Pledge Agreement - Exhibit 4.14







       

      THE UNITED STATES OF AMERICA

      acting through the Rural Utilities Service

       

      NATIONAL RURAL UTILITIES

      COOPERATIVE FINANCE CORPORATION

       

      U.S. BANK TRUST NATIONAL ASSOCIATION

       

      _______________________________

      

      PLEDGE AGREEMENT

      

      _______________________________

       

Dated as of June 14, 2005


       









	TABLE OF
      CONTENTS

		
      
	Page
	  	  	  
	
      ARTICLE I

	
        
	
       
	
        

	
      Definitions and Other Provisions of General Application

	
       
	
       
	
       

	
      SECTION 1.01.
	
      Definitions.............................................................................................................................
	
      2

	  	  	  
	
      ARTICLE II

	  	  	  
	
      Application of this Pledge Agreement

	   	  	    
	
      SECTION 2.01.
	
      Application of the Lien of this Pledge
      Agreement................................................................
	5
	
      SECTION 2.02.
	Delivery of Certificates of
      Available Securities prior to Application of  Pledge.................	5
	
      SECTION 2.03.
	
      Maintenance of Available
      Securities.....................................................................................
	6
	
      SECTION 2.04.
	
      Existence of Rating Trigger
      Event.......................................................................................
	
      6

	
      SECTION 2.05.
	
      UCC
      Filings...........................................................................................................................
	
      6

	
      SECTION 2.06.
	
      APPLICATION OF ARTICLES III, IV AND V OF THIS PLEDGE AGREEMENT.......
	
      6

	 	 	 
	
      ARTICLE III

	 	 	 
	
      Provisions as to Pledged Collateral

	 	 	 
	
      SECTION 3.01.
	
      Pledged Securities.................................................................................................................
	
      7

	
      SECTION 3.02.
	
      Holding of Pledged
      Securities..............................................................................................
	
      7

	
      SECTION 3.03.
	
      Withdrawal and Substitution of Pledged
      Collateral............................................................
	
      7

	
      SECTION 3.04.
	
      Reassignment of Pledged Securities upon
      Payment............................................................
	
      8

	
      SECTION 3.05.
	
      Addition of Pledged
      Collateral.............................................................................................
	8
	
      SECTION 3.06.
	
      Accompanying Documentation...........................................................................................
	9
	
      SECTION 3.07.
	
      Renewal; Extension; Substitution........................................................................................
	
      9

	
      SECTION 3.08.
	
      Voting Rights; Interest and
      Principal..................................................................................
	9
	
      SECTION 3.09.
	
      Protection of Title; Payment of Taxes; Liens,
      etc...............................................................
	10
	
      SECTION 3.10.
	
      Maintenance of Pledged
      Collateral......................................................................................
	11
	
      SECTION 3.11.
	
      Representations, Warranties and
      Covenants......................................................................
	11
	
      SECTION 3.12.
	
      Further Assurances..............................................................................................................
	
      12

	   
	
      ARTICLE IV

	 	 	 
	
      Application of Moneys Included in Pledged Collateral

	 	 	 
	
      SECTION 4.01.
	
      Investment of Moneys by Collateral
      Agent..........................................................................
	12
	SECTION 4.02.	Collateral Agent To Retain
      Moneys during Event of
      Default.............................................	13
	 	 	 
	
      -i-







	
      TABLE OF CONTENTS

	
      (continued)

	  
	
      ARTICLE V

	   	  	  
	
      Remedies

	 	 	 
	
      SECTION 5.01.
	
      Events of Default....................................................................................................................
	
      14

	
      SECTION 5.02.
	
      Remedies Upon
      Default.........................................................................................................
	
      14

	
      SECTION 5.03.
	
      Application of
      Proceeds.......................................................................................
      .................
	
      16

	
      SECTION 5.04.
	
      Securities
      Act..........................................................................................................................
	16

	 	 	 
	
      ARTICLE VI

	 	 	 
	
      The Collateral Agent

	 	 	 
	
      SECTION 6.01.
	
      Certain Duties and
      Responsibilities........................................................................................
	17
	SECTION 6.02.	Certain Rights of
      Collateral Agent.........................................................................................	18 
	
      SECTION 6.03.
	
      Money Held by Collateral
      Agent............................................................................................
	20
	SECTION 6.04.	Compensation and
      Reimbursement........................................................................................	20 
	
      SECTION 6.05.
	
      Corporate Collateral Agent Required;
      Eligibility...................................................................
	
      20

	
      SECTION 6.06.
	
      Resignation and Removal; Appointment of
      Successor...........................................................
	21
	
      SECTION 6.07.
	
      Acceptance of Appointment by
      Successor.............................................................................
	
      21

	
      SECTION 6.08.
	Merger, Conversion,
      Consolidation or Succession to
      Business.............................................	
      22

	 	 	 
	
      ARTICLE VII

	 	 	 
	
      Miscellaneous

	 	 	 
	
      SECTION 7.01
	
      Notices....................................................................................................................................
	22
	
      SECTION 7.02
	
      Waivers;
      Amendment.............................................................................................................
	23
	
      SECTION 7.03
	
      Successors and
      Assigns..........................................................................................................
	23
	
      SECTION 7.04
	
      Counterparts;
      Effectiveness....................................................................................................
	23
	
      SECTION 7.05
	
      Severability...............................................................................................................................
	23
	
      SECTION 7.06
	
      GOVERNING
      LAW..............................................................................................................
	23
	
      SECTION 7.07
	
      WAIVER OF JURY
      TRIAL..................................................................................................
	24
	
      SECTION 7.08
	
      Headings..................................................................................................................................
	24
	
      SECTION 7.09
	
      Security Interest
      Absolute.......................................................................................................
	24
	
      SECTION 7.10
	
      Termination or
      Release...........................................................................................................
	24
	
      SECTION 7.11
	
      Collateral Agent Appointed
      Attorney-in-Fact........................................................................
	25
	   	   	   
	Schedule I -
	Form of Certificate
      of Available Securities	   
	Schedule II -	Form of Certificate
      of Pledged Collateral	  
	
      Schedule IIII -
	Addresses for
      Notices	   
	 	 	   
	  	
      -ii-
	  




                                                                                   
            PLEDGE AGREEMENT, dated as of June 14, 2005, 

                                                               
            among NATIONAL
            RURAL UTILITIES COOPERATIVE FINANCE

                                                               
            CORPORATION, a District of
            Columbia cooperative association and its 

                                                               
            successors and assigns
            (hereinafter called the "Borrower"), having its
            principal

                                                               
            executive office and mailing address at 2201 Cooperative
            Way, Herndon, VA

                                                               
            20171-3025, the UNITED STATES OF AMERICA, acting
            through the Rural

                                                               
            Utilities Service, a Rural Development agency of
            the United States Department

                                                               
            of Agriculture and its successors and
            assigns ("RUS"), and U.S. BANK 

                                                               
            TRUST NATIONAL
            ASSOCIATION, a national association and its 

                                                               
            successors and assigns
            (hereinafter called the "Collateral Agent"), having
            its 

                                                               
            corporate office at 100 Wall Street, Suite 1600, New York, NY 10005-3701.

RECITALS OF THE BORROWER

              WHEREAS the Borrower has issued a bond to the Federal Financing Bank to
represent a loan therefrom in the aggregate principal amount of up to
$1,000,000,000 (hereinafter called the "Initial Bond"); and the
Initial Bond has been guaranteed by RUS pursuant to a Series A Bond Guarantee
Agreement dated as of June 14, 2005, between the Borrower and RUS (together
with all additional similar bond guarantee agreements between the Borrower and
RUS related to guarantees under Section 313A of the Rural Electrification Act of
1936, as amended, the "Bond Guarantee Agreement"); and

              WHEREAS the Borrower may from time to time issue additional bonds to the
Federal Financing Bank that are guaranteed by RUS (together with the Initial
Bond, the "Bonds"); and

              WHEREAS, the Borrower is required pursuant to the terms of the Bond Guarantee
Agreement to pledge certain property to the Collateral Agent for the benefit of
RUS if a Rating Trigger Event exists;

              NOW, THEREFORE, THIS PLEDGE AGREEMENT WITNESSETH that, to secure the
performance of the certain Obligations contained in the Bond Guarantee
Agreement, the Reimbursement Note and herein, for the duration of any
Rating Trigger Event, the Borrower assigns and pledges to the Collateral Agent,
its successors and assigns, for the benefit of RUS, and grants to the Collateral
Agent, its successors and assigns, for the benefit of RUS, a security interest
in the following (collectively referred to as the "Pledged Collateral")
in each case with effect from and after the occurrence of a Rating Trigger Event
and as otherwise provided in Article II: (a)(i) the Pledged Securities and the
certificates representing the Pledged Securities; (ii) subject to Section 3.08,
all payments of principal or interest, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of, in
exchange for, and all other Proceeds received in respect of, the Pledged
Securities 

  1



Pledge Agreement

 pledged hereunder; (iii) subject to Section 3.08, all rights and
privileges of the Borrower with respect to the Pledged Securities pledged
hereunder; (iv) all Proceeds of any of the foregoing above; and (b) any
property, including cash and Permitted Investments, that may, on the date hereof
or from time to time hereafter, be subject to the Lien hereof by the Borrower by
delivery, assignment or pledge thereof to the Collateral Agent hereunder and the
Collateral Agent is authorized to receive the same as additional security
hereunder (subject to any reservations, limitations or conditions agreed to in
writing by the Borrower and RUS respecting the scope or priority of such
security or the use and disposition of such property or the Proceeds thereof).

              TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for the benefit of RUS,
forever; subject, however, to the terms, covenants and
conditions hereinafter set forth.


ARTICLE I



Definitions and Other Provisions of General Application


              SECTION 1.01. Definitions.
For all purposes of this Pledge Agreement, except as otherwise expressly
provided or unless the context otherwise requires:

                  (i) the terms defined in this Article have the meanings assigned to them
    in this Article, and include the plural as well as the singular;

                  (ii) all accounting terms not otherwise defined herein have the meanings
    assigned to them in accordance with generally accepted accounting
    principles;

                  (iii) all reference in this instrument to designated
    "Articles", "Sections" and other subdivisions are to the
    designated Articles, Sections and other subdivisions of this instrument; and

                  (iv) the words "herein", "hereof" and
    "hereunder" and other words of similar import refer to this Pledge
    Agreement as a whole and not to any particular Article, Section or other
    subdivision.

              "Allowable Amount" on any date, means:





  
(a) with respect to cash, 100% thereof;



            


            

            
              
(b) with respect to Eligible Securities, the aggregate principal
amount of such Eligible Securities theretofore advanced thereon which remains
unpaid on such date; and


(c) with respect to Permitted Investments, the cost to the Borrower
thereof (exclusive of accrued interest or brokerage commissions) except that
with respect to any Permitted Investments which are traded on any national
securities exchange or over-the-

2



 

            




            

Pledge Agreement


  
counter market, Allowable Amount on any date
shall mean the fair market value thereof (as determined by the Borrower).

  





              "Available Securities" means the Eligible Securities
specified in Schedule A of the Certificate of Available Securities most recently
delivered to the Collateral Agent and RUS.



              "Bond Guarantee Agreement" has the meaning given to that
term in the recitals.



              "Bonds" has the meaning given to that term in the recitals.



              "Borrower" means the Person named as the "Borrower"
in the first paragraph of this instrument.



              "Borrower Notice" and "Borrower Order"
mean, respectively, a written notice or order signed in the name of the Borrower
by either its Governor or its Chief Financial Officer, and by any Vice President
of the Borrower, and delivered to the Collateral Agent and RUS.



              "Certificate of Available Securities" means a certificate
delivered to the Collateral Agent and RUS substantially in the form of
Schedule I attached hereto.



              "Certificate of Pledged Collateral" means a certificate
delivered to the Collateral Agent and RUS substantially in the form of
Schedule II attached hereto.



              "Collateral Agent" means the Person named as the "Collateral
Agent" in the first paragraph of this instrument.



              "Eligible Security" means a note or bond of any Person
payable or registered to, or to the order of, the Borrower, the Rural Telephone
Finance Cooperative or the National Cooperative Services Corporation, and in
respect of which (i) no default has occurred in the payment of principal or
interest in accordance with the terms of such note or bond that is continuing
beyond the contractual grace period (if any) provided in such note or bond for
such payment; (ii) no "event of default" as defined in such note or
bond (or in any instrument creating a security interest in favor of the
Borrower, the Rural Telephone Finance Cooperative or the National Cooperative
Services Corporation in respect of such note or bond), shall exist that has
resulted in the exercise of any right or remedy described in such note or bond
(or in any such instrument); and (iii) such note or bond is not classified by
the Borrower as a non-performing loan under generally accepted accounting
principles in the United States.



              "Event of Default" has the meaning set forth in
Section 5.01.



              "Initial Bond" has the meaning given to that term in the
recitals.

3



Pledge Agreement



              "Lien" means any lien, pledge, charge, mortgage,
encumbrance, debenture, hypothecation or other similar security interest
attaching to any part of the Pledged Collateral.



              "Lien of this Pledge Agreement" or "Lien hereof"
means the Lien created by these presents.



              "Obligations" means the due and punctual performance of the
obligations of the Borrower to make payment under Sections 4.1, 9.4 and 10.3 of
the Bond Guarantee Agreement and, without duplication, under the Reimbursement
Note.



              "Officers' Certificate" means a certificate signed by either
the Governor or the Chief Financial Officer of the Borrower, and by any Vice
President of the Borrower, and delivered to RUS and/or the Collateral Agent, as
applicable.



              "Permitted Investment" has the meaning given to that term in
Section 4.01.



              "Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.



              "Pledge Agreement" means this Pledge Agreement, as
originally executed and as it may from time to time be supplemented, restated or
amended entered into pursuant to the applicable provisions hereof.



              "Pledged Collateral" has the meaning set forth in the
Granting Clause.



              "Pledged Securities" means has the meaning set forth in
Section 3.01.



              "Proceeds" has the meaning specified in Section 9-102
of the Uniform Commercial Code.



              "Rating Trigger Event" has the meaning given to that term in
the Bond Guarantee Agreement.



              "Reimbursement Note" has the meaning given to that term in
the Bond Guarantee Agreement.



              "RUS" means the Person named as "RUS" in
the first paragraph of this instrument.



              "RUS Notice" and "RUS Order" mean,
respectively, a written notice or order signed by the Secretary and delivered to
the Collateral Agent and the Borrower.



              "RUS Notice of Default" has the meaning given to that term
in Section 5.02.

  4



Pledge Agreement



              "Secretary" shall mean the Secretary of Agriculture acting
through the Administrator of RUS.



              "Uniform Commercial Code" means the Uniform Commercial Code
as from time to time in effect in the District of Columbia.



              "United States" means the United States of America, its
territories, possessions and other areas subject to its jurisdiction.



              "Vice President" means any vice president of the Borrower,
whether or not designated by a number or a word or words added before or after
the title "vice president".


ARTICLE II



Application of this Pledge Agreement




              SECTION 2.01. Application
of the Lien of this Pledge Agreement. Notwithstanding any other provision of
this Pledge Agreement, and in accordance with the Granting Clause hereof:


              (a) no Lien shall attach to the Available Securities in favor of the
Collateral Agent, for the benefit of RUS, prior to the occurrence of a Rating
Trigger Event;


              (b) the Lien hereof shall automatically, and without further act,
attach and apply to the Available Securities upon the occurrence of a Rating
Trigger Event subject to the terms, covenants and conditions set forth in this
Pledge Agreement; and


              (c) upon cessation of the Rating Trigger Event, the Lien hereof shall
be automatically released and the Collateral Agent shall execute and deliver to
the Borrower, at the Borrower's expense, all documents that the Borrower shall
reasonably request to evidence such release. Any execution and delivery of
documents pursuant to this paragraph (c) shall be without recourse to or
warranty by the Collateral Agent.



              SECTION 2.02. Delivery
of Certificates of Available Securities prior to Application of Pledge. At
the time of the first advance under the Initial Bond, and thereafter each time
money is advanced under the Bonds prior to the existence of a Rating Trigger
Event, the Borrower shall deliver, and from time to time prior to the existence
of a Rating Trigger Event the Borrower may deliver, a Certificate of Available
Securities to the Collateral Agent and RUS, dated not more than 30 days prior to
delivery, showing that the aggregate principal amount of Eligible Securities
specified in Schedule A thereto that have been delivered to the Collateral Agent
shall at least equal the aggregate principal amount of the Bond(s) outstanding,
or to be outstanding after any such advance, at the date thereof. At the time of
delivery of a Certificate of Available Securities, the Borrower shall deliver to
the Collateral Agent all Available Securities specified in such certificate that
are not already deposited with the Collateral Agent 

5



 Pledge Agreement

  accompanied by the
appropriate instruments of transfer executed in blank and in a form satisfactory
to the Collateral Agent and by such other instruments and documents as the
Collateral Agent may reasonably request. All Eligible Securities deposited with
the Collateral Agent that were previously Available Securities, but are no
longer specified in the Certificate of Available Securities most recently
delivered, shall, at the Borrower's expense and pursuant to a Borrower Order, be
returned by the Collateral Agent to the Borrower.



              SECTION 2.03. Maintenance
of Available Securities. Prior to the occurrence of a Rating Trigger Event:


              (a) the Collateral Agent shall hold and segregate the Available
Securities in a separate account;


              (b) the Borrower shall cause the aggregate principal amount of
Available Securities at all times to be not less than 100% of the aggregate
principal amount of the Bond(s) outstanding; and


              (c) the Borrower shall not create, or permit to exist, any Lien that
is secured by, or in any way attaches to, the Available Securities, without the
prior written consent of RUS.



              SECTION 2.04. Existence
of Rating Trigger Event. For the purposes of this Pledge Agreement (but
without affecting whether or not the Lien hereof applies):


              (a) the Collateral Agent shall not be required
to recognize that a Rating Trigger Event exists before such time as the
Collateral Agent receives an RUS Notice or Borrower Notice stipulating the
existence of such event; and


              (b) the Collateral Agent shall not be required
to recognize that a Rating Trigger Event has ceased to exist until (i) such time
as the Collateral Agent receives an RUS Notice stipulating that such event has
ceased to exist; or (ii) 30 days after receipt by the Collateral Agent of a
Borrower Notice stipulating that such event has ceased, provided that the
Collateral Agent does not receive an RUS Notice within such timeframe disputing
the cessation of such Rating Trigger Event. Upon receipt of any such
Borrower Notice under subparagraph (ii) of this Subsection, the Collateral Agent
shall provide a copy of such Borrower Notice to RUS.



              SECTION 2.05. UCC
Filings. The Borrower shall prepare and file in the proper Uniform
Commercial Code filing office in the District of Columbia (i) on or prior to the
Closing Date, a financing statement recording the Collateral Agent's interest in
the Pledged Collateral; and (ii) from time to time thereafter, continuation
statements or such other filings as are necessary to maintain the perfection of
the Lien hereof on the Pledged Collateral.



              SECTION 2.06.APPLICATION
OF ARTICLES III, IV AND V OF THIS PLEDGE AGREEMENT. THE PARTIES SHALL HAVE
NO RIGHTS OR OBLIGATIONS UNDER ARTICLES III, IV OR V HEREOF, AND THE PROVISIONS 

6



Pledge Agreement


OF SUCH ARTICLES SHALL NOT APPLY, EXCEPT DURING THE CONTINUANCE OF A RATING
TRIGGER EVENT.


ARTICLE III



Provisions as to Pledged Collateral




              SECTION 3.01. Pledged
Securities. The "Pledged Securities" shall mean:


              (a) upon and from the occurrence of a Rating Trigger Event until such
time as the first Certificate of Pledged Collateral is delivered hereunder, the
Available Securities as specified in the most recent Certificate of Available
Securities delivered prior to the occurrence of such Rating Trigger Event; and


              (b) upon and from delivery of the first Certificate of Pledged
Collateral until the cessation of such Rating Trigger Event, the Eligible
Securities listed on Schedule A and Schedule B of the Certificate of Pledged
Collateral most recently delivered.



              SECTION 3.02. Holding
of Pledged Securities. After the occurrence of a Rating Trigger Event and
unless and until an Event of Default shall occur, the Collateral Agent, on
behalf of RUS, shall hold the Pledged Securities in the name of the Borrower (or
its nominee), endorsed or assigned in blank or in favor of the Collateral Agent.
Upon occurrence of an Event of Default, the Collateral Agent, on behalf of RUS,
shall have the right (in its sole and absolute discretion), to the extent a
register is maintained therefor, to register the Pledged Securities in the
Collateral Agent's own name as pledgee, or in the name of the Collateral Agent's
nominee (as pledgee or as sub-agent) or to continue to hold the Pledged
Securities in the name of the Borrower, endorsed or assigned in blank or in
favor of the Collateral Agent. Upon cessation of such Event of Default, the
Collateral Agent shall take such action as is necessary to again cause the
Pledged Securities to be registered in the name of the Borrower (or its
nominee).



              SECTION 3.03. Withdrawal
and Substitution of Pledged Collateral. (a) Any
part of the Pledged Collateral may be withdrawn by the Borrower or substituted
for cash or other Eligible Securities or Permitted Investments by the Borrower
and shall be delivered to the Borrower by the Collateral Agent upon Borrower
Order at any time and from time to time, together with any other documents or
instruments of transfer or assignment necessary to reassign to the Borrower said
Pledged Collateral and the interest of the Borrower, provided the
aggregate Allowable Amount of Pledged Collateral remaining after such withdrawal
or substitution shall at least equal the aggregate principal amount of the
Bond(s) outstanding after such withdrawal or substitution, as shown by the
Certificate of Pledged Collateral furnished to the Collateral Agent pursuant to
Subsection (b)(i) of this Section.

7



    
Pledge Agreement

              (b)
Prior to any such withdrawal or substitution, the Collateral Agent
shall be furnished with the following instruments:


  
      (i) a Certificate of Pledged Collateral, dated not more than 30
    days prior to such withdrawal or substitution, showing that immediately
    after such withdrawal or substitution the requirements of Subsection (a) of
    this Section will be satisfied; and

    (ii) an Officers' Certificate certifying that no Event of Default
    has occurred which has not been remedied.

  



              Upon any such withdrawal or substitution, the Borrower shall deliver any cash
or Eligible Securities or Permitted Investments to be substituted and the
Collateral Agent shall execute any instruments of transfer or assignment
specified in a Borrower Order as necessary to vest in the Borrower any part of
the Pledged Collateral withdrawn.

              In case an Event of Default shall have occurred and be continuing, the
Borrower shall not withdraw or substitute any part of the Pledged Collateral, provided
that any Pledged Collateral may be withdrawn (a) as provided for in Section
3.04; or (b) upon the deposit with the Collateral Agent of an amount of cash at
least equal to the Allowable Amount (at the time of such withdrawal) of the
Pledged Securities so withdrawn and the delivery to the Collateral Agent of the
instruments referred to in Subsection (b)(i) of this Section and a Borrower
Order.

              SECTION 3.04. Reassignment
of Pledged Securities upon Payment. Upon receipt of:


        (i) an Officers' Certificate stating that all payments of
    principal, premium (if any) and interest have been made upon any Pledged
    Securities held by the Collateral Agent other than payment of an amount (if
    any) specified in said certificate required fully to discharge all
    obligations on said Pledged Securities; and

        (ii)
    cash in the amount (if any) so specified fully to discharge
    said Pledged Securities, the Collateral Agent shall deliver to the Borrower upon Borrower Order said
Pledged Securities, together with any other documents or instruments of transfer
or assignment necessary to reassign to the Borrower said Pledged Securities and
the interest of the Borrower specified in such Borrower Order.



              SECTION 3.05. Addition
of Pledged Collateral. At any time, the Borrower may pledge additional
Eligible Securities, cash or Permitted Investments under this Pledge Agreement
by delivering such Pledged Collateral to the Collateral Agent, accompanied by a
Certificate of Pledged Collateral specifying such additional collateral and
dated not more than 30 days prior thereto, provided that, in the case of
additional Permitted Investments, no such Permitted Investments shall be subject
to any reservations, limitations or conditions referred to in the Granting
Clause hereof.

8




Pledge Agreement

              SECTION 3.06. Accompanying
Documentation. Where Eligible Securities are delivered to the Collateral
Agent under Section 3.03 or Section 3.05, such securities shall be accompanied
by the appropriate instruments of transfer executed in blank and in a form
satisfactory to the Collateral Agent and by such other instruments and documents
as the Collateral Agent may reasonably request. All other property delivered to
the Collateral Agent under Section 3.03 or Section 3.05 and comprising part of
the Pledged Collateral shall be accompanied by proper instruments of assignment
duly executed by the Borrower and such other instruments or documents as the
Collateral Agent may reasonably request.

              SECTION 3.07. Renewal;
Extension; Substitution. Unless and until an Event of Default shall have
occurred and be continuing, the Borrower may at any time renew or extend,
subject to the Lien of this Pledge Agreement, any Pledged Security upon any
terms or may accept in place of and in substitution for any such Pledged
Security, another Eligible Security or Securities of the same issuer or of any
successor thereto for at least the same unpaid principal amount, all as
evidenced by a Borrower Order delivered to the Collateral Agent; provided,
however, that in case of any substitution, Eligible Securities
substituted as aforesaid shall be subject to the Lien of this Pledge Agreement
as part of the Pledged Collateral and be held in the same manner as those for
which they shall be substituted, and in the case of each substituted Eligible
Security the Borrower shall provide an Officers' Certificate certifying to the
Collateral Agent that such substituted security satisfies the requirements of
this Section. So long as no Event of Default shall have occurred and be
continuing, the Collateral Agent, upon Borrower Order stating that no Event of
Default shall have occurred and be continuing, shall execute any consent to any
such renewal, extension or substitution as shall be specified in such Borrower
Order.

              SECTION 3.08. Voting
Rights; Interest and Principal. Unless and until an Event of Default
has occurred and is continuing, and RUS delivers to the Collateral Agent an RUS
Notice of Default suspending the Borrower's rights under this clause:

    
    
        (i) The Borrower shall be entitled to exercise any and all voting
    and/or other consensual rights and powers inuring to an owner of Pledged
    Securities or any part thereof provided that such rights and powers
    shall not be exercised in any manner inconsistent with the terms of the Bond
    Guarantee Agreement or this Pledge Agreement.

    
        (ii) The Collateral Agent shall execute and deliver to the
    Borrower, or cause to be executed and delivered to the Borrower, all such
    proxies, powers of attorney and other instruments as the Borrower may
    reasonably request for the purpose of enabling the Borrower to exercise the
    voting and/or consensual rights and powers it is entitled to exercise
    pursuant to subparagraph (i) above.

    
        (iii) The Borrower shall be entitled to receive and retain any and
    all interest, principal and other distributions paid on or distributed in
    respect of the Pledged Securities; provided that any non-cash
    interest, principal or other 



    9




     Pledge Agreement

    
     distributions that would constitute Pledged
    Securities if pledged hereunder, and received in exchange for Pledged
    Securities or any part thereof pledged hereunder, or in redemption thereof,
    or as a result of any merger, consolidation, acquisition or other exchange
    of assets to which such issuer of Pledged Securities may be a party or
    otherwise, shall be and become part of the Pledged Collateral, and, if
    received by the Borrower, shall not be commingled by the Borrower with any
    of its other funds or property but shall be held separate and apart
    therefrom, shall be held in trust for the benefit of the Collateral Agent
    and shall be forthwith delivered to the Collateral Agent in the same form as
    so received (with any necessary endorsement).

    

              (b) If an Event of Default shall have occurred and be continuing,
then, to the extent such rights are suspended by the applicable RUS Notice of
Default, all rights of the Borrower to interest, principal or other
distributions that the Borrower is authorized to receive pursuant to
paragraph (a)(iii) of this Section 3.08 shall cease, and all such suspended
rights shall thereupon become vested in the Collateral Agent, which shall have
the sole and exclusive right and authority to receive and retain such interest,
principal or other distributions. All interest, principal or other distributions
received by the Borrower contrary to the provisions of this Section 3.08 shall
be held in trust for the benefit of the Collateral Agent, shall be segregated
from other property or funds of the Borrower and shall be forthwith delivered to
the Collateral Agent in the same form as so received (with any necessary
endorsement). Any and all money and other property paid over to or received by
the Collateral Agent pursuant to the provisions of this paragraph (b) shall be
retained by the Collateral Agent in an account to be established by the
Collateral Agent upon receipt of such money or other property and shall be
applied in accordance with the provisions of Section 5.03. After all Events of
Default have ceased, the Collateral Agent shall promptly repay to the Borrower
(without interest) all interest, principal or other distributions that the
Borrower would otherwise be permitted to retain pursuant to the terms of
paragraph (a)(iii) of this Section 3.08 and that remain in such account.


              (c) If an Event of Default shall have occurred and be continuing,
then, to the extent such rights are suspended by the applicable RUS Notice of
Default, all rights of the Borrower to exercise the voting and consensual rights
and powers it is entitled to exercise pursuant to paragraph (a)(i) of this
Section 3.08, and the obligations of the Collateral Agent under paragraph (a)(ii)
of this Section 3.08, shall cease, and all such rights shall thereupon become
vested in the Collateral Agent, which shall have the sole and exclusive right
and authority to exercise such voting and consensual rights and powers; provided
that the Collateral Agent shall have the right from time to time during the
existence of such Event of Default to permit the Borrower to exercise such
rights and powers.

              SECTION 3.09. Protection
of Title; Payment of Taxes; Liens, etc. The Borrower will:

    
    
        (i) duly and promptly pay and discharge, or cause to be paid and
    discharged, before they become delinquent, all taxes, assessments,
    governmental and other charges lawfully levied, assessed or imposed upon or
    against any of the 



    10



    

    Pledge Agreement

    Pledged Collateral, including the income or profits
    therefrom and the interests of the Collateral Agent in such Pledged
    Collateral;

        (ii)
    duly observe and conform to all valid requirements of any
    governmental authority imposed upon the Borrower relative to any of the
    Pledged Collateral, and all covenants, terms and conditions under or upon
    which any part thereof is held;

        (iii) cause to be paid and discharged all lawful claims
    (including, without limitation, income taxes) which, if unpaid, might become
    a lien or charge upon Pledged Collateral; and

        (iv) do all things and take all actions necessary to keep the Lien
    of this Pledge Agreement a first and prior lien upon the Pledged Collateral
    and protect its title to the Pledged Collateral against loss by reason of
    any foreclosure or other proceeding to enforce any lien prior to or pari
    passu with the Lien of this Pledge Agreement.

              Nothing contained in this Section shall require the payment of any such tax,
assessment, claim, lien or charge or the compliance with any such requirement so
long as the validity, application or amount thereof shall be contested in good
faith; provided, however, that the Borrower shall have set aside
on its books such reserves (segregated to the extent required by generally
accepted accounting principles) as shall be deemed adequate with respect thereto
as determined by the Board of Directors of the Borrower (or a committee
thereof).

              SECTION 3.10. Maintenance
of Pledged Collateral. The Borrower shall cause the aggregate principal
amount of Pledged Collateral held by the Collateral Agent at all times to be not
less than 100% of the aggregate principal amount of the Bond(s) outstanding.

              SECTION 3.11. Representations,
Warranties and Covenants. The Borrower represents, warrants and covenants to
the Collateral Agent, for the benefit of RUS, that from the time that they are
pledged hereunder, and for so long as they are required to remain pledged:

              (a)
except for the Lien hereof and any Lien consented to in writing by RUS, the Borrower or the Rural Telephone Finance Cooperative or the National
Cooperative Services Corporation (i)  is and will continue to be the direct
owner, beneficially and of record, of the Pledged Securities from time to time
pledged hereunder, (ii) holds and will continue to hold the same free and
clear of all Liens, other than Liens created by this Pledge Agreement,
(iii) will make no assignment, pledge, hypothecation or transfer of, or
create or permit to exist any security interest in or other Lien on, the Pledged
Collateral, other than Liens created by this Pledge Agreement and (iv) will
defend its title or interest thereto or therein against any and all Liens (other
than the Lien created by this Pledge Agreement), however arising, of all Persons
whomsoever;

11

    


Pledge Agreement

              (b) except for restrictions and limitations imposed by the Bond
Guarantee Agreement or securities laws generally, the Pledged Securities are and
will continue to be freely transferable and assignable, and none of the Pledged
Securities are or will be subject to any restriction of any nature that might
prohibit, impair, delay or otherwise affect the pledge of such Pledged
Securities hereunder, the sale or disposition thereof pursuant hereto or the
exercise by the Collateral Agent of rights and remedies hereunder;


              (c) the Borrower has the power and authority to pledge the Pledged
Collateral pledged by it hereunder in the manner hereby done or contemplated;


              (d) no consent or approval of any governmental authority, any
securities exchange or any other Person (with the exception RUS) was or is
necessary to the validity of the pledge effected hereby (other than such as have
been obtained and are in full force and effect); and


              (e) by virtue of the execution and delivery by the Borrower of this
Pledge Agreement, when any Pledged Securities are delivered to the Collateral
Agent in accordance with this Pledge Agreement, the Collateral Agent will obtain
a legal and valid Lien upon and security interest in such Pledged Securities as
security for the payment and performance of the Obligations.

              SECTION 3.12. Further
Assurances. The Borrower will execute and deliver, or cause to be executed
and delivered, all such additional instruments and do, or cause to be done, all
such additional acts as (a) may be necessary or proper, consistent with the
Granting Clause hereof, to carry out the purposes of this Pledge Agreement and
to make subject to the Lien hereof any property intended so to be subject or
(b) may be necessary or proper to transfer to any successor the estate,
powers, instruments and funds held hereunder and to confirm the Lien of this
Pledge Agreement. The Borrower will also cause to be filed, registered or
recorded any instruments of conveyance, transfer, assignment or further
assurance in all offices in which such filing, registering or recording is
necessary to the validity thereof or to give notice thereof.


ARTICLE IV



Application of Moneys Included in Pledged Collateral


              SECTION 4.01. Investment
of Moneys by Collateral Agent. Any moneys held by the Collateral Agent as
part of the Pledged Collateral shall, upon Borrower Order and as stated therein,
be invested or reinvested by the Collateral Agent until required to be paid out
by the Collateral Agent as provided in this Pledge Agreement, in any one or more
of the following (herein called "Permitted Investments"):

    
    
        (i) obligations of or guaranteed by the United States of America
    or any agency thereof for which the full faith and credit of the United
    States of America or such agency shall be pledged;



    12



    
    Pledge Agreement

    
        (ii)
    obligations of any state or municipality, or subdivision or
    agency of either thereof, which are rated AA (or equivalent) or better by at
    least two nationally recognized statistical rating organizations or having a
    comparable rating in the event of any future change in the rating system of
    such agencies;

        (iii) certificates of deposit issued by, or time deposits of, any
    bank or trust company (including the Collateral Agent) organized under the
    laws of the United States of America or any State thereof having capital and
    surplus of not less than $500,000,000 (determined from its most recent
    report of condition, if it publishes such reports at least annually pursuant
    to law or the requirements of Federal or State examining or supervisory
    authority); and

    
        (iv) commercial paper of bank holding companies or of other
    issuers (excluding the Borrower) generally rated in the highest category by
    at least two nationally recognized statistical rating organizations and
    maturing not more than one year after the purchase thereof.

    

Unless and until an Event of Default shall have occurred and be continuing,
any interest received by the Collateral Agent on any such investments which
shall exceed the amount of accrued interest, if any, paid by the Collateral
Agent on the purchase thereof, and any profit which may be realized from any
sale, redemption or maturity of such investments, shall be paid to the Borrower.
Such investments shall be held by the Collateral Agent as a part of the Pledged
Collateral, but upon Borrower Order the Collateral Agent shall sell all or any
designated part of the same, and the proceeds of such sale shall be held by the
Collateral Agent subject to the same provisions hereof as the cash used by it to
purchase the investments so sold. In case the net proceeds realized upon any
sale, redemption or maturity shall amount to less than the purchase price paid
by the Collateral Agent for the purchase of the investments so sold, the
Collateral Agent shall notify the Borrower in writing thereof, and the Borrower
shall pay to the Collateral Agent the amount of the difference between such
purchase price and the amount so realized, and the amount so paid shall be held
by the Collateral Agent in like manner and subject to the same conditions as the
proceeds realized upon such sale. The Borrower will reimburse the Collateral
Agent for any brokerage commissions or other expenses incurred by the
Collateral Agent in connection with the purchase or sale of such investments.
The Collateral Agent may aggregate such costs and expenses of and such receipts
from such investments on a monthly basis (or such other periodic basis as the
Borrower and the Collateral Agent may agree in writing from time to time) so as
to net each against the other during such period and pay to the Borrower amounts
due to it or notify the Borrower of amounts due from it on a net basis for such
period.

              SECTION 4.02. Collateral
Agent To Retain Moneys during Event of Default. If an Event of Default shall
have occurred and be continuing, moneys held by the Collateral Agent as a part
of the Pledged Collateral shall not be paid over to the Borrower upon Borrower
Order except pursuant to Section 5.03.

13




Pledge Agreement

ARTICLE V



Remedies


              SECTION 5.01. Events
of Default. "Event of Default", wherever used herein, means
any "Event of Default" as defined in Sections 10.1(a) and 10.1(c)
of the Bond Guarantee Agreement, provided that, for the purposes of
this Pledge Agreement:


              (a) the Collateral Agent shall not be required to recognize that an
Event of Default exists before such time as the Collateral Agent receives an RUS
Notice or Borrower Notice stating that an Event of Default exists and specifying
the particulars of such default in reasonable detail; and


              (b) the Collateral Agent shall not be required to recognize that an
Event of Default has ceased until (i) such time as the Collateral Agent receives
an RUS Notice stipulating that such event has ceased to exist; or (ii) 30 days
after receipt by the Collateral Agent of a Borrower Notice stipulating that such
event has ceased to exist, provided that the Collateral Agent does not
receive an RUS Notice within such timeframe disputing the cessation of such
Event of Default, and further provided that no additional RUS Notice of
Default shall have been received in respect of any other subsisting Event(s) of
Default. Upon receipt of any Borrower Notice under subparagraph (ii) of this
Subsection, the Collateral Agent shall provide a copy of such Borrower Notice to
RUS.

              SECTION 5.02. Remedies
Upon Default. If an Event of Default shall have occurred and be continuing,
RUS may issue a notice (an "RUS Notice of Default"), which may
be combined with the notice provided under Section 5.01(b), suspending the
rights of the Borrower under Section 3.08 in part without suspending all such
rights (as specified by RUS in its sole and absolute discretion) without waiving
or otherwise affecting RUS' rights to give additional RUS Notices of Default
from time to time suspending other rights under Section 3.08 so long as
an Event of Default has occurred and is continuing. Subject to paragraph (b)
of this Section 5.02, upon cessation of an Event of Default, all rights of the
Borrower suspended under the applicable RUS Notice of Default shall revest in
the Borrower.


              (a) Upon the occurrence of an Event of Default, the Collateral Agent
shall, for the benefit and at the direction of RUS, have the right to exercise
any and all rights afforded to a secured party under the Uniform Commercial Code
or other applicable law. Without limiting the generality of the foregoing, the
Borrower agrees that the Collateral Agent shall have the right, but only if so
instructed by an RUS Order and subject to the requirements of applicable law and
the Collateral Agent's right (in its sole and absolute discretion) to receive
indemnification or other reasonable assurances that its costs and expenses in
connection therewith will be paid, to sell or otherwise dispose of all or any
part of the Pledged Collateral at a public or private sale or at any broker's
board or on any securities exchange, for cash, upon credit or for future
delivery as the Collateral Agent shall deem appropriate. The Collateral Agent
shall be authorized at any such sale of securities (if it deems it advisable to
do so) to restrict the prospective bidders or purchasers to Persons who will
represent and agree that they are purchasing 

14



 Pledge Agreement

 the Pledged Collateral for their
own account for investment and not with a view to the distribution or sale
thereof, and upon consummation of any such sale the Collateral Agent shall have
the right to assign, transfer and deliver to the purchaser or purchasers thereof
the Pledged Collateral so sold. Each such purchaser at any sale of Pledged
Collateral shall hold the property sold absolutely, free from any claim or right
on the part of the Borrower, and the Borrower hereby waives (to the extent
permitted by law) all rights of redemption, stay and appraisal which the
Borrower now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted.


              (b) The Collateral Agent shall give the Borrower 10 days' written
notice (which the Borrower agrees is reasonable notice within the meaning of
Section 9-611 of the Uniform Commercial Code or its equivalent in other
jurisdictions) of the Collateral Agent's intention to make any sale of Pledged
Collateral. Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker's board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Collateral Agent may fix and state in the notice (if any) of such sale.
At any such sale, the Pledged Collateral, or portion thereof, to be sold may be
sold in one lot as an entirety or in separate parcels, as the Collateral Agent
may (in its sole and absolute discretion) determine. The Collateral Agent shall
not be obligated to make any sale of any Pledged Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of such
Pledged Collateral shall have been given. The Collateral Agent may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Pledged Collateral is made on credit or for future delivery, the Pledged
Collateral so sold may be retained by the Collateral Agent until the sale price
is paid by the purchaser or purchasers thereof, but the Collateral Agent shall
not incur any liability in case any such purchaser or purchasers shall fail to
take up and pay for the Pledged Collateral so sold and, in case of any such
failure, such Pledged Collateral may be sold again upon like notice. At any
public (or, to the extent permitted by law, private) sale made pursuant to this
Pledge Agreement, RUS may bid for or purchase, free (to the extent permitted by
law) from any right of redemption, stay, valuation or appraisal on the part of
the Borrower (all said rights being also hereby waived and released to the
extent permitted by law), the Pledged Collateral or any part thereof offered for
sale and may make payment on account thereof by using any claim then due and
payable to RUS from the Borrower as a credit against the purchase price, and RUS
may, upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to Pledged Collateral therefor. For
purposes hereof, a written agreement to purchase the Pledged Collateral or any
portion thereof shall be treated as a sale thereof; the Collateral Agent shall
be free to carry out such sale pursuant to such agreement and the Borrower shall
not be entitled to the return of the Pledged Collateral or any portion thereof
subject thereto, notwithstanding the fact that after the Collateral Agent shall
have entered into such an agreement all Events of Default shall have been
remedied and the Obligations paid in full. As an alternative to exercising 

15



 Pledge Agreement

 the
power of sale herein conferred upon it, the Collateral Agent may proceed by a
suit or suits at law or in equity to foreclose this Pledge Agreement and to sell
the Collateral or any portion thereof pursuant to a judgment or decree of a
court or courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver. Any sale pursuant to the provisions of this Section
5.02 shall be deemed to conform to the commercially reasonable standards as
provided in Section 9-610(b) of the Uniform Commercial Code or its
equivalent in other jurisdictions.

              Section 5.03. Application
of Proceeds. The Collateral Agent shall apply the proceeds of any collection
or sale of Pledged Collateral, including any Pledged Collateral consisting of
cash, as follows:

    
    
                  FIRST, to the payment of all reasonable
    costs and expenses incurred by the Collateral Agent in connection with or
    reasonably related or reasonably incidental to such collection or sale or
    otherwise in connection with or related or incidental to this Pledge
    Agreement or any of the Obligations, including all court costs and the
    reasonable fees and expenses of its agents and legal counsel, the repayment
    of all advances made by the Collateral Agent (in its sole discretion)
    hereunder on behalf of the Borrower and any other reasonable costs or
    expenses incurred in connection with the exercise of any right or remedy
    hereunder;

    
                  SECOND, to the payment to RUS in full of
    the Obligations; such payment to be for an amount certified in a RUS
    Notice delivered to the Collateral Agent as being the amount due and owing
    to RUS under the Obligations; and

    
                  THIRD, to the Borrower, its successors or
    assigns, or as a court of competent jurisdiction may otherwise direct.

    


Upon any sale of the Pledged Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Pledged Collateral so
sold and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.

              Section 5.04. Securities
Act. In view of the position of the Borrower in relation to the
Pledged Collateral, or because of other current or future circumstances, a
question may arise under the Securities Act of 1933, as now or hereafter in
effect, or any similar statute hereafter enacted analogous in purpose or effect
(such Act and any such similar statute as from time to time in effect being
called the "Federal Securities Laws") with respect to any
disposition of the Pledged Collateral permitted hereunder. The Borrower
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Collateral, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Collateral could dispose of the same. Similarly, there may be
other legal restrictions or 

16

    

Pledge Agreement

 limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Collateral under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. The Borrower recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Collateral, limit the purchasers to those who will agree, among other things, to
acquire such Pledged Collateral for their own account, for investment, and not
with a view to the distribution or resale thereof. The Borrower acknowledges and
agrees that in light of such restrictions and limitations, the Collateral Agent,
in its sole and absolute discretion (a) may proceed to make such a sale
whether or not a registration statement for the purpose of registering such
Pledged Collateral or part thereof shall have been filed under the Federal
Securities Laws and (b) may approach and negotiate with a single potential
purchaser to effect such sale. The Borrower acknowledges and agrees that any
such sale might result in prices and other terms less favorable to the seller
than if such sale were a public sale without such restrictions. In the event of
any such sale, the Collateral Agent shall incur no responsibility or liability
for selling all or any part of the Pledged Collateral at a price that the
Collateral Agent, in its sole and absolute discretion, may in good faith deem
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might have been realized if the sale were deferred
until after registration as aforesaid or if more than a single purchaser were
approached. The provisions of this Section 5.04 will apply notwithstanding the
existence of a public or private market upon which the quotations or sales
prices may exceed substantially the price at which the Collateral Agent sells.


ARTICLE VI



The Collateral Agent


              SECTION 6.01. Certain
Duties and Responsibilities. At all times under this Pledge Agreement:

    
                  (i) the Collateral Agent undertakes to perform such duties and
    only such duties as are specifically set forth in this Pledge Agreement, and
    no implied covenants or obligations shall be read into this Pledge Agreement
    against the Collateral Agent; and

    
                  (ii) in the absence of bad faith on its
    part, the Collateral Agent may conclusively rely, as to the truth of the
    statements and the correctness of the opinions expressed therein, upon
    certificates or opinions furnished to the Collateral Agent and substantially
    conforming to the requirements of this Pledge Agreement; but in the case of
    any such certificates or opinions which by any provision hereof are
    specifically required to be furnished to the Collateral Agent the Collateral
    Agent shall be under a duty to examine the same to determine whether or not
    they substantially conform to the requirements of this Pledge Agreement.

    17

    


Pledge Agreement

              (b) No provision of this Pledge Agreement shall be construed to
relieve the Collateral Agent from liability for its own grossly negligent
action, its own grossly negligent failure to act, or its own willful misconduct,
except that:

    
    
                  (i) this Subsection shall not be construed to limit the effect of
    Subsection (a) of this Section;

    
                  (ii) the Collateral Agent shall not be liable for any error of
    judgment made in good faith, unless it shall be proved that the Collateral
    Agent was grossly negligent in ascertaining the pertinent facts; and

    
                  (iii) no provision of this Pledge Agreement shall require the
    Collateral Agent to expend or risk its own funds or otherwise incur any
    financial liability in the performance of any of its duties hereunder, or in
    the exercise of any of its rights or powers, if it shall have reasonable
    grounds for believing that repayment of such funds or adequate indemnity
    against such risk or liability is not reasonably assured to it.

    


              (c) Whether or not therein expressly so provided, every provision of
this Pledge Agreement relating to the conduct or affecting the liability of or
affording protection to the Collateral Agent shall be subject to the provisions
of this Section.

              SECTION 6.02. Certain
Rights of Collateral Agent. Except as otherwise provided in Section 6.01:

    
                  (a) the Collateral Agent may rely and shall be protected in acting
    or refraining from acting upon any resolution, certificate, statement,
    instrument, opinion, report, notice, request, direction, consent, order,
    bond, debenture or other paper or document believed by it to be genuine and
    to have been signed or presented by the proper party or parties;

    
                  (b) any request or direction of the Borrower mentioned herein
    shall be sufficiently evidenced by a Borrower Notice or Borrower Order;

    
                  (c) any request or direction of RUS mentioned herein shall be
    sufficiently evidenced by an RUS Notice or RUS Order;

    
                  (d) whenever in the administration of this Pledge Agreement the
    Collateral Agent shall deem it desirable that a matter be proved or
    established prior to taking, suffering or omitting any action hereunder, the
    Collateral Agent (unless other evidence be herein specifically prescribed)
    may, in the absence of bad faith on its part, rely upon an Officers'
    Certificate in the case of the Borrower, and a certificate signed by the
    Secretary in the case of RUS;

    
                  (e) the Collateral Agent may consult with counsel and the advice
    of such counsel shall be full and complete authorization and protection in
    respect of any action taken, suffered or omitted by it hereunder in good
    faith and in reliance thereon;

    18

    

    
    Pledge Agreement

                  (f) the Collateral Agent shall be under no obligation to exercise
    any of the rights or powers vested in it by this Pledge Agreement at the
    request or direction of either the Borrower or RUS pursuant to this Pledge
    Agreement, unless such party shall have offered to the Collateral Agent
    reasonable security or indemnity against the costs, expenses and liabilities
    which might be incurred by it in compliance with such request or direction;

    
                  
    (g) the Collateral Agent shall not be bound to make any
    investigation into the facts or matters stated in any resolution,
    certificate, statement, instrument, opinion, report, notice, request,
    direction, consent, order, bond, debenture or other paper or document, or to
    recompute, verify, reclassify or recalculate any information contained
    therein, but the Collateral Agent, in its sole and absolute discretion, may
    make such further inquiry or investigation into such facts or matters as it
    may see fit, and, if the Collateral Agent shall determine to make such
    further inquiry or investigation, it shall be entitled to examine the books,
    records and premises of the Borrower, personally or by agent or attorney;

    
                  
    (h) the Collateral Agent may execute any of the powers hereunder
    or perform any duties hereunder either directly or by or through agents or
    attorneys and the Collateral Agent shall not be responsible for any
    misconduct or negligence on the part of any agent or attorney appointed with
    due care by it hereunder;

    
                  
    (i) unless explicitly stated herein to the contrary, the
    Collateral Agent shall have no duty to inquire as to the performance of any
    Borrower's covenants herein. In addition, the Collateral Agent shall not be
    deemed to have knowledge of any Rating Trigger Event, or Event of Default,
    unless the Collateral Agent has received an RUS Notice in accordance with
    Section 2.04(a) or Section 5.01(a) (as applicable), and shall not be deemed
    to have knowledge of the cessation of the same until such time as it
    receives a Borrower Notice in accordance with Section 2.04(b) or Section
    5.01(b) (as applicable); and

    
                  
    (j) unless explicitly stated herein to the contrary, the
    Collateral Agent shall have no obligation to take any action with respect to
    any Rating Trigger Event or Event of Default until it has received the an
    RUS Notice applicable to such event in accordance with Section 2.04(a) or
    Section 5.01(a) (as applicable), and the Collateral Agent shall have no
    liability for any action or inaction taken, suffered or omitted in respect
    of any such event by it prior to such time as the applicable RUS Notice is
    delivered. Similarly, the Collateral Agent shall have no obligation to take
    any action with respect to the cessation of a Rating Trigger Event or Event
    of Default until it has received a Borrower Notice applicable to such event
    in accordance in accordance with Section 2.04(b) or Section 5.01(b) (as
    applicable), and the Collateral Agent shall have no liability for any action
    or inaction taken, suffered or omitted in respect of any such event by it
    prior to such time as the applicable Borrower Notice is delivered.

    19

    

Pledge Agreement

              
SECTION 6.03. Money
Held by Collateral Agent. Money held by the Collateral Agent hereunder need
not be segregated from other funds except to the extent required by law. The
Collateral Agent shall have no liability to pay interest on or (except as
expressly provided herein) invest any such moneys.

              SECTION 6.04. Compensation
and Reimbursement. The Borrower agrees:

    
                  (i) to pay to the Collateral Agent from time to time reasonable
    compensation for all services rendered by it hereunder;

    
                  (ii) except as otherwise expressly provided herein, to reimburse
    the Collateral Agent upon its request for all reasonable expenses,
    out-of-pocket costs, disbursements and advances incurred or made by the
    Collateral Agent in accordance with any provision of this Pledge Agreement
    (including the reasonable compensation and the expenses and disbursements of
    its agents and counsel), except to the extent any such expense, disbursement
    or advance may be attributable to its gross negligence or bad faith; and

    
                  (iii) to indemnify the Collateral Agent for, and to defend and
    hold it harmless against, any loss, liability or expense incurred without
    gross negligence or bad faith on its part, arising out of or in connection
    with the acceptance or administration of this Pledge Agreement or the
    performance of its duties hereunder, including the costs and expenses of
    defending itself against any claim or liability in connection with the
    exercise or performance of any of its powers or duties hereunder, except to
    the extent such loss, liability or expense may be attributable to its gross
    negligence or bad faith; provided, however, that the Borrower
    shall have no liability under this clause for any settlement of any
    litigation or other dispute effected without the prior written consent of
    the Borrower (such consent not to be unreasonably withheld).


              (b) Any such amounts payable as provided hereunder shall be additional
Obligations secured by the Lien hereof. The provisions of this Section 6.04
shall remain operative and in full force and effect regardless of the
termination of this Pledge Agreement or the Bond Guarantee Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any term or provision of
this Pledge Agreement or the Bond Guarantee Agreement, or any investigation made
by or on behalf of the Collateral Agent or RUS. All amounts due under this
Section 6.04 shall be payable on written demand therefor.

              SECTION 6.05. Corporate
Collateral Agent Required; Eligibility. There shall at all times be a
Collateral Agent hereunder which shall be a corporation or association organized
and doing business under the laws of the United States of America or of any
State, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000, subject to supervision or
examination by Federal or State authority. If such corporation publishes reports
of 

20

    

Pledge Agreement

 condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. Neither the Borrower nor any Person directly or
indirectly controlling, controlled by or under common control with the Borrower
shall serve as Collateral Agent hereunder. If at any time the Collateral Agent
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.

              SECTION 6.06. Resignation
and Removal; Appointment of Successor.   

              (a) No resignation or removal of the
Collateral Agent and no appointment of a successor Collateral Agent pursuant to
this Article shall become effective until the acceptance of appointment by the
successor Collateral Agent under Section 6.07.


              (b) The Collateral Agent may resign at any time by giving written
notice thereof to the Borrower. If an instrument of acceptance by a successor
Collateral Agent shall not have been delivered to the Collateral Agent within 30
days after the giving of such notice of resignation, the resigning Collateral
Agent may petition any court of competent jurisdiction for the appointment of a
successor Collateral Agent.


              (c) If at any time:

    
                     
    (i) except if an Event of Default has occurred and is continuing,
    the Borrower, in its sole and absolute discretion, elects to remove the
    Collateral Agent; or

    
                      (ii) the Collateral Agent shall cease to be eligible under Section
    6.05 or shall become incapable of acting or shall be adjudged a bankrupt or
    insolvent or a receiver of the Collateral Agent or of its property shall be
    appointed or any public officer shall take charge or control of the
    Collateral Agent or of its property or affairs for the purpose of
    rehabilitation, conservation or liquidation, 

     then, in any such case, the Borrower may remove the Collateral Agent by
delivery of a Borrower Order to that effect.

    

                  (d)
    If the Collateral Agent shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Collateral
Agent for any cause, the Borrower shall promptly appoint a successor Collateral
Agent by delivering a Borrower Notice to the retiring Collateral Agent, the
successor Collateral Agent and RUS to such effect.

              SECTION 6.07. Acceptance
of Appointment by Successor. Every successor Collateral Agent appointed
hereunder shall execute, acknowledge and deliver to the Borrower, RUS and to the
retiring Collateral Agent an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Collateral Agent shall
become effective and such successor Collateral Agent, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and
duties of the 

21





Pledge Agreement

 retiring Collateral Agent; but, on request of the Borrower, RUS or
the successor Collateral Agent, such retiring Collateral Agent shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Collateral Agent all the rights, powers and trusts of the retiring
Collateral Agent, and shall duly assign, transfer and deliver to such successor
Collateral Agent all property and money held by such retiring Collateral Agent
hereunder, subject nevertheless to its Lien, if any, provided for in Section
6.04. Upon request of any such successor Collateral Agent, the Borrower shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Collateral Agent all such rights, powers and
trusts.

              
No successor Collateral Agent shall accept its appointment unless at the time
of such acceptance such successor Collateral Agent shall be eligible under
Section 6.05 hereof.

              
SECTION 6.08. Merger,
Conversion, Consolidation or Succession to Business. Any corporation into
which the Collateral Agent may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Collateral Agent shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Collateral Agent, shall be the successor of the Collateral Agent hereunder,
provided such corporation shall be eligible under Section 6.05 hereof without
the execution or filing of any paper or any further act on the part of any of
the parties hereto.


ARTICLE VII



Miscellaneous


              
SECTION 7.01. 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 III 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 the Collateral Agent 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.


              
(a) All Borrower Notices and Borrower Orders delivered to the
Collateral Agent shall be contemporaneously copied to RUS by the Borrower, and
all RUS Notices and RUS Orders delivered to the Collateral Agent shall be
contemporaneously copied by RUS to the Borrower, and all Collateral Agent
notices delivered to either the Borrower or RUS shall be contemporaneously
copied to the other such party by the Collateral Agent.

22

    

Pledge Agreement

              
SECTION 7.02. Waivers;
Amendment. (a) No failure or delay by a party in exercising any right or power
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. The rights and remedies of
each party hereunder are cumulative and are not exclusive of any rights or
remedies that such party would otherwise have. No waiver of any provision of
this Pledge Agreement or consent to any departure by any party therefrom shall
in any event be effective unless the same shall be permitted by
paragraph (b) of this Section 7.02, 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 any party in any case shall entitle any party to any
other or further notice or demand in similar or other circumstances.


              
(b) Neither this Pledge Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower, the Collateral Agent and RUS.

              
SECTION 7.03. Successors
and Assigns. Whenever in this Pledge Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party; and all covenants, promises and agreements by or on
behalf of the Borrower, the Collateral Agent or RUS that are contained in this
Pledge Agreement shall bind and inure to the benefit of their respective
successors and assigns.

              
SECTION 7.04. Counterparts;
Effectiveness. This Pledge Agreement may be executed in counterparts, each
of which shall constitute an original but all of which when taken together shall
constitute a single contract. Delivery of an executed signature page to this
Pledge Agreement by facsimile transmission shall be as effective as delivery of
a manually signed counterpart of this Pledge Agreement.

              
SECTION 7.05. Severability.
Any provision of this Pledge Agreement held to be invalid, illegal or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity, illegality or unenforceability without
affecting the validity, legality and enforceability of the remaining provisions
hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction. The
parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

              
SECTION 7.06. GOVERNING
LAW. THIS PLEDGE 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 STATE OF NEW YORK.

23

    

Pledge Agreement

              
SECTION 7.07. 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
PLEDGE 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 PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS PLEDGE
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 7.07.

              
SECTION 7.08. Headings.
Article and Section headings and the Table of Contents used herein are for
convenience of reference only, are not part of this Pledge Agreement and are not
to affect the construction of, or to be taken into consideration in
interpreting, this Pledge Agreement.

              
SECTION 7.09. Security
Interest Absolute. All rights of the Collateral Agent and/or RUS hereunder,
the grant of a security interest in the Pledged Collateral and all obligations
of the Borrower hereunder shall be absolute and unconditional irrespective of
(a) any lack of validity or enforceability of the Bond Guarantee Agreement,
any agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Bond Guarantee Agreement or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute
a defense available to, or a discharge of, the Borrower in respect of the
Obligations or this Pledge Agreement.

              
SECTION 7.10. Termination
or Release. (a) This Pledge Agreement shall terminate on the date when the
Collateral Agent receives an RUS Notice to the effect that all of the
Obligations have been indefeasibly paid in full and the Federal Financing Bank
has no further commitment to lend under the Bonds, and if applicable at such
time the Lien hereof shall be released.


              
(b) Upon any withdrawal, substitution or other disposal by the
Borrower of any Pledged Collateral that is permitted by the terms of this Pledge
Agreement, or upon the effectiveness of any written consent to the release of
the security interest granted hereby in any Pledged Collateral, the Lien hereof
securing such Pledged Collateral shall be automatically released.

24

    


Pledge Agreement

              
(c) In connection with any termination or release pursuant to
paragraph (a) or (b) the Collateral Agent shall deliver to the Borrower the
Pledged Collateral and shall execute and deliver to the Borrower, at the
Borrower's expense, all documents that the Borrower shall reasonably request to
evidence such termination or release. Any execution and delivery of documents
pursuant to this Section 7.10 shall be without recourse to or warranty by the
Collateral Agent.

              
SECTION 7.11. Collateral
Agent Appointed Attorney-in-Fact. The Borrower hereby appoints the
Collateral Agent the attorney-in-fact of the Borrower for the purpose of, upon
the occurrence and during the continuance of an Event of Default, carrying out
the provisions of this Pledge Agreement with respect to the Pledged Collateral
and taking any action and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which appointment
is irrevocable and coupled with an interest but is subject nevertheless to the
terms and conditions of this Pledge Agreement. Without limiting the generality
of the foregoing, the Collateral Agent shall have the right, upon the occurrence
and during the continuance of an Event of Default, with full power of
substitution either in the Collateral Agent's name or in the name of the
Borrower (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment relating
to the Pledged Collateral or any part thereof; (b) to demand, collect,
receive payment of, give receipt for and give discharges and releases of all or
any of the Pledged Collateral; (c) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Pledged
Collateral or to enforce any rights in respect of any Pledged Collateral;
(d) to settle, compromise, compound, adjust or defend any actions, suits or
proceedings relating to all or any of the Pledged Collateral; (e) to
notify, or to require the Borrower to notify, obligors under Pledged Securities
to make payment directly to the Collateral Agent; and (f) to use, sell,
assign, transfer, pledge, make any agreement with respect to or otherwise deal
with all or any of the Pledged Collateral, and to do all other acts and things
necessary to carry out the purposes of this Pledge Agreement, as fully and
completely as though the Collateral Agent were the absolute owner of the Pledged
Collateral for all purposes; provided that nothing herein contained shall
be construed as requiring or obligating the Collateral Agent to make any
commitment or to make any inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent, or to present or file any claim or notice, or
to take any action with respect to the Pledged Collateral or any part thereof or
the moneys due or to become due in respect thereof or any property covered
thereby. The Collateral Agent and RUS shall be accountable only for amounts
actually received as a result of the exercise of the powers granted to them
herein, and neither they nor their officers, directors, employees or agents
shall be responsible to the Borrower for any act or failure to act hereunder,
except for their own gross negligence or willful misconduct.

25

    

               
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to
be duly executed, all as of the day and year first above written.

 

 
    

	
      NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION,

	
        
    
	
       by

    	 
		
      ________________________________
	 	
      Name:

	 	
      Title: 



    

 

 
    

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

	
          
    
	
      by 

    	
		/s/ Curtis M. Anderson                          
	 	
      Name: 

	 	
       Acting Administrator of the Rural Utilities Service



    

 

    
	
      U.S. BANK TRUST NATIONAL ASSOCIATION

	
          
    
	
      by 

    	
		
      ________________________________
	 	
      Name: 

		
      Title:



    

 

[Signature Page to Pledge Agreement]

    

               
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to
be duly executed, all as of the day and year first above written.

 

 

    
	
      NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION,

	
        
    
	 by	
		
      /s/ Sheldon C.
      Petersen                             
	 	
      Name: Sheldon C. Petersen

	 	
      Title:    Governor



    

 

 
    

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

	
          
    
	by 	
		________________________________
	 	
      Name:

	 	
      
 Acting Administrator of the Rural Utilities Service



    

 

    
	
      U.S. BANK TRUST NATIONAL ASSOCIATION

	
          
    
	
      by 

    	
		
      /s/ Beverly A. Freeney                              
	 	
      
      Name: Beverly A. Freeney

		
      Title:  Vice President



    

     

    

SCHEDULE I

TO

PLEDGE AGREEMENT

NATIONAL RURAL UTILITIES

COOPERATIVE FINANCE CORPORATION

PLEDGE AGREEMENT DATED AS OF JUNE 14, 2005

CERTIFICATE OF AVAILABLE SECURITIES FILED WITH

U.S. BANK TRUST NATIONAL ASSOCIATION, Collateral Agent

               
________________, Governor (or Chief Financial Officer) and
____________________, Vice-President, respectively, of National Rural Utilities
Cooperative Finance Corporation, hereby certify to RUS and the Collateral Agent
under the above-mentioned Pledge Agreement as amended to the date hereof (herein
called the "Pledge Agreement") as follows:



	
      1.
	
      The Allowable Amount of Available Securities certified hereby, all as
      shown on Schedule A hereto, is........................
	
      $

	
      2.
	
      The aggregate principal amount of the Bond(s) outstanding at the date
      hereof is.....................................................................
	
      $

	
      3.
	
      The aggregate amount, if any, of the Advance to be made on the basis of
      this Certificate is..................................................
	
      $

	
      4.
	
      The sum of the amounts in items 2 and 3 is............................
	
      $

	
      5.
	
      The aggregate amount by which the Allowable Amount of Available
      Securities exceeds the aggregate principal amount of the Bond(s)
      outstanding plus the amount of any Advance in item 3 (item 1 minus item 4)
      is...........................................
	
      $

	
      6.
	
      So far as is known to the undersigned no Rating Trigger Event exists.
	 



               
All terms which are defined in the Pledge Agreement are used herein as so
defined.

               
Dated:

 
    

	
      ________________________________________

	
      

      ________________________________________

	
      

      OF NATIONAL RURAL UTILITIES

      COOPERATIVE FINANCE CORPORATION



    




 

SCHEDULE I

TO

PLEDGE AGREEMENT


 

AVAILABLE SECURITIES

SCHEDULE A TO OFFICERS' CERTIFICATE

DATED



  
	
      Eligible Securities
		
      Name of Issuer
		
      Current Allowable Amount (Item 1)

	
         
	 	 	 	 
	
        Available Securities

             
        (Here List Securities)...........				


      
 

2

    

SCHEDULE II

TO

PLEDGE AGREEMENT



NATIONAL RURAL UTILITIES

COOPERATIVE FINANCE CORPORATION

PLEDGE AGREEMENT DATED AS OF JUNE 14, 2005

CERTIFICATE OF PLEDGED COLLATERAL FILED WITH

U.S. BANK TRUST NATIONAL ASSOCIATION, Collateral Agent

               
________________, Governor (or Chief Financial Officer) and
____________________, Vice-President, respectively, of National Rural Utilities
Cooperative Finance Corporation, hereby certify to RUS and the Collateral Agent
under the above-mentioned Pledge Agreement as amended to the date hereof (herein
called the "Pledge Agreement") as follows:

 

	
      1.
	
      The Allowable Amount of Pledged Collateral shown in item 8 in the
      most recent Certificate of Pledged Collateral dated ______________
      delivered to the Collateral Agent is........................................................................
	
      $

	
         	
       	
       
	
      2.
	
      The increase (or decrease) in the Allowable Amount of such Pledged
      Collateral and the Allowable Amount of any Eligible Securities substituted
      for other Pledged Securities pursuant to Section 3.07 of the Pledge
      Agreement, remaining on deposit with the Collateral Agent, as shown on
      Schedule A hereto, is...............................................................
	
      $

	
       	
       	
       
	
      3.
	
      The Allowable Amount, as at the date of such most recent Certificate of
      Pledged Collateral, of Pledged Collateral which has, since such date, been
      withdrawn or substituted for pursuant to Section 3.07 (including Pledged
      Securities fully paid) by the Borrower or ceased to be Pledged Collateral,
      as shown on Schedule A hereto, is..........................................
	
      $

	
       	
       	
       
	
      4.
	
      The present Allowable Amount of Pledged Collateral certified to the
      Collateral Agent in the most recent Certificate of Pledged Collateral
      (item 1 plus (or minus, if decrease) item 2, and minus item 3) is.....................
	
      $

	
       	
       	
       
	
      5.
	
      The Allowable Amount of Pledged Collateral certified hereby, including
      the Pledged Collateral deposited herewith, which were not certified in the
      most recent Certificate of Pledged Collateral, all as shown on
      Schedule B hereto, is...................................................................................................
	
      $




 

    

 

    
SCHEDULE II

TO

PLEDGE AGREEMENT



	
      6.
	
      The Allowable Amount of Pledged Collateral held by the Collateral Agent
      on the date hereof and included in this Certificate before any withdrawals
      (item 4 plus item 5) is...........................................................
	
      $

	
       	
       	
       
	
      7.
	
      The Allowable Amount of Pledged Collateral the withdrawal of which is
      hereby requested, if any, as shown on Schedule C hereto (the Pledged
      Collateral made the basis of such withdrawal being designated on
      Schedule A and/or Schedule B hereto)
      is.................................................
	
      $

	
       	
       	
       
	
      8.
	
      The Allowable Amount of Pledged Collateral held by the Collateral Agent
      on the date hereof and included in this Certificate after any withdrawals
      (item 6 minus item 7) is.........................................................
	
      $

	
       	
       	
       
	
      9.
	
      The aggregate principal amount of the Bond(s) outstanding at the date
      hereof is.....................................................................................................
	
      $

	
       	
       	
       
	
      10.
	
      The aggregate amount by which such Allowable Amount of Pledged
      Securities exceeds the aggregate principal amount of the Bond(s)
      outstanding (item 8 minus item 9) is..........................................................
	
      $




               
All terms which are defined in the Pledge Agreement are used herein as so
defined.

               
Dated:

 
    

	
      ________________________________________

	
      

      ________________________________________

	
      

      OF NATIONAL RURAL UTILITIES

      COOPERATIVE FINANCE CORPORATION



    

      
2



 

SCHEDULE II

TO

PLEDGE AGREEMENT

 


PLEDGED COLLATERAL ON DEPOSIT

SCHEDULE A TO OFFICERS' CERTIFICATE

DATED



        
	
      Pledged Collateral
		
      Name of Issuer
		
      Allowable Amount included in Certificate last previously
      filed (Item 1)
		
      Increase

      (Decrease)

      in such

      Allowable

      Amount (Items 2

      and 3)
		
      Current Allowable Amount (Item 4)

	
        
        Cash...................................

    
		                       		                    		                      		                       
	
         	 	 	 	 	 	 	 	  
	
        
        Permitted Investments

             (Here List).........................

      
		 		 		 		 
	
        
          	 	   	 	   	 	    	 	     
	
        
        Pledged Securities 

             (Here List Securities).........

                            
              
      
		 		 		 		 


      
3






 

SCHEDULE II

TO

PLEDGE AGREEMENT



 

PLEDGED COLLATERAL BEING DEPOSITED

SCHEDULE B TO OFFICERS' CERTIFICATE

DATED


        
	
      Pledged Collateral
		
      Name of Issuer
		
      Allowable Amount

      (Item 5)

	
        
        Cash...................................
				 
	
        
        Permitted Investments

             (Here List).........................
				
	
        
        Pledged Securities 

             (Here List Securities).........

                            
              
      
				 


      
4

      


SCHEDULE II

TO

PLEDGE AGREEMENT



 

PLEDGED COLLATERAL BEING WITHDRAWN

SCHEDULE C TO OFFICERS' CERTIFICATE

DATED


      

  
	
      Pledged Collateral
		
      Name of Issuer
		
      Allowable Amount

      (Item 7)

	
        
        Cash........................................



    				
	
        
        Permitted Investments

             (Here
        List)...................................



    				
	
        
        Pledged Securities
        (Here List
             Securities)...................................        



    				


      
  
  5

    

SCHEDULE III

TO

PLEDGE AGREEMENT



Addresses for Notices

  
  1. The addresses referred to in Section 7.01 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: REDLG Program

        

      

              If to the Borrower:

      
        
          National Rural Utilities Cooperative Finance Corporation

          2201 Cooperative Way

          Herndon, VA 20171-3025

          Telephone: 703-709-6718

          Fax: 703-709-6819

          Attention of: Steven L. Lilly, Chief Financial Officer

        

      

              With a copy to:

      
        
          National Rural Utilities Cooperative Finance Corporation

          2201 Cooperative Way

          Herndon, VA 20171-3025

          Telephone: 703-709-6712

          Fax: 703-709-6811

          Attention of: John J. List, Esq., General Counsel

        

      

          If to the Collateral Agent:

      
        
          U.S. Bank Trust National Association

          100 Wall Street

          Suite 1600

          New York, NY 10005-3701

          Fax: 212-509-3384

          Attention of: Beverly A. Freeney