THIRD AMENDED, RESTATED, AND CONSOLIDATED BOND GUARANTEE AGREEMENT
dated as of December 1, 2016
between
UNITED STATES OF AMERICA
acting through the
Rural Utilities Service
as Guarantor,
and
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION,
as the Borrower.

    

1

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TABLE OF CONTENTS
 
Page
RECITALS
1

ARTICLE I 
 
DEFINITIONS
 
SECTION 1.1. Definitions
2

SECTION 1.2. Principles of Construction
6

ARTICLE II 
 
THE GUARANTEE
 
SECTION 2.1. Guarantees of Original Bonds
7

SECTION 2.2. Execution of the Series L Guarantee
7

SECTION 2.3. Coverage of the Series L Guarantee
7

SECTION 2.4. Payment on the Guarantees
7

SECTION 2.5. Issuance of Additional Guarantees
7

ARTICLE III
 
CONDITIONS PRECEDENT
 
SECTION 3.1. Conditions Precedent to Issuance of a Guarantee
8

SECTION 3.2. Conditions Precedent to each Advance
9

ARTICLE IV
 
GUARANTEE FEE
 
SECTION 4.1. Guarantee Fee
10

SECTION 4.2. Amount of Guarantee Fee; Dates of Payment
10

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ARTICLE V
 
SERVICING OF THE GUARANTEED BONDS
 
SECTION 5.1. Servicing
10

ARTICLE VI
 
REPORTING REQUIREMENTS
 
SECTION 6.1. Annual Reporting Requirements
11

SECTION 6.2. Default Notices
11

ARTICLE VII 
 
LIMITATIONS ON AMENDMENTS TO THE GUARANTEED BONDS
 
SECTION 7.1. Limitations on Amendments to the Guaranteed Bonds
12

ARTICLE VIII
 
REPRESENTATIONS OF THE PARTIES
 
SECTION 8.1. Representation of RUS
12

SECTION 8.2. Representations of the Borrower
12

ARTICLE IX
 
AGREEMENTS OF THE BORROWER
 
SECTION 9.1. Patronage Refunds
14

SECTION 9.2. Security and Collateral
14

SECTION 9.3. Subrogation
15

SECTION 9.4. Use of Proceeds
15

SECTION 9.5. Compliance with Covenants in Other Agreements
15

SECTION 9.6. Ratings
15

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SECTION 9.7. Acknowledgment of Borrower
16

SECTION 9.8. Financial Expert
16

SECTION 9.9. Compliance with Federal Laws and Regulations
16

SECTION 9.10. RUS Site Visits to the Borrower's Headquarters
16

SECTION 9.11. Annual Meeting Between CFC and RUS
16

ARTICLE X
 
EVENTS OF DEFAULT
 
SECTION 10.1. Events of Default
16

SECTION 10.2. Compulsory Redemption
17

SECTION 10.3. Acceleration by RUS’s Purchase of the Bonds
17

SECTION 10.4. Effect of Payments by RUS pursuant to the RUS Guarantees
17

SECTION 10.5. Remedies Not Exclusive
17

ARTICLE XI
 
MISCELLANEOUS
 
SECTION 11.1. GOVERNING LAW
18

SECTION 11.2. WAIVER OF JURY TRIAL
18

SECTION 11.3. Method of Payment
18

SECTION 11.4. Notices
18

SECTION 11.5. Benefit of Agreement
18

SECTION 11.6. Entire Agreement
18

SECTION 11.7. Amendments and Waivers
19

SECTION 11.8. Counterparts
19

SECTION 11.9. Termination of Agreement
19

SECTION 11.10. Survival
19

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SECTION 11.11. Severability
19

Schedule I – Addresses for Notices
Annex A – Form of Supplement to the Bond Guarantee Agreement
Annex B– Form of Bond Purchase Agreement
Annex C – Pledge Agreement
Annex D – Form of Reimbursement Note
Annex E – Opinion of Counsel to the Borrower
Annex F – Officers’ Closing Certificate
Annex G – Officers’ Advance Certificate
Annex H – Auditors’ Letter

iv

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THIRD AMENDED, RESTATED AND CONSOLIDATED BOND GUARANTEE AGREEMENT dated as of
December 1, 2016, between the UNITED STATES OF AMERICA (the “Government”),
acting through the Rural Utilities Service, a Rural Development agency of the
United States Department of Agriculture, and its successors and assigns (“RUS”);
and NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, a cooperative
association existing under the laws of the District of Columbia (the
“Borrower”).
RECITALS
1.     The Federal Financing Bank, a body corporate and instrumentality of the
Government under the general supervision of the Secretary of the Treasury, and
its permitted successors and assigns (“FFB”), has previously made loans to the
Borrower in the aggregate principal amount of up to $5,423,286,000 upon the
terms and subject to the conditions set forth in the following Bond Purchase
Agreements by and among the Borrower, FFB and RUS, each as in effect as of the
date hereof: (a) that certain Series A Bond Purchase Agreement dated as of June
14, 2005, (b) that certain Series B Bond Purchase Agreement dated as of April
28, 2006, (c) that certain Series C Bond Purchase Agreement dated as of
September 19, 2008, (d) that certain Series D Bond Purchase Agreement dated as
of November 10, 2010, (e) that certain Series E Bond Purchase Agreement dated as
of December 1, 2011 (f) that certain Series F Bond Purchase Agreement dated as
of December 13, 2012, (g) that certain Series G Bond Purchase Agreement dated as
of November 21, 2013, (h) that certain Series H Bond Purchase Agreement dated as
of November 18, 2014, and (i) that certain Series K Bond Purchase Agreement
dated as of March 29, 2016 (collectively, the “Original Bond Purchase
Agreements”), and upon the terms and subject to the conditions set forth in the
following Future Advance Bonds, each as in effect as of the date hereof: (a)
that certain Series A Future Advance Bond dated as of June 14, 2005, (b) that
certain Series B Future Advance Bond dated as of April 28, 2006, (c) that
certain Series C Future Advance Bond dated as of September 19, 2008, (d) that
certain Series D Future Advance Bond dated as of November 10, 2010, (e) that
certain Series E Future Advance Bond dated as of December 1, 2011, (f) that
certain Series F Future Advance Bond dated as of December 13, 2012, (g) that
certain Series G Future Advance Bond dated as of November 21, 2013, (h) that
certain Series H Future Advance Bond dated as of November 18, 2014, and (i) that
certain Series K Future Advance Bond dated as of March 29, 2016 (collectively,
the “Original Bonds”).
2.     RUS previously determined that the Borrower was eligible to receive
guarantees under Section 313A of the Rural Electrification Act of 1936, as
amended (the “RE Act”) and the regulations promulgated thereunder (as set forth
in Section 1720 of Part 7 of the Code of Federal Regulations (the
“Regulations”)) and entered into that certain Second Amended, Restated, and
Consolidated Bond Guarantee Agreement dated as of March 29, 2016, by and between
the Borrower and RUS (the “Prior Bond Guarantee Agreement”).

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

3.     On July 5, 2016, the Borrower applied to RUS (the “Application”), in
accordance with the RE Act and the Regulations, for RUS to guarantee a tenth
loan from FFB to the Borrower, the proceeds of which would be used by the
Borrower to fund new Eligible Loans (as defined herein) or to refinance existing
debt instruments of the Borrower used to fund Eligible Loans.
4.     RUS has determined that the Borrower is eligible for guarantees under
Section 313A of the RE Act.
5.     FFB is willing to make a loan to the Borrower in the aggregate principal
amount of up to $375,000,000.00 upon the terms and subject to the conditions set
forth in the Series L Bond Purchase Agreement among FFB, the Borrower and the
Government dated as of the date hereof, as the same may be amended,
supplemented, consolidated or restated from time to time in accordance with the
terms thereof (the “Series L Bond Purchase Agreement”; together, with the
Original Bond Purchase Agreements, the “Bond Purchase Agreements”), and upon the
terms and subject to the conditions set forth in the Series L Future Advance
Bond issued by the Borrower to FFB and dated as of the date hereof (the “Series
L Bond”; together with the Original Bonds, the “Bonds”).
6.     The Borrower and RUS have agreed to (i) amend and restate the Prior Bond
Guarantee Agreement, (ii) set forth the terms by which RUS will issue its
guarantee of the Series L Bond, and (iii) set forth the terms by which RUS will
issue additional guarantees, as contemplated by Section 313A of the RE Act, upon
the terms and subject to the conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual agreements herein contained, RUS
and the Borrower agree as follows:
ARTICLE I    

DEFINITIONS
SECTION 1.1.    Definitions. As used in this Agreement, the following terms
shall have the following meanings:
“91-day Treasury-Bill Rate” shall mean, for any date, the rate equal to the
weighted average per annum discount rate (expressed as a bond equivalent yield
and applied on a daily basis) for direct obligations of the United States with a
maturity of thirteen weeks ("91-day Treasury-Bills") sold at the applicable
91-day Treasury-Bill auction on or most recently prior to such date, as
published on the website http://www.treasurydirect.gov/RI/OFBills or otherwise
as reported by the U.S. Department of the Treasury. In the event that the
results of the auctions of 91-day Treasury Bills cease to be published or
reported as provided above, or that no 91-day Treasury Bill auction is held in a
particular week, then the 91-day Treasury-Bill Rate in effect as a result of the
last such publication or report will remain in effect until such

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

time, if any, as the results of auctions of 91-day Treasury-Bills will again be
so published or reported or such auction is held, as the case may be.
“Administrator” shall mean the Administrator of RUS.
“Advance” shall have the meaning given to that term in the Bond.
“Agreement” shall mean this Second Amended, Restated and Consolidated Bond
Guarantee Agreement, as the same may be amended, supplemented, consolidated or
restated from time to time.
“Application” shall have the meaning given to that term in the recitals hereto.
“Bond” shall have the meaning given to that term in the recitals hereto.
“Bond Fee” shall mean the fee applicable to each Advance as calculated in
accordance with paragraph 9(b) of the Bond.
“Bond Purchase Agreements” shall have the meaning given to that term in the
recitals hereto.
“Bond Documents” shall mean the Bonds, the Bond Purchase Agreements, the
Guarantees, this Agreement, the Pledge Agreement and the Reimbursement Notes.
“Borrower” shall have the meaning given to that term in the Preamble.
“Borrower Notice” shall have the meaning given to that term in the Pledge
Agreement.
“Business Day” shall mean any day other than a Saturday, a Sunday, a legal
public holiday under 5 U.S.C. §6103 for the purpose of statutes relating to pay
and leave of employees or any other day declared to be a legal holiday for the
purpose of statutes relating to pay and leave of employees by Federal statute or
Federal Executive Order.
“Certificate of Pledged Collateral” shall have the meaning given to that term in
the Pledge Agreement.
“Closing Date” shall mean December 1, 2016.
“Consolidated Subsidiary” means at any date any Subsidiary and any other entity
the accounts of which would be combined or consolidated with those of the
Borrower in its combined or consolidated financial statements if such statements
were prepared as of such date.
“Eligible Loan” shall mean all or part of any Loan that the Borrower has made
for any electrification or telephone purpose eligible under the RE Act, to the
extent the Loan is not used directly or indirectly to fund projects for the
generation of electricity.

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

“Event of Default” shall have the meaning given to that term in Section 10.1.
“FFB” shall have the meaning given to that term in the recitals hereto.
“Financial Statements”, in respect of a Fiscal Year, shall mean the consolidated
financial statements (including footnotes) of the Borrower for that Fiscal Year
as audited by independent certified public accountants appointed by the
Borrower.
“Fiscal Year” shall mean the fiscal year of the Borrower, as such may be changed
from time to time, which at the date hereof commences on June 1 of each calendar
year and ends on May 31 of the following calendar year.
“Government” shall have the meaning given to that term in the Preamble.
“Guarantee” shall mean a guarantee executed by the Secretary, in the form
attached to a Bond.
“Guarantee Fee” shall have the meaning given to that term in Section 4.1.
“Guaranteed Bond” shall mean a Bond with the executed Guarantee attached
thereto.
“Indebtedness” with respect to any Person shall mean without duplication:
(a)    all indebtedness which would appear as indebtedness on a balance sheet of
such Person prepared in accordance with generally accepted accounting principles
(i) for money borrowed, (ii) which is evidenced by securities sold for money or
(iii) which constitutes purchase money indebtedness;
(b)    all indebtedness of others guaranteed by such Person (not including
endorsements for collection or deposit in the ordinary course of business);
(c)    all indebtedness secured by any mortgage, lien, pledge, charge or
encumbrance upon property owned by such Person, even though such Person has not
assumed or become liable for the payment of such indebtedness; and
(d)    all indebtedness of such Person created or arising under any conditional
sale or other title retention agreement (including any lease in the nature of a
title retention agreement) with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession of such property),
but only if such property is included as an asset on the balance sheet of such
Person,
provided that, in computing the “Indebtedness” of such Person, there shall be
excluded any particular indebtedness if, upon or prior to the maturity thereof,
there shall have been deposited with the proper depositary in trust money (or
evidences of such indebtedness) in the amount necessary to pay, redeem or
satisfy such indebtedness; and provided further that no provision of this
definition shall be construed to include as

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

“Indebtedness” of the Borrower or its Consolidated Subsidiaries any indebtedness
by virtue of any agreement by the Borrower or its Consolidated Subsidiaries to
advance or supply funds to Members or Consolidated Subsidiary members.
“Investment Grade Rating” shall mean, in respect of any ratable instrument, a
rating for that instrument in one of the four highest rating categories (within
which there may be subcategories or gradations which are to be ignored for the
purposes of this definition) of a Rating Agency. At the date hereof, this would
require the following: (i) a BBB- rating or higher from Standard & Poor’s, a
division of The McGraw-Hill Companies, Inc.; (ii) a Baa3 rating or higher from
Moody’s Investors Service, Inc.; or (iii) a BBB- rating or higher from Fitch,
Inc.
“Loan” shall mean a loan that the Borrower has or will have outstanding to any
of its Members or associates.
“Member” shall mean any Person who is member or patron of the Borrower, as the
case may be.
“Original Bonds” shall have the meaning given to that term in the recitals
hereto.
“Original Bond Purchase Agreements” shall have the meaning given to that term in
the recitals hereto.
“Person” means an individual, a corporation, a partnership, an association, a
trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
“Pledge Agreement” shall mean the Third Amended, Restated and Consolidated
Pledge Agreement dated as of December 1, 2016 entered into by the Borrower, RUS
and U.S. Bank National Association, an executed copy of which is attached as
Annex C hereto, and an executed original of which has previously been delivered
to each of the parties thereto, as the same may be amended, supplemented, or
restated from time to time in accordance with the terms thereof and hereof.
“Prior Bond Guarantee Agreement” shall have the meaning given to that term in
the recitals hereto.
“Program” shall mean the guarantee program for bonds and notes issued for
electrification or telephone purposes authorized by Section 313A of the RE Act
and 7 C.F.R. Part 1720.
“Rating Agency” shall mean (i) Standard & Poor’s, a division of The McGraw-Hill
Companies, Inc., Moody’s Investors Service, Inc., or Fitch, Inc.; and (ii) their
respective successor rating agencies.
“RE Act” shall have the meaning given to that term in the recitals hereto.

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

“Regulations” shall have the meaning given to that term in the recitals hereto.
“Reimbursement Note” shall mean a note issued by the Borrower to RUS, in the
form of Annex D attached hereto, as the same may be amended, supplemented, or
restated from time to time in accordance with the terms thereof and hereof.
“Requested Advance Date” shall have the meaning given to that term in the Bonds.
“RUS” shall have the meaning given to that term in the Preamble.
“Secretary” shall mean the Secretary of Agriculture acting through the
Administrator.
“Senior Secured Credit Rating” means a credit rating of the Borrower by a Rating
Agency in the category of “Senior Secured”, as set forth in an annual credit
opinion or letter for the Borrower.
“Series L Bond” shall have the meaning given to that term in the recitals
hereto.
“Series L Guarantee” shall mean the Guarantee executed by the Secretary and
attached to the Series L Bond.
“Series L Bond Purchase Agreement” shall have the meaning given to that term in
the recitals hereto.
“Subrogation Claim” shall have the meaning given to that term in Section 9.3(a).
“Subsidiary” of any Person means (i) any corporation more than 50% of whose
stock of any class or classes having by the terms thereof ordinary voting power
to elect a majority of the directors of such corporation (irrespective of
whether or not at the time stock of any class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time owned by such Person directly or indirectly through
its Subsidiaries; and (ii) any other Person in which such Person directly or
indirectly through Subsidiaries has more than a 50% voting and equity interest;
provided that no Person shall be deemed a Subsidiary whose only assets are (A)
loans guaranteed, in whole or in part, as to principal and interest by the
Government through RUS pursuant to a guarantee; and (B) investments incidental
thereto.
“Termination Date” shall mean the date upon which this Agreement terminates in
accordance with Section 11.9.
SECTION 1.2.    Principles of Construction. Unless the context shall otherwise
indicate, the terms defined in Section 1.1 hereof include the plural as well as
the singular and the singular as well as the plural. The words “hereafter”,
“herein”,

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

“hereof”, “hereto” and “hereunder”, and words of similar import, refer to this
Agreement as a whole. The descriptive headings of the various articles and
sections of this Agreement were formulated and inserted for convenience only and
shall not be deemed to affect the meaning or construction of the provisions
hereof.
ARTICLE II    

THE GUARANTEES
SECTION 2.1.    Guarantee of Original Bonds. Prior to the execution of this
Agreement, the Secretary executed Guarantees for each of the Original Bonds
pursuant to Section 313A of the RE Act. Such Guarantees are obligations
supported by the full faith and credit of the Government and are incontestable
except for fraud or misrepresentation of which FFB had actual knowledge at the
time it extended the loan represented by the Guaranteed Bonds. The Guarantees
remain in full force and effect and are subject to the provisions set forth in
this Agreement.
SECTION 2.2.    Execution of Series L Guarantee. Upon presentation to RUS of the
Series L Bond, and upon satisfaction of the conditions set forth in Section 3.1
of this Agreement, and subject to Section 2.3, the Secretary shall execute,
pursuant to the RE Act, the Series L Guarantee.
SECTION 2.3.    Coverage of the Series L Guarantee. The Series L Guarantee shall
be an obligation supported by the full faith and credit of the Government and
incontestable except for fraud or misrepresentation of which FFB had actual
knowledge at the time it extended the loan represented by the Series L
Guaranteed Bond.
SECTION 2.4.    Payment on the Guarantees. RUS guarantees the full repayment of
the principal, interest, late payment charges, Bond Fees and discount or
prepayment premiums, if any, when and as due on the Guaranteed Bonds in
accordance with the terms of the Guarantees, provided, however, that any payment
by RUS under each Guarantee does not relieve the Borrower of any of its
obligations or liabilities under or in respect of this Agreement or any of the
Bond Documents.
SECTION 2.5.    Issuance of Additional Guarantees. RUS may from time to time
issue additional guarantees of loans of the Borrower pursuant to the RE Act.
Such guarantees shall become subject to this Agreement by the execution of a
supplement by RUS and the Borrower substantially in the form attached hereto as
Annex A.

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

ARTICLE III    

CONDITIONS PRECEDENT
SECTION 3.1.    Conditions Precedent to Issuance of a Guarantee. RUS shall be
under no obligation to execute and deliver a Guarantee unless and until the
following conditions have been satisfied or waived in writing:
(a)     Bond Documents. RUS shall have received originals of: (i) the Bond to
which the Guarantee relates (with an unexecuted Guarantee attached thereto) duly
executed on behalf of the Borrower, identical in all respects to the form of
Bond attached to the Bond Purchase Agreement except to the extent that RUS may
have approved changes therein, (ii) a Bond Purchase Agreement duly executed on
behalf of the Borrower and FFB, identical in all respects to the form of Bond
Purchase Agreement in Annex B attached hereto except to the extent that RUS may
have approved changes therein, and (iii) a Reimbursement Note duly executed on
behalf of the Borrower, identical in all respects to the form of Reimbursement
Note in Annex D attached hereto except to the extent that RUS may have approved
changes therein.
(b)     Amount of RE Act Loans. The Borrower shall have provided RUS a
certification by its Governor and its Chief Financial Officer or Chief Operating
Officer (or other senior management acceptable to the Secretary) certifying that
as of the Closing Date the outstanding principal amount of Loans made for
electrification and telephone purposes eligible under the RE Act is equal to or
greater than the amount of the Borrower’s Guaranteed Bonds under the Program,
including the Bond.
(c)     Opinion of Counsel. Counsel to the Borrower shall have furnished an
opinion substantially as to each of the matters listed in Annex E attached
hereto.
(d)     No material adverse change. The Borrower shall have certified to the
Secretary (in the manner specified in paragraph (g) of this Section 3.1), and
the Secretary shall be satisfied, that no material adverse change shall have
occurred in the financial condition of the Borrower between the date of the
Application and the date of execution of the Guarantee.
(e)     Investment Grade Rating of Bond. The Borrower shall have provided
evidence of an Investment Grade Rating from a Rating Agency for the Bond,
without regard to the Guarantee.
(f)     Senior Secured Credit Rating. The Borrower shall have provided evidence
satisfactory to the Secretary of its Senior Secured Credit Rating.
(g)     Certification of Senior Management. The Borrower shall have provided RUS
a certification by its Governor and its Chief Financial Officer or Chief
Operating Officer (or other senior management acceptable to the Secretary),

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

substantially in the form attached of Annex F attached hereto, of the following:
(i) that the Borrower is a lending institution organized as a private,
not-for-profit, cooperative association with the appropriate expertise,
experience and qualifications to make loans for electrification or telephone
purposes; (ii) the matter to be certified under paragraph (d) of this Section
3.1; and (iii) acknowledgment of the Borrower’s commitment to comply with the
reporting requirements specified in Article VI.
(h)     UCC Filing. The Borrower shall have provided RUS with evidence that the
Borrower has filed the financing statement required pursuant to Section 2.05(i)
of the Pledge Agreement.
SECTION 3.2.    Conditions Precedent to each Advance. The following conditions
shall be fulfilled to the satisfaction of RUS or waived in writing by RUS prior
to the drawdown of each Advance under a Guaranteed Bond:
(a)     Existing Loans.
(i) The Borrower shall have certified to the Secretary (in the manner specified
in paragraph (d) of this Section 3.2): (A) the total aggregate principal amount
of outstanding Eligible Loans as of the Requested Advance Date; (B) the total
aggregate principal amount of outstanding Loans as of the Requested Advance
Date; and (C) the percentage the amount in subparagraph (A) comprises of the
amount in subparagraph (B).
(ii) For Advances made under the Series L Bond, advances made under the Original
Bonds, or advances under any new Bonds executed by the Borrower subsequent to
the Closing Date, the Borrower shall have certified as to the portion of
Eligible Loans that is comprised of (A) refinanced RUS debt; (B) debt of Members
for whom both RUS and the Borrower have outstanding loans; and (C) debt of
Members for whom both RUS and the Borrower have outstanding concurrent loans
pursuant to Section 307 of the RE Act, and that the amount of Eligible Loans in
(A), (B) and (C) of this subparagraph exceeds the amount of Bonds outstanding as
of the date thereof.
(b)      Use of Proceeds. The Borrower shall have certified to the Secretary (in
the manner specified in paragraph (d) of this Section 3.2) that the Advance will
be applied: (A) to fund new Eligible Loans under the RE Act; and/or (B) to
refinance existing debt instruments of the Borrower, in the case of each such
debt instrument up to the percentage certified by the Borrower in accordance
with Section 3.2(a)(i)(C) hereof.
(c)     No material adverse change. The Borrower shall have certified to the
Secretary (in the manner specified in paragraph (d) of this Section 3.2), and
the Secretary shall be satisfied, that no material adverse change shall have
occurred in the financial condition of the Borrower between the Closing Date and
the applicable Requested Advance Date.

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

(d)     Certification of Senior Management. The Borrower shall have provided RUS
a certification by its Governor and its Chief Financial Officer or Chief
Operating Officer (or other senior management acceptable to the Secretary),
substantially in the form attached as Annex G attached hereto, of the matters to
be certified under paragraphs (a), (b) and (c) of this Section 3.2.
(e)     Certificate of Pledged Collateral. The Borrower shall have provided RUS
a copy of a Certificate of Pledged Collateral in accordance with the terms of
the Pledge Agreement.
ARTICLE IV    

GUARANTEE FEE
SECTION 4.1.    Guarantee Fee. The Borrower shall pay a guarantee fee (the
“Guarantee Fee”), to the RUS for deposit into the Rural Economic Development
Subaccount maintained under Section 313(b)(2)(A) of the RE Act.
SECTION 4.2.    Amount of Guarantee Fee; Dates of Payment. (%3) The Guarantee
Fee will be in the amount of 30 basis points (0.30 percent) of the unpaid
principal amount of the Bonds, payable as provided in paragraph (b) of this
Section 4.2.
(a)     The Guarantee Fee will be payable, in advance, on each January 15 and
July 15 in the amount of 15 basis points (0.15 percent) of the outstanding
principal amount of the Bonds on that date. In addition, on the date of each
Advance under a Bond, the Borrower will pay to RUS the Guarantee Fee on the
principal amount of such advance in the amount of (i) 30 basis points (0.30
percent) of the principal amount of such advance multiplied by (ii) the ratio of
(x) the actual amount of days from the date of such advance until the next
January 15 or July 15, whichever comes first, to (y) 365 (except in calendar
years including February 29, when the number shall be 366).
(b)     Payments of the Guarantee Fee are non-refundable as of the date and in
the amount required to be paid hereunder, without regard to any reduction in the
principal amount of the Bonds after that date.
ARTICLE V    

SERVICING OF THE GUARANTEED BONDS
SECTION 5.1.    Servicing. The Secretary, or other agent of the Secretary on his
or her behalf, shall have the right to service the Guaranteed Bonds, and
periodically inspect the books and accounts of the Borrower to ascertain
compliance with the provisions of the RE Act with respect to the guarantees
under Section 313A thereof and the Bond Documents. The Secretary, or agent
thereof, shall endeavor to give the

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

Borrower at least five Business Days’ notice of any intention to inspect the
Borrower’s books and accounts. Such inspection shall be made only during regular
office hours of the Borrower or at any time the Borrower and Secretary, or agent
thereof, find mutually convenient.
ARTICLE VI    

REPORTING REQUIREMENTS
SECTION 6.1.    Annual Reporting Requirements. Until the Termination Date, the
Borrower shall provide the Secretary with the following items within 90 days of
the end of each Fiscal Year, in each case, in form and substance satisfactory to
the Secretary:
(a)    the Financial Statements for such Fiscal Year;
(b)    a Certificate of Pledged Collateral as of the end of such Fiscal Year;
(c)    a letter substantially in the form of Annex H attached hereto, by KPMG
LLP or by such other reputable, independent certified public accountants engaged
by the Borrower, who in the judgment of the Secretary have the requisite skills,
knowledge, reputation and experience to provide such letter, such letter to be
based upon Schedule A to the applicable certificate delivered under paragraph
(b) of this Section 6.1;
(d)    a receipt from the Collateral Agent (as defined in the Pledge Agreement),
or such other evidence as is satisfactory to the Secretary, as to the Pledged
Collateral held by the Collateral Agent at the end of such Fiscal Year, such
Pledged Collateral to agree with Schedule A to the applicable certificate
delivered under paragraph (b) of this Section 6.1;
(e)    a projection of the Borrower’s balance sheet, income statement and
statement of cash flows over the ensuing five years, pro forma assuming the full
principal amount of the Bond is advanced;
(f)    the most recent credit assessment of the Borrower issued by a Rating
Agency;
(g)    the most recent Senior Secured Credit Rating issued by a Rating Agency;
and

(h)    such other information as is reasonably requested by the Secretary.

SECTION 6.2. Default Notices. If an action, occurrence or event shall happen
that is, or with notice and the passage of time would become, an Event of
Default,

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

the Borrower shall deliver a Borrower Notice of such action, occurrence or event
to RUS before 4:00 p.m. District of Columbia time on the Business Day following
the date the Borrower becomes aware of such action, occurrence or event, and, if
such Event of Default should occur, shall submit to RUS, as soon as possible
thereafter, a report setting forth its views as to the reasons for the Event of
Default, the anticipated duration of the Event of Default and what corrective
actions the Borrower is taking to cure such Event of Default.
ARTICLE VII    

LIMITATIONS ON AMENDMENTS TO THE GUARANTEED BONDS
SECTION 7.1.    Limitations on Amendments to the Guaranteed Bonds. No amendment
or supplement to, and no modification or rescission of, the Guaranteed Bonds
shall be effective unless approved in writing by RUS, nor shall any waiver of
any rights of RUS under the Guaranteed Bonds be effective against RUS unless
such waiver has been approved in writing by RUS. No amendment or supplement to,
and no modification of, any of the other Bond Documents, which materially
adversely affects RUS, shall be effective unless approved in writing by RUS, nor
shall any waiver of any rights of RUS under any of the Bond Documents be
effective against RUS unless such waiver has been approved in writing by RUS.
ARTICLE VIII    

REPRESENTATIONS OF THE PARTIES
SECTION 8.1.    Representation of RUS. RUS represents that the Guarantees
endorsed on the original of the Guaranteed Bonds constitute legal, valid and
binding obligations supported by the full faith and credit of the Government,
incontestable except for fraud or misrepresentation of which FFB had actual
knowledge at the time it extended the loan represented by the Guaranteed Bonds.
SECTION 8.2.    Representations of the Borrower. The Borrower hereby represents
to RUS that on the date hereof, the Closing Date, and each Requested Advance
Date:
(a)    the Borrower has been duly organized and is validly existing and in good
standing as a cooperative association under the laws of the District of
Columbia;
(b)    the Borrower has the corporate power and authority to execute and deliver
this Agreement and each of the other Bond Documents to which the Borrower is a
party, to consummate the transactions contemplated hereby and thereby and to
perform its obligations hereunder and thereunder;

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

(c)    the Borrower has taken all necessary corporate action to authorize the
execution and delivery of this Agreement and each of the other Bond Documents to
which the Borrower is a party, the consummation by the Borrower of the
transactions contemplated hereby and thereby and the performance by the Borrower
of its obligations hereunder and thereunder;
(d)    this Agreement and each of the other Bond Documents to which the Borrower
is a party have been duly authorized, executed and delivered by the Borrower and
constitute the legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms, subject to: (i)
applicable bankruptcy, reorganization, insolvency, moratorium and other laws of
general applicability relating to or affecting creditors’ rights generally; and
(ii) the application of general principles of equity regardless of whether such
enforceability is considered in a proceeding in equity or at law;
(e)    no approval, consent, authorization, order, waiver, exemption, variance,
registration, filing, notification, qualification, license, permit or other
action is now, or under existing law in the future will be, required to be
obtained, given, made or taken, as the case may be, with, from or by any
regulatory body, administrative agency or governmental authority having
jurisdiction over the Borrower to authorize the execution and delivery by the
Borrower of this Agreement or any of the other Bond Documents to which the
Borrower is a party, or the consummation by the Borrower of the transactions
contemplated hereby or thereby or the performance by the Borrower of its
obligations hereunder or thereunder;
(f)    neither the execution or delivery by the Borrower of this Agreement or
any of the other Bond Documents to which the Borrower is a party nor the
consummation by the Borrower of any of the transactions contemplated hereby or
thereby nor the performance by the Borrower of its obligations hereunder or
thereunder, including, without limitation, the pledge of the Pledged Securities
(as such term is defined in the Pledge Agreement) to RUS if required, conflicts
with or will conflict with, violates or will violate, results in or will result
in a breach of, constitutes or will constitute a default under, or results in or
will result in the imposition of any lien or encumbrance pursuant to any term or
provision of the articles of incorporation or the bylaws of the Borrower or any
provision of any existing law or any rule or regulation currently applicable to
the Borrower or any judgment, order or decree of any court or any regulatory
body, administrative agency or governmental authority having jurisdiction over
the Borrower or the terms of any mortgage, indenture, contract or other
agreement to which the Borrower is a party or by which the Borrower or any of
its properties is bound;
(g)    there is no action, suit, proceeding or investigation before or by any
court or any regulatory body, administrative agency or governmental authority
presently pending or, to the knowledge of the Borrower, threatened with respect
to the Borrower, this Agreement or any of the other Bond Documents to which the
Borrower is a party challenging the validity or enforceability of this

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

Agreement or any of the other Bond Documents to which the Borrower is a party or
seeking to restrain, enjoin or otherwise prevent the consummation by the
Borrower of the transactions contemplated by this Agreement or any of the other
Bond Documents to which the Borrower is a party or which, if adversely
determined, would have a material adverse effect on the Borrower’s financial
condition or its ability to perform its obligations under this Agreement or any
of the other Bond Documents to which the Borrower is a party;
(h)    the Borrower is a lending institution organized as a member-owned,
not-for-profit, cooperative association with the appropriate expertise,
experience and qualifications to make loans for electrification or telephone
purposes;
(i)    the total principal amount of the Guaranteed Bonds under the Program does
not exceed the total principal amount of outstanding Loans, made for
electrification and telephone purposes eligible under the RE Act, as of the
Closing Date; and
(j)    no material adverse change has occurred in the financial condition of the
Borrower between the date of the Application and the date this representation is
given.
ARTICLE IX    

AGREEMENTS OF THE BORROWER
SECTION 9.1.    Patronage Refunds. The Borrower shall not make cash patronage
refunds in excess of five percent of its total patronage capital, as disclosed
in its most recent Financial Statements, during any portion of a Fiscal Year in
which the Borrower has a Senior Secured Credit Rating (without regard to the
Guarantee or any other third party credit support) that is not equal to at least
two of the following ratings: (i) “A-”or higher from Standard & Poor’s, a
division of The McGraw-Hill Companies, Inc.; (ii) “A3” or higher from Moody’s
Investors Service, Inc.; (iii) “A-” or higher from Fitch, Inc.; and (iv) an
equivalent rating from a successor rating agency to any of those Rating
Agencies. While the Borrower is subject to such restriction, equity securities
issued as part of a patronage refund shall not be redeemed in cash, and, if the
Borrower shall have outstanding any common stock or preferred stock, the
Borrower shall not issue any dividends on any such stock.
SECTION 9.2.    Security and Collateral. (%3) The Pledged Securities (as such
term is defined in the Pledge Agreement) shall be pledged immediately upon the
execution of the Pledge Agreement and delivery of the Certificate of Pledged
Collateral in accordance with the terms and conditions of the Pledge Agreement
to secure the payment obligations of the Borrower under this Agreement and under
the Reimbursement Notes.

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

(a)     Until the Termination Date, the Borrower shall cause the Pledged
Collateral (as such term is defined in the Pledge Agreement) to be at all times
not less than 100% of the aggregate principal amount of the Guaranteed Bonds and
any other guaranteed bonds issued by the Borrower under the Program and, except
as provided for in paragraph (a) of this Section 9.2 or otherwise permitted by
the Pledge Agreement, shall not create, or permit to exist, any pledge, lien,
charge, mortgage, encumbrance, debenture, hypothecation or other similar
security instrument that secures, or in any way attaches to, such Pledged
Collateral without the prior written consent of RUS.
SECTION 9.3.    Subrogation. (%3) The Borrower agrees that RUS shall be
subrogated to the rights of FFB to the extent of any and all payments made by
RUS under each Guarantee (herein called the “Subrogation Claim”). The Borrower
agrees to pay directly to RUS all amounts due on the Guaranteed Bonds as to
which RUS is so subrogated, together with interest thereon (to the extent
permitted by applicable law) at a rate determined by the following paragraph,
and such payments shall satisfy the obligations of the Borrower hereunder with
respect to such amounts paid by RUS.
(a)     The Subrogation Claim of RUS shall bear interest from the date of
payment by RUS under the Guarantees until the date such claim is satisfied.
Interest shall accrue at an annual rate of the greater of 1.5 times the 91-day
Treasury-Bill Rate or 200 basis points (2.00%) above the interest rate on the
Guaranteed Bonds.
SECTION 9.4.    Use of Proceeds. (%3) The Borrower shall only apply the proceeds
of the Guaranteed Bonds to finance new Eligible Loans or, subject to paragraph
(b), to refinance existing debt instruments of the Borrower.
(a)     The Borrower may only apply the proceeds of each Advance to refinance
any of the Borrower’s indebtedness up to the percentage certified by the
Borrower under Section 3.2(a)(iii) hereof of the amount of such indebtedness
being refinanced.
SECTION 9.5.    Compliance with Covenants in Other Agreements. The Borrower and
each of its Subsidiaries will observe and perform within any applicable grace
period all covenants and agreements (as the same may be from time to time
amended or waived) contained in any agreement or instrument relating to any
Indebtedness of the Borrower or any of its Subsidiaries, aggregating for the
Borrower and its Subsidiaries in excess of $50,000,000, if the effect of the
failure to observe or perform such covenant or agreement is to accelerate, or to
permit the holder of such Indebtedness or any other Person to accelerate, the
maturity of such Indebtedness.
SECTION 9.6.    Ratings. For the term of the Bonds, the Borrower shall request,
and do all things reasonably within its power to obtain (including paying all
fees incidental thereto), Senior Secured Credit Ratings from at least two Rating
Agencies on at least an annual basis. The Borrower agrees to provide the
Secretary with all published

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

updates on the Borrower’s credit ratings, including all published agency reports
relating to the Borrower.
SECTION 9.7.    Acknowledgment of Borrower. The Borrower acknowledges and agrees
that failure by the Borrower to receive any repayment under a Loan, does not
affect the Borrower’s obligations to make payments under this Agreement or any
other Bond Document.
SECTION 9.8.    Financial Expert. The Borrower will cause a financial expert
(within the meaning of Section 407 of the Sarbanes-Oxley Act of 2002) to serve
on the audit committee of its board of directors until the Termination Date; and
shall not allow the financial expert position on the audit committee to remain
vacant for more than 90 consecutive days.
SECTION 9.9.    Compliance with Federal Laws and Regulations. The Borrower shall
comply with all applicable Federal laws and regulations.
SECTION 9.10.    RUS Site Visits to the Borrower’s Headquarters. The Borrower
agrees, upon three Business Days’ notice, to allow RUS to conduct site visits to
the Borrower’s corporate headquarters to assess (i) CFC’s processes for pledging
Pledged Collateral under the Pledge Agreement and (ii) the Borrower’s other
related financial operations.
SECTION 9.11.    Annual Meeting Between CFC and RUS. CFC agrees to meet with RUS
on an annual basis, within 30 days of the filing of its Form 10-K with the
Securities and Exchange Commission, to discuss its financial condition for the
most recent fiscal year, which will include an analysis of (i) how CFC is
preparing for and proposes to meet its long-term debt obligations, and (ii)
CFC’s interest rate risk management strategy, including its positions in
derivatives and its risk sensitivity.
ARTICLE X    

EVENTS OF DEFAULT
SECTION 10.1.    Events of Default. Each of the following actions, occurrences
or events shall, but only (except in the case of subsections (a), (c) and (e)
below) if the Borrower does not cure such action, occurrence or event within 30
days of notice from RUS requesting that it be cured, constitute an “Event of
Default” under the terms of this Agreement:
(a)    A failure by the Borrower to make a payment of principal, interest or a
Bond Fee when due on a Guaranteed Bond;
(b)    The issuance of a Guaranteed Bond in violation of the terms and
conditions of this Agreement or any of the other Bond Documents;

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

(c)    A failure by the Borrower to make payment of the Guarantee Fee required
by Article IV when due;
(d)    A misrepresentation by the Borrower to the Secretary in any material
respect in connection with this Agreement, the Guaranteed Bonds or the
information reported pursuant to Article VI;
(e)    A failure by the Borrower to comply with the covenant contained in
Section 9.5 hereof; or
(f)    A failure by the Borrower to comply with any other material covenant or
provision contained in this Agreement or any of the other Bond Documents, except
that the failure of the Borrower to comply with Section 9.8 hereof shall not
constitute such an Event of Default.
SECTION 10.2.    Compulsory Redemption. If an Event of Default occurs, the
Secretary may demand that the Borrower redeem the Guaranteed Bonds in accordance
with its terms.
SECTION 10.3.    Acceleration by RUS’s Purchase of the Bonds. If an Event of
Default occurs, and RUS purchases from FFB each Bond in its entirety in the
manner provided in Section 13.5 of each Bond Purchase Agreement, then the entire
purchase price shall be included in the Principal Amount of the Reimbursement
Notes as defined therein and shall be immediately due and payable to RUS.
Payment to RUS of all amounts due under the Reimbursement Notes after such an
acceleration shall satisfy in full all obligations of the Borrower under the
Bonds and Reimbursement Notes and all corresponding obligations under the other
Bond Documents, including any obligations to reimburse RUS for any payments
thereafter made by RUS under the RUS Guarantees.
SECTION 10.4.    Effect of Payments by RUS pursuant to the RUS Guarantees. No
payment by RUS pursuant to the RUS Guarantees shall (i) be considered a payment
for purposes of determining the existence of a failure of the Borrower to
perform its obligations to RUS under the Bond Documents, or (ii) relieve the
Borrower of its obligations to reimburse RUS for payments made by RUS pursuant
to the RUS Guarantees. Payment by the Borrower to RUS of amounts due under the
Reimbursement Notes shall satisfy pro tonto the corresponding obligations of the
Borrower under the Bonds.
SECTION 10.5.    Remedies Not Exclusive. Upon the occurrence of an Event of
Default, the Secretary shall be entitled to take such other action as is
provided for by law, in this Agreement, or in any of the other Bond Documents,
including injunctive or other equitable relief.

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

ARTICLE XI    

MISCELLANEOUS
SECTION 11.1.    GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE UNITED STATES OF
AMERICA, TO THE EXTENT APPLICABLE, AND OTHERWISE THE LAWS OF THE DISTRICT OF
COLUMBIA.
SECTION 11.2.    WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.2.
SECTION 11.3.    Method of Payment. All payments to be made by the Borrower to
RUS hereunder, shall be made in the manner notified to the Borrower by RUS from
time to time in accordance with Section 11.4.
SECTION 11.4.    Notices. All notices and other communications hereunder to be
made to any party shall be in writing and shall be addressed as specified in
Schedule I attached hereto as appropriate. The address, telephone number, or
facsimile number for any party may be changed at any time and from time to time
upon written notice given by such changing party to the other parties hereto. A
properly addressed notice or other communication to the Borrower shall be deemed
to have been delivered at the time it is sent by facsimile (fax) transmission. A
properly addressed notice or other communication to RUS shall be deemed to have
been delivered at the time it is sent by facsimile (fax) transmission, provided
that the original of such faxed notice or other communication shall have been
received by RUS within five Business Days.
SECTION 11.5.    Benefit of Agreement. This Agreement shall become effective
when it shall have been executed by RUS and the Borrower, and thereafter shall
be binding upon and inure to the respective benefit of the parties and their
permitted successors and assigns.
SECTION 11.6.    Entire Agreement. This Agreement, including Schedule I hereto
and Annexes A to H hereto, and the other Bond Documents, constitutes the

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

entire agreement between the parties hereto concerning the matters contained
herein and supersedes all prior oral and written agreements and understandings
between the parties.
SECTION 11.7.    Amendments and Waivers. (%3) No failure or delay of RUS or the
Borrower in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No waiver of any provision of this Agreement or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be authorized as provided in paragraph (b) of this Section 11.7, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No notice or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances.
(b) No provision of this Agreement may be amended or modified except pursuant to
an agreement in writing entered into by RUS and the Borrower. No provision of
this Agreement may be waived except in writing by the party or parties receiving
the benefit of and under such provision.
SECTION 11.8.    Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
SECTION 11.9.    Termination of Agreement. This Agreement shall terminate upon
the indefeasible payment in full of all amounts payable hereunder, under the
Reimbursement Notes and under the Guaranteed Bonds.
SECTION 11.10.    Survival. The representations and warranties of each of the
parties hereto contained in this Agreement and contained in each of the other
Bond Documents to which such party hereto is a party thereto, and the parties’
obligations under any and all thereof, shall survive and shall continue in
effect following the execution and delivery of this Agreement, any disposition
of the Guaranteed Bonds and the expiration or other termination of any of the
other Bond Documents, but, in the case of each Bond Document, shall not survive
the expiration or the earlier termination of such Bond Document, except to the
extent expressly set forth in such Bond Document.
SECTION 11.11.    Severability. If any term or provision of this Agreement or
any Bond Document or the application thereof to any circumstance shall, in any
jurisdiction and to any extent, be invalid or unenforceable, such term or such
provision shall be ineffective as to such jurisdiction to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
any remaining terms or provisions of such Bond Document or the application of
such term or provision to circumstances other than those as to which it is held
invalid or unenforceable.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed
by an authorized officer as of the day and year first above written.

UNITED STATES OF AMERICA, acting
through the Administrator of the Rural Utilities Service

By: /s/ BRANDON MCBRIDE
Name:    Brandon McBride
Title:    Administrator
Rural Utilities Service

NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION, as the Borrower

By: /s/ SHELDON C. PETERSEN     
Name:    Sheldon C. Petersen
Title: Governor and
Chief Executive Officer

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SCHEDULE I
TO
AMENDED, RESTATED AND CONSOLIDATED BOND GUARANTEE AGREEMENT
Addresses for Notices
1.
The addresses referred to in Section 11.4 hereof, for purposes of delivering
communications and notices, are as follows:

If to RUS:
Rural Utilities Service
United States Department of Agriculture
1400 Independence Avenue, SW
Washington, DC 20250
Fax: 202-720-1725
Attention of: The Administrator
Subject: Guaranteed Underwriter Program
and
Ms. Amy McWilliams
Management Analyst
Rural Utilities Service
United States Department of Agriculture
1400 Independence Avenue, SW
Stop 1568, Room 0226-S
Washington, DC 20250
Email: Amy.McWilliams@wdc.usda.gov
Fax: 844-749-0736

If to the Borrower:
National Rural Utilities Cooperative Finance Corporation
20701 Cooperative Way
Dulles, VA 20166
Telephone: 703-467-7402
Fax: 703-467-5178
Attention of: J. Andrew Don, Chief Financial Officer
With a copy to:
National Rural Utilities Cooperative Finance Corporation
20701 Cooperative Way
Dulles, VA 20166
Telephone: 703-467-1872

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

Fax: 703-467-5651
Attention of: Roberta B. Aronson, Esq., General Counsel

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ANNEX A
Form of Supplement to Third Amended, Restated and Consolidated Bond Guarantee
Agreement

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

SUPPLEMENT TO THIRD AMENDED, RESTATED AND CONSOLIDATED BOND GUARANTEE AGREEMENT
dated as of [_____________] (the “Supplement”) by and between the UNITED STATES
OF AMERICA (the “Government”), acting through the Rural Utilities Service, a
Rural Development agency of the United States Department of Agriculture, and its
successors and assigns (“RUS”); and NATIONAL RURAL UTILITIES COOPERATIVE FINANCE
CORPORATION, a cooperative association existing under the laws of the District
of Columbia (the “Borrower”).
RECITALS

1, The Borrower and RUS are parties to that certain Third Amended, Restated and
Consolidated Bond Guarantee Agreement, dated as of December 1, 2016, pursuant to
which RUS has agreed to issue guarantees of certain Bonds, as contemplated by
Section 313A of the RE Act, upon the terms and subject to the conditions
provided therein (the “Original Agreement”). Capitalized terms that are not
defined herein shall have the meanings assigned to them in the Original
Agreement.
2. On [date of Application], the Borrower applied to RUS, in accordance with
Section 313A of the Act and the Regulations, for RUS to guarantee a [Application
number] loan from FFB to the Borrower, the proceeds of which would be used by
the Borrower to fund new Eligible Loans or to refinance existing debt
instruments of the Borrower used to fund Eligible Loans.
3, FFB is willing to make a loan to the Borrower in the aggregate principal
amount of up to $[___________] upon the terms and subject to the conditions set
forth in that certain Series [__] Bond Purchase Agreement, dated as of
[__________], by and among FFB, the Borrower and RUS, as the same may be
amended, supplemented, consolidated or restated from time to time in accordance
with the terms thereof (the “Series [__] Bond Purchase Agreement”), and upon the
terms and subject to the conditions set forth in the Series [__] Future Advance
Bond issued by the Borrower to FFB and dated as of the date hereof (the “Series
[__] Bond”).
4. RUS has determined that the Borrower is eligible for guarantees under Section
313A of the RE Act and is willing to issue its guarantee of the Series [__] Bond
(the “Section [__] Guarantee”) upon the terms and subject to the conditions set
forth in the Original Agreement.
NOW, THEREORE, in consideration of the mutual agreements herein contained, RUS
and the Borrower agree as follows:
SECTION 1. Recitals. The foregoing recitals are incorporated into the Original
Agreement by reference.
SECTION 2. Definitions.
A.
The following definitions will be added to Section 1.1 of the Original
Agreement:

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

“Series [_] Bond” shall have the meaning given to that term in the recitals
hereto.
“Series [_] Bond Purchase Agreement” shall have the meaning given to that term
in the recitals hereto.
“Series [__] Guarantee” shall have the meaning given to that term in the
recitals hereto.
B.
The following definitions shall be amended as indicated below:

“Bonds” shall mean the Original Bonds and the Series [__] Bond dated as of
[__________].
“Bond Purchase Agreement” shall mean the Original Bond Purchase Agreements, the
Series L Bond Purchase Agreement, and the Series [__] Bond Purchase Agreement
dated as of [___________].
SECTION 3. Conditions Precedent to the Issuance of the Series [__] Guarantee.
The obligation of RUS to enter into this Supplement and to issue the guarantee
of the Series [__] Bond pursuant to the terms hereof is subject to the
satisfaction of the conditions precedent listed in Section 3.1 of the Original
Agreement unless and until such conditions have been satisfied or waived in
writing.
SECTION 4. Prior Representation of RUS. The representation made by RUS in
Section 8.1 of the Original Agreement is true and correct as of the date hereof.
SECTION 5. Prior Representations of the Borrower. All representations made by
the Borrower in Section 8.2 of the Original Agreement are true and correct as of
the date hereof.
SECTION 6. Incorporation; Inconsistency with Original Agreement. Except as
otherwise amended or modified herein, the terms, conditions and provisions of
the Original Agreement are incorporated herein by reference as if set forth in
full herein and remain in full force and effect. In the event of any conflict or
inconsistency between the terms of this Supplement and the Original Agreement,
the terms of this Supplement shall control. Nothing in this Supplement shall,
however, eliminate or modify any special condition, special affirmative covenant
or special negative covenant, if any, specified in the Original Agreement.
SECTION 7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE UNITED STATES OF AMERICA, TO THE
EXTENT APPLICABLE, AND OTHERWISE THE LAWS OF THE DISTRICT OF COLUMBIA.

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed
by an authorized officer as of the day and year first above written.

UNITED STATES OF AMERICA, acting
through the Administrator of the Rural Utilities Service

By:______________________________        
Title:    Administrator
Rural Utilities Service

NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION, as the Borrower

By:_______________________________
    
Name:____________________________                            Title:
_____________________________    

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ANNEX B
Form of Bond Purchase Agreement

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Third Amended, Restated and Consolidated Bond Guarantee Agreement

ANNEX C
Pledge Agreement
Dated as of December 1, 2016

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ANNEX D
Form of Reimbursement Note

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ANNEX E
Opinion of Counsel to the Borrower
(1)    The Borrower has been duly incorporated and is validly existing as a
not-for-profit cooperative association in good standing under the laws of the
District of Columbia with corporate power and authority to execute and perform
its obligations under the Bond Documents.
(2)    The Bond Documents have been duly authorized, executed and delivered by
the Borrower, and such documents constitute the legal, valid and binding
agreements of the Borrower, enforceable against the Borrower in accordance with
their respective terms subject to (a) applicable bankruptcy, reorganization,
insolvency, moratorium and other laws of general applicability relating to or
affecting creditors’ rights generally, and (b) the application of general
principles of equity regardless of whether such enforceability is considered in
a proceeding in equity or at law.
(3)    Neither the execution nor the delivery by the Borrower of any of the Bond
Documents nor the consummation by the Borrower of any of the transactions
contemplated therein, including, without limitation, the pledge of the Pledged
Securities (as such term is defined in the Pledge Agreement) to RUS if required,
nor the fulfillment by the Borrower of the terms of any of the Bond Documents
will conflict with or violate, result in a breach of or constitute a default
under any term or provision of the Articles of Incorporation or By-laws of the
Borrower or any law or any regulation or any order known to Counsel currently
applicable to the Borrower of any court, regulatory body, administrative agency
or governmental body having jurisdiction over the Borrower or the terms of any
indenture, deed of trust, note, note agreement or instrument to which the
Borrower is a party or by which the Borrower or any of its properties is bound.
(4)    No approval, authorization, consent, order, registration, filing,
qualification, license or permit of or with any state or Federal court or
governmental agency or body including, without limitation, RUS, having
jurisdiction over the Borrower is required for any consummation by the Borrower
of the transactions contemplated by the Bond Documents except such as have been
obtained from RUS; provided, however, no opinion is expressed as to the
applicability of any Federal or state securities law to any sale, transfer or
other disposition of the Guaranteed Bond after the date hereof.
(5)    There is no pending or, to the best of Counsel’s knowledge, threatened
action, suit or proceeding before any court or governmental agency, authority or
body or any arbitrator with respect to the Borrower, or any of the Bond
Documents, or which, if adversely determined, would have a material adverse
effect on the Borrower’s financial condition or its ability to perform its
obligations under any of the Bond Documents, except as previously disclosed.

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ANNEX F
Officers’ Closing Certificate
TO:        The United States of America acting through the Rural Utilities
Service.
We, [ ], Governor and Chief Executive Officer, and [ ], Senior Vice President
and Chief Financial Officer [or Executive Vice President and Chief Operating
Officer], of National Rural Utilities Cooperative Finance Corporation (the
“Borrower”), pursuant to the Third Amended, Restated and Consolidated Bond
Guarantee Agreement dated as of December 1, 2016, between the Borrower and the
United States of America acting through the Rural Utilities Service (the “Bond
Guarantee Agreement”), hereby certify on behalf of the Borrower that as at the
date hereof:
(1)    the Borrower is a lending institution organized as a member-owned,
not-for-profit, cooperative association with the appropriate expertise,
experience and qualifications to make loans for electrification or telephone
purposes;
(2)    no material adverse change has occurred in the financial condition of the
Borrower between the date of the Application and the date hereof;
(3)    we acknowledge the commitment of the Borrower to submit to the Secretary
the documents required under Article VI of the Bond Guarantee Agreement in
accordance with the terms thereof; and
(4)    all of the representations contained in Section 8.2 of the Bond Guarantee
Agreement remain true and correct in all respects.
Capitalized terms used in this certificate shall have the meanings given to
those terms in the Bond Guarantee Agreement.
DATED as of this 1st day of December 2016.
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

______________________________
Governor and
Chief Executive Officer

                            

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ANNEX G
Officers’ Advance Certificate
TO:        The United States of America acting through the Rural Utilities
Service.
We, [ ], Governor and Chief Executive Officer, and [ ], of National Rural
Utilities Cooperative Finance Corporation (the “Borrower”), pursuant to the
Third Amended, Restated and Consolidated Bond Guarantee Agreement dated as of
December 1, 2016,, between the Borrower and the United States of America acting
through Rural Utilities Service (the “Bond Guarantee Agreement”), hereby certify
on behalf of the Borrower that:
(1)    (i) as at the last day of the most recent month ended more than 10
business days before the date hereof, the total aggregate principal amount of
outstanding Eligible Loans is: $ ;
(ii) as at the last day of the most recent month ended more than 10 business
days before the date hereof, the total aggregate principal amount of outstanding
Loans is: $ ;
(iii) the percentage the amount under (i) comprises of the amount under (ii) is:
%;
(2)    (i) Of the total aggregate principal amount of outstanding Eligible Loans
under (1) (i), the amount associated with refinancing RUS Debt is: $ ;
(ii) Of the total aggregate principal amount of outstanding Eligible Loans under
(1) (i), the amount associated with debt of Members for whom both RUS and the
Borrower have outstanding loans is: $ ;
(iii) Of the total aggregate principal amount of outstanding Eligible Loans
under (1) (i), the amount associated with debt of Members for whom both RUS and
the Borrower have outstanding concurrent loans pursuant to Section 307 of the RE
Act is: $ ; and
(iv) The sum of the amount of Eligible Loans in (2)(i), (2)(ii), and (2)(iii) of
$___________ exceeds the amount of Bonds outstanding of $___________ as of this
date.
(3)    the Advance will be applied to: (i) fund new Eligible Loans under the RE
Act; or (ii) to refinance existing debt instruments of the Borrower, in the case
of each such debt instrument up to the percentage set forth in clause (1)(iii)
above;

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(4)    as at the date hereof, no material adverse change has occurred in the
financial condition of the Borrower between the Closing Date and the applicable
Requested Advance Date; and
(5)    as at the date hereof, all of the representations contained in Section
8.2 of the Bond Guarantee Agreement remain true and correct in all respects.
Capitalized terms used in this certificate shall have the meanings given to
those terms in the Bond Guarantee Agreement.

DATED as of this 1st day of December, 2016.
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

______________________________
Governor and
Chief Executive Officer

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ANNEX H
Auditors’ Letter
To the Board of Directors of
National Rural Utilities Cooperative Finance Corporation
Dulles, Virginia
We have performed the procedures enumerated below, which were agreed to by
National Rural Utilities Cooperative Finance Corporation (the “Company”) and the
Rural Utilities Service (the “RUS”), solely to assist in evaluating the
Company’s compliance with Section 6.1(b) of the Third Amended, Restated and
Consolidated Bond Guarantee Agreement between the Company and the United States
of America, acting through the RUS, dated December 1, 2016 (the “Bond Guarantee
Agreement”), as of [last day of preceding fiscal year]. The Company’s management
is responsible for the Company’s compliance with those requirements. This
agreed-upon procedures engagement was conducted in accordance with attestation
standards established by the American Institute of Certified Public Accountants.
The sufficiency of these procedures is solely the responsibility of those
parties specified in this report. Consequently, we make no representation
regarding the sufficiency of the procedures described below either for the
purpose for which this report has been requested or for any other purpose.
The procedures that we performed and our findings are as follows:
1.
We obtained the attached schedule of the total aggregate unpaid principal amount
of the securities identified by the Company as comprising the Pledged
Securities, as defined in the Bond Guarantee Agreement, as of [last day of
preceding fiscal year] from Company management and compared the total aggregate
unpaid principal amount shown on such schedule ($ ____) to the Company's
underlying accounting records as of the same date and found them to be in
agreement.

2.
We obtained the attached schedule of the total aggregate amount of all amounts
outstanding under the Guaranteed Bonds, as defined in the Bond Guarantee
Agreement, as of [last day of preceding fiscal year] from Company management and
compared the amount shown on such schedule ($_____) to the Company's underlying
accounting records as of the same date and found them to be in agreement.

We were not engaged to, and did not, conduct an examination, the objective of
which would be the expression of an opinion on compliance. Accordingly, we do
not express such an opinion. Had we performed additional procedures, other
matters might have come to our attention that would have been reported to you.

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This report is intended solely for the information and use of the Company and
the RUS and is not intended to be and should not be used by anyone other than
these specified parties.
July , 20

Yours truly,
_____________________________
KPMG LLP