exercised thereby and a guarantee that the Security, together with this duly completed form entitled "Option to Elect Repayment" on the reverse of the Security, will be received by the paying agent not later than the fifth Business Day after the date of such telegram, telex, facsimile transmission or letter, provided, however, that such telegram, telex, facsimile transmission or letter shall be effective only if the Security with such form duly completed are received by the paying agent by such fifth Business Day. If less than the entire principal amount of the attached Security is to be repaid, specify the portion thereof which the Holder elects to have repaid: ____________________; and specify the denomination or denominations (which shall be an Authorized Denomination) of the Security or Securities to be issued to the Holder for the portion of the within Security not being repaid (in the absence of any specification, one such Security will be issued for the portion not being repaid): ______________________. Dated: ------------------ ------------------------------ NOTICE: The signature to this Option to Elect Repayment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatsoever. EX-4.5 4 FORM OF FLOATING RATE, MTN 1 EXHIBIT 4.5 [This Security is a Depositary Security within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depositary or nominee of a Depositary. This Security is exchangeable for Securities registered in the name of a Person other than the Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any nominee of the Depositary to a successor Depositary or a nominee of such successor Depositary) may be registered except in such limited circumstances. Unless this certificate is presented by an authorized representative of The Depositary Trust Company (55 Water Street, New York, New York) to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depositary Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.] REGISTERED REGISTERED PRINCIPAL AMOUNT: NO. FLR U.S. $ NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION MEDIUM-TERM NOTE, SERIES C (FLOATING RATE) CUSIP ORIGINAL ISSUE DATE: INITIAL INTEREST RATE: STATED MATURITY DATE: CALCULATION AGENT: INDEX MATURITY: SPREAD: +/- ___ 1 MONTH ___ 3 MONTHS SPREAD MULTIPLIER: ___ 6 MONTHS ___ 1 YEAR ___ OTHER INTEREST COMMERCIAL TREASURY RATE BASIS: __ PAPER RATE __ PRIME RATE __ LIBOR __ REUTERS ___ RATE __ TELERATE __ FED FUNDS __ CD RATE __ OTHER________________ RATE MAXIMUM INTEREST RATE: % INTEREST PAYMENT PERIOD:________________ MINIMUM INTEREST RATE: % INTEREST RATE RESET PERIOD:_____________ 2 REGULAR RECORD DATE(S): INTEREST RESET DATE(S): INTEREST PAYMENT DATE(S): INTEREST DETERMINATION DATE(S): CALCULATION DATE: REDEMPTION DATE(S): REDEMPTION PERIOD(S) AND PRICE(S): REPAYMENT DATE(S): REPAYMENT PRICE(S): INITIAL MATURITY DATE: RENEWAL TERMS: (IF ANY) FINAL MATURITY DATE: EXTENSION TERMS: (IF ANY) OTHER PROVISIONS: OPTIONAL RESET DATE(S): (IF ANY) NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, a District of Columbia cooperative association (herein called the "Company", which term includes any successor Person under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to , or registered assigns, the principal sum of U.S. DOLLARS, on the Stated Maturity Date set forth above, and to pay interest thereon at the rate per annum equal to the Initial Interest Rate specified above until the first Interest Reset Date specified above following the Original Issue Date specified above and thereafter at a rate determined in accordance with the provisions on the reverse hereof under the heading "Determination of Commercial Paper Rate," "Determination of Prime Rate," "determination of LIBOR," "Determination of Treasury Rate, "Determination of Fed Funds Rate," "Determination of CD Rate" or "Determination of Other Interest Rate Basis," depending upon whether the Interest Rate Basis specified above is Commercial Paper Rate, Prime Rate, LIBOR, Treasury Rate, Fed Funds Rate, CD Rate or Other, which Rate may be adjusted by adding or subtracting the Spread or by multiplying the Spread Multiplier (as such terms are defined below) depending on whether a Spread or Spread Multiplier is designated above, until the principal hereof is paid or duly made available for payment. The "Spread," if any, is the number of basis points designated above, and the "Spread Multiplier," if any, is the percentage designated above. The Company will pay interest monthly, quarterly, semiannually or annually as specified above under Interest Payment Period commencing with the First Interest Payment Date specified above next succeeding the Original Issue Date, and thereafter on the Interest Payment Dates as specified above, and on the Maturity Date or, if applicable, upon redemption or repayment (such Stated Maturity Date, redemption date or repayment date, a "Maturity"). The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or 3 3 one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest set forth above (whether or not a Business Day), next preceding such Interest Payment Date; provided, however, that if the Original Issue Date falls between a Regular Record Date and an Interest Payment Date, the first payment of interest will be paid on the Interest Payment Date following the next succeeding Regular Record Date to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on such next succeeding Regular Record Date; and provided further that interest payable at Maturity shall be payable to the Person to whom principal shall be payable (whether or not such Maturity is an Interest Payment Date). Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of (and premium, if any) and interest on this Security will be made [at the office or agency of the Company as may be designated by it for such purpose in the Borough of Manhattan, The City of New York in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company, payment of interest may be made by United States dollar check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. Notwithstanding the foregoing, a holder of $10,000,000 or more in aggregate principal amount of Securities of like tenor and terms shall be entitled to receive such payment 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 such payment of interest][by wire transfer to the account designated by the Depositary]. The Company has initially designated Bank of Montreal Trust Company as its Paying Agent for the Securities the Borough of Manhattan, The City of New York. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent, by manual signature of an authorized signatory, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 4 4 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, TRUSTEE'S CERTIFICATE OF AUTHENTICATION By ----------------------------------- Governor This is one of the Securities of the series designated therein issued under the within-mentioned Indenture. Dated: Harris Trust and Savings --------------------------------- Bank, as Trustee Assistant Secretary-Treasurer Attest: ------------------------------- Assistant Secretary-Treasurer By ------------------------- Authorized Signatory 5 NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION MEDIUM-TERM NOTE, SERIES C (FLOATING RATE) This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture dated as of December 15, 1987, as supplemented by a First Supplemental Indenture dated as of October 1, 1990 (the Indenture as so supplemented being herein called the "Indenture"), between the Company and Harris Trust and Savings Bank, as successor trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof, which series is unlimited in aggregate principal amount. Each Security of this series shall be dated the date of its authentication by the Trustee. Each Security of this series shall also bear an Original Issue Date, as specified on the face hereof, and such Original Issue Date shall remain the same for all Securities subsequently issued upon transfer, exchange or substitution of such original Security (or such subsequently issued Securities) regardless of their dates of authentication. Unless one or more Redemption Dates are specified on the face hereof, this Security shall not be redeemable at the option of the Company before the Stated Maturity specified on the face hereof. If one or more Redemption Dates (or ranges of Redemption Dates) are so specified, this Security is subject to redemption on any such date (or during any such range) at the option of the Company, upon notice by first-class mail, postage prepaid, mailed not less than 30 days nor more than 60 days prior to the Redemption Date specified in such notice, at the applicable Redemption Price specified on the face hereof (expressed as a percentage of the principal amount of this Security), together in the case of any such redemption with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is prior to the Redemption Date will be payable to the Holder of this Security, or one or more Predecessor Securities, of record at the close of business on the relevant Regular or Special Record Dates, all as provided in the Indenture. The Company may elect to redeem less than the entire principal amount hereof, provided that the principal amount, if any, of this Security that remains outstanding after such redemption is an Authorized Denomination as defined herein. In the event of any redemption in part, the Company will not be required to (i) issue, register the transfer of, or exchange any Security during a period of 15 days next preceding the day of the first mailing of the notice of redemption of Securities selected for redemption or (ii) register the transfer or exchange of any Security, or any portion thereof, called for redemption, except the unredeemed portion of any Security being redeemed in part. 6 2 Unless one or more Repayment Dates is specified above, this Security shall not be repayable at the option of the Holder on any date prior to the Stated Maturity specified above. If one or more Repayment Dates (or ranges of Repayment Dates) are so specified, this Security is subject to repayment on any such date (or during any such range) at the option of the Holder at a price equal to 100% of the principal amount hereof or, if this Security is a Discounted Security (as specified on the face hereof), the applicable Repayment Price specified on the face hereof (expressed as a percentage of the principal amount of this Security), together in the case of any such repayment with accrued interest to the Repayment Date, but interest installments whose Stated Maturity is prior to the Repayment Date will be payable to the Holder of this Security, or one or more Predecessor Securities, of record at the close of business on the relevant Regular or Special Record Dates, all as provided in the Indenture. For this Security to be repaid at the option of the Holder, the Paying Agent must receive at least 30 days but not more than 60 days prior to the Repayment Date on which this Security is to be repaid, (a) appropriate wire transfer instructions and (b) either (i) this Security with the form entitled "Option to Elect Repayment" below duly completed or (ii) a telegram, telex, facsimile transmission or a letter from a member of a national securities exchange, or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States setting forth the name of the Holder of this Security, the principal amount of this Security, the portion of principal amount of this Security to be repaid, the certificate number or a description of the tenor and terms of this Security, a statement that the option to elect repayment is being exercised thereby and a guarantee that this Security, together with the duly completed form entitled "Option to Elect Repayment" on this Security, will be received by the Paying Agent not later than the fifth Business Day after the date of such telegram, telex, facsimile transmission or letter, provided, however, that such Security and form duly completed is received by the Paying Agent by such fifth Business Day. Exercise of the repayment option by the Holder shall be irrevocable, except a Holder who has tendered this Security for repayment pursuant to a Reset Notice or an Extension Notice (each as defined in the Prospectus Supplement related hereto). The repayment option with respect to this Security may be exercised by the Holder for less than the entire principal amount hereof, provided that the principal amount, if any, of this Security that remains outstanding after such repayment must be an authorized denomination as defined herein. The Company will not be required to register the transfer or exchange of any Security following the receipt of a notice to repay a Security as described above. All questions as to the validity, eligibility (including time of receipt) and acceptance of any Security for repayment will be determined by the Trustee, whose determination will be final, binding and non-appealable. In the event of redemption or repayment of this Security in part only, a new Security or Securities of this series and of like tenor and for a principal amount equal to the unredeemed or unrepaid portion will be delivered to the registered Holder upon the cancellation hereof. 7 3 If so specified above, the Stated Maturity of this Security may be extended at the option of the Company, in the manner set forth below (unless otherwise provided on the face hereof), for the period or periods specified above (each an "Extension Period") up to but not beyond the date (the "Final Maturity Date") set forth above: (a) The Company may exercise such option by notifying the Paying Agent of such exercise at least 45 but no more than 60 days prior to the Stated Maturity in effect prior to such exercise (the "Original Stated Maturity"). If the Company exercises such option, the Paying Agent will mail by first-class mail, postage pre-paid, to the Holder of this Security no later than 40 days prior to the Original Stated Maturity a notice setting forth (i) the election of the Company to extend the Original Stated Maturity, (ii) the new Stated Maturity (which shall then be considered the Stated Maturity for all purposes of this Security), (iii) the Spread and/or Spread Multiplier applicable to the Extension Period and (iv) the provisions, if any, for redemption during such Extension Period, including the date or dates on which or the period or periods during which and the price or prices at which such redemption may occur during the Extension Period. Upon the Paying Agent's transmittal of the Extension Notice, the Original Stated Maturity of this Security shall be extended automatically, and, except as modified by the Extension Notice and as described in the next paragraph, this Security will have the same terms as prior to the transmittal of such Extension Notice. (b) Notwithstanding the foregoing, not later than 20 days prior to the Original Stated Maturity of this Security the Company may, at its option, revoke the Spread and/or Spread Multiplier provided for in the Extension Notice and establish a Spread and/or Spread Multiplier that is higher than the Spread and/or Spread Multiplier provided for in the Extension Notice for the Extension Period by mailing or causing the Paying Agent to transmit notice, by first class mail, postage prepaid, of such higher Spread and/or Spread Multiplier to the Holder of this Security. Such notice shall be irrevocable. All Securities with respect to which the Stated Maturity is extended will bear such higher Spread and/or Spread Multiplier for the Extension Period. (c) If the Company elects to extend the Stated Maturity of this Security, the Holder hereof will have the option to elect repayment of this Security by the Company on the Original Stated Maturity at a price equal to the principal amount hereof plus interest accrued to such date. In order for this Security to be so repaid on the Original Stated Maturity, the Holder hereof must follow the procedures set forth above for optional repayment, except that the period for delivery of this Security or notification to the Paying Agent shall be at least 25 but not more than 35 days prior to the Original Stated Maturity and except that, if the Holder hereof has tendered this Security for repayment pursuant to an Extension Notice, such Holder may, by written notice to the Paying Agent, revoke such tender for repayment until the 8 4 close of business on the tenth day prior to the Original Stated Maturity. If so specified above, this Security may be renewed by the Holder of the Security on an Interest Payment Date (specified above) occurring in or prior to the twelfth month following the Original Issue Date (the "Initial Maturity Date") in accordance with the procedures described below: (a) On the Interest Payment Date occurring in the sixth month (unless a different interval (the "Special Election Interval") is specified above) prior to the Initial Maturity Date (as specified above) of a Renewable Note (the "Initial Renewal Date") and on the Interest Payment Date occurring in each sixth month (or in the last month of each Special Election Interval) after such Initial Renewal Date (each, together with the Initial Renewal Date, a "Renewal Date"), the term of this Security may be extended to the Interest Payment Date occurring in the twelfth month (or, if a Special Election Interval is specified the last month in a period equal to twice the Special Election Interval) after such Renewal Date, if the Holder of this Security elects to extend the term of this Security or any portion hereof as provided below. If the Holder of this Security does not elect to extend the term of any portion of the principal amount of this Security during the specified period prior to any Renewal Date, such portion will become due and payable on the Interest Payment Date occurring in the sixth month (or the last month in the Special Election Interval) after such Renewal Date (the "New Maturity Date"). (b) A Holder of this Security may elect to renew the term of this Security, or if specified above, any portion thereof, by delivering a notice to such effect to the Trustee (or any duly appointed Paying Agent) at the Corporate Trust Office not less than 15 nor more than 30 days prior to such Renewal Date (unless another period is specified above as the "Special Election Period"). Such election will be irrevocable and will be binding upon each subsequent Holder of this Security. An election to renew the term of this Security may be exercised with respect to less than the entire principal amount of this Security only if so specified above and only in such principal amount, or any integral multiple in excess thereof, as specified above. Notwithstanding the foregoing, the term of this Security may not be extended beyond the Stated Maturity specified above. (c) If the Holder of this Security does not elect to renew this Security, this Security must be presented to the Trustee (or any duly appointed Paying Agent) simultaneously with notice of such election (or, in the event notice of such election, together with a guarantee of delivery within five Business Days, is transmitted on behalf of the Holder hereof from a member of a national securities exchange, the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States, within five Business Days of the date of such notice). As soon as practicable following receipt of this 9 5 Security the Trustee (or any duly appointed Paying Agent) will issue in exchange of this Security in the name of the Holder hereof (i) a Security, in a principal amount equal to the principal amount of this Security for which the election to renew the term hereof was exercised, with terms identical to those specified on this Security (except for the Original Issue Date and the Initial Interest Rate and except that such Security will have a fixed, nonrenewable Stated Maturity on the New Maturity Date) and (ii) if such election is made with respect to less than the full principal amount of this Security, a replacement Security in a principal amount equal to the principal amount of this Security for which the election was made, with terms identical to this Security. If so specified above, the Spread and/or Spread Multiplier of this Security may be reset at the option of the Company on the date set forth on the face hereof (each an "Optional Reset Date") in accordance with the procedures described below): (a) The Company may exercise such option by notifying the Paying Agent of such exercise at least 45 but not more than 60 days prior to an Optional Reset Date set forth on the face hereof. If the Company exercises such option, the Paying Agent will mail by first-class mail, postage prepaid, to the Holder of this Security not later than 40 days prior to such Optional Reset Date a notice (the "Reset Notice") setting forth (i) the election of the Company to reset the Spread and/or Spread Multiplier of this Security, (ii) such new Spread and/or Spread Multiplier, and (iii) the provisions, if any, for redemption of this Security during the period from such Optional Reset Date to the next Optional Reset Date or, if there is no such next Optional Reset Date, to the Stated Maturity of this Security (each such period a "Subsequent Period"), including the date or dates on which or the period or periods during which and the price or prices at which such redemption may occur during such Subsequent Interest Period. (b) Notwithstanding the foregoing, not later than 20 days prior to an Optional Reset Date of this Security, the Company may, at its option, revoke the Spread and/or Spread Multiplier provided for in the Reset Notice and establish a Spread and/or Spread Multiplier that is higher for the Subsequent Interest Period commencing on such Optional Reset Date by mailing or causing the Paying Agent to mail notice of such higher Spread and/or Spread Multiplier by first class mail, postage prepaid, to the Holder of this Security. Such notice shall be irrevocable. All Securities with respect to which the Spread and/or Spread Multiplier is reset on an Optional Reset Date will bear such higher Spread and/or Spread Multiplier. (c) If the Company elects to reset the Spread and/or Spread Multiplier of this Security, the Holder of this Security will have the option to elect repayment of this Security by the Company on any Optional Reset Date at a price equal to the principal amount hereof 10 6 plus interest accrued to such Optional Reset Date. In order for this Security to be so repaid on an Optional Reset Date, the Holder hereof must follow the procedures set forth above for optional repayment, except that the period for delivery of this Security or notification to the Paying Agent shall be a least 25 but not more than 35 days prior to such Optional Reset Date and except that, if the Holder hereof has tendered this Security for repayment pursuant to a Reset Notice, such Holder may, by written notice to the Paying Agent, revoke such tender for repayment until the close of business on the tenth day prior to such Optional Reset Date. Commencing with the first interest payment date specified on the face hereof following the Original Issue Date, the rate at which interest on this Security is payable shall be reset daily, weekly, monthly, quarterly, semi-annually or annually (each an "Interest Reset Date") as shown on the face hereof under Interest Rate Reset Period; provided, however, that (i) the interest rate in effect from the Original Issue Date to the first Interest Payment Date will be the Initial Interest Rate selected on the face hereof and (ii) unless otherwise specified above, the interest rate in effect hereon for the ten days immediately prior to the Maturity hereof shall be that in effect on the 10th day preceding such Maturity hereof. Each such adjusted rate shall be applicable on and after the Interest Reset Date to which it relates to but not including the next succeeding Interest Reset Date or until Maturity. If any Interest Reset Date specified on the face hereof would otherwise be a day that is not a Business Day (as defined below), such Interest Reset Day shall be postponed to the next day that is a Business Day, except that if (i) the rate of interest on this Security shall be determined in accordance with the provisions under the heading "Determination of LIBOR" below, and (ii) such Business Day is in the next succeeding calendar month limit, such Interest Reset Date shall be the immediately preceding Business Day. Subject to applicable provisions of law and except as specified herein, on each Interest Reset Date, the sum of interest on this Security shall be the sum determined in accordance with the provisions under the applicable heading below. The interest rate on this Security will in no event be higher than the interest rate permitted by New York law as the same may be modified by United States law of general applicability. Under present New York law, subject to certain exceptions, the maximum rate of interest for any loan less than $250,000 is 16% per annum and for any Loan in the amount of $250,000 or more but less than $12,500,000 is 25% on a simple interest basis. This limit may not apply if $2,500,000 or more has been invested in Securities. DETERMINATION OF COMMERCIAL PAPER RATE. "Commercial Paper Rate" means, with respect to each Interest Determination Date specified on the face hereof, the Money Market Yield (calculated as described below) of the rate on such date for commercial paper bearing the Index Maturity specified on the face hereof as published by the Board of Governors of the Federal Reserve System in "Statistical release H.15(519), Selected Interest Rates" 11 7 or any successor publication of the Board of Governors of the Federal Reserve System 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 Interest Calculation Date pertaining to such Interest Determination Date, then the Commercial Paper Rate shall be the Money Market Yield of the rate on such Interest Determination Date for Commercial Paper during the Index Maturity specified on the face hereof 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 Interest Calculation Date such Rate is not yet published in either H.15(519) or Composite Quotations, the rate for that 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 Interest Determination Date, of three leading dealers of commercial paper in The City of New York Selected by the Calculation Agent for Commercial Paper for the Index Maturity specified on the face hereof placed for an industrial issuer whose bond rating is "AA", or the equivalent, from a nationally recognized 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 will be the Commercial Paper Rate then in effect on such Interest Determination Date. "MONEY MARKET YIELD" means a yield (expressed as a percentage rounded, if necessary, to the next higher one hundred thousandth of a percentage point) calculated in accordance with the following formula: D x 360 Money Market Yield = ---------------- x 100 360 - (D x M) 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. DETERMINATION OF PRIME RATE. Unless otherwise specified above, if the Interest Rate Basis on the Security is the Prime Rate, such rate with respect to any Interest Reset Date shall equal (i) the rate set forth for the relevant Interest Determination Date in H.15(519) under the heading "Bank Prime Loan", or (ii) if such rate is not published prior to 9:00 A.M., New York City time, on the Calculation Date pertaining to such Prime Rate 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 that appears on the display designated as page "NYMF" on the Reuters Monitor Money Rates Service (or such other page as may replace the NYMF page on that service for purpose of displaying prime rates or base lending rates of major United States banks) ("Reuters Screen NYMF Page"), as such bank's prime rate or base lending rate as in effect for 12 8 such Interest Determination Date or (iii) if fewer than four such rates appear on the Reuters Screen NYMF Page on such Interest Determination Date, the arithmetic mean of the prime rates (quoted on the basis of the actual number of days in the year divided by a 360-day year) as of the close of business on such Prime Rate 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 for which quotations are requested, adjusted in each case by the addition or subtraction of the Spread, if any, specified on the face hereof, or by multiplication by the Spread Multiplier, if any, specified on the face hereof; provided, however, that if fewer than two banks selected as aforesaid are quoting as mentioned in this sentence, the Prime Rate shall be calculated by the Calculation Agent and shall be determined as the arithmetic mean on the basis of the prime rates 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 United States, or any State thereof, having total equity capital of at least U.S. $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 for such Prime Interest Determination Date will be the interest rate otherwise in effect on such Prime Interest Determination. DETERMINATION OF LIBOR. Unless otherwise specified above, if the Interest Rate Basis on this Security is LIBOR, such rate with respect to any Interest Reset Date will be determined by the Calculation Agent in accordance with the following provisions: (i) LIBOR will be, as specified on the face hereof, either: (a) the arithmetic mean of the offered rates for deposits in U.S. Dollars having the Index Maturity shown on the face hereof, commencing on the second London Business Day immediately following such Interest Determination Date, which appear on the display designated as page "LIBO" on the Reuters Monitor Money Rates Service (or such other page as may replace the LIBOR page on that service for the purpose of displaying London interbank offered rates of major banks) ("Reuters Screen LIBO Page") as of 11:00 A.M., London time, on such Interest Determination Date, if at least two such offered rates appear on the Reuters Screen LIBO Page ("LIBOR Reuters"), or (b) the rate for deposit in U.S. dollars having the Index Maturity specified above, commencing on the second London Business Day immediately following such Interest Determination Date, that appears on the display designated as page "3750" on the Telerate Service (or such other page as may replace page 3750 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) ("Telerate Page 3750) as of 11:00 A.M., London time, on such Interest Determination Date ("LIBOR Telerate"). If neither LIBOR Reuters nor LIBOR Telerate is specified above, 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 13 9 on Telerate Page 3750, as applicable, LIBOR for such Interest Determination Date will be determined as described in (ii) below. (ii) With respect to an LIBOR Interest Determination Date on which fewer than two offered rates appear on the Reuters Screen LIBO Page as described 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 shown on the face hereof are offered at approximately 11:00 A.M., London time, on such LIBOR Interest Determination Date by four major banks in the London interbank market selected by the Calculation Agent (the "Reference Banks") to prime banks in the London interbank market, commencing on the second London Business Day immediately following such Interest Determination Date and in a principal amount equal to an amount of not less than U.S. $1,000,000 that is representative for a single transaction in such market at such time (a "Representative Amount"). The Calculation Agent will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, LIBOR with respect to such LIBOR Interest Determination Date will be the arithmetic mean of such quotations as determined by the Calculation Agent, adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, or by multiplication of the Spread Multiplier, if any, specified on the face hereof. If fewer than two quotations are provided, LIBOR with respect to 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 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 shown on the face hereof commencing on the second London Business Day immediately following such LIBOR Interest Determination Date and in a Representative 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, adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, or by multiplication by the Spread Multiplier, if any, specified on the face hereof; 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 Interest Determination Date. DETERMINATION OF TREASURY RATE. "Treasury Rate" means with respect to each Interest Determination Date specified on the face hereof the rate for the most recent auction of direct obligations of the United States ("Treasury bills") having the Index Maturity specified on the face hereof as 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 Interest Calculation Date pertaining to such 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 Treasury. In the event that the results of the auction of 14 10 Treasury bills bearing the Index Maturity specified on the face hereof are not published or announced as provided above by 3:00 p.m. New York City time on such Interest 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 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 specified 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 will be the Treasury Rate then in effect on such Interest Determination Date. DETERMINATION OF FED FUNDS RATE. "Fed Funds Rate" means with respect to each Interest Determination Date specified on the face hereof the rate on such date for Federal Funds as such rate shall be published in H.15(519) under the heading "Federal Funds (Effective)" or, if not so published by 9:00 a.m. New York City time on the Calculation Date pertaining to such Interest Determination Date, the Fed Funds Rate will be the rate on such Interest Determinate 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 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 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 will be the Fed Funds Rate in effect as at such Interest Determination Date. DETERMINATION OF CD RATE. "CD Rate" means, with respect to each Interest Determination Date specified on the face hereof, the rate on such date for negotiable certificates of deposit having the Index Maturity specified on the face hereof 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 Interest Determination Date, the CD Rate will be the rate on such Interest Determination Date for negotiable certificates of deposit of the Index Maturity specified on the face hereof as published in Composite Quotations under the heading "Certificates of Deposit". If such rate is not published by 3:00 p.m. New York City time on such Calculation Date, then the CD Rate on such Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of the secondary market offered rates as of 10 a.m., New York City time, on such Interest Determination Date, of three leading nonbank dealers in negotiable US Dollar certificates of deposit in The City 15 11 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 specified on the face hereof 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, the CD Rate will be the CD Rate in effect on such Interest Determination Date. DETERMINATION OF OTHER INTEREST RATE BASES. Notwithstanding the foregoing, the interest rate hereon shall not be greater than the Maximum Interest Rate, if any, or less than the Minimum Interest Rate, if any, shown on the face hereof. The Calculation Agent shall calculate the interest rate on this Security in accordance with the foregoing on or before each Interest Calculation Date. The Interest Calculation Date, if applicable, pertaining to any Interest Determination Date, shall be 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 if sooner the Business Day preceding the applicable Interest Payment Date or Maturity, as the case may be. All percentages resulting from any calculation on this Security will be rounded to the nearest one hundred-thousandth of a percentage point, with five one millionths of a percentage point rounded upwards, and all dollar amounts used in or resulting from such calculation on this Security will be rounded to the nearest cent (with one-half cent being rounded upward). The Calculation Agent will upon the request of the Holder of this Security provide to such Holder the interest rate hereon then in effect and if different the interest rate which will become effective as a result of a determination made on the most recent Interest Determination Date (outlined below) specified on the face hereof. If any Interest Payment Date specified hereof would otherwise be a day that is not a business day, the Interest Payment Date shall be postponed to the next day that is a Business Day, except that if (i) the rate of interest on the Security shall be determined in accordance with the provisions of the heading "Determination of LIBOR" above, and (ii) such Business Day is in the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding Business Day. If the Maturity Date falls on a day that is not a Business Day, the payment of principal, premium, if any, and interest will be made on the next succeeding Business 16 12 Day as if made on the date such payment was due, and no interest on such payment will accrue. "Business Day" means (i) any day that is not a Saturday or Sunday and that in The City of New York is not a day on which banking institutions generally are authorized or obligated by or pursuant to law, regulation or executive order to close and (ii) only if the rate of interest on the Security should be determined in accordance with the provisions of the heading "Determination of LIBOR" above, any such day on which dealings on deposit in U.S. dollars are transacted on the London interbank market (a "London Business Day"). The date as of which the Interest Rate will be determined (the "Interest Determination Date") for each Interest Reset Date if the rate of interest on this Security shall be determined in accordance with the provisions under the heading "Determination of Commercial Paper Rate", "Determination of Prime Rate", "Determination of Fed Funds Rate", or "Determination of CD Rate" above will be the second Business Day preceding such Interest Reset Date. The Interest Determination Date pertaining to an Interest Reset Date if the rate of interest on this Security shall be determined in accordance with the provisions of the heading "Determination of LIBOR" above will be the second London Business Day preceding such Interest Reset Date. The Interest Determination Date pertaining to an Interest Reset Date if the rate of interest of the Security shall be determined in accordance with the provisions of the heading "Determination of Treasury Rate" above (the "Treasury Interest Determination Date") will be the day of the week in which such Interest Reset Date falls on which Treasury Bills would normally be auctioned. Treasury Bills are normally sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is normally 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 should fall on any Interest Reset Date, then such Interest Reset Date shall instead be the first Business Day immediately following such auction date. Interest payments for this Security 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 Original Issue Date, if no interest has been paid with respect to this Security) to, but excluding the Interest Payment Date (or Maturity Date); provided, however, that if the Interest Reset Dates with respect to the Security are daily or weekly, interest payable on any Interest Payment Date, other than interest payable on any date on which principal hereof 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, provided however, that interest payments for this Security at 17 13 Maturity will include interest accrued to but excluding the Maturity Date. Accrued interest hereon from the Original Issue Date or from the last date to which interest hereon has been paid, as the case may be, shall be an amount calculated by multiplying the face amount hereof by an accrued interest factor. Such accrued interest factor shall be 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 shall be computed by dividing the interest rate applicable to such day by 360, in the case of the Commercial Paper Rate, Prime Rate, LIBOR, Fed Funds Rate or CD Rate, or by the actual number of days in the year, in the case of the Treasury Rate. The Company at its option, subject to the terms and conditions provided in the Indenture, (a) will be discharged from any and all obligations in respect of the Securities (except for certain obligations including obligations to register the transfer or exchange of Securities, replace stolen, lost or mutilated Securities, maintain paying agencies and hold moneys for payment in trust) or (b) need not comply with certain restrictive covenants of the Indenture after the Company deposits with the Trustee (or, in certain circumstances, 91 days after the Company deposits with the Trustee), pursuant to an escrow trust agreement, money or U.S. Government Obligations, or a combination of money and U.S. Government Obligations, which through the payment of interest thereon and principal thereof in accordance with their terms will provide money in an amount sufficient to pay all the principal of, and interest on, the Securities on the dates such payments are due in the currency, currencies or currency unit or units, in which such Securities are payable and in accordance with the terms of the Securities. If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of all series affected thereby (acting as one class). The Indenture also contains provisions permitting the Holders of not less than a majority in principal amount of the Outstanding Securities of all series affected thereby (acting as one class), on behalf of the Holders of all Securities of each such series, to waive compliance by the Company with certain provisions of the Indenture. The Indenture also provides that, regarding the Securities of any series, the Holders of not less than a majority in principal amount of the Outstanding Securities of such series may waive certain past defaults and their consequences on behalf of the Holders of all Securities of such series. Any such consent or waiver by the Holder of this Security shall be 18 14 conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. As set forth in, and subject to, the provisions of the Indenture, no Holder of any Security of this series will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to this series, the Holders of not less than 25% in principal amount of the Outstanding Securities of this series shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as trustee, the Trustee shall not have received from the Holders of a majority in principal amount of the Outstanding Securities of this series a direction inconsistent with such request and the Trustee shall have failed to institute such proceeding within 60 days; provided, however, that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of (and premium, if any) or interest on this Security on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Security or the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, places and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency as may be designated by the Company in the Borough of Manhattan, The City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of the tenor and terms, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form, without coupons, in denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor and terms of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum 19 15 sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and the Securities shall be governed by, and construed in accordance with, the laws of the State of New York. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. 20 16 -------------------- ABBREVIATIONS The following abbreviations, when used in the inscription of the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN Act ____Custodian____ TEN ENT - as tenants by the entireties (cust) (Minor) JT TEN - as joint tenants with right Under Uniform Gifts to of survivorship and not as Minors Act__________________ tenants in common (State) Additional abbreviations may also be used though not in the above list. FOR VALUE RECEIVED, the undersigned hereby sell(s), assigns and transfer(s) unto Please insert social security or other identifying number of assignee / / - ----------------------------------------------------------------------------- PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- the within Security and all rights thereunder, hereby irrevocably constituting and appointing_____________________________________________________Attorney to transfer said Security on the books of the Company, with full power of substitution in the premises. Dated: ------------------- ------------------------------------ Signature (The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever.) 21 17 OPTION TO ELECT REPAYMENT TO BE COMPLETED ONLY IF THIS SECURITY IS REPAYABLE AT THE OPTION OF THE HOLDER AND THE HOLDER ELECTS TO EXERCISE SUCH RIGHTS The undersigned hereby irrevocably requests and instructs the Company to repay the attached Security (or portion thereof specified below) pursuant to its terms at a price equal to 100% of the principal amount thereof together in the case of any such repayment with interest to the Repayment Date, to the undersigned at ___________________________________________________. For the Security to be repaid at the option of the Holder, the paying agent must receive at its corporate trust office, at least 30 days but not more than 60 days prior to the Repayment Date on which the Security is to be repaid, (i) the Security together with this "Option to Elect Repayment" form duly completed or (ii) a telegram, telex, facsimile transmission or a letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States setting forth the name of the Holder of the Security, the principal amount of the Security, the principal amount of the Security to be repaid, the certificate number or a description of the tenor and terms of the Security, a statement that the option to elect repayment is being exercised thereby and a guarantee that the Security, together with this duly completed form entitled "Option to Elect Repayment" on the reverse of the Security, will be received by the paying agent not later than the fifth Business Day after the date of such telegram, telex, facsimile transmission or letter, provided, however, that such telegram, telex, facsimile transmission or letter shall be effective only if the Security with such form duly completed are received by the paying agent by such fifth Business Day. If less than the entire principal amount of the attached Security is to be repaid, specify the portion thereof which the Holder elects to have repaid: ____________________; and specify the denomination or denominations (which shall be an Authorized Denomination) of the Security or Securities to be issued to the Holder for the portion of the within Security not being repaid (in the absence of any specification, one such Security will be issued for the portion not being repaid): ______________________. Dated: ----------------------- ------------------------------ NOTICE: The signature to this Option to Elect Repayment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatsoever. EX-5 5 OPINION & CONSENT OF MILBANK, TWEED 1 EXHIBIT 5 [MTH&M Letterhead] April 5, 1995 National Rural Utilities Cooperative Finance Corporation Woodland Park 2201 Cooperative Way Herndon, Virginia 22071-3025 Dear Sirs: We have acted as counsel for National Rural Utilities Cooperative Finance Corporation (the "Company") in connection with the proposed public offering from time to time, directly to purchasers or through agents or underwriters to be designated from time to time (which may include Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and others), of Debt Securities and Warrants to purchase Debt Securities of the Company (collectively, the "Securities"), such Securities to be issued under an Indenture dated as of December 15, 1987 as supplemented by a First Supplemental Indenture dated as of October 1, 1990 (together, the "Indenture"), between the Company and Harris Trust and Savings Bank, as successor Trustee, as contemplated in the Company's Registration Statement filed on Form S-3 on the date hereof (the "Registration Statement") pursuant to Rule 415 under the Securities Act of 1933. We submit this opinion for use as Exhibits 5 and 8 to the Registration Statement and hereby consent to the use of this opinion in the Registration Statement and to the use of our name under the caption "Legal Opinions" in the Prospectus. We have investigated the corporate status of the Company and have examined the corporate proceedings authorizing the creation and issuance of the Securities. 2 - 2 - Based upon the foregoing, and having regard to legal considerations that we deem relevant, we are the opinion that the Securities, when duly authorized and executed by the Company and authenticated by or on behalf of the successor Trustee, pursuant to the terms of the Indenture, and issued for value in accordance with the terms of the Indenture and applicable resolutions of the Board of Directors of the Company, will be validly issued, binding obligations of the Company. In our opinion, the discussion under the caption "United States Taxation" in the Prospectus included as part of the Registration Statement is correct in all material respects. Very truly yours, /s/Milbank, Tweed, Hadley & McCloy MAW/BK EX-12 6 SCHEDULE OF COMPUTATION OF RATIO OF MARGINS 1 EXHIBIT 12 NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION COMPUTATION OF RATIO OF MARGINS TO FIXED CHARGES (DOLLAR AMOUNTS IN THOUSANDS) FOR THE NINE MONTHS ENDED FEBRUARY 28, 1995 AND THE YEARS ENDED MAY 31, 1994, 1993, 1992, 1991 AND 1990
FEBRUARY 28, 1995 1994 1993 1992 1991 1990 -------- -------- -------- -------- -------- -------- Net margins before extraordinary loss........... $ 43,976 $ 33,188 $ 41,648 $ 45,553 $ 48,305 $ 39,273 Add: Fixed charges............. 259,512 263,230 265,412 314,863 349,954 354,010 -------- -------- -------- -------- -------- -------- Margins available for fixed charges...................... $303,488 $296,418 $307,060 $360,416 $398,259 $393,283 ======== ======== ======== ======== ======== ======== Fixed charges: Interest on all debt (including amortization of discount and issuance costs).................... $259,512 $263,230 $265,412 $314,863 $349,954 $354,010 -------- -------- -------- -------- -------- -------- Total fixed charges............ $259,512 $263,230 $265,412 $314,863 $349,954 $354,010 ======== ======== ======== ======== ======== ======== Ratio of margins to fixed charges...................... 1.17 1.13 1.16 1.14 1.14 1.11 ======== ======== ======== ======== ======== ========
EX-23.1 7 CONSENT OF ARTHUR ANDERSEN LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement of our report dated July 18, 1994 included in National Rural Utilities Cooperative Finance Corporation's Form 10-K for the year ended May 31, 1994 and to all references to our Firm included in this Registration Statement. ARTHUR ANDERSEN LLP Washington, D.C. April 5, 1995 EX-25 8 FORM T-1 1 EXHIBIT 25 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2) ____ HARRIS TRUST AND SAVINGS BANK (NAME OF TRUSTEE) Illinois 36-1194448 (STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.) 111 West Monroe Street, Chicago, Illinois 60603 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) Amy Roberts, Harris Trust and Savings Bank, 111 West Monroe Street, Chicago, Illinois, 60603 312-461-2121 (NAME, ADDRESS AND TELEPHONE NUMBER FOR AGENT FOR SERVICE) NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION (NAME OF OBLIGOR) District of Columbia 52-089-1669 (STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.) 2201 Cooperative Way, Herndon, Virginia, 22071-3025 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) Debt Securities (Title of indenture securities) 2 1. GENERAL INFORMATION. Furnish the following information as to the Trustee: (a) Name and address of each examining or supervising authority to which it is subject. Commissioner of Banks and Trust Companies, State of Illinois, Springfield, Illinois; Chicago Clearing House Association, 164 West Jackson Boulevard, Chicago, Illinois; Federal Deposit Insurance Corporation, Washington, D.C.; The Board of Governors of the Federal Reserve System, Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Harris Trust and Savings Bank is authorized to exercise corporate trust powers. 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the Trustee, describe each such affiliation. The Obligor is not an affiliate of the Trustee. 3. THRU 15. NO RESPONSE NECESSARY 16. LIST OF EXHIBITS. 1. A copy of the articles of association of the Trustee is now in effect which includes the authority of the trustee to commence business and to exercise corporate trust powers. A copy of the Certificate of Merger dated April 1, 1972 between Harris Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc. which constitutes the articles of association of the Trustee as now in effect and includes the authority of the Trustee to commence business and to exercise corporate trust powers was filed in connection with the Registration Statement of Louisville Gas and Electric Company, File No. 2-44295, and is incorporated herein by reference. 2. A copy of the existing by-laws of the Trustee. A copy of the existing by-laws of the Trustee was filed in connection with the Registration Statement of Hillenbrand Industries, Inc., File No. 33-44086, and is incorporated herein by reference. 3. The consents of the Trustee required by Section 321(b) of the Act. (included as Exhibit A on page 2 of this statement) 4. A copy of the latest report of condition of the Trustee published pursuant to law or the requirements of its supervision or examining authority. (included as Exhibit B on page 3 of this statement) 3 SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, Harris Trust and Savings Bank, a corporation organized and existing under the laws of the State of Illinois, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago, and State of Illinois, on the 5th day of April, 1995. HARRIS TRUST AND SAVINGS BANK By: /s/ AMY S. ROBERTS ------------------------------ Amy S. Roberts Assistant Vice President EXHIBIT A The consents of the trustee required by Section 321(b) of the Act. Harris Trust and Savings Bank, as the Trustee herein named, hereby consents that reports of examinations of said trustee by Federal and State authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefore. HARRIS TRUST AND SAVINGS BANK By:/s/ AMY S. ROBERTS ------------------ Amy S. Roberts Assistant Vice President 4 EXHIBIT B Attached is a true and correct copy of the statement of condition of Harris Trust and Savings Bank as of December 31, 1994, as published in accordance with a call made by the State Banking Authority and by the Federal Reserve Bank of The Seventh Reserve District. Harris Trust and Savings Bank 111 West Monroe Street Chicago, Illinois 60603 of Chicago, Illinois, and Foreign and Domestic Subsidiaries, at the close of business on December 31, 1994, a state banking institution organized and operating under the banking laws of this State and a member of the Federal Reserve System. Published in accordance with a call made by the Commissioner of Banks and Trust Companies of the State of Illinois and by the Federal Reserve Bank of this District. Bank's Transit Number 71000288
THOUSANDS OF DOLLARS ASSETS Cash and balances due from depository institutions: Non-interest bearing balances and currency and coin $1,226,753 Interest bearing balances $732,083 Securities: a. Held-to-maturity securities $718,072 b. Available-for-sale securities $1,795,896 Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: Federal funds sold $374,200 Securities purchased under agreements to resell $9,831 Loans and lease financing receivables: Loans and leases, net of unearned income $6,371,039 LESS: Allowance for loan and lease losses $90,492 ---------- Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b) $6,280,547 Assets held in trading accounts $169,830 Premises and fixed assets (including capitalized leases) $136,703 Other real estate owned $1,780 Investments in unconsolidated subsidiaries and associated companies $37 Customer's liability to this bank on acceptances outstanding $69,447 Intangible assets $24,851 Other assets $403,300 -------- TOTAL ASSETS $11,944,330 ===========
5 LIABILITIES Deposits: In domestic offices $4,529,148 Non-interest bearing $2,659,945 Interest bearing $1,869,203 In foreign offices, Edge and Agreement subsidiaries, and IBFs $2,486,418 Non-interest bearing $31,903 Interest bearing $2,454,515 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: Federal funds purchased $1,179,441 Securities sold under agreements to repurchase $1,643,381 Trading Liabilities $149,363 Other borrowed money: a. With original maturity of one year or less $667,231 b. With original maturity of more than one year $14,268 Bank's liability on acceptances executed and outstanding $69,447 Subordinated notes and debentures $235,000 Other liabilities $240,902 -------- TOTAL LIABILITIES $11,214,599 =========== EQUITY CAPITAL Common stock $100,000 Surplus $275,000 a. Undivided profits and capital reserves $375,032 b. Net unrealized holding gains (losses) on available-for-sale securities ($20,301) --------- TOTAL EQUITY CAPITAL $729,731 ======== Total liabilities, limited-life preferred stock, and equity capital $11,944,330 ===========
I, Paul Skubic, Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief, PAUL SKUBIC 1/27/95 We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and, to the best of our knowledge and belief, has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and the Commissioner of Banks and Trust Companies of the State of Illinois and is true and correct. DONALD S. HUNT, RICHARD E. TERRY, JAMES J. GLASSER, Directors. -----END PRIVACY-ENHANCED MESSAGE-----