UNITED STATES DEPARTMENT OF AGRICULTURE

Rural Utilities Service

**BULLETIN 1710B‑1**

**SUBJECT: [Guide to Federal Financing Bank Loans Guaranteed by
RUS]{.underline}**

**TO:** RUS Electric and Telecommunications Borrowers

**EFFECTIVE DATE:** Date of Approval

**OFFICE OF PRIMARY INTEREST:** Assistant Administrator, Electric
Program

**PREVIOUS INSTRUCTIONS:** This is a new bulletin.

**FILING INSTRUCTIONS:** Electric Borrowers should file this bulletin
with 7 CFR Part 1710, General and Pre-loan Policies and Procedures
Common to Insured and Guaranteed Electric Loans. Telecommunications
borrowers should file this bulletin with 7 CFR Part 1735, General
Policies, Types of Loans, Loan Requirements \-- Telephone Program.

This bulletin is available on the RUS Home Page. The address is:

http://www.usda.gov/rus/home/home.htm

**PURPOSE:** This bulletin is a guide to assist electric and
telecommunications borrowers in understanding the terms, conditions, and
options of RUS guaranteed loans made by the Federal Financing Bank
(FFB). These terms, conditions, and options are established in the FFB
Future Advance Promissory Note evidencing such a loan, and in RUS
regulations at 7 CFR Chapter XVII.

RUS has made every effort to ensure the accuracy of the information in
this guide. However, in case of discrepancies, the Future Advance
Promissory Note and RUS rules are the authoritative sources. RUS can
offer information about FFB interest rates and the terms and conditions
of loans. However, the borrower is ultimately responsible for final
selection of options.

\_\_\_***BLAINE D. STOCKTON, JR.***\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_**2/24/98**\_\_\_\_\_\_\_\_\_\_\_\_

Assistant Administrator Date

Electric Program

\_\_\_\_***KEN B. CHANDLER***\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_**2/24/98**\_\_\_\_\_\_\_\_\_\_\_\_

Assistant Administrator Date

Telecommunications Program

**TABLE OF CONTENTS**

1\. General

2\. Interest rates and fees

3\. Loan applications and servicing

4\. Advance of funds

5\. Requests for advances

6\. Advance date

7\. Maturity date

8\. Principal repayment method

9\. Prepayment/refinancing options

10\. Exercising prepayment/refinancing options

11\. Maturity extension

**EXHIBIT**

Annex A to Future Advance Promissory Note \-- Form of Advance Request
(RUS Approval Required)

INDEX:

Electric loan

Federal Financing Bank

Loan guarantee

Telecommunications loan

**ABBREVIATIONS**

FFB Federal Financing Bank

RTB Rural Telephone Bank

RUS Rural Utilities Service

USDA United States Department of Agriculture

**DEFINITIONS**

**[Annex]{.underline}** means a form attached to the Future Advance
Promissory Note evidencing an FFB loan. These annexes are completed by
the borrower and submitted to RUS and/or FFB when the borrower wishes to
receive fund advances from an FFB loan, or to extend maturity, prepay,
or refinance such advances.

**[Borrower]{.underline}** means any organization that has an
outstanding loan made or guaranteed by RUS or RTB for rural
electrification or telecommunications, or which is seeking such
financing.

**[Note]{.underline}** means the Future Advance Promissory Note
evidencing an FFB loan.

**[RE Act]{.underline}** means the Rural Electrification Act of 1936, as
amended, (7 U.S.C. 901 *et seq*.).

**[Treasury]{.underline}** means the United States Department of the
Treasury.

**1. GENERAL**

**1.1 [Background]{.underline}:** The Federal Financing Bank (FFB) is an
instrumentality of the United States Department of the Treasury. Section
306 of the RE Act authorizes RUS to offer 100 percent guarantees of
loans made by FFB to qualified electric and telecommunications
borrowers.

**1.2** **[Eligibility for FFB loans]{.underline}:** Generally, electric
and telecommunications borrowers eligible for loans under section 305 of
the RE Act, and telecommunications borrowers eligible for loans under
section 408 of the RE Act also qualify for RUS guarantees of FFB loans,
if the borrower so elects.

**Ω Electric borrowers:** Some electric borrowers are not eligible for
insured loans under section 305 because they prepaid RUS loans under
7 CFR 1786 subpart F. These borrowers may be eligible for RUS guarantees
of FFB loans.

**Telecommunications borrowers:** Some loan purposes are not eligible
for RUS hardship, RUS cost-of-money loans, or RTB loans. See RUS rules
at CFR 1735.10(b), 1735.17, and 1735.21(a). These purposes may be
eligible for RUS guarantees of FFB loans.

**1.3 [For further information]{.underline}:**

**Ω Electric borrowers:** Basic loan eligibility requirements are in RUS
rules at 7 CFR Part 1710. For additional information, **distribution
borrowers** should contact their RUS general field representative or the
Director of the Regional Division that serves as primary contact for the
borrower. **Power supply borrowers** should contact the Director, Power
Supply Division.

**Telecommunications borrowers:** Basic loan eligibility requirements
are in RUS rules at 7 CFR Parts 1735 and 1737. Specific information
about guaranteed loans is in 7 CFR 1735.32. For additional information,
telecommunications borrowers should contact their RUS general field
representative or the Director of the Area Division that serves as
primary contact for the borrower.

**1.4 [Financing options]{.underline}:** FFB offers a wide range of
financing options, including long- and short-term maturities and
prepayment and refinancing privileges. The borrower selects these
options at the time loan funds are advanced, and different options may
be selected for each advance.

**1.5 [The Note]{.underline}:** The vehicle for these financing options
is the Future Advance Promissory Note evidencing an RUS guaranteed FFB
loan. A new form of Note, issued in 1997, is the result of a
comprehensive effort on the part of FFB and RUS to modernize and
streamline loan procedures, and to provide a flexible debt instrument
that meets the needs of borrowers and lenders. This bulletin is intended
to be a plain English guide to the terms of the note. In case of
discrepancies, the note and RUS rules are the authoritative sources.

**1.6 [Electing financing options]{.underline}:** RUS can offer
information about loan eligibility, FFB interest rates, and the terms
and conditions of FFB loans. However, the borrower is ultimately
responsible for the selection of options.

**2. INTEREST RATES AND FEES**

**2.1** **[Interest rates]{.underline}:**

**2.1.1** FFB interest rates are equal to Treasury's cost of money for
debt instruments with similar maturities and options, plus one-eighth of
one percent (0.125 percent). See paragraph 6 of the Note.

***\$\$ [Costs of financing options]{.underline}*:** Different interest
rates apply to long- and short-term maturities and to different
financing options. In addition, premiums for prepayment and refinancing
will apply. See sections 7, 8, and 9 of this bulletin. These interest
rates and premiums reflect the costs to Treasury of the options and
privileges.

**2.1.2** Tables of interest rates are issued daily. Sample rates are
available on the RUS homepage. Information about current interest rates
is available from the Director of the RUS Division that serves as
primary point of contact for the borrower.

**2.2 [Fees]{.underline}:**

**2.2.1** There is an annual loan servicing fee of one one-thousandth of
one percent (0.001 percent) on the principal balance outstanding at the
end of each calendar year. The borrower receives a bill for this fee
which is payable on the March payment date. See paragraph 9 of the Note.

**2.2.2** There is no loan origination fee.

**2.2.3** There is a late charge for overdue payments. See paragraph 11
of the Note.

**3. LOAN APPLICATIONS AND SERVICING**

**3.1 [Loan requests]{.underline}:** Borrowers may request an FFB loan
to cover all or part of their financing needs. A single loan request
may, at the borrower's option, include a mix of FFB and other RUS
financing, and, in the case of telecommunications borrowers, financing
from RTB.

**3.2 [Processing and servicing]{.underline}:** Applications for FFB
loans are reviewed and approved by the same RUS and other USDA staff
that process other loan applications. Most servicing is done by RUS and
other USDA staff.

**3.3** **[Loan applications]{.underline}:** An application for an FFB
loan consists of the same type of documentation as other RUS electric or
telecommunications loans. These documents must include the following
information.

**Ω Electric borrowers:** The transmittal letter and board resolution
submitted as part of the loan application (7 CFR 1710.401(a)(1) and (2),
respectively) must request an FFB loan. Sample forms of these documents
are available from the Director of the Regional Division or the Power
Supply Division. The long-range financial forecast submitted in support
of the application (7 CFR 1710.401(c)(1)) must reflect the interest
rates of FFB and any other financing requested. If the loan request
includes a mix of FFB and other RUS financing a separate board
resolution and RUS Form 740c, Cost Estimates and Loan Budget for
Electric Borrowers (7 CFR 1710.401(a)(3)), must be submitted for each
part. Additional information may be required in some cases.

**Telecommunications borrowers:** Information about the type(s) of
financing requested must be included in the transmittal letter submitted
as part of the loan application and in the Loan Design (7 CFR 1737).

**4. ADVANCE OF FUNDS**

**4.1** There is no limit to the number of advances of funds from an FFB
loan. Each advance carries its own maturity date and interest rate. See
sections 7, 8, and 9 of this bulletin.

**4.2** Funds are advanced in multiples of \$1000, except for the last
advance on a loan.

***\$\$ [Interest rates]{.underline}*** depend on the options selected
by the borrower.

**5. Requests for advances**

**5.1** **[Submitting requests]{.underline}:** Requests for advances
from FFB loans are submitted by the borrower to RUS in the same manner
as requests for advances from other RUS and RTB loans. FFB requires that
the borrower submit Annex A, Form of Advance Request (RUS Approval
Required), to RUS in addition to the RUS documentation. The borrower
indicates the options selected on Annex A. See paragraph 3(a) of the
Note. A copy of Annex A is the exhibit to this bulletin.

**Ω** **Electric borrowers** submit RUS Form 595, Financial Requirement
and Expenditure Statement, and Annex A.

**Telecommunications borrowers** submit RUS Form 481, Financial
Requirements Statement (FRS), and Annex A.

**5.2 [Processing requests]{.underline}:** RUS processes the requests in
the same manner as requests for advances from other types of loans.
After RUS approval, RUS forwards the request to FFB.

**6. Advance date**

**6.1 [Borrower election of advance date]{.underline}:** The borrower
elects an advance date for each advance. See paragraph 3(a)(2) of the
Note.

**6.2** **[Permissible advance dates]{.underline}:** An advance date
must be on a business day.

**a.** The **[earliest]{.underline}** date for an advance is
**[10 business days after RUS receives the request]{.underline}**. RUS
will forward the approved request to FFB not later that 3 days before
the requested advance date. See paragraph (3)(b) of the Note.

**b.** The **[last]{.underline}** day for an advance is shown on the
front of the note.

**Ω Electric Borrowers:** For **distribution borrowers,** the fund
advance period begins on the date of the Note and is one year longer
than the construction financing period (also known as the loan period),
but not less than 4 years. For example, if the loan period is 2 years,
the last date for an advance is 4 years from the date of the Note. If
the loan period is 4 years, the last date for an advance is 5 years
after the date of the Note. For **power supply borrowers,** the last
date for an advance is generally 4 years after the planned completion
for service of the facilities financed by the loan.

**Telecommunications Borrowers:** The latest advance date is 6 months
prior to the final maturity date of the loan.

***\$\$ [Interest rates]{.underline}:*** FFB establishes the interest
rate as of the advance date, taking into consideration the amortization
schedule and options selected. See paragraph 6(c) of the Note.

**7. Maturity date**

**7.1. [Borrower election of maturity date]{.underline}:** The borrower
elects a maturity date for each advance. See paragraph 5 of the Note.

**7.2 [Permissible maturity dates]{.underline}**

**a.** A maturity date must be on a payment date. See section 8.1 of
this bulletin.

**b.** The **earliest** maturity date is one full calendar quarter
(90 days) after the advance date.

**c.** The **latest** maturity date is the final maturity date of the
loan as shown on the first page of the note.

***\$\$ [Interest rates]{.underline}:*** The interest rate on the
advance is based on the length of the period between the advance date
and the maturity date, the amortization schedule, and the
prepayment/refinancing options selected. See paragraph 6(c) of the Note.

**8. Principal repayment method**

**8.1 [Principal payment dates]{.underline}:** Outstanding principal is
payable in quarterly installments beginning on the first principal
payment date for the loan. A principal payment date (or payment date) is
generally the last day of a calendar quarter. However, if the last day
of the quarter is not a business day, the first business day of the next
quarter is a payment date and a permissible maturity date. See
paragraph 8(a) of the Note.

**8.2 [First principal payment date for the loan]{.underline}:** This
date is shown on the front of the note.

**Ω Electric borrowers:** For **distribution borrowers,** the first
principal payment date for the loan is 2 years after the date of the
Note. For **power supply borrowers**, the first principal payment date
for the loan is generally the last day of the second calendar quarter
after the planned completion for service of the facilities financed by
the loan.

**Telecommunications borrowers:** The first principal payment date for
the loan is 2 years after the date of the note. See 7 CFR 1735.43(b).

**8.3 [Borrower election of principal repayment method]{.underline}**:
See paragraph 8(b) of the Note.

**8.3.1 If the maturity date selected is [before]{.underline} the first
principal payment date for the loan,** no selection of principal
repayment method at the time of the advance is appropriate.

**8.3.2 If the maturity date selected is [on or after]{.underline} the
first principal payment date for the loan,** the borrower must select a
principal repayment method from the options listed below. All principal
repayment methods are calculated such that the advance will be repaid in
full on the final maturity date for the loan, even if the borrower has
selected an earlier interim maturity date for the advance.

**P Equal principal installments:** Under this option the amount of all
quarterly principal installments on an advance is approximately equal.
Interest on each advance is added as applicable, and the total amount
varies from payment to payment.

**G Graduated principal installments:** Under this option, the amount of
each of the first third of the quarterly payments is about one-half the
amount of each of the remaining payments.

**L Level debt service payments:** Under this option, the total amount
of all quarterly payments, including both interest and principal, is
approximately equal.

***\$\$ [Costs of these options]{.underline}:* P** requires higher
principal payments early in the loan, and thus carries the lowest
interest rate. **G** allows the lowest principal payments early in the
loan and carries the highest interest rate. However, the interest rate
difference is small.

**9. Prepayment/refinancing OPTIONS**

**9.1 [Borrower election of prepayment/refinancing
options]{.underline}:** For each advance, the borrower chooses from the
options listed below. See paragraph 16 of the Note.

**9.1.1 If the maturity date is [before]{.underline} the 5th anniversary
of the advance date,** the market value premium (or discount), **M**,
described in section 9.1.2 below, automatically applies.

**9.1.2 If the maturity date selected is [on or after]{.underline} the
5th anniversary of the advance date,** the borrower must elect
either **M** or **F**.

**M Market value premium (or discount) privilege:** This option allows
the borrower to prepay or refinance all or part of the advance at any
time at a price equal to the difference between the market price of the
advance if it were sold by FFB on the secondary market, and the amount
that FFB would receive from the borrower if the advance were not prepaid
or refinanced. See paragraph 16(a) of the Note.

***\$\$ [Cost of selecting M]{.underline}:*** Advances under **M** carry
a lower interest rate than advances under **F**. The dollar amount of
the premium or discount is determined at the time the advance is prepaid
or refinanced in whole or in part.

**F Fixed premium privilege:** Under this option the **formula** for
determining the prepayment premium is fixed at the time the advance is
requested. The actual **amount** of the premium is calculated at the
time of the prepayment or refinancing. Under this option the borrower
elects whether to include a 5-year no-call period, and the method for
determining the fixed premium. **Choose one from paragraph a,
[and]{.underline} one from paragraph b below**. See paragraph 16(b) of
the Note.

**a.** **5-year no-call period:** The borrower elects whether to include
a 5-year period during which the advance may not be prepaid or
refinanced. The borrower elects either:

**Y Yes:** The borrower elects to include a 5-year no-call period. The
advance may **[not]{.underline}** be prepaid or refinanced until after
the fifth anniversary of the advance date, or

**N** **No:** The borrower elects not to include a 5-year no-call
period. The advance may be prepaid or refinanced at any time.

**b. Method for determining the fixed premium:** The borrower elects the
method for determining the fixed premium:

**X 10 percent premium declining over 10 years:** Under this option, if
the borrower prepays or refinances all or part of the advance, FFB will
charge a premium equal to 10 percent of the amount being prepaid or
refinanced, multiplied by a fraction based on the time remaining until
the tenth anniversary of the advance or, if the borrower elected the
5-year no-call option, the tenth anniversary of the end of the no-call
period (a total of 15 years). No premium will apply on or after this
tenth anniversary.

**V 5 percent premium declining over 5 years:** Under this option, if
the borrower prepays or refinances all or part of the advance, FFB will
charge a premium equal to 5 percent of the amount being prepaid or
refinanced multiplied by a fraction based on the time remaining to the
fifth anniversary of the advance or, if the borrower elected the 5-year
no-call option, the fifth anniversary of the end of the no-call period
(a total of 10 years). No premium will apply for prepayment or
refinancing on or after this fifth anniversary.

**P Par (no premium):** The borrower may prepay or refinance the advance
with no premium.

***\$\$ [Costs of selecting F]{.underline}:*** Advances under **F**
carry a higher interest rate than advances under **M**, reflecting the
cost to Treasury of the borrower's selections. The dollar amount of the
fixed premium is determined at the time the borrower prepays or
refinances. See paragraph 6(d) of the Note.

• Locking the interest rate in for 5 years by electing **Y** results in
a lower interest rate but less flexibility than **N**.

• **P** carries a higher interest rate than either **X** or **V**, but
no premium is due on prepaying or refinancing. **X **offers a lower
interest rate but imposes a higher premium due on prepaying or
refinancing than **V.**

**10. Exercising prepayment/refinancing OTPIONs**

**10.1 [Prepayment privilege]{.underline}:** See paragraph 17 of the
Note.

**10.1.1** To exercise the option to prepay all or part of an advance
the borrower completes **Annex C‑1,** Form of Prepayment Election
Notice, Specified Principal Amount(s), or **Annex C‑2,** Form of
Prepayment Notice, Fixed Sum to be Applied, and sends the completed
annex to RUS.

**10.1.2** The minimum amount of principal that may be prepaid is the
lesser of \$100,000 or the remaining amount outstanding. See
paragraph 17(g) of the Note.

**10.1.3** The appropriate annex must reach RUS **[not later than
10 business days]{.underline}** before the requested date for
prepayment. The annex, approved by RUS, must reach FFB **not later than
5 business days before the prepayment date.** See paragraph 17(d) of the
Note.

**10.2 [Refinancing privilege]{.underline}:** See paragraph 18 of the
Note.

**10.2.1.** To exercise the option to refinance all or part of an
advance, the borrower generally completes **Annex D‑1,** Form of
Refinancing Election Notice. Annex D‑1 must reach RUS **[not later than
10 business days]{.underline}** before the requested date of the
refinancing**.**

**10.2.2** If the borrower has been notified that RUS approval of
refinancing is required, the borrower completes **Annex D‑2**, Form of
Refinancing Election Notice (**RUS Approval Required**), and sends the
completed annex to RUS **[not later than 15 business days]{.underline}**
before the requested date of the refinancing. See Paragraphs 18(b)
and (d) of the Note.

**10.2.3** The annex, bearing RUS approval if necessary, must reach FFB
**not later than 5 business days before the refinancing date.** See
paragraph 18(c) of the Note.

**10.3 [Rescission of prepayment and refinancing
elections]{.underline}:** The borrower may rescind a prepayment or
refinancing election by notifying FFB and RUS not later than 3:00 PM
Washington, DC, time, on the second business day prior to the scheduled
prepayment or refinancing date. See paragraph 19 of the Note.

**11. MATURITY EXTENSION**

**11.1 [Notice to borrower]{.underline}:** RUS notifies the borrower on
**Annex B‑1**, Form of Maturity Extension Election Notice, or **B‑2**,
Form of Maturity Extension Election Notice (RUS Approval Required)
approximately 4 weeks prior to the maturity date of each advance. See
paragraph 15 of the Note.

**11.2 [Borrower election]{.underline}:** If the maturity date is prior
to the final maturity of the loan, the borrower may elect to repay part
or all of the outstanding balance, or to extend or "roll over" the
maturity.

**11.3 [If the borrower does not make an election]{.underline}**, the
maturity is automatically extended for 90 days. The principal repayment
method previously in effect remains in effect, or if no principal
repayment method was previously in effect, the level debt service method
(L) will apply.

**11.4 [For options other than those described in paragraph 11.3
above]{.underline}**, the borrower elects a new maturity date, a
principal repayment method and whether to include a
prepayment/refinancing privilege. The options are described in sections
7, 8, and 9, respectively, of this bulletin.

**11.5 [Submitting and processing requests to extend
maturity]{.underline}:**

**11.5.1** The borrower submits the request to extend the maturity to
RUS by completing **Annex B‑1** or **B‑2**.

**a. Annex B‑1** does not require RUS approval. The borrower completes
the annex and sends the original to FFB and a copy to RUS. Annex B‑1
must be received by FFB and RUS no later than **[3 business
days]{.underline}** prior to the upcoming maturity date.

**b. Annex B‑2** requires RUS approval. If RUS notifies the borrower on
Annex B‑2, the borrower completes the annex and sends the original to
and a copy to RUS. To ensure timely processing, Annex B‑2 must be
received by RUS no later than **[15 business days]{.underline}** prior
to the upcoming maturity date. RUS will forward the approved annex to
FFB.

**11.5.2** FFB processes the request and notifies RUS. The borrower will
be notified of the new interest rate.

#### EXHIBIT TO RUS BULLETIN 1710B‑1

RUS

**ANNEX A**

**TO**

**FUTURE ADVANCE PROMISSORY NOTE**

**FORM**

**OF**

**ADVANCE REQUEST**

**(RUS APPROVAL REQUIRED)**

ADVANCE REQUEST

(RUS APPROVAL REQUIRED)

\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*

*REFER TO RURAL UTILITIES SERVICE (RUS) REGULATIONS AND INSTRUCTIONS FOR
A DESCRIPTION OF (1) THE 0THER FORMS AND MATERIALS THAT ARE REQUIRED IN
CONNECTION WITH EACH REQUEST FOR AN ADVANCE, AND (2) THE TIME LIMIT FOR
SUBMITTING THOSE FORMS AND MATERIALS AND THIS ADVANCE REQUEST TO RUS.*

*DIRECT ALL [QUESTIONS]{.underline}* *ON HOW TO COMPLETE THIS FORM TO
THE ASSIGNED CONTACT OFFICE FOR THE BORROWER:*

*For Electric Borrowers:* Power Supply Division, RUS \-- telephone no.:
(202) 720-6436

Northern Regional Division, RUS \-- telephone no.: (202) 720-1420

Southern Regional Division, RUS \-- telephone no.: (202) 720-0848

*For Telephone Borrowers:* Northeast Area, RUS \-- telephone no.: (202)
690-4673

> Southeast Area, RUS \-- telephone no.: (202) 720-0715
>
> Northwest Area, RUS \-- telephone no.: (202) 720-1025
>
> Southwest Area, RUS - telephone no.: (202) 720-0800

*WHEN COMPLETED, DELIVER THIS [ORIGINAL]{.underline}* *FORM (TOGETHER
WITH ALL OTHER FORMS AND MATERIAL REQUIRED BY RUS) [TO RUS]{.underline}
AT THE ADDRESS OF THE CONTACT OFFICE INDICATED BELOW.*

USDA-Rural Utilities Service

> *For Electric Borrowers.* Stop 1568, Power Supply Division
>
> Stop 1566, Northern Regional Division
>
> Stop 1567, Southern Regional Division

*For Telephone Borrowers.* Stop 1599, Northeast Area

> Stop 1596, Southeast Area
>
> Stop 1595, Northwest Area
>
> Stop 1597, Southwest Area

1400 Independence Avenue, S.W.

Washington, D.C. 20250

\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*

ADVANCE REQUEST

Manager

Federal Financing Bank

Reference is made to the following-described Future Advance Promissory
Note (the \"Note\") payable to the Federal Financing Bank (\"FFB\"),
which is guaranteed by the Rural Utilities Service (\"RUS\") :

Name of Borrower (the \"Borrower\"):

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
1

FFB Note Identifier:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
2

The undersigned, as an authorized officer of the Borrower, hereby
requests FFB to make an advance of funds (\"this Advance\") under,
pursuant to, and in accordance with the applicable terms of the Note.

The undersigned further requests that this Advance be made as follows:

l\. Requested Advance Amount:
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ 3

2\. Requested Advance Date:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ 4

3\. Wire Instructions:

A. CORRESPONDENT BANK (if any) FOR PAYEE'S BANK:

Name of financial institution
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Address of financial institution
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

ABA number of financial institution
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

B. PAYEE\'S BANK AND ACCOUNT:

Name of financial institution
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Address of financial institution
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

ABA number of financial institution
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

#  Account name \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Account number
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

4\. Maturity Date: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ 5

5\. Principal Repayment Method:

***\[SELECT 1 OF THE FOLLOWING 3 METHODS FOR THE REPAYMENT OF PRINCIPAL*
[ONLY]{.underline} *IF THE MATUR1TY DATE SELECTED FOR THIS AD*VANCE
*WILL OCCUR* [ON OR AFTER]{.underline} *THE \"FIRST PRINCIPAL PAYMENT
DATE\" SPECIFIED ON PAGE I OF THE NOTE.\]***

\"P\" for the \"equal principal installments\"

method 6

#  

#  \"G\" for \"graduated principal installments\"

method

\"L\" for the \"level debt service\" method

6\. Prepayment/Refinancing Privilege:

*\[ELECT 1 OF THE FOLLOWING 2 PAYMENT/REFINANCING PRIVILEGES
[ONLY]{.underline} IF THE MATURITY DATE SELECTED FOR THIS ADVANCE WILL
OCCUR [ON OR AFTER]{.underline} THE FIFTH OF THE REQUESTED ADVANCE
DATE.\]*

**\"**M**\"** for the \"market value premium **(**or discount)\"

privilege **7**

\"F\" for the \"fixed premium\" privilege

o No-Call Period Option Election:

> *\[ELECT I OF THE FOLLOWING 2 NO-CALL PERIOD OPTIONS
> [ONLY]{.underline}* *IF A "FIXED PREMIUM\" PRIVILEGE IS ELECTED FOR
> THIS ADVANCE.\]*

\"Y\" for \"yes,\" if the privilege [is]{.underline}

to include a 5-year no-call period 8

\"N\" for \"no,\" if the privilege [is not]{.underline}

to include a 5-year no-call period

o Premium Option Selection:

*\[SELECT I OF THE FOLLOWING 3 PREMIUM OPTIONS* [ONLY]{.underline} *IF A
\"FIXED PREMIUM\" PRIWLEGE IS ELECTED FOR THIS ADVANCE.\]*

\"X\" for 10% premium declining over

10 years 9

\"V\" for 5% premium declining over

5 years

\"P\" for par (no premium)

The undersigned hereby certifies that the authority of the undersigned
to execute and deliver this Advance Request on behalf of the Borrower is
valid and in full force and effect on the date hereof.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Name of Borrower)

By:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Name:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Title:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

NOTICE OF RUS APPROVAL OF

ADVANCE REQUEST

Notice is hereby given to FFB that the preceding Advance Request made by
the Borrower identified therein has been approved by RUS for purposes of
the Note identified therein.

**FOR ACCOUNTING** ADMINISTRATOR of the

**USE ONLY** RURAL UTILITIES SERVICE;

acting through his or her

duly authorized designee

RUS Budget

##  Account

##  Number By: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_ Name:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Title:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

**INSTRUCTIONS**

^1^ Insert the corporate name of the Borrower. If the corporate name of
the Borrower at the time of this Advance is different from the corporate
name that appears on page 1 of the Note, add
\"(formerly\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ )\", and
insert in this second blank the corporate name of the Borrower as it
appears on page 1 of the Note.

^2^ Insert the \"Note Identifier that FFB assigned to the Note (as
provided in the Agreement)**.**

**^3^** Insert the particular amount of funds that the Borrower requests
to be advanced.

**^4^** Insert the particular calendar date that the Borrower requests
to be date on which this Advance is to be made.

^5^ Insert the particular calendar date that the Borrower selects to be
the date on which this Advance is to mature. This date (a) must be the
last day of a calendar quarter, (b) may not be later than the \"Final
Maturity Date\" specified on page 1 of the Note, and (c) may not be less
than one complete calendar quarter from the Requested Advance Date.

^6^ Insert in the box \"P\" if the Borrower selects the \"equal
principal installments\" method as the method for the repayment of
principal that is to apply to this Advance. Insert in the box \"G\" if
the Borrower selects the \"graduated principal installments\" method as
the method for the repayment of principal that is to apply to this
Advance. Insert in the box \"L\" if the Borrower selects the \"level
debt service\" method as the method for the repayment of principal that
is to apply to this Advance.

^7^ Insert in the box \"M\" if the Borrower elects to have the \"market
value premium (or discount)\" prepayment privilege apply to this
Advance. Insert in the box \"F\" if the Borrower elects to have a
\"fixed premium\" prepayment/refinancing privilege apply to this
Advance.

^8^ Insert in the box \"Y\" if the Borrower elects to have the fixed
premium prepayment/refinancing privilege that is to apply to this
Advance include a 5-year no-call period during which this Advance will
not be eligible for prepayment or refinancing. Insert in the box \"N\"
if the Borrower elects to have the fixed premium prepayment/refinancing
privilege that is to apply to this Advance [not]{.underline} include any
5-year no-call period.

^9^ Insert in the box \"X\" if the Borrower selects a 10% premium
declining over 10 years as the premium option that is to be included in
the fixed premium prepayment/refinancing privilege that is to apply to
this Advance. Insert in the box \"V\" if the Borrower selects a 5%
premium declining over 5 years as the premium option that is to be
included in the fixed premium prepayment/ refinancing privilege that is
to apply to this Advance. Insert in the box \"P\" if the Borrower
selects par (no premium) as the premium option that is to be included in
the fixed premium prepayment/refinancing privilege that is to apply to
this Advance.