**Rural Development**

**United States Department of Agriculture**

**RURAL UTILITIES SERVICE**

***RUS Bulletin 1738-2***

**Rural Broadband Access Loan and Loan Guarantee Advance and
Construction Procedures Guide**

![](media/image1.png){width="4.375in" height="3.2in"}

*According to the Paperwork Reduction Act of 1995, an agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a valid OMB control number.
The valid OMB control number for this information collection is
0572‑XXXX. The time required to complete this information collection is
estimated to average 30 minutes per response, including the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the collection
of information.*

# **TABLE OF CONTENTS**

Construction Procedures

1 General 6

a Buy American 7

b List of Materials 7

c Interim Construction 8

d Insurance 8

e Title Clearance 8

f Software License 8

g Subcontracts 9

h Amendments 9

i Records 10

2 Engineering and Architectural Services 10

> a General 10
>
> b Engineering Services from an Outside Consultant 10
>
> c Closeout 11
>
> d In-House Engineering 11
>
> e Architectural Services 12
>
> f Closeout 12

3 Small-scale Construction 13

a General 13

b Buildings other than Towers 13

c Towers 13

d RUS Form 773 Contract Construction Procedures 13

e Work Order Construction Procedures 14

f Inspection and Certification 14

g Reimbursement 14

> 4 Large-scale Construction 14
>
> a General 14
>
> b Building Construction 15
>
> \(1\) General 15
>
> \(2\) Bidding 17
>
> \(3\) Closeout 19
>
> c Core Network and Access Equipment 20
>
> \(1\) General 20
>
> \(2\) Negotiated Purchase 20
>
> \(3\) Closeout 21
>
> d Outside Plant Construction 22
>
> \(1\) General 22
>
> \(2\) Bidding 23
>
> \(3\) Closeout 26

Advance and Disbursement of Broadband Loan Funds

1 General 28

2 Broadband Loan Budget 28

3 Budget Adjustments 28

4 Deposit Account 28

5 Financial Requirement Statement (FRS) 29

6 Temporary Excess Construction Funds 31

7 Method of Advances for Broadband Loan Funds 31

a Direct Cost-of-Money and Direct 4% Loans 31

> b Private Loan Guarantee 32

[Exhibits]{.underline}

Exhibit A -- Forms 33

INDEX:

Regulatory Issuances

Nonregulatory Issuances

**GENERAL**

This bulletin implements and explains the provisions of the loan
documents containing the requirements and procedures to be followed by a
borrower for constructing broadband facilities using RUS broadband loan
funds. A borrower shall maintain accounting and plant records sufficient
to document the cost and location of all construction and to support
loan fund advances and disbursements. The standard Loan Documents also
contain provisions regarding advances and disbursement of broadband loan
funds by borrowers. This bulletin also implements certain provisions by
setting forth requirements and procedures to be followed by the
borrowers in obtaining advances and making disbursements of loan funds.

**Abbreviations**

For purpose of this bulletin:

-   *CFR* stands for Code of Federal Regulations.

-   *FRS* stands for RUS Form 481 (OMB control number 0572-0023),
    *Financial Requirement Statement.*

-   *GFR* stands for RUS general field representative.

-   *P&S* stands for plans and specifications.

-   *Pub. L.* stands for Public Law.

-   *RE Act* *of 1938* stands for Rural Electrification Act of 1938.

-   *RUS* stands for Rural Utilities Service.

-   *U.S.C.* stands for United States Code.

**Definitions**

For purposes of this bulletin:

-   *Accept; Acceptance* means RUS' determination that a product meets
    RUS requirements in accordance with RUS regulations. Accepted
    products are included in the List of Materials.

-   *Advance* means transferring funds from RUS to the borrower\'s
    deposit account**.**

-   *Architect* means a person registered as an architect in the state
    where construction is performed.

-   *Bid guarantee* means a bid bond or certified check required of
    contractors bidding on construction work to ensure that the bidder,
    if successful, will furnish a performance bond.

-   *Borrower* means any organization with an outstanding loan made or
    guaranteed by RUS, or that is seeking such financing.

-   *Buy American Requirement* means RUS\' requirements for compliance
    with the \"Buy American\" provision of the Rural Electrification Act
    of 1938 (June 21, 1938, Ch. 554, Title IV 401, 52 Stat. 818), as
    amended.

-   *Broadband Service* means a minimum transmission rate as defined in
    the current NOFA applicable to the Broadband Loan Program.

-   *Closeout documents* mean the documents required to certify
    satisfactory completion of all obligations under a contract.

```{=html}
<!-- -->
```
-   *Construction* means purchase and installation of broadband
    facilities in a borrower\'s system.

-   *Contract* means the agreement between the borrower and an
    independent contractor covering the purchase and installation of
    broadband facilities for a borrower's system using an RUS contract
    form.

-   *Contract forms* mean RUS requirements to use standard forms of
    contracts for construction, procurement, engineering services, and
    architectural services, if the construction, procurement or services
    are financed by RUS.

-   *Contract construction* means construction performed using an RUS
    contract form.

-   *Core network and access equipment* mean any switching or
    transmission equipment used primarily for the delivery of broadband
    service.

-   *Deposit account* means an account required by the loan contract
    into which all RUS loan funds are advanced.

-   *Disbursement* means payment by the borrower out of the deposit
    account for approved loan purposes.

-   *Domestic product* means a product that is manufactured in the
    United States or in any eligible country, substantially all from
    articles, materials, or supplies mined, produced, or manufactured,
    as the case may be, in the United States or in any eligible country.
    An "eligible country" is any country that applies with respect to
    the United States an agreement ensuring reciprocal access for United
    States products and services and United States suppliers to the
    market of that country, as determined by the United States Trade
    Representative.

-   *Engineer* means a person registered as an engineer in the state
    where construction is performed, or a person on the borrower\'s
    staff authorized by RUS to perform engineering services.

-   *In-house engineering* means any preloan or postloan engineering
    services performed by the borrower's staff.

-   *Installation* means the act of setting up or placing in position
    equipment for service or use in the borrower\'s system.

-   *Interim construction* means the construction, improvement, or
    acquisition of facilities and equipment after RUS determines that an
    application is complete, but prior to release of loan funds.

-   *Labor and materials* means all the labor and materials required for
    construction.

-   *Large-scale construction* means any construction project, excluding
    buildings or structures that are estimated to cost more than
    \$500,000 including all labor and materials.

-   *List of Materials* means collectively, the latest edition, as
    supplemented, of RUS Informational Publication 344‑2, "List of
    Materials Acceptable for Use on Telecommunications Systems of RUS
    Borrowers." The List of Materials is published in January of every
    other year with supplements published every other month. The List of
    Materials is available on a subscription basis from the
    Superintendent of Documents, U.S. Government Printing Office,
    Washington, DC 20250. The List of Materials is also available on the
    Internet at <http://www.usda.gov/rus/telecom/materials/listomat.htm>
    . This electronic version is updated after each Committee A meeting
    in which products are considered for acceptance or deletion from the
    List of Materials.

-   *Loan* means any broadband loan made or guaranteed by RUS.

-   *Loan documents* mean the documents covering a loan made by RUS,
    including the loan contract, note and mortgage or other security
    documents between the borrower and RUS.

-   *Loan funds* means funds provided by RUS through a loan.

-   *Non-domestic product* means any product other than a domestic
    product.

-   *Outside plant* means the part of the telecommunications network
    that is physically located outside of telecommunication buildings.
    This includes cable, conduits, poles and other supporting structures
    and certain other associated equipment items.

-   *Performance bond* means a surety bond on a form satisfactory to RUS
    guaranteeing the contractor\'s faithful performance of a contract.
    (See 7 CFR Part 1788.)

-   *Plans and specifications* means an RUS contract form, the
    appropriate specifications, and such additional information and
    documents needed to provide a clear, accurate, and complete
    understanding of the construction to be performed.

-   *Responsive bid* means a bid that complies with the plans and
    specifications.

-   *RUS* means the Rural Utilities Service; an agency of the United
    States Department of Agriculture and successor to the Rural
    Electrification Administration.

-   *Small-scale construction* means any construction project that is
    estimated to cost \$500,000, or less, including all labor and
    materials.

-   *Subcontract* means a secondary contract undertaking some of the
    obligations of a primary contract. Under RUS contract forms, the
    primary contractor bears the full responsibility for the performance
    of the subcontractor.

-   *System design* means supporting data for a loan application.

-   *Technical acceptance* means a letter given to a manufacturer by
    Committee A upon determining that a nondomestic product meets RUS
    requirements for financing upon meeting the Buy American
    requirement. Under this requirement, a nondomestic bid is in
    compliance with the "Buy American" provision of 1938, as amended, if
    the bid is lower than the lowest domestic bid by at least 6% of its
    material content.

-   *Work order construction* means any construction performed by the
    borrower\'s employees, pursuant to its work order procedure, with
    the borrower furnishing all materials, equipment, tools, and
    transportation.

**CONSTRUCTION PROCEDURES**

1 General

> All construction must conform to the approved system design and shall
> be covered by an Environmental Report prepared in accordance with
> 7 CFR Part 1794 and approved by RUS. No construction shall commence
> until all necessary local, state and federal requirements have been
> satisfied.
>
> Materials and equipment purchased or construction performed prior to a
> determination by RUS that the loan application is complete will not be
> eligible for financing. Only new materials and equipment may be
> financed with loan funds, unless otherwise approved in writing by RUS.
>
> a\. [Buy American]{.underline}
>
> All materials and equipment financed with loan funds are subject to
> the "Buy American" provisions (7 U.S.C. 901 *et seq.* as amended in
> 1938), as amended.
>
> For RUS financing of a product, RUS requires that the product complies
> with the "Buy American" provision of the RE Act of 1938, as amended. A
> product complying with both of the provisions listed below complies
> with this
>
> "Buy American provision and is considered a domestic product by RUS.
> If the product does not meet either of the two conditions, the product
> is then classified as nondomestic for purposes of RUS financing. These
> conditions are:
>
> \(1\) Final assembly or manufacture of the product, as the product
> would be used by an RUS borrower, is completed in the United States or
> eligible countries; and
>
> \(2\) The cost of the United States and eligible countries' components
> (in any combination) within the product is more than 50 percent of the
> total cost of all components utilized in the product. The cost of
> non-domestic components (components not manufactured within the United
> States or eligible countries) which are included in the finished
> product must include all duties, taxes, and delivery charges to the
> point of assembly or manufacture.
>
> A bid for a nondomestic product is considered to be in compliance with
> the "Buy American" provision by RUS if the nondomestic bid is lower
> than the lowest domestic bid by at least six percent of the cost of
> the material content of the nondomestic bid. This six percent cost
> differential is added to the nondomestic bid for the purpose of
> determining the low bid only.
>
> b [List of Materials]{.underline}
>
> RUS will only finance equipment or materials that have been accepted
> and included in Informational Publication 344‑2, "*List of Materials
> Acceptable for Use on Telecommunications Systems of RUS Borrowers*"
> (List of Materials) or equipment that has received RUS technical
> acceptance, unless otherwise approved by RUS in writing prior to its
> purchase. The borrower may use loan funds for equipment that has not
> been accepted or technically accepted by RUS when the List of
> Materials does not include similar equipment to the equipment proposed
> by the borrower. When purchasing a product not listed on Informational
> Publication 344‑2, the borrower shall be responsible for ensuring that
> this equipment meets the RUS Buy American requirement.
>
> If the borrower wishes to use a non-listed product when similar
> products are listed on the List of Materials, a written request shall
> be submitted to RUS stating the
>
> cost of the product to be purchased along with the justification for a
> waiver. This waiver must be granted prior to commencing any
> construction activities including entering into an agreement with the
> supplier.

c Interim Construction

> Once RUS has determined that an application is complete, the loan
> applicant may proceed with interim construction for construction that
> must be performed immediately. This should not be construed as a
> commitment that RUS will make loan funds available. To ensure that
> interim construction is eligible for reimbursement with loan funds the
> borrower must comply with the following requirements:
>
> \(1\) Equal employment opportunity requirements in RUS Bulletin
> 320‑15;
>
> \(2\) Interim construction is covered by an Environmental Report
> approved by RUS prior to construction;
>
> \(3\) Plans and specifications for the interim construction include
> RUS Form 375, found in Exhibit A, notifying the contractors or
> manufactures that RUS loan funds have not been approved and that other
> sources of financing are available.
>
> \(4\) All RUS construction procedures in this bulletin (RUS Bulletin
> 1738-2) are followed to complete the construction.
>
> d [Insurance]{.underline}
>
> A performance bond is required for construction exceeding \$250,000,
> as indicated in 7 CFR Part 1788, Subpart C.
>
> The borrower is responsible for ensuring that its contractor and
> engineer comply with all the insurance and bond requirements of
> 7 CFR Part 1788, Subpart C.
>
> e [Title Clearance]{.underline}
>
> For any building construction over \$250,000, the borrower shall
> determine that title to the real estate has been approved by RUS
> before releasing the invitations to bid.
>
> f [Software License]{.underline}
>
> As part of the equipment purchase, the contractor may require that the
> borrower enter into a software license agreement for the use of the
> equipment. For such agreement, RUS requires the use of RUS Form 390,
> *Software License Agreement -- Special Equipment Contract*, found in
> Exhibit A.
>
> g [Subcontracts]{.underline}
>
> RUS construction contract Forms 257, 397, and 515 contain provisions
> for subcontracting. The contractor should refer to the individual
> contracts for the amounts and conditions on subcontracting.
>
> RUS Form 282, Subcontract, shall be used for subcontracts. Minor
> modifications or additions may be made to the subcontract form, as
> long as they do not change the terms and conditions of the primary
> contract. Any alterations to the subcontract shall be initialed and
> dated by the parties executing the subcontract. These alterations
> shall be noticeable by using italic print or any other means that
> accomplished this purpose.
>
> Subcontracts shall be prepared in triplicate. All copies shall be
> executed by the contractor and subcontractor and consented to by the
> borrower and surety, if applicable. Subcontracts are not subject to
> RUS approval provided that they are in accordance with the provisions
> of the appropriate RUS construction contract. Upon execution, one copy
> each will be sent to the borrower, contractor, and subcontractor.
>
> As stated in RUS Forms 257, 397, and 515, the contractor shall bear
> full responsibility for the acts and omissions of the subcontractor
> and is not relieved of any of the contractual obligations to the
> borrower and to the Government.
>
> h [Amendments]{.underline}
>
> The borrower shall obtain RUS approval before execution of any
> amendment to a contract if:
>
> \(1\) The amendment alters the terms and conditions of the contract or
> changes the scope of the project covered by the contract regardless of
> the amount of the contract before amendment;
>
> \(2\) The amendment by itself (or together with preceding amendments)
> increases the original contract price by 20% or more. In this case, a
> bond extension will be required to bring the penal sum of the bond to
> the total amended contract price; or
>
> \(3\) The amendment causes an unbonded contract to require a
> contractor\'s performance bond. This would occur when an amendment
> increases the contract price to an amount requiring a performance bond
> per 7 CFR Part 1788, Subpart C.
>
> Advance RUS approval to execute other contract amendments is not
> required. These amendments may be submitted to RUS at any time prior
> to closeout. To receive an advance of funds based on an amended
> contract amount, the borrower
>
> may submit three copies of the amendment to RUS for approval. For each
> amendment executed, the borrower shall make certain that:
>
> \(1\) The contractor\'s bond covers the additional work to be
> performed; and
>
> \(2\) The contractor is licensed to do business in the county and
> state where the construction is proposed.
>
> i [Records]{.underline}
>
> Records supporting construction financed by RUS shall be retained
> until audited and approved by RUS.
>
> Records related to plant in service must be retained until the
> facilities are permanently removed from utility service, all removal
> and restoration activities are completed, and all costs are retired
> from the accounting records unless accounting adjustments resulting
> from reclassification and original costs studies have been approved by
> RUS or other regulatory body having jurisdiction.
>
> Life and mortality study data for depreciation purposes must be
> retained for 25 years or for 10 years after plant is retired,
> whichever is longer.

2 Engineering and Architectural Services

> a [Genera]{.underline}l
>
> Borrowers shall obtain architectural and engineering services only
> from persons or firms who are not affiliated with, and have not
> represented a contractor, vendor or manufacturer who may provide
> labor, materials, or equipment to the borrower under any current loan.
>
> All engineering services required by a borrower, including inspection
> and certification, shall be rendered by an engineer selected by the
> borrower and licensed in the where the facilities will be located or
> by qualified employees on the borrower\'s staff authorized by RUS to
> perform such services.
>
> b\. [Engineering Services from an Outside Consultant]{.underline}
>
> Engineering services performed by an outside consultant shall be
> covered under an RUS Form 217, *Postloan Engineering Services
> Contract - Telecommunications*, or RUS Form 245, *Engineering Service
> Contract -- Special Services*.
>
> Three copies of RUS Form 245 or 217, executed by the borrower and the
> engineer, shall be forwarded to RUS for approval. RUS will not approve
> the contract if, in RUS' judgment:
>
> \(1\) Unacceptable modifications have been made to the contract form;
>
> \(2\) The contract will not accomplish loan purposes;
>
> \(3\) The engineering service fees are unreasonable; or
>
> \(4\) The contract presents unacceptable loan security risk to RUS.
>
> If RUS approves the contract, RUS will send one copy to the borrower
> and one copy to the engineer.
>
> c [Closeout]{.underline}
>
> Upon completion of all services required under the RUS Form 217
> contract, the borrower shall obtain from the engineer three copies of
> RUS Form 506*, Final Statement of Engineering Fee*. For RUS Form 245,
> the borrower shall obtain three copies of a final statement of fees
> from the engineer. If the statement is satisfactory, the borrower
> shall sign all copies and send three to RUS for approval. After RUS
> approval of the final statement of fees, RUS shall send one copy to
> the borrower and one copy to the engineer.
>
> d [In-House Engineering]{.underline}
>
> When the proposed construction is such that the engineering involved
> is within the capabilities of employees on the borrower\'s staff,
> borrowers may request RUS approval to provide such services. The
> request shall include:
>
> \(1\) A description of services to be performed;
>
> \(2\) The name and qualifications of the employee to be in charge. RUS
> requires this employee to meet the experience requirements for
> registered engineers. In the absence of specific experience
> requirements, this employee should have at least eight years
> experience in the design and construction of telecommunication
> facilities, with at least two years of the work experience at a
> supervisory level. RUS does not require professional registration of
> this employee, but this does not relieve the borrower from compliance
> with applicable state registration requirements, which may require a
> licensed individual to perform such service;
>
> \(3\) The names, qualifications, and responsibilities of other
> principal employee(s) who will be associated with providing the
> engineering services; and
>
> \(4\) A letter signed by an authorized representative of the borrower
> requesting in‑house engineering approval and certifying the supporting
> information.
>
> RUS shall notify the borrower by letter of approval or disapproval to
> perform in‑house engineering. The letter shall set forth any
> conditions associated with an approval or the reasons for disapproval.
> RUS approval of in-house engineering for construction shall be only
> for the specific projects named in the notice of approval.
>
> e [Architectural Services]{.underline}
>
> The borrower shall be responsible for selecting an architect, licensed
> in the state where the building will be located, to perform the
> architectural services required in the design and construction of
> buildings.
>
> The borrower shall use either RUS Form 220 or RUS Form 217 when
> contracting for architectural services.
>
> Three copies of RUS Form 220 or Form 217, executed by the borrower and
> the architect, shall be forwarded to RUS for approval. RUS will not
> approve the contract if, in RUS' judgment:
>
> \(1\) Unacceptable modifications have been made to the contract form;
>
> \(2\) The contract will not accomplish loan purposes;
>
> \(3\) The architectural service fees are unreasonable; or
>
> \(4\) The contract presents unacceptable loan security risk to RUS.
>
> If RUS approves the contract, RUS will send one copy to the architect
> and one copy to the borrower.
>
> f\. [Closeout]{.underline}
>
> RUS borrowers shall obtain two copies of a completed RUS Form 284,
> *Final Statement of Architect\'s Fees*, when all services and
> obligations required under the architectural services contract have
> been completed.
>
> If RUS Form 284 and supporting data are satisfactory, the borrower
> shall approve the statement, sign both copies, and send one copy to
> RUS.

3 Small-scale Construction

> a [General]{.underline}
>
> Construction may be performed using the work order method or by an
> outside contractor. When using an outside contractor, either RUS
> Contract Form 773, *Miscellaneous Construction Work and Maintenance
> Services,* or an appropriate RUS contract (RUS Form 257, 397, or 515)
> shall be used. When using an RUS Form (257, 397, or 515), the
> procedures noted in the large-scale construction section shall be
> followed. The inspection and reimbursement procedures for work order
> and RUS Form 773 construction are the same and are listed at the end
> of this section.
>
> Unless otherwise approved by RUS, a borrower shall finance small-scale
> construction with general funds and obtain reimbursement with loan
> funds when construction is completed and properly executed closeout
> documents have been submitted to RUS. If a borrower satisfies RUS of
> its inability to finance the construction temporarily with general
> funds, RUS may establish, on a case‑by‑case basis, a work order fund
> in an amount not exceeding \$500,000, for specific construction
> projects. The work order fund will be closed upon receipt of an FRS
> and the executed Forms 771a for the specific projects for which the
> work order fund was established.
>
> b [Buildings other than Towers]{.underline}
>
> For unattended buildings that are estimated to cost \$50,000, or less,
> the borrower shall use RUS Form 773 contract construction procedures
> that are discussed in this section of this bulletin. For all other
> buildings, unattended or attended, the borrower must use RUS Form 257,
> *Contract to Construct Building.* Procedures for construction under
> RUS Form 257 are included under Large-scale construction, in the
> building section.
>
> c [Towers]{.underline}
>
> For all tower construction, the borrower shall use RUS Form 773
> contract construction procedures.
>
> d\. [RUS Form 773 Contract Construction Procedures]{.underline}
>
> The borrower shall prepare RUS Contract Form 773, without
> modifications, and attach any diagrams, sketches, and tabulations
> necessary to specify clearly the work to be performed and who shall
> provide which materials.
>
> RUS recommends that borrowers obtain quotations from several
> contractors before entering into a contract to ensure obtaining the
> lowest cost. The borrower shall ensure that the contractor selected
> meets all federal and state licensing requirements, as well as bonding
> requirements, and that the contractor maintains the insurance coverage
> required by the contract for the duration of the work. (See 7 CFR Part
> 1788.)
>
> e [Work Order Construction Procedures]{.underline}
>
> Work order construction shall be performed according to all local,
> state and federal requirements.
>
> As construction is performed, the borrower shall keep daily time and
> material reports, referenced by the work project number, to record
> labor and materials used.
>
> f [Inspection and Certification]{.underline}
>
> Upon completion and prior to closeout, the borrower shall obtain the
> engineer\'s certification on RUS Form 771a. An authorized official of
> the borrower shall execute the borrower\'s certification on RUS Form
> 771a.
>
> g [Reimbursement]{.underline}
>
> To request funds for construction completed under the work order
> construction procedures or RUS Form 773 contract construction
> procedures, the borrower shall submit an original RUS Form 771a signed
> or initialed by the GFR, a description of each project, and RUS Form
> 481, *Financial Requirement Statement* (FRS). RUS Form 771a should be
> submitted only with the FRS that it supports.

4 Large-scale Construction

> a [General]{.underline}
>
> The borrower shall use RUS Forms 257, 397, and 515 for large-scale
> construction, except for tower construction. RUS Form 773 contract
> construction procedures contract shall be used for all tower
> construction. The construction procedures in this section shall apply
> to small-scale construction when the borrower chooses to use 257, 397,
> or 515 contract forms for such construction.
>
> Two methods of procurement are discussed in this section: bidding and
> negotiated purchase. The borrower shall use bidding when using RUS
> Form 257 and 515. For purchases on RUS Form 397 the borrower may use
> either method: bidding or negotiated purchase. Bidding is discussed in
> the sections describing the RUS Form 257 and 515. The bidding
> procedures are repeated in each section for the
>
> convenience of the reader. Negotiated purchase is discussed in the
> section describing the RUS Form 397 construction procedures.
>
> b [Building Construction]{.underline}
>
> \(1\) [General]{.underline}
>
> RUS Form 257, *Contract to Construct Buildings*, shall be used for
> RUS‑financed construction of all buildings estimated to cost more than
> \$50,000. All construction pertaining to the building structure shall
> be performed under one contract. Separate contracts may be used for
> planting shrubbery, surfacing of roads and parking areas, and other
> identifiable parts of the project not pertaining to the building
> structure. These separate contracts shall also be subject to RUS
> approval.
>
> If during construction of the building, changes to the P&S results in
> a cost increase of 20% or more, the borrower shall submit to RUS for
> approval an amendment to the contract detailing all the changes along
> with an extension to the contractor's bond covering the increased
> cost.
>
> The site location, design, and construction of the facilities shall
> comply with all applicable laws and regulations, including:
>
> \(a\) Pub. L. 90-480 (42 U.S.C. 4151) (Access to Physically
> Handicapped), which requires certain buildings financed with Federal
> funds be designed and constructed to be accessible to the physically
> handicapped;
>
> \(b\) Pub. L. 91-596 (29 U.S.C. 651) the Occupational Safety and
> Health Act of 1970. OSHA issues rules and regulations covering
> occupational safety and health standards for buildings. These
> regulations are codified in 29 CFR Chapter XVII;
>
> \(c\) 7 CFR Part 1794, which provides for compliance with the National
> Environmental Policy Act (NEPA) and Council on Environmental Quality
> (CEQ) regulations (40 CFR Parts 1500-1508) implementing the procedural
> provisions of NEPA, as well as RUS conformance with other laws,
> regulations, and Executive Orders regarding environmental protection;
> and
>
> \(d\) 7 CFR Part 1792, Subpart C, which requires that the building
> design comply with applicable seismic design criteria. Prior to the
> design of buildings, borrowers shall submit to RUS a written
> acknowledgement from the architect or engineer that the design will
> comply.
>
> The borrower shall prepare P&S for construction of all buildings. The
> P&S shall include:
>
> \(a\) RUS Contract Form 257, *Contract to Construct Buildings*;
>
> \(b\) Complete and detailed specifications covering materials and
> workmanship;
>
> \(c\) A detailed building plan. Where the building is to house
> electronic apparatus, the detailed plan or specifications shall
> include the equipment environmental requirements and network equipment
> required; and
>
> \(d\) A site plan for each building showing the building location and
> giving the legal description of the site. Sufficient information shall
> be provided for the site to allow RUS to identify this site as the
> same property for which the borrower submitted a title opinion to RUS.
> The legal description shall be typed on the site plan. The borrower
> shall also furnish topographical information and a description of any
> proposed site development work and show proposed connections for
> public utilities.
>
> The P&S shall show the identification and date of the model code used
> for seismic safety design considerations, and the seismic factor used.
> See 7 CFR Part 1792, Subpart C.
>
> One set of P&S shall be furnished to RUS for approval. RUS shall
> approve the P&S in writing or notify the borrower of any reason for
> withholding approval. Upon RUS approval of the P&S, the borrower shall
> solicit bids from at least three prospective bidders.
>
> The bid documents shall consist of a copy of the approved P&S,
> including RUS Form 257. The bid document shall set the time for the
> bid opening.
>
> \(2\) [Bidding]{.underline}
>
> All procurement transactions shall be conducted in a manner to
> provide, to the maximum extent practical, open and free competition.
> Awards shall be made to the bidder whose bid is responsive to the P&S
> and is most advantageous to the recipient, price, quality and other
> factors considered. The P&S shall clearly set forth all requirements
> including all other factors to be used in evaluating bids or proposals
> that the bidder shall fulfill in order for the bid to be evaluated by
> the borrower. Any and all bids may be rejected when it is in the
> borrower\'s interest to do so. Bidding includes:
>
> \(a\) [Bid Opening Date]{.underline}
>
> The borrower will schedule the bid opening date. The borrower shall
> wait until receiving RUS approval of the P&S before setting the date.
> Sufficient time should be allowed for the bidders to examine the
> project site and prepare their bids. The borrower shall invite the GFR
> to attend.
>
> \(b\) [Invitations to Bid]{.underline}
>
> The borrower should obtain from its engineer a list of prospective
> bidders and a recommendation indicating which bidders are considered
> qualified.
>
> \(c\) [Qualifying Bidders]{.underline}
>
> If the notice and instructions to bidders require that bidders show
> evidence of meeting certain requirements, the borrower shall qualify
> bidders before issuing P&S to them.
>
> \(d\) [Review of Bids]{.underline}
>
> The borrower shall review all bids to determine that:
>
> \(1\) The bid guarantees are adequate;
>
> \(2\) The bids are responsive to the P&S;
>
> \(3\) All minor errors or irregularities made through inadvertence are
> corrected or waived. Failing this, the bid shall be rejected as
> nonresponsive; and
>
> \(4\) In the event of non-minor errors or irregularities, the bid is
> rejected and the bid price not disclosed.
>
> \(e\) [Evaluating Bids]{.underline}
>
> The borrower shall consider the same alternates in all bids in
> determining the low bid.
>
> \(f\) [Rejection]{.underline}
>
> The borrower shall reject:
>
> \(1\) All bids if quoted prices are not acceptable or if the
> specifications were ambiguous and resulted in bidders having different
> interpretations of the requirements.
>
> \(2\) Any bid that is not responsive, or is incomplete, or submitted
> by an unqualified bidder, or unbalanced between labor and materials or
> other respects.
>
> \(g\) [Award of Contract]{.underline}
>
> The engineer will review all bids for compliance to the P&S. The
> borrower shall obtain from the engineer the determination of the
> selected bid, a tabulation of all bids and the engineer\'s
> recommendation for award of the contract. The borrower may award the
> contract immediately if the following conditions are met:
>
> \(1\) The project is included in an approved loan and adequate funds
> were budgeted in the loan and are available;
>
> \(2\) All applicable RUS procedures were followed, including those in
> the *Notice and Instructions to Bid* in the standard forms of
> contract; and
>
> \(3\) The award is to the lowest responsive bidder.
>
> If the above conditions are not satisfied, the quotes along with the
> engineer's bid recommendation and bid tabulations must be submitted to
> RUS for approval. In this case, contracts cannot be executed until RUS
> has notified the borrower of approval of the bid.
>
> \(h\) [Execution of Contract]{.underline}
>
> The borrower shall submit to RUS three original counterparts of the
> contract executed by the contractor and borrower. If RUS
>
> approves the contract, it shall return one copy to the borrower and
> send one copy to the contractor.
>
> 3 [Closeout]{.underline}
>
> Upon completion of construction, the borrower shall complete, with the
> assistance of its architect or engineer, the documents listed in the
> following table.

+----+------------------------------+-------+-------+-----+-------+---+
| D  |                              |       |       |     |       |   |
| oc |                              |       |       |     |       |   |
| um |                              |       |       |     |       |   |
| en |                              |       |       |     |       |   |
| ts |                              |       |       |     |       |   |
| Re |                              |       |       |     |       |   |
| qu |                              |       |       |     |       |   |
| ir |                              |       |       |     |       |   |
| ed |                              |       |       |     |       |   |
| to |                              |       |       |     |       |   |
| Cl |                              |       |       |     |       |   |
| os |                              |       |       |     |       |   |
| eo |                              |       |       |     |       |   |
| ut |                              |       |       |     |       |   |
| Co |                              |       |       |     |       |   |
| ns |                              |       |       |     |       |   |
| tr |                              |       |       |     |       |   |
| uc |                              |       |       |     |       |   |
| ti |                              |       |       |     |       |   |
| on |                              |       |       |     |       |   |
| of |                              |       |       |     |       |   |
| B  |                              |       |       |     |       |   |
| ui |                              |       |       |     |       |   |
| ld |                              |       |       |     |       |   |
| in |                              |       |       |     |       |   |
| gs |                              |       |       |     |       |   |
+----+------------------------------+-------+-------+-----+-------+---+
|    |                              | C     |       | Dis |       |   |
|    |                              | opies |       | tri |       |   |
|    |                              | pre   |       | but |       |   |
|    |                              | pared |       | ion |       |   |
|    |                              | by    |       |     |       |   |
+----+------------------------------+-------+-------+-----+-------+---+
| R  | Description                  | Contr | Archi | Bo  | Contr | R |
| US |                              | actor | tect/ | rro | actor | U |
| Fo |                              |       |       | wer |       | S |
| rm |                              |       | Eng   |     |       |   |
|    |                              |       | ineer |     |       |   |
+----+------------------------------+-------+-------+-----+-------+---+
| 2  | Construction or Equipment    | **\-  | **3** | **\ | **\-  | * |
| 38 | Contract Amendment (if not   | \--** |       | -\- | \--** | * |
|    | previously submitted, send   |       |       | -** |       | 3 |
|    | to RUS for approval)         |       |       |     |       | * |
|    |                              |       |       |     |       | * |
+----+------------------------------+-------+-------+-----+-------+---+
| 18 | Certificate of Completion    | **\-  | **2** | **  | **1** | * |
| 1^ | (contract construction)      | \--** |       | 1** |       | * |
| 1^ |                              |       |       |     |       | \ |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | \ |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | * |
|    |                              |       |       |     |       | * |
+----+------------------------------+-------+-------+-----+-------+---+
| 2  | Certificate of Contractor    | **1** | **\-  | **  | **\-  | * |
| 31 |                              |       | \--** | 1** | \--** | * |
|    |                              |       |       |     |       | \ |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | \ |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | * |
|    |                              |       |       |     |       | * |
+----+------------------------------+-------+-------+-----+-------+---+
| 2  | Waiver and Release of Lien   | **1** | **\-  | **  | **\-  | * |
| 24 | from each Supplier           |       | \--** | 1** | \--** | * |
|    |                              |       |       |     |       | \ |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | \ |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | * |
|    |                              |       |       |     |       | * |
+----+------------------------------+-------+-------+-----+-------+---+
| 2  | Certificate (Buy American)   | **1** | **\-  | **  | **\-  | * |
| 13 |                              |       | \--** | 1** | \--** | * |
|    |                              |       |       |     |       | \ |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | \ |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | * |
|    |                              |       |       |     |       | * |
+----+------------------------------+-------+-------+-----+-------+---+
| \  | "As Built" Plans and         | **\-  | **1** | **  | **\-  | * |
| -\ | Specifications^2^            | \--** |       | 1** | \--** | * |
| -- |                              |       |       |     |       | \ |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | \ |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | * |
|    |                              |       |       |     |       | * |
+----+------------------------------+-------+-------+-----+-------+---+
| \  | Guarantees, Warranties,      | **1** | **\-  | **  | **\-  | * |
| -\ | Bonds, Operating or          |       | \--** | 1** | \--** | * |
| -- | Maintenance Instructions,    |       |       |     |       | \ |
|    | etc.                         |       |       |     |       | - |
|    |                              |       |       |     |       | \ |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | - |
|    |                              |       |       |     |       | * |
|    |                              |       |       |     |       | * |
+----+------------------------------+-------+-------+-----+-------+---+

> ^1^ RUS has issued a proposed rule in the Federal Register in which it
> proposes to replace RUS Form 181 with RUS 187. RUS Form 181 will be
> eliminated. When the proposed rule becomes final, the borrower shall
> then use RUS Form 187 instead of RUS Form 181.
>
> ^2^ When only minor changes were made during construction, one copy of
> a statement to that effect from the Architect will be accepted instead
> of the "as built*"* P&S.
>
> If the final cost of the buildings differs from the cost of the
> approved contract and any amendments, a final amendment reflecting any
> changes must be submitted to RUS.
>
> Upon completion of the project, the borrower shall obtain from the
> architect or engineer the closeout certification stating that the
> project and all required documentation are satisfactory and complete.
> Use RUS Form 756 in Exhibit A.
>
> After all required RUS approvals are obtained, the borrower shall make
> final payment under Article III of RUS Form 257.
>
> c [Core Network and Access Equipment]{.underline}
>
> \(1\) [General]{.underline}
>
> When purchasing core network and access equipment, borrowers shall use
> RUS Contract Form 397, *Special Equipment Contract (Including
> Installation).* For core network and access equipment RUS will not
> finance large-scale construction contracts that do not include
> installation. The borrower may purchase the equipment using either
> method: negotiated purchase or bidding.
>
> Under the terms of RUS Form 397, the prices do not include any amounts
> that are or may be payable by the supplier or the borrower on account
> of taxes imposed upon the sale, purchase or use of equipment, material
> and software covered by the contracts. If any such tax is paid by the
> supplier, the contract requires that the amount is to be stated
> separately on all invoices and paid by the borrower.
>
> The engineer prepares P&S consisting of performance specifications,
> installation requirements, and application engineering requirements.
> The borrower shall send one copy of the P&S to RUS for approval. RUS
> shall approve the P&S in writing or notify the borrower of any reason
> for withholding approval.
>
> \(2\) [Negotiated Purchase]{.underline}
>
> Following approval of the P&S, the borrower should solicit quotes from
> at least three suppliers of equipment of different manufacturers. To
> negotiate for a single quote requires prior written RUS approval. To
> request RUS approval the borrower may send a letter to RUS, which
> includes a justification for such sole-source negotiation.
>
> Based upon the engineer's recommendation, the borrower may award the
> contract if the following conditions are met:
>
> \(a\) The project is included in an approved system design; adequate
> funds were budgeted in the loan; and are available;
>
> \(b\) All applicable RUS procedures were followed; and
>
> \(c\) The award is to the lowest responsive quote.
>
> If the above conditions are not satisfied, the quotes must be
> submitted to RUS along with the engineer's recommendation for
> approval. In this case, contracts cannot be executed until RUS has
> notified the borrower of approval of the quote.
>
> The borrower shall send three executed contracts to RUS for approval.
> After RUS approval of the contract, RUS will return one copy to the
> borrower and one copy to the supplier.
>
> \(3\) [Closeout]{.underline}
>
> Upon completion of the equipment installation, the borrower and their
> engineer shall arrange with the supplier for acceptance testing of the
> equipment. After completion of the acceptance tests by the borrower
> and the supplier, the borrower and its engineer should review the test
> results to ensure that the equipment is in conformance with the P&S.
> All deficiencies must be documented and corrected before the contract
> can be closed out.
>
> Once the equipment has been accepted, the borrower:
>
> \(a\) Assembles and distributes the documents listed in the following
> table. These documents are required for the closeout of the RUS Form
> 397 contract.

  --------------------- ---------------------------------- ------------------------- ------------------------- --------------------- ------------------------- -------------------------
  Documents [Required                                                                                                                                          
  for]{.smallcaps}                                                                                                                                             
  Closeout of RUS Form                                                                                                                                         
  397 Contract                                                                                                                                                 

  RUS Form              Description                        Copies Prepared by                                  Distribution                                    

                                                           Supplier                  Engineer                  Borrower              Supplier                  RUS

  238                   Construction or Equipment Contract **[\-\--]{.smallcaps}**   **3**                     **\-\--**             **\-\--**                 **3**
                        Amendment (If not previously                                                                                                           
                        submitted, send to RUS for                                                                                                             
                        approval.)                                                                                                                             

  396                   Certificate of                     **[\-\--]{.smallcaps}**   **[2]{.smallcaps}**       **[1]{.smallcaps}**   **[\-\--]{.smallcaps}**   **[1]{.smallcaps}**
                        Completion---Special Equipment                                                                                                         
                        Contract (Including Installation).                                                                                                     

  744                   Certificate of Contractor and      **[1]{.smallcaps}**       **[\-\--]{.smallcaps}**   **[1]{.smallcaps}**   **[\-\--]{.smallcaps}**   **[\-\--]{.smallcaps}**
                        Indemnity Agreement                                                                                                                    

  213                   Certificate (Buy American)         **[1]{.smallcaps}**       **[\-\--]{.smallcaps}**   **[1]{.smallcaps}**   **[\-\--]{.smallcaps}**   **[\-\--]{.smallcaps}**

  \-\--                 Report in writing, including all   **[1]{.smallcaps}**       **[\-\--]{.smallcaps}**   **[1]{.smallcaps}**   **[\-\--]{.smallcaps}**   **[\-\--]{.smallcaps}**
                        measurements and other information                                                                                                     
                        required under Part II of the                                                                                                          
                        applicable specifications                                                                                                              

  [\-\--]{.smallcaps}   Set of maintenance recommendations **[1]{.smallcaps}**       **[\-\--]{.smallcaps}**   **[1]{.smallcaps}**   **[\-\--]{.smallcaps}**   **[\-\--]{.smallcaps}**
                        for all equipment furnished under                                                                                                      
                        the contract                                                                                                                           
  --------------------- ---------------------------------- ------------------------- ------------------------- --------------------- ------------------------- -------------------------

> \(b\) Obtains the contract close out certification from the engineer
> that the project and all required documentation are satisfactory and
> complete. (See RUS Form 756 in Exhibit A.)
>
> \(c\) Submits a copy of the engineer\'s RUS Form 756 within 30 days of
> completion of the project.
>
> \(d\) Makes final payment under the payment terms of the contract.
>
> d [Outside Plant Construction]{.underline}
>
> \(1\) [General]{.underline}
>
> All large scale outside plant projects must be bid to be eligible for
> funding. Only outside plant project that qualify for the small-scale
> construction procedures can be negotiated with a contractor on RUS
> Form 773.
>
> When performing outside plant construction, borrowers shall use RUS
> Form 515, *Telecommunications System Construction Contract* using the
> sealed competitive bidding.
>
> The engineer prepares P&S consisting of the RUS Form 515 and the
> applicable construction specifications listed below:
>
> \(a\) RUS Form 515a (Bulletin 1753F-150), *Specifications and Drawings
> for Construction of Direct Buried Plant*;
>
> \(b\) RUS Form 515b (Bulletin 1753F-151), *Specifications and Drawings
> for Construction of Underground Plant*;
>
> \(c\) RUS Form 515c (Bulletin 1753F-152), *Specifications and Drawings
> for Construction of Aerial Plant*; and/or
>
> \(d\) RUS 515d (Bulletin 1753-153), *Specifications and Drawings for
> Service Installation at Customer Access Locations*;
>
> In addition the P&S must also include the following items:
>
> \(a\) Description of special assembly units and guide drawings, if
> any;

.

> \(b\) Key, detail, and cable layout maps; and
>
> \(c\) If applicable, a list of any owner-furnished materials and the
> associated unit cost, using RUS Form 787.
>
> When the borrower furnishes materials under RUS Form 787,
> *Supplement A to Construction Contract (RUS Form 515*, these steps
> should be followed:
>
> \(a\) Materials on hand to be furnished by the borrower shall be
> released to the contractor at the start of construction. Materials on
> order, but not yet received, shall be provided to the contractor as
> they become available. The borrower shall obtain from the contractor a
> written receipt for all such materials delivered.
>
> \(b\) Materials on hand, until released to the contractor, shall be
> covered by fire and either wind-storm or extended coverage insurance,
> exclusive of materials in the open and not within 100 feet of any
> building. Poles, wherever stored, shall be covered by fire insurance.
> All insured values must be at least 80 percent of the cash value of
> the property insured.
>
> \(c\) Subject to adjustment at the time of final settlement, the
> borrower shall obtain from the contractor monthly invoices that show
> credit to the borrower, at the prices quoted in RUS Form 787 for all
> materials furnished by the borrower and installed by the contractor
> the preceding month.
>
> \(d\) Any materials furnished by the borrower remaining as surplus at
> the completion of construction shall be returned to the borrower. For
> such materials, the borrower shall furnish a written receipt to the
> contractor and credit the contractor at the prices quoted in RUS Form
> 787*."*
>
> The borrower shall send one set of P&S for approval. RUS shall approve
> the P&S in writing or notify the borrower of any reason for
> withholding approval.
>
> Upon RUS approval of the P&S, the borrower shall solicit bids from at
> least six prospective bidders. The bid documents shall consist of a
> copy of the approved P&S, including RUS Form 515.
>
> \(2\) [Bidding]{.underline}
>
> All procurement transactions shall be conducted in a manner to
> provide, to the maximum extent practical, open and free competition.
> Awards shall be made to the bidder whose bid is responsive to the P&S
> and is most advantageous to the recipient, price, quality and other
> factors considered. The P&S shall clearly set forth all requirements
> including all other factors to be used in evaluating bids or proposals
> that the bidder shall fulfill in order for the bid to be evaluated by
> the borrower. Any and all bids may be rejected when it is in the
> borrower\'s interest to do so. Bidding includes:
>
> \(a\) [Bid opening date]{.underline}
>
> The borrower will schedule the bid opening date. The borrower shall
> wait until receiving RUS approval of the P&S before setting the date.
> Sufficient time should be allowed for the bidders to examine the
> project site and prepare their bids. The borrower shall invite the GFR
> to attend.
>
> \(b\) [Invitations to bid]{.underline}
>
> The borrower should obtain from its engineer a list of prospective
> bidders and a recommendation indicating which bidders are considered
> qualified.
>
> \(c\) [Qualifying bidders]{.underline}
>
> If the notice and instructions to bidders require that bidders show
> evidence of meeting certain requirements, the borrower shall qualify
> bidders before issuing P&S to them.
>
> \(d\) [Review of bids]{.underline}
>
> The borrower shall review all bids to determine that:
>
> \(1\) The bid guarantees are adequate;
>
> \(2\) The bids are responsive to the P&S;
>
> \(3\) All minor errors or irregularities made through inadvertence are
> corrected or waived. Failing this, the bid shall be rejected as
> nonresponsive; and
>
> \(4\) In the event of non-minor errors or irregularities, the bid is
> rejected and the bid price not disclosed.
>
> \(e\) [Evaluating Bids]{.underline}
>
> The borrower shall consider the same alternates in all bids in
> determining the low bid.
>
> \(f\) [Rejection]{.underline}
>
> The borrower shall reject:
>
> \(1\) All bids if quoted prices are not acceptable or if the
> specifications were ambiguous and resulted in bidders having different
> interpretations of the requirements.
>
> \(2\) Any bid that is not responsive, or is incomplete, or submitted
> by an unqualified bidder, or unbalanced between labor and materials or
> other respects.
>
> \(g\) [Award of Contract]{.underline}
>
> The engineer will review all bids for compliance to the P&S. The
> borrower shall obtain from the engineer the determination of the
> selected bid, a tabulation of all bids and the engineer\'s
> recommendation for award of the contract. The borrower may award the
> contract immediately if the following conditions are met:
>
> \(1\) The project is included in an approved loan and adequate funds
> were budgeted in the loan and are available;
>
> \(2\) All applicable RUS procedures were followed, including those in
> the *Notice and Instructions to Bid* in the standard forms of
> contract; and
>
> \(3\) The award is to the lowest responsive bidder.
>
> If the above conditions are not satisfied, the quotes along with the
> engineer's bid recommendation must be submitted to RUS for approval.
> In this case, contracts cannot be executed until RUS has notified the
> borrower of approval of the bid.
>
> \(h\) [Execution of Contract]{.underline}
>
> The borrower shall submit to RUS three original counterparts of the
> contract executed by the contractor and borrower. If RUS approves the
> contract, it shall return one copy to the borrower and send one copy
> to the contractor.
>
> \(3\) [Closeout]{.underline}
>
> After construction has been completed per the P&S, and acceptance
> tests have been made, the borrower shall arrange the time for a final
> inspection to be conducted by the borrower\'s engineer, the
> contractor, the GFR and a representative of the borrower. The steps
> for closeout of the contract are included in the following table.

  -------------- -------------- ------------- ----------------------------------------------
  Step-by-Step                                
  Procedure for                               
  Closeout of                                 
  RUS Form 515                                
  Construction                                
  Contract                                    

  Sequence                      By            Procedure

  Step           When                         

  1              Upon           Borrower\'s   Prepares the following: a set of Detail Maps
                 Completion of  Engineer      and a set (when applicable) of Key Maps which
                 Construction                 show in red the work done under the 515
                                              contract; a Tabulation of Staking Sheet; and a
                                              tentative Final Inventory, RUS Forms 724 and
                                              724a.

  2              After          Borrower\'s   Forwards letter to the borrower with copies to
                 acceptance     Engineer      the GFR stating that the project is ready for
                 tests are made               final inspection. Schedules inspection date.

  3              Upon receipt   GFR           Advises borrower whether attending the final
                 of letter from               inspection will be possible.
                 Borrower\'s                  
                 Engineer                     

  4              By inspection  Borrower\'s   Obtains and makes available the following
                 date           Engineer      documents: a set of \`\`as constructed\'\'
                                              detail maps and (when applicable) \`\`as
                                              built\'\' key maps; a list of construction
                                              change orders; the final staking sheets; the
                                              tabulation staking sheets; the treated forest
                                              products inspection reports or certificates of
                                              compliance; the tentative final inventory, RUS
                                              Forms 724 and 724a; the tentative tabulation,
                                              and, a report of results of acceptance tests.

  5              During         Borrower\'s   Issues instructions to contractor covering
                 inspection     Engineer      corrections to be made in construction as a
                                              result of inspection.

  6              During         Contractor    Corrects construction on basis of instructions
                 inspection                   from the borrower\'s engineer. The corrections
                                              should proceed closely behind the inspection
                                              in order that the borrower\'s engineer can
                                              check the corrections before leaving the
                                              system.

  7              During         Borrower\'s   Inspects and approves corrected construction.
                 inspection     Engineer      Marks inspected areas on the key map, if
                                              available, otherwise on the detail maps.
  -------------- -------------- ------------- ----------------------------------------------

> When the total inventory price exceeds the contract by more than
> 20 percent, the borrower shall submit for RUS approval an amendment
> and an extension to the contractor\'s bond.
>
> When the acceptance tests and inspections have been completed and all
> deficiencies have been corrected, the borrower:
>
> \(a\) Assembles and distributes the documents listed in the following
> table that are required for the closeout of the RUS Form 515 contract.

  ----------- ----------------------------------- ------------ ----------- -------------- ------------ -----------
  Documents                                                                                            
  Required to                                                                                          
  Closeout                                                                                             
  RUS Form                                                                                             
  515                                                                                                  
  Contract                                                                                             

  RUS Form    Description                         Copies                   Distribution                
                                                  prepared by                                          

                                                  Contractor   Engineer    Borrower       Contractor   RUS

  724         Final Inventory\--Certificate of    **\-\--**    **2**       **1**          **1**        **\-\--**
              Completion                                                                               

  724a        Final Inventory\--Assembly Units    **\-\--**    **2**       **1**          **1**        **\-\--**

  None        Contractor\'s Bond Extension (send  **3**        **\-\--**   **\-\--**      **\-\--**    **3**
              to RUS when required)                                                                    

  213         Certificate (Buy American)          **1**        **\-\--**   **1**          **\-\--**    **\-\--**

  \-\--       Listing of Construction Change                   **1**       **1**          **\-\--**    **\-\--**
              Orders                                                                                   

  224         Waiver and Release of Lien (from    **1**        **\-\--**   **1**          **\-\--**    **\-\--**
              each supplier)                                                                           

  231         Certificate of Contractor           **1**        **\-\--**   **1**          **\-\--**    **\--**

  527         Final Statement of Construction     **\-\--**    **2**       **1**          **1**        **\-\--**

  \-\--       Reports on Results of Acceptance    **\-\--**    **1**       **1**          **1**        **\-\--**
              Tests                                                                                    

  \-\--       Set of Final Staking Sheets         **\-\--**    **1**       **1**          **\-\--**    **\-\--**

  \-\--       Tabulation of Staking Sheets        **\-\--**    **1**       **1**          **\-\--**    **\-\--**

  \-\--       Correction Summary (legible copy)   **\-\--**    **1**       **1**          **\-\--**    **\-\--**

  \-\--       Treated Forest Products Inspection  **\-\--**    **\-\--**   **1**          **\-\--**    **\-\--**
              Reports or Certificates of                                                               
              Compliance (prepared by inspection                                                       
              company or supplier).                                                                    

  \-\--       Final Key Map (when applicable)     **\-\--**    **1**       **1**          **\-\--**    **\-\--**

  \-\--       Final Central Office Area and Town  **\-\--**    **1**       **1**          **\-\--**    **\-\--**
              Maps                                                                                     
  ----------- ----------------------------------- ------------ ----------- -------------- ------------ -----------

> \(b\) Obtains the contract closeout certifications from the engineer
> that the project and all required documentation are satisfactory and
> complete. (See RUS Form 756 in Exhibit A.)
>
> \(c\) Submits a copy of the engineer\'s RUS Form 756 within 30 days of
> completion of the project.
>
> \(d\) Makes final payment in accordance with the payment terms of the
> contract.
>
> When the total inventory price exceeds the contract by more than
> 20 percent, an amendment and an extension to the contractor\'s bond
> are required.

ADVANCE AND DISBURSEMENT OF BROADBAND LOAN FUNDS

1 General

> The standard loan documents contain provisions regarding advances and
> disbursement of loan funds by broadband borrowers. This section
> implements certain provisions by setting forth requirements and
> procedures to be followed by the borrowers in obtaining advances and
> making disbursements of loan funds.
>
> RUS is under no obligation to make or approve advances of loan funds
> unless the borrower complies with all terms and conditions of the loan
> documents. The borrower shall use funds in its construction funds only
> to make disbursements approved by RUS.

2 Broadband Loan Budget

> When the loan is approved, RUS provides the borrower a broadband loan
> budget. This budget divides the loan into accounts that are associated
> with the proposed projects, such as electronic equipment and
> engineering. When an advance is requested, it must be requested
> against the appropriate account.

3 Budget Adjustments

> If more funds are required than are available in an account, the
> borrower may request RUS' approval of a budget adjustment to use funds
> from another account. The request shall include an explanation of the
> change, the account to be used and a description of how the adjustment
> will affect loan purposes. RUS will not approve a budget adjustment
> unless the borrower can demonstrate that all loan purposes can be
> completed. RUS may make a budget adjustment without a formal request
> when a budget account is insufficient to encumber funds for a contract
> that otherwise would be approved by RUS.

4 Deposit Account

The borrower shall establish and maintain a deposit account primarily to
hold advances until disbursed. All loan fund advances shall be deposited
in the deposit account.

> The deposit account shall only be established in a bank or depository
> whose deposits are insured by the Federal Deposit Insurance
> Corporation or other federal agency acceptable to RUS. Moneys in the
> deposit account shall be used solely for the purpose approved in the
> loan application and shall be withdrawn from time to time only as
> agreed to by RUS.
>
> RUS may require that other funds be deposited into the deposit
> account. These may include equity or general fund contributions to
> construction, proceeds from the sale of property, interest received on
> loan funds and similar types of receipts. Deposit slips for any
> deposits to the deposit account shall show the source and amount of
> funds deposited and be executed by an authorized representative of the
> bank. All advances will be deposited into the deposit account by
> electronic transfers.
>
> Funds shall be disbursed only up to the amount approved for advance as
> indicated on the financial requirement statement.
>
> The disbursement of nonloan funds deposited into the deposit account
> requires the same RUS approvals as loan funds.
>
> Disbursements must be evidenced by canceled checks. Disbursements to
> reimburse general funds shall be documented by a reimbursement
> schedule to be retained in the borrower's file that lists the deposit
> account check number, date, and an explanation of amounts reimbursed
> by construction project.

5 Financial Requirement Statement (FRS**)**

> To request advances the borrower must submit to RUS an FRS (REA Form
> 481), a description of the advances desired, and other related
> information to the transactions as required by RUS.
>
> The borrower shall request funds in the first advance of loan funds to
> repay any interim financing indebtedness. RUS may not make further
> advances of loan funds until the borrower has submitted evidence, in
> form and substance satisfactory to the Administrator, that (1) any
> indebtedness created by the interim financing and any liens associated
> therewith have been fully discharged of record and (2) the borrower
> has satisfied all other conditions on the advance of additional loan
> funds.
>
> If the source of funds for interim financing is the borrower\'s
> internally generated funds, the borrower may request reimbursement of
> those funds along with advances for other purposes on the first
> Financial Requirement Statement submitted to RUS.
>
> The FRS is used by RUS and the borrower to record and control
> transactions in the deposit account. Approved contracts and other
> items are shown on the FRS under "Approved Purposes." Funds are
> approved for advance as follows:

a [Construction]{.underline}

> \(1\) *Construction contracts*: Ninety percent of the encumbered
> amount (95 percent for outside plant), with the final 10 percent (5
> percent for outside plant) approved when RUS approves the closeout
> documents.
>
> \(2\) *Work orders*: The portion of the work order summary determined
> by RUS to be for approved loan purposes.
>
> \(3\) *Work order fund*: Based on the borrowers request to establish a
> work order fund and RUS' approval of this request.
>
> *(4) Real estate*: Upon request of the borrower after submission of
> evidence of a valid title.
>
> \(5\) *Right of way procurement*: Based on the borrower's itemized
> costs. These costs cannot include any costs for acquiring right of
> way.
>
> b [Engineering]{.underline}
>
> \(1\) *Preloan engineering*: The final itemized invoice from the
> person or firm that completed the system design.
>
> \(2\) *Postloan engineering contracts*: Ninety percent of the amount
> of the RUS approved engineering contract. The balance is approved when
> the engineering contract is closed.
>
> \(3\) *In-house engineering*: Ninety percent of the amount of the RUS
> approved in-house engineering proposal. The balance is approved when
> the final statement of fees is received.
>
> \(4\) *Office equipment, vehicles, and work equipment*: Based on
> copies of invoices.
>
> \(5\) *Refinancing*: Based on the amount in the approved budget.
>
> \(6\) *Acquisitions*: Based on the final itemized costs, but cannot
> exceed the approved budget.
>
> Funds other than loan funds that are deposited in the deposit account
> are reported as a credit under total disbursements. Disbursements of
> these funds are subject to the same RUS approvals as loan funds.
>
> The borrower shall request advances as needed to meet its obligations
> promptly. Generally, RUS does not approve an advance requested more
> than 60 days before the obligation is payable.
>
> Funds should be disbursed for the item for which they were advanced.
> If the borrower needs to pay an invoice for which funds have not been
> advanced, and disbursement of advanced funds for another item has been
> delayed, the latter funds may be disbursed to pay the invoice for up
> to the amount approved for advance for that item on the FRS. The
> borrower shall make entries on the next FRS showing the changes under
> "Total
>
> Advances to Date" and shall explain the changes in writing before RUS
> will process the next FRS.
>
> The certification on each of the three copies of the FRS sent to RUS
> shall be signed by a corporate officer or manager authorized to sign
> such statements. RUS Form 675, *Certificate of Authority*, shall be
> submitted to RUS indicating the names of all persons authorized to
> sign a FRS. RUS will not process a FRS signed by an individual whose
> name is not included on the most recent Form 675.
>
> The documentation required for the FRS transactions are the deposit
> slip, the cancelled deposit account checks and the supporting invoices
> or reimbursement schedules. These shall be kept for in the borrower's
> files for periodic audits by RUS.

6 Temporary Excess Construction Funds

> When unanticipated events delay the borrower's disbursement of
> advanced funds, the funds may be used for other approved purposes or
> must remain in the deposit account. If the deposit account is an
> interest bearing account, all interest earned must remain in the
> deposit account and cannot be disbursed without RUS approval.

7 Method of Advances for Broadband Loan Funds

> a [Direct Cost-of-money and Direct 4% Loans]{.underline}
>
> The first or subsequent advances may be conditioned on the
> satisfaction of certain requirements stated in the borrower's loan
> contract.
>
> All advances shall be made electronically using the Automatic Clearing
> House (ACH). Normally, for advance of funds ACH only makes one payment
> per FRS.
>
> The following information shall be included with each advance:
>
> \(1\) Name and address of borrower's bank. If the borrower's bank is
> not a member of the Federal Reserve System, the name and address of
> its correspondent bank that is a member of the Federal Reserve System;
>
> \(2\) ACH routing information;
>
> \(3\) Borrower's bank account title and number; and
>
> \(4\) Any other necessary identifying information.
>
> b\. [Private Loan Guarantee.]{.underline}
>
> The first advance or subsequent advances may be conditioned on the
> satisfaction of certain requirements stated in the borrower's loan
> contract.
>
> Upon review and processing of the FRS, RUS will notify the private
> lender of the amount of loan funds to be advanced to the borrower. The
> private lender will advance loan funds based on the terms and
> conditions agreed to by the private lender, RUS and the borrower.
>
> With each FRS submitted to RUS the borrower shall include any
> information that the private lender requires to make an advance of
> funds.

Exhibit A: FORMS

# 

*According to the Paperwork Reduction Act of 1995, an agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a valid OMB control number.
The valid OMB control number for this information collection is
0572‑XXXX. The time required to complete this information collection is
estimated to average .05 of a minute per response, including the time
for reviewing instructions, searching existing data sources, gathering
and maintaining the data needed, and completing and reviewing the
collection of information.*

INTERIM FINANCING ADDENDUM

If this project is financed in part by the Rural Telephone Bank, an
agency of the United States of America, the references in the contract
documents to \"the United States of America and the Government\" shall
mean the \"Rural Telephone Bank\", as well, and the references to the
\"Administrator\" shall mean the \"Governor\" of the Rural Telephone
Bank as well. If the project is financed wholly by the Rural Telephone
Bank, the reference to \"the United States of America\" and the0
\"Government\" shall mean the Rural Telephone Bank and the references to
the \"Administrator\" shall mean the \"Governor\" of the Rural Telephone
Bank. References to RUS loans or loan contracts shall include RUS
guarantees of loans by others.

The Owner, notwithstanding the references in the contract documents to
the RUS or Rural Telephone Bank financing of the work herein provided
for, plans to use funds other than RUS or Rural Telephone Bank loan
funds initially and expects to be reimbursed subsequently with RUS or
Rural Telephone Bank loan funds in whole or in part. It is understood
that:

  ----- ------------ ----- -- --- ----- -- --- ------ -- ------- -- -------- -- ------------------
  1\.                RUS      ,   RTB      ,   or FFB    loan       , has       been made and
  An                                                     has        not         

        has not been                                                            
        released.                                                               
        (Owner                                                                  
        checks                                                                  
        applicable                                                              
        boxes.)                                                                 
  ----- ------------ ----- -- --- ----- -- --- ------ -- ------- -- -------- -- ------------------

> 2\. Arrangements have been made for other funds so that invoices may
> be paid promptly in accordance with the contract provisions.
>
> 3\. Approval of the contract by RUS or the Rural Telephone Bank shall
> not be construed as a commitment to make a loan for this purpose.

  ---------- -- --------------- ---- ----------------------------------------
  Date                               

                                     OWNER'S NAME

                                     

  BY                                 

                                     PRESIDENT

                                     

  Date                               

                                     CONTRACTOR'S NAME

  BY                                 

                                     TITLE

                                     
  ---------- -- --------------- ---- ----------------------------------------

*According to the Paperwork Reduction Act of 1995, an agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a valid OMB control number.
The valid OMB control number for this information collection is
0572‑XXXX. The time required to complete this information collection is
estimated to average 1 hour per response, including the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the collection
of information.*

**U.S. Department of Agriculture**

**Rural Utilities Service**

**Software License Agreement**

*Addendum to RUS Form 397, Special Equipment Contract (including
installation),*

*RUS Form 398, Special Equipment Contract (not including installation),
and RUS Form 773,* *Miscellaneous Construction Work and Maintenance
Services Contract*

**(***Use only when the Contractor requires a software license
agreement.***)**

\(1\) **[Definitions]{.underline}**. For the purpose of this Software
License Agreement \--

*[Contract]{.underline}* means the RUS Form 397, *Special Equipment
Contract (including installation)*, RUS Form 398, *Special Equipment
Contract (not including installation*), or RUS Form 773, *Miscellaneous
Construction Work and Maintenance Services Contract*

  ------- -------------------------------------------- ---------------------
  dated                                                , between

                                                       (the Licensee) and

                                                       (the Licensor).
  ------- -------------------------------------------- ---------------------

*[Days]{.underline}* mean calendar days.

*[Licensed Software]{.underline}* means the computer programs, furnished
for the operation of the System(s) provided under the Contract, whether
contained on a tape, disc, semiconductor device, or other memory device
or system memory consisting of logic instructions and instruction
sequences in machine-readable object code, which manipulate data in the
central processor, control and perform input/output operations, perform
error diagnostic and recovery routines, control call processing, and
perform peripheral control, administrative and maintenance functions; as
well as Licensor\'s standard customer documentation, excluding source
code, used to describe, maintain and use the programs provided under the
Contract.

*[Licensee and Licensor]{.underline}*, respectively, mean the parties
signing the software license agreement as the licensee and licensor.

*[Right-to-Use Fee]{.underline}* is defined in Section (2).

*[Specifications]{.underline}* means the respective RUS specification
such as the RUS Form 397b, *Trunk Carrier System Specifications*; RUS
Form 397c, *Subscriber Carrier Specifications*; RUS Form 397d, *Design
Specifications for Point-to-Point Microwave Radio Systems*; RUS Form
397g, *Performance Specifications for Line Concentrators*; and RUS Form
397h, *Design Specifications for Digital Lightwave Transmission
Systems*; or when an RUS does not have an specification covering the
product, the consulting engineer's prepared specification; which is part
of the Contract.

*[System]{.underline}* means the stored program controlled central
office and associated remote switching terminal or terminals which use
the Licensed Software covered by this License.

\(2\) **[Software License Provisions]{.underline}**. The Licensor may
charge a fee, herein referred to as a Right-to-Use Fee, for use of the
Licensed Software. The Right-to-Use Fee shall be included in the Total
Base Bid as defined in the Contract. In consideration of the
Right-to-Use Fee, the Licensor hereby grants the Licensee the right to
use all Licensed Software, solely in connection with the System provided
under this Contract, so that the System performs in accordance with the
Contract and the Specifications.

\(i\) The Licensee\'s right to use the Licensed Software is
non-exclusive and limited to use or operation in the United States of
America, including its Territories, the Federated States of Micronesia,
the Marshall Islands, Palau and the Commonwealth of Puerto Rico, with
the System for which the Licensed Software is provided by the Licensor.
The Licensee may reuse the equipment and its accompanying Licensed
Software at another location within the Licensee\'s System without
obtaining additional approvals from Licensor, provided, however, that
the Licensee notify the Licensor, within ten (10) days, of the change in
location of the equipment and Licensed Software.

\(ii\) The Licensee and any successor to the Licensee\'s title in the
System may, without further consent of the Licensor, transfer the
Licensed Software and all of the Licensee\'s rights and interests under
this Software License to any transferee who acquires legal title to the
System, provided that such transferee first agrees in writing to the
Licensor to abide by all of the terms and conditions of this License
including, without limitation, the territorial limitation stated in
Section (2)(i) and the restrictions on decompiling or reverse assembly
stated in Section (2)(iii). Licensee shall give Licensor written notice
thirty (30) days prior to any transfer. The Licensor shall not place any
additional conditions on the transferee\'s use of the System or the
Licensed Software. If the provisions of this Section (2) (ii) are
satisfied, thereafter the Licensee shall bear no responsibility for
transferee\'s failure to abide by the terms and conditions of this
License.

\(iii\) The Licensee shall take reasonable steps to protect the
confidentiality of the Licensed Software and shall not decompile or
reverse assemble of all or any part of the Licensed Software to generate
source code. The Licensee shall not make the Licensed Software available
to any person except on a need to know basis. The obligations of the
Licensee hereunder shall not extend to any information or data relating
to the Licensed Software which is now available to the general public or
becomes available by reason of the acts of the Licensor or third
parties.

\(iv\) The Licensee may reproduce or copy the Licensed Software and
related materials solely for the purpose of archival backup, in-house
training and operating, maintaining, and administering the System
provided under this Contract. In such reproduction, the Licensee shall
include, upon all such copies of the Licensed Software, all proprietary
notices, including the copyright notice within the Licensed Software
program and related documentation in the form in which it is received
from the Licensor.

\(v\) The Licensee acknowledges that the Licensed Software program is
the property of the Licensor, and shall not do, or cause to be done,
anything to activate any of the subsisting nonactivated computer
instruction steps therein unless authorized in writing by the Licensor.
The Licensor shall have the exclusive right to activate, or authorize
the activation of, the subsisting nonactivated program instruction steps
in the Licensed Software. In this event Licensee shall pay any
additional Right-To-Use Fee(s) agreed to by Licensee and Licensor.

\(vi\) In the event the Licensor develops significant improvements to
the Licensed Software, the Licensor may market the improvements as a
separate offering requiring payment of an additional Right-to-Use Fee.

\(vii\) The Licensee shall not modify or otherwise change the Licensed
Software other than at the direction of the Licensor. This provision
shall not apply to:

\(A\) Changes to the Licensed Software which are necessary to preserve
or restore service. Licensee shall use all reasonable efforts to contact
Licensor before making any such changes. If the Licensor is unable to
make the necessary changes promptly to the Licensed Software to preserve
or restore service, then the Licensee may make only such changes to the
Licensed Software as are necessary to preserve or restore service. In
such event, Licensee shall promptly notify Licensor of the changes made
by Licensee.

\(B\) Changes made by the Licensee to its own database; and

\(C\) Changes made by the Licensee in connection with the exercise of
its rights under Section (2) (xi).

\(viii\) Within thirty (30) days after written notice that a program or
a release thereof has been discontinued and is no longer required for
the operation of the System and the Licensor has furnished the Licensee
with a new program that is fully satisfactory to the Licensee, the
Licensee agrees to return the original and all copies of the
discontinued program and specified related documents. If such return is
impossible or impractical, the Licensee shall destroy said program and
documents and provide the Licensor with a written notice of such
destruction.

\(ix\) The Licensor warrants to the Licensee that any Software licensed
under this Software License shall function for a period of five (5)
years from the warranty start date defined in the Contract in accordance
with the Specifications and any written or printed technical material
provided by the Licensor to explain the operation of the Licensed
Software and aid in its use. The Licensor shall correct all deficiencies
within thirty (30) days from the date of receipt by the Licensor of
written notice of such deficiencies from the Licensee. An extension of
this thirty (30) day period may be allowed only if agreed upon by the
Licensee and RUS. It shall be the Licensor\'s obligation to insert and
thoroughly test, at no charge to the Licensee, any software amendment or
alteration provided to satisfy the obligations of this Section (2)(ix).
If a deficiency is detected or a correction made within the final ninety
(90) days of the warranty, the warranty shall be extended to a date
ninety (90) days after the deficiency has been corrected.

\(x\) The Licensor shall hold harmless and indemnify the Licensee from
any and all claims, suits, and proceedings for the infringement of any
patent, copyright, trademark, or violation of trade secrets covering any
Licensed Software used with the System, except for items of the
Licensee\'s design or selection. If the Licensee\'s use of the Licensed
Software is enjoined, the Licensor shall promptly, at its own expense,
place the Licensee in a position where it is able to use the System in
accordance with the Specifications, whether by: (A) modifying the
Licensed Software or portion thereof so that it no longer infringes but
remains functionally equivalent, (B) replacing the Licensed Software
with noninfringing equivalent software, (C) obtaining for the Licensee a
license or other right to use, or (D) such other actions as may be
required. This shall be in addition to any other rights or claims which
the Licensee may have. The Licensor shall, at its own expense, (and the
Licensee agrees to permit the Licensor to do so) defend any suits which
may be instituted by any party against the Licensee for alleged
infringement of patents, copyright, trademark, or violation of trade
secrets relative to the Licensor\'s performance hereunder. Either party
shall notify the other promptly of any such claims, and the Licensee
shall give to the Licensor full authority and opportunity to settle such
claims, and shall reasonably cooperate with the Licensor in obtaining
information relative to such claims.

\(xi\) In the event the Licensor becomes unwilling or unable to furnish
support required by the Contract for the Licensed Software, the Licensor
shall, upon written request of the Licensee, provide with the greatest
possible dispatch all Licensed Software back-up documentation including
proprietary information other than agreed excluded documentation. In
this event,

(1) the Licensee shall be permitted full use of all Licensed Software
and documentation as long as the System is operational and (2) the
Licensee may modify, or have modified, the Licensed Software for feature
enhancement or proper equipment operation and becomes the owner of such
modifications for all purposes, including patenting, copywriting, sale,
or license thereof. Agreed excluded documentation is Licensed Software
back-up documentation described in the first sentence of this Section
(2) (xi) which (A) is proprietary information of a third party, (B) was
specifically described at the pre-bid technical session and individually
identified in an attachment to the Bid, and (C) RUS and the Licensee
agree, before bids are opened, may be excluded from the requirements of
this Section (2) (xi). In the event the Licensor furnishes agreed
excluded documentation and the Licensee exercises its rights under this
Section (2)(xi), the Licensor shall use its best efforts to provide such
agreed excluded information to the Licensee, or obtain continuing
support agreements from the parties retaining legal rights to the
excluded documentation. Licensor agrees that certain Licensed Software
cannot be excluded from the requirements of this Section (2)(xi)
including, but not limited to, software, the absence or improper
operation of which would significantly impair the operation of the
System, would significantly impair the ability of the Licensee to
generate revenue, or would pose a risk to RUS loan security.

\(xii\) A breach of this License by the Licensor is a breach of the
Contract. Therefore, the remedies specified in the Contract shall apply.

\(xiii\) The Licensee shall have thirty (30) days after receipt of
written notice from the Licensor to correct any breach of this License.
Damages payable by the Licensee for its breach of this License shall not
exceed the total Contract price. The Licensor shall not terminate this
License unless:

\(A\) The Licensor has given RUS sixty (60) days notice before
termination; and

\(B\) RUS agrees with the Licensor that termination is the only method
available to prevent significant harm to the Licensor from additional
Licensee defaults.

\(xiv\) The obligations of Licensee and Licensor and any successors in
title under this Agreement shall survive the termination of this
Agreement and continue after any termination of rights granted
hereunder.

\(xv\) Licensee and Licensor agree that it will not, without the prior
written permission of the other party, use in advertising, publicity,
packaging, labeling, or otherwise, any trade name, trademark, trade
device, service mark, symbol, or any other identification or any
abbreviation, contraction, or simulation thereof owned by the other
party or any of its affiliates or used by the other party or any of its
affiliates to identify any of their products or services, unless
otherwise agreed by the parties.

\(xvi\) This Software License Agreement shall prevail notwithstanding
any conflicting terms or legends which may appear on or in the Licensed
Software.

\(xvii\) If any Section or part thereof, in this Agreement shall be held
to be invalid or unenforceable in any jurisdiction in which this
Agreement is being performed, then the meaning of such Section or part
shall be construed so as to render it enforceable, to the extent
feasible; and if no feasible interpretation would save such Section or
part, it shall be severed from this Agreement and the remainder shall
remain in full force and effect. However, in the event such Section or
part is considered an essential element of this Agreement, the parties
shall promptly negotiate a replacement therefor.

\(xviii\) This Software License and any amendments thereto, or revisions
thereof, are subject to RUS approval.

  -------------- -- ------------------------------ -- -------------- -- -----------------------------
  **LICENSOR**                                        **LICENSEE**      

                                                                        

                                                                        

  **Company                                           **Company         
  Name**                                              Name**            

  **By**                                              **By**            

                                                                        

  **Title**                                           **Title**         

                                                                        

  **Date**                                            **Date**          

                                                                        
  -------------- -- ------------------------------ -- -------------- -- -----------------------------

*According to the Paperwork Reduction Act of 1995, an agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a valid OMB control number.
The valid OMB control number for this information collection is
0572‑XXXX. The time required to complete this information collection is
estimated to average .05 of a minute per response, including the time
for reviewing instructions, searching existing data sources, gathering
and maintaining the data needed, and completing and reviewing the
collection of information.*

*.***U.S. Department of Agriculture**

**Rural Utilities Service**

# CONTRACT CLOSEOUT CERTIFICATION

(*Submit an original and a copy to RUS Area Engineering Branch*.)

  ---------------------- -- ------------------------------------------------
  BORROWER'S NAME:          

  PROJECT DESIGNATION:      

  CONTRACT TYPE &           
  NUMBER:                   

  CLOSEOUT AMOUNT:          

  SALES TAXES (*INCLUDED    
  ABOVE):*                  
  ---------------------- -- ------------------------------------------------

In connection with the above construction contract, the undersigned
certify that:

1.  The construction is complete and was done in accordance with the RUS
    approved system design or layout or subsequent RUS approved changes;

2.  The construction was for loan purposes;

3.  Construction used RUS-accepted materials and was in accordance with
    specifications published by RUS covering the construction which were
    in effect when the contract was executed, or in the absence of such
    specifications, that it meets other applicable specifications and
    standards (specify), and that it meets all applicable national and
    local code requirements;

4.  The construction complies with the \`\`Buy American\'\' provision
    ( 7 U.S.C. 903 note) of the Rural Electrification Act of 1938 (7
    U.S.C. 901 et seq.), as amended;

5.  All necessary approvals have been obtained from regulatory bodies
    and other entities with jurisdiction over the project;

6.  All closeout documents required by this part have been examined and
    found complete such that the Contractor has fulfilled all
    obligations under the contract except for warranty coverage; and

7.  The engineer or architect is not affiliated with and does not
    represent the contractor, vendor, or manufacturer who is a
    participant in the contract.

  ---------- -------------------------- -- -- -------------------- ---------------------------
  BORROWER                                    ENGINEER/ARCHITECT   

  BY:                                         BY:                  

                                                                   

  TITLE:                                      TITLE:               

  DATE:                                       DATE:                

                                              CO.:                 
  ---------- -------------------------- -- -- -------------------- ---------------------------