series-c_futureadvancebond.htm


    
      
        	 
      	 
      	
                Bond

              
	
                FOR
      FFB USE ONLY

              	 
      	
                Date            September
      9,2008

              
	 
      	 
      	 
      
	
                Bond
      Identifier:

              	 
      	
                Place

              
	 
      	 
      	
                of

              
	 
      	 
      	
                Issue           Washington,
      DC

              
	 
      	 
      	 
      
	
                Purchase
      Date:

              	 
      	
                Last
      Day

              
	 
      	 
      	
                for
      an

              
	 
      	 
      	
                Advance
      (¶3)    October 15, 2011

              
	 
      	 
      	 
      
	 
      	 
      	
                Maximum

              
	 
      	 
      	
                Principal

              
	 
      	 
      	
                Amount
      (¶4)     $500,000,000.00

              
	 
      	 
      	 
      
	 
      	 
      	
                Final

              
	 
      	 
      	
                Maturity

              
	 
      	 
      	
                Date
      (¶5)       October 15,
    2031

              


      


       

    

    
      FUTURE ADVANCE BOND

      SERIES C

      


      


      


      1.    Promise to
Pay.

      


      FOR VALUE RECEIVED, NATIONAL RURAL UTILITIES COOPERATIVE
FINANCE CORPORATION, a cooperative association existing under the laws of
the District of Columbia (the "Borrower," which term
includes any successors or assigns) promises to pay the FEDERAL FINANCING BANK ("FFB"), a body
corporate and instrumentality of the United States of America (FFB, for so long
as it shall be the holder of this Bond, and any successor or assignee of FFB,
for so long as such successor or assignee shall be the holder of this Bond,
being the "Holder"), at the
times, in the manner, and with interest at the rates to be established as
hereinafter provided, such amounts as may be advanced from time to time by FFB
to the Borrower under this Bond (each such amount being an "Advance", and more
than one such amount being "Advances").

       

      
        2.    Reference to Certain
Agreements.

         

      

      (a)  Bond Purchase
Agreement.  This Bond is the "Bond" referred to in, and
entitled to the benefits of, the Series C Bond Purchase Agreement dated as of
even date herewith, made by and among FFB, the Borrower, and the Administrator
of the Rural Utilities Service, a Rural Development agency of the United


       

      
        
          
          

        

        
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      States
Department of Agriculture ("RUS") (such
agreement, as it may be amended, supplemented, and restated from time to time in
accordance with its terms, being the "Bond Purchase
Agreement").

      


      (b) Bond Guarantee
Agreement.  This Bond is the "Bond" referred to in, and
entitled to the benefits of, the Series C Bond Guarantee Agreement dated as of
even date herewith, made between RUS and the Borrower (such agreement, as it may
be amended, supplemented, and restated from time to time in accordance with its
terms, being the "Bond
Guarantee Agreement").

      


      (c) Pledge
Agreement.  This Bond is the "Bond" referred to in the Pledge
Agreement dated as of even date herewith, made among the Borrower, RUS, and U.S.
Bank Trust National Association, a national association (such agreement, as it
may be amended, supplemented, and restated from time to time in accordance with
its terms, being the "Pledge
Agreement").

       

      
        3.    Advances; Advance Requests;
RUS Approval Requirement; Last Day for an Advance.

      

       

      (a) Subject to the terms and conditions
of the Bond Purchase Agreement, FFB shall make Advances to the Borrower from
time to time under this Bond, in each case upon delivery to FFB of a written
request by the Borrower for an Advance under this Bond, in the form of request
attached to the Bond Purchase Agreement as Exhibit A thereto (each such request
being an "Advance
Request") and completed as prescribed in section 7.3.1 of the Bond
Purchase Agreement.

      


      (b) To be effective, an Advance Request
must first be delivered to RUS for approval and be approved by RUS in writing,
and such Advance Request, together with written notification of RUS's approval
thereof (each such notification being an "Advance Request Approval
Notice"), must be received by FFB consistent with the advance notice
requirements prescribed in section 7.3.2(b) of the Bond Purchase Agreement.


      


      (c) FFB shall make each requested
Advance on the particular calendar date that the Borrower requested in the
respective Advance Request to be the date on which the respective Advance is to
be made (such date being the "Requested Advance
Date" for such Advance), subject to the provisions of the Bond Purchase
Agreement describing certain circumstances under which a requested Advance shall
be made on a later date; provided, however, that no
Advance shall be made under this Bond after the particular date specified on
page 1 of this Bond as being the "Last Day for an Advance."

      


      4.    Principal Amount of
Advances; Maximum Principal Amount.

      


      The principal amount of each Advance
shall be the particular dollar amount that the Borrower specified in the


       

      
        
          
          

        

        
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      respective
Advance Request as the "Requested Advance Amount" for the respective Advance;
provided, however, that the
aggregate principal amount of all Advances made under this Bond shall not exceed
the particular amount specified on page 1 of this Bond as being the "Maximum
Principal Amount."  

       

      
        5.    Maturity
Dates for Advances.

      

       

      Subject to paragraph 15 of this Bond,
each Advance shall mature on the particular calendar date that the Borrower
selected in the respective Advance Request to be the date on which the
respective Advance is to mature (such date being the "Maturity Date" for
such Advance), provided that such Maturity Date meets all of the criteria for
Maturity Dates prescribed in section 7.3.1(a)(5) of the Bond Purchase
Agreement.

      


      6.    Computation of Interest on
Advances.

      


      (a) Subject to paragraphs 11 and 16 of
this Bond, interest on the outstanding principal of each Advance shall accrue
from the date on which the respective Advance is made to the date on which such
principal is due.

      


      (b) Interest on each Advance shall be
computed on the basis of (1) actual days elapsed from (but not including) the
date on which the respective Advance is made (for the first payment of interest
due under this Bond for such Advance) or the date on which the payment of
interest was last due (for all other payments of interest due under this Bond
for such Advance), to (and including) the date on which the payment of interest
is next due; and (2) a year of 365 days (except in calendar years including
February 29, when the basis shall be a 366-day year).

      


      (c) The basic interest rate for each
Advance shall be established by FFB, as of the date on which the respective
Advance is made, on the basis of the determination made by the Secretary of the
Treasury pursuant to section 6(b) of the Federal Financing Bank Act of 1973, as
amended (codified at 12 U.S.C. § 2281 et seq.) (the "FFB Act"); provided, however, that the
shortest maturity used as the basis for any rate determination shall be the
remaining maturity of the most recently auctioned  United States
Treasury bills having the shortest maturity of all United States Treasury bills
then being regularly auctioned.  

      


      (d) In
the event that (1) the Borrower has selected for any Advance a Maturity Date
that will occur on or after the fifth anniversary of the Requested Advance Date
for such Advance, and (2) the Borrower has elected for such Advance a
prepayment/ refinancing privilege described in section 11.3 of the Bond Purchase
Agreement, then the interest rate for such Advance shall also include a price
(expressed in terms of a basis point increment to the applicable basic interest
rate) for the particular prepayment/refinancing privilege that the Borrower


       

      
        
          
          

        

        
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      selected,
which price shall be established by FFB on the basis of a determination made by
FFB as to the difference between (A) the estimated market yield of a
notional obligation if such obligation were to (i) be issued by the Secretary of
the Treasury, (ii) have a maturity comparable to the maturity of such Advance,
and (iii) include a prepayment and refinancing privilege identical to the
particular prepayment/refinancing privilege that the Borrower
elected for such Advance, and (B) the estimated market yield of a notional
obligation if such obligation were to (i) be issued by the Secretary of the
Treasury, (ii) have a maturity comparable to the maturity of such Advance, but
(iii) not include such prepayment and refinancing privilege.

      


      7.    Payment of Interest; Payment
Dates.

      


      Interest accrued on the outstanding
principal amount of each Advance shall be due and payable quarterly on January
15, April 15, July 15, and October 15 of each year (each such day being a
"Payment
Date"), beginning on the first Payment Date to occur after the date on
which the respective Advance is made, up through and including the Maturity Date
of such Advance; provided, however, that with
respect to each Advance that is made in the 30-day period immediately preceding
any Payment Date, payments of accrued interest on the outstanding principal
amount of the respective Advance shall be due beginning on the second Payment
Date to occur after the date on which such Advance is made. 

      


      8.    Repayment of
Principal.

      


      Subject to paragraph 15 of this Bond,
the principal amount of each Advance shall be payable on the Maturity Date for
the respective Advance.

      


      9.    Fee.

      


      (a)  A fee to cover expenses
and contingencies, assessed by FFB pursuant to section 6(c) of the FFB Act,
shall accrue on the outstanding principal amount of each Advance for the period
from the date on which the respective Advance is made to the date on which the
principal amount of such Advance is due, not taking into account any maturity
extensions permitted by paragraph 15 of this Bond (such period being the "Advance
Period").  

      


      (b) The fee on each Advance shall
be:

      


      (1) 22.5
basis points (0.225%) per annum of the unpaid
principal balance of such Advance for an Advance Period of a year or
less;

      


      (2) 27.5
basis points (0.275%) per annum of the unpaid
principal balance of such Advance for an Advance Period greater than a year but
no more than 5 years; and 

      


      
        
          
          

        

        
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      (3) 35
basis points (0.35%) per annum of the unpaid
principal balance of such Advance for an Advance Period greater than 5
years.  

      


      (c) The
fee on each Advance shall be computed in the same manner as accrued interest is
computed under paragraph 6(b) of this Bond, and shall be due and payable at the
same times as accrued interest is due and payable under paragraph 7 of this Bond
(adjusted as provided in paragraph 10 of this Bond if a Payment Date is not a
Business Day).  The fee on each Advance shall be credited to RUS as
required by section 505(c) of the Federal Credit Reform Act of 1990, as amended
(codified at 2 U.S.C. § 661d(c)).

      


      10.    Business
Days.

      


      (a) Whenever any Payment Date, the
Maturity Date for any Advance, or the Final Maturity Date shall fall on a day on
which either FFB or the Federal Reserve Bank of New York is not open for
business, the payment that would otherwise be due on such Payment Date, Maturity
Date, or Final Payment Date, as the case may be, shall be due on the first day
thereafter on which FFB and the Federal Reserve Bank of New York are both open
for business (any such day being a "Business
Day").  

      


      (b) In the event that any Payment Date
falls on a day other than a Business Day, then the extension of time for making
the payment that would otherwise be due on such Payment Date shall be (1) taken
into account in establishing the interest rate for the respective Advance, (2)
included in computing interest due in connection with such payment, and (3)
excluded in computing interest due in connection with the next
payment.

      


      (c) In the event that the Maturity Date
for any Advance or the Final Maturity Date falls on a day other than a Business
Day, then the extension of time for making the payment that would otherwise be
due on such Maturity Date or the Final Maturity, as the case may be, shall be
(1) taken into account in establishing the interest rate for such Advance, and
(2) included in computing interest due in connection with such
payment.

      


      11.    Late
Payments.

      


      (a) In the event that any payment of
any amount owing under this Bond is not made when and as due (any such amount
being then an "Overdue
Amount"), then the amount payable shall be such Overdue Amount plus
interest thereon (such interest being the "Late Charge")
computed in accordance with this subparagraph (a).

      


      (1) The Late Charge shall accrue from
the scheduled date of payment for the Overdue Amount (taking into account


       

      
        
          
          

        

        
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      paragraph
10 of this Bond) to the date on which payment is made.

      


      (2) The Late Charge shall be computed
on the basis of (A) actual days elapsed from (but not including) the scheduled
date of payment for such Overdue Amount (taking into account paragraph 10 of
this Bond) to (and including) the date on which payment is made, and (B) a year
of 365 days (except in calendar years including February 29, when the basis
shall be a 366-day year).

      


      (3) The Late Charge shall accrue at a
rate (the "Late Charge
Rate") equal to one and one-half times the rate to be determined by the
Secretary of the Treasury taking into consideration the prevailing market yield
on the remaining maturity of the most recent auctioned 13-week United States
Treasury bills.  

      


      (4) The initial Late Charge Rate shall
be in effect until the earlier to occur of either (A) the date on which payment
of the Overdue Amount and the amount of accrued Late Charge is made, or (B) the
first Payment Date to occur after the scheduled date of payment for such Overdue
Amount.  In the event that the Overdue Amount and the amount of the
accrued Late Charge are not paid on or before such Payment Date, then the amount
payable shall be the sum of the Overdue Amount and the amount of the accrued
Late Charge, plus a Late Charge on such sum accruing at a new Late Charge Rate
to be then determined in accordance with the principles of clause (3) of this
subparagraph (a).  For so long as any Overdue Amount remains unpaid,
the Late Charge Rate shall be re-determined in accordance with the principles of
clause (3) of this subparagraph (a) on each Payment Date to occur thereafter,
and shall be applied to the Overdue Amount and all amounts of the accrued Late
Charge to the date on which payment of the Overdue Amount and all amounts of the
accrued Late Charge is made.

      


      (b) Nothing in subparagraph (a) of this
paragraph 11 shall be construed as permitting or implying that the Borrower may,
without the written consent of FFB, modify, extend, alter or affect in any
manner whatsoever (except as explicitly provided herein) the right of FFB to
receive any and all payments on account of this Bond on the dates specified in
this Bond.

      


      12.    Final Due
Date.

      


      Notwithstanding anything in this Bond
to the contrary, all amounts outstanding under this Bond remaining unpaid as of
the Final Maturity Date shall be due and payable on the Final Maturity
Date.

      


      
        
          
          

        

        
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      13.    Manner of Making
Payments.

      


      (a) For so long as FFB is the Holder of
this Bond and RUS is the bond servicing agent for FFB (as provided in the Bond
Purchase Agreement), each payment under this Bond shall be paid in immediately
available funds by electronic funds transfer to the account of the United States
Treasury (for credit to the subaccount of RUS, as bond servicing agent for FFB)
maintained at the Federal Reserve Bank of New York specified by RUS in a written
notice to the Borrower, or to such other account as may be specified from time
to time by RUS in a written notice to the Borrower.

      


      (b) In the event that FFB is the Holder
of this Bond and RUS is not the bond
servicing agent for FFB, each payment under this Bond, with the exception of the
fee described in paragraph 9 of this Bond, shall be paid in immediately
available funds by electronic funds transfer to the account of the United States
Treasury (for credit to the subaccount of FFB) maintained at the Federal Reserve
Bank of New York specified by FFB in a written notice to the Borrower, or to
such other account as may be specified from time to time by FFB in a written
notice to the Borrower.  In the event that FFB is the Holder of this
Bond and RUS is not the bond
servicing agent for FFB, each payment of the fee described in paragraph 9 of
this Bond shall be paid in immediately available funds by electronic funds
transfer to the account of the United States Treasury (for credit to the
subaccount of RUS) maintained at the Federal Reserve Bank of New York specified
from time to time by RUS in a written notice delivered by RUS to the
Borrower.

      


      (c) In the event that FFB is not the Holder of
this Bond, then each payment under this Bond, with the exception of the fee
described in paragraph 9 of this Bond, shall be made in immediately
available funds by electronic funds transfer to such account as shall be
specified by the Holder in a written notice to the Borrower.  In the
event that FFB is not the Holder of
this Bond, each payment of the fee described in paragraph 9 of this Bond shall
be made in the manner specified by FFB in the written notice delivered by FFB to
the Borrower and RUS as provided in section 15.4.2 of the Bond Purchase
Agreement.

      


      14.    Application of
Payments.

      


      Each payment made on this Bond shall be
applied, first, to the payment of Late Charges (if any) payable under paragraphs
11 and 18 of this Bond, then to the payment of premiums (if any) payable under
paragraphs 16 and 17 of this Bond, then to the payment of unpaid accrued
interest, then on account of outstanding principal, and then to the payment of
the fee payable under paragraph 9 of this Bond.

      
        
          
          

        

        
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      15.    Maturity
Extensions.

      


      (a) With respect to each Advance (1)
for which the Borrower has selected a Maturity Date that will occur before the
twentieth anniversary of the Requested Advance Date specified in the respective
Advance Request, or (2) for which a Maturity Date that will occur before the
twentieth anniversary of the Requested Advance Date specified in the respective
Advance Request has been determined as provided in subparagraph (b) of this
paragraph 15 (each such Maturity Date being an "Interim Maturity
Date"), the Borrower may, effective as of such Interim Maturity Date,
elect to extend the maturity of all or any portion of the outstanding principal
amount of the respective Advance to a new Maturity Date to be selected by the
Borrower in the manner and subject to the limitations specified in this
subparagraph (a) (each such election being a "Maturity Extension
Election"; each such elective extension of the maturity of any Advance
that has an Interim Maturity Date being a "Maturity Extension";
and the Interim Maturity Date that is in effect for an Advance immediately
before any such elective Maturity Extension being, from and after such Maturity
Extension, the "Maturity Extension Effective
Date").  

      


      (1) Except under the circumstances
described in clause (3) of this subparagraph (a), the Borrower shall
deliver to FFB (with a copy to RUS) written notification of each Maturity
Extension Election, in the form of notification attached to this Bond as Annex 1-A (each such
notification being a "Maturity Extension Election
Notice"), making reference to the "Advance Identifier" (as that term is
defined in the Bond Purchase Agreement) that FFB assigned to such Advance (as
provided in the Bond Purchase Agreement) and specifying, among other things, the
following: 

      


      (A) the amount of the outstanding
principal of the such Advance with respect to which the Borrower elects to
extend the maturity; and

      


      (B) the new Maturity Date that the
Borrower selects to be in effect for such principal amount after the respective
Maturity Extension Effective Date, which date:

      


      (i) may be either (I) a new Interim
Maturity Date, or (II) the twentieth anniversary of the Requested Advance Date
specified in the original Advance Request (if such twentieth anniversary date is
a Payment Date) or the Payment Date immediately preceding such twentieth
anniversary date (if such twentieth anniversary date is not a Payment Date);
and

      


      
        
          
          

        

        
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      (ii) in the event that the Borrower
selects a new Interim Maturity Date as the new Maturity Date for any Advance,
must meet the criteria for Maturity Dates prescribed in section 7.3.1(a)(5) of
the Bond Purchase Agreement (provided, however, that, for
purposes of selecting a new Maturity Date in connection with a Maturity
Extension Election, each of the references to the "Requested Advance Date" for
the respective Advance in section 7.3.1(a)(5)(D) of the Bond Purchase Agreement
shall be deemed to be a reference to the "respective Maturity Extension
Effective Date").

      


      (2) To be effective, a Maturity
Extension Election Notice must be received by FFB on or before the third
Business Day before the Interim Maturity Date in effect for the respective
Advance immediately before such Maturity Extension.

      


      (3) In the event that either of the
circumstances described in subclause (A) or (B) of the next sentence occurs,
then a Maturity Extension Election Notice (in the form of notice attached to
this Bond as Annex
1-B), to be effective, must first be delivered to RUS for approval and be
approved by RUS in writing, and such Maturity Extension Election Notice,
together with written notification of RUS's approval thereof, must be received
by FFB on or before the third Business Day before the Interim Maturity Date in
effect for the respective Advance immediately before such Maturity
Extension.  RUS approval of a Maturity Extension Election Notice will
be required under either of the following circumstances:

      


      (A) (i) any payment of any amount owing
under this Bond is not made by the Borrower when and as due; (ii) payment
is made by RUS in accordance with the guarantee set forth at the end of this
Bond; and (iii) RUS delivers notice to both the Borrower and FFB advising
each of them that each Maturity Extension Election Notice delivered by the
Borrower after the date of such notice shall require the approval of RUS;
or

      


      (B) FFB at any time delivers written
notice to both the Borrower and RUS advising each of them that each Maturity
Extension Election Notice delivered by the Borrower after the date of such
notice shall require the approval of RUS.

      


      (b) With respect to any Advance that
has an Interim Maturity Date, in the event that FFB does not receive a Maturity
Extension Election Notice (and, if required under subparagraph (a)(3) of
this paragraph 15, written notification 

       

      
        
          
          

        

        
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      of RUS's
approval thereof) on or before the third Business Day before such Interim
Maturity Date, then the maturity of such Advance shall be extended automatically
in the manner and subject to the limitations specified in this subparagraph (b)
(each such automatic extension of the maturity of any Advance that has an
Interim Maturity Date also being a "Maturity Extension";
and the Interim Maturity Date that is in effect for an Advance immediately
before any such automatic Maturity Extension also being, from and after such
Maturity Extension, the "Maturity Extension Effective
Date").  The new Maturity Date for such Advance shall be the
immediately following Payment Date.  The amount of principal that will
have its maturity extended automatically shall be the entire outstanding
principal amount of such Advance on such Maturity Extension Effective Date, less
the amount of any payment of principal made on such Maturity Extension Effective
Date.

      


      (c) In the event that the maturity of
any Advance that has an Interim Maturity Date is extended under either
subparagraph (a) or (b) of this paragraph 15, then the basic interest rate
for such Advance, from and after the respective Maturity Extension Effective
Date, shall be the particular rate that is established by FFB, as of such
Maturity Extension Effective Date, in accordance with the principles of
paragraph 6(c) of this Bond.

      


      (d) In
the event that the maturity of any Advance that has an Interim Maturity Date is
extended under either subparagraph (a) or (b) of this paragraph 15, then
the fee for such Advance, from and after the respective Maturity Extension
Effective Date, shall be the particular fee that is assessed by FFB, as of such
Maturity Extension Effective Date, with the new Advance Period being the period
from the Maturity Extension Effective Date through the new Maturity Date, in
accordance with the principles of paragraphs 9(b) and (c) of this
Bond.

      


      (e) In the event that (1) the maturity
of any Advance that has an Interim Maturity Date is extended under either
subparagraph (a) or (b) of this paragraph 15, and (2) the Maturity Date for such
extended Advance is a date that will occur before the fifth
anniversary of the respective Maturity Extension Effective Date, then the
prepayment/refinancing privilege described in section 11.2 of the Bond Purchase
Agreement shall apply automatically to such Advance.

      


      (f) In the event that (1) the Borrower
makes a Maturity Extension Election with respect to any Advance that has an
Interim Maturity Date, and (2) the Borrower selects as the Maturity Date for
such extended Advance a new Maturity Date that will occur on or after the fifth
anniversary of the respective Maturity Extension Effective Date, then the
Borrower must elect a prepayment/refinancing privilege for such extended Advance
from between the options described in sections 11.2 and 11.3 of the Bond
Purchase Agreement (provided, however, that each of
the 

       

      
        
          
          

        

        
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      references
to "the Requested Advance Date for such Advance" in  section 11.3 of
the Bond Purchase Agreement shall be deemed to be a reference to "the respective
Maturity Extension Effective Date").  The Maturity Extension Election
Notice delivered by the Borrower in connection with each such Maturity Extension
Election must also specify the particular prepayment/refinancing privilege that
the Borrower elects for the respective extended Advance.  In the event
that the Borrower elects for any such extended Advance a prepayment/refinancing
privilege described in section 11.3 of the Bond Purchase Agreement, then the
interest rate for such extended Advance, from and after the respective Maturity
Extension Effective Date, shall include a price (expressed in terms of a basis
point increment to the applicable basic interest rate) for the particular
prepayment/refinancing privilege that the Borrower elects, which price shall be
established by FFB, as of such Maturity Extension Effective Date, in accordance
with the principles of paragraph 6(d) of this Bond.  

      


      (g) The maturity of each Advance may be
extended more than once as provided in this paragraph 15, but upon the twentieth
anniversary of the Requested Advance Date specified in the original Advance
Request (if such twentieth anniversary date is a Payment Date) or upon the
Payment Date immediately preceding such twentieth anniversary date (if such
twentieth anniversary date is not a Payment Date), no further Maturity
Extensions may occur.

      


      16.    Prepayments.

      


      (a) The Borrower may elect to prepay
all or any portion of the outstanding principal amount of any Advance made under
this Bond, or to prepay this Bond in its entirety, in the manner, at the price,
and subject to the limitations specified in this paragraph 16 (each such
election being a "Prepayment
Election").

      


      (b) For each Prepayment Election in
which the Borrower elects to prepay a particular amount of the outstanding
principal of an Advance, the Borrower shall deliver to RUS written notification
of the respective Prepayment Election, in the form of notification attached to
this Bond as Annex
2-A (each such notification being a "Prepayment Election
Notice"), making reference to the Advance Identifier that FFB assigned to
the respective Advance (as provided in the Bond Purchase Agreement) and
specifying, among other things, the following: 

      


      (1) the particular date on which the
Borrower intends to make the prepayment on such Advance (such date being the
"Intended Prepayment
Date" for such Advance), which date: 

      


      (A) must be a Business Day;
and

      


      (B) for any Advance for which the
Borrower has selected a fixed premium prepayment/refinancing 

       

      
        
          
          

        

        
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      privilege
that includes a 5-year period during which such Advance shall not be eligible for
any prepayment or refinancing (such time period being a "No-Call Period"), may
not be a date that will occur before the applicable "First Call Date" determined
as provided in section 11.3.2 of the Bond Purchase Agreement (such date being
the "First Call
Date"); and

      


      (2) the amount of principal of the
respective Advance that the Borrower intends to prepay, which amount may be
either:

      


      (A) the total outstanding principal
amount of such Advance; or

      


      (B) an amount less than the total
outstanding principal amount of such Advance (subject to subparagraph (g) of
this paragraph 16) (any such amount being a "Portion").

      


      (c) For each Prepayment Election in
which the Borrower elects to have a particular amount of funds applied by FFB
toward the prepayment of the outstanding principal of an Advance, the Borrower
shall deliver to RUS written notification of the respective Prepayment Election,
in the form of notification attached to this Bond as Annex 2-B (each such
notification also being a "Prepayment Election
Notice"), making reference to the Advance Identifier that FFB assigned to
the respective Advance (as provided in the Bond Purchase Agreement) and
specifying, among other things, the following: 

      


      (1) the particular date on which the
Borrower intends to make the prepayment on such Advance (such date being the
"Intended Prepayment
Date" for such Advance), which date: 

      


      (A) must be a Business Day;
and

      


      (B) for any Advance for which the
Borrower has selected a fixed premium prepayment/refinancing privilege that
includes a 5-year No-Call Period, may not be a date that will occur before the
applicable First Call Date; and

      


      (2) the particular amount of funds that
the Borrower elects to be applied by FFB toward a prepayment of the outstanding
principal amount of such Advance.

      


      (d) To be effective, a Prepayment
Election Notice must be approved by RUS in writing, and such Prepayment Election
Notice, together with written notification of RUS's approval thereof, must be
received by FFB on or before the fifth Business Day before the date specified
therein as the Intended Prepayment Date for the respective Advance or
Portion.

      


      
        
          
          

        

        
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      (e) The Borrower shall pay to FFB a
price for the prepayment of any Advance, any Portion of any Advance, or this
Bond in its entirety (such price being the "Prepayment Price" for
such Advance or Portion or this Bond, as the case may be) determined as
follows:

      


      (1) in the event that the Borrower
elects to prepay the entire outstanding principal amount of any Advance, then
the Borrower shall pay to FFB a Prepayment Price for such Advance equal to the
sum of:

      


      (A) the entire outstanding principal
amount of such Advance on the Intended Prepayment Date;

      


      (B) all unpaid interest (and Late
Charges, if any) accrued on such Advance through the Intended Prepayment Date;
and

      


      (C) the amount of the premium or
discount credit (if any) that is required under the particular
prepayment/refinancing privilege that applies to such Advance;

      


      (2) in the event that the Borrower
elects to prepay a Portion of any Advance, then the Borrower shall pay to FFB a
Prepayment Price for such Portion that would equal such Portion's pro rata share
of the Prepayment Price that would be required for a prepayment of the entire
outstanding principal amount of such Advance (determined in accordance with the
principles of clause (1) of this subparagraph (e)); and

      


      (3) in the event that the Borrower
elects to prepay this Bond in its entirety, then the Borrower shall pay to FFB
an amount equal to the sum of the Prepayment Prices for all outstanding Advances
(determined in accordance with the principles of clause (1) of this subparagraph
(e)).

      


      (f) Payment of the Prepayment Price for
any Advance, any Portion of any Advance, or this Bond in its entirety shall be
due to FFB before 3:00 p.m. (Washington, DC, time) on the Intended Prepayment
Date for such Advance or Portion or this Bond, as the case may be.

      


      (g) Each prepayment of a Portion shall,
as to the principal amount of such Portion, be subject to a minimum amount equal
to $100,000.00 of principal.

      


      (h) The Borrower may make more than one
Prepayment Election with respect to an Advance, each such Prepayment Election
being made with respect to a different Portion of such Advance, until such time
as the entire principal amount of such Advance is repaid in full.

      


      
        
          
          

        

        
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      17.    Refinancings.

      


      (a) The Borrower may elect to refinance
the outstanding principal amount of any Advance (but not any Portion) in the
manner, at the price, and subject to the limitations specified in this paragraph
17 (each such election being a "Refinancing
Election").

      


      (b) Except under the circumstances
described in subparagraph (d) of this paragraph 17, the Borrower shall
deliver to FFB (with a copy to RUS) written notification of each Refinancing
Election, in the form of notification attached to this Bond as Annex 3-A (each such
notification being a "Refinancing Election
Notice"), making reference to the Advance Identifier that FFB assigned to
the respective Advance (as provided in the Bond Purchase Agreement) and
specifying, among other things, the following: 

      


      (1) the particular date on which the
Borrower intends to refinance the respective Advance (such date being the "Intended Refinancing
Date" for the respective Advance), which date:

      


      (A) must be a Payment Date;
and

      


      (B) for any Advance for which the
Borrower has selected a prepayment/refinancing privilege that includes a 5-year
No-Call Period, may not be a date that will occur before the applicable First
Call Date;

      


      (2) the amount of the outstanding
principal of the respective Advance that the Borrower elects to refinance (which
may not be a Portion); and

      


      (3) the Maturity Date that the Borrower
selects to be in effect for such principal amount after such refinancing, which
date may be:

      


      (A) the Maturity Date that is in effect
for such Advance immediately before such refinancing; or

      


      (B) a new Maturity Date that the
Borrower selects in connection with such Refinancing Election, provided that
such new Maturity Date meets the criteria for Maturity Dates prescribed in
section 7.3.1(a)(5) of the Bond Purchase Agreement (provided, however, that for
purposes of selecting a new Maturity Date in connection with a Refinancing
Election, each of the references to the "Requested Advance Date" for the
respective Advance in section 7.3.1(a)(5)(D) of the Bond Purchase Agreement
shall be deemed to be a reference to the "respective Refinancing Effective
Date").

      


      
        
          
          

        

        
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      (c) To be effective, a Refinancing
Election Notice must be received by FFB on or before the fifth Business Day
before the date specified therein as the Intended Refinancing Date.

      


      (d) In the event that either of the
circumstances described in clause (1) or (2) of the next sentence shall have
occurred, then a Refinancing Election Notice (in the form of notice attached to
this Bond as Annex
3-B), to be effective, must first be delivered to RUS for approval and be
approved by RUS in writing, and such Refinancing Election Notice, together with
written notification of RUS's approval thereof, must be received by FFB on or
before the fifth Business Day before the date specified therein to be the
Intended Refinancing Date.  RUS approval of a Refinancing Election
Notice will be required under either of the following
circumstances:

      


      (1) (A) payment of any amount owing
under this Bond is not made by the Borrower when and as due; (B) payment is made
by RUS in accordance with the guarantee set forth at the end of this Bond; and
(C) RUS delivers notice to both the Borrower and FFB advising each of them that
each Refinancing Election Notice delivered by the Borrower after the date of
such notice shall require the approval of RUS; or

      


      (2) FFB at any time delivers written
notice to both the Borrower and RUS advising each of them that each Refinancing
Election Notice delivered by the Borrower after the date of such notice shall
require the approval of RUS.

      


      (e) The Borrower shall pay to FFB a
price for the refinancing of any Advance (such price being the "Refinancing Price"
for such Advance) equal to the sum of:  

      


      (1) all unpaid interest (and Late
Charges, if any) accrued on such Advance through the Intended Refinancing Date;
and

      


      (2) the amount of the premium (if any)
that is required under the particular prepayment/refinancing privilege that
applies to such Advance.

      


      In the
event that (A) the prepayment/refinancing privilege that applies to the
particular Advance being refinanced is the privilege described in section 11.2
of the Bond Purchase Agreement, and (B) the Market Value Premium (or Discount)
that is to be included in the Refinancing Price for such Advance is a discount
on such Advance, then such discount shall be applied by FFB in the manner
requested by the Borrower in a written notice delivered by the Borrower to FFB
and approved by RUS in writing.

      


      (f) Payment of the Refinancing Price
for any Advance shall be due to FFB before 3:00 p.m. (Washington, DC, time) on
the Intended Refinancing Date for such Advance.

      


      
        
          
          

        

        
          Bond
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      (g) In the event that a Refinancing
Election Notice (and, if required under subparagraph (d) of this paragraph 17,
written notification of RUS's approval thereof) is received by FFB on or before
the fifth Business Day before the Intended Refinancing Date specified therein,
then the refinancing of the respective Advance shall become effective on such
Intended Refinancing Date (in such event, the Intended Refinancing Date being
the "Refinancing
Effective Date").  In the event that a Refinancing Election
Notice (and, if required under subparagraph (d) of this paragraph 17, written
notification of RUS's approval thereof) is received by FFB after the fifth
Business Day before the Intended Refinancing Date specified therein, then the
refinancing of the respective Advance shall become effective on the fifth
Business Day to occur after the day on which such Refinancing Election Notice
(and, if required under subparagraph (d) of this paragraph 17, written
notification of RUS's approval thereof) is received by FFB (in such event, the
fifth Business Day to occur after the day on which such Refinancing Election
Notice (and, if required under subparagraph (d) of this paragraph 17, written
notification of RUS's approval thereof) is received by FFB being the "Refinancing Effective
Date"), provided that the Borrower shall have paid to FFB, in addition to
the Refinancing Price required under subparagraph (e) of this paragraph 17, the
interest accrued from the Intended Refinancing Date through such Refinancing
Effective Date.

      


      (h) In the event that the Borrower
makes a Refinancing Election with respect to any Advance, the basic interest
rate for such Advance, from and after the respective Refinancing Effective Date,
shall be the particular rate that is established by FFB, as of such Refinancing
Effective Date, in accordance with the principles of paragraph 6(c) of this
Bond.

      


      (i) In
the event that the Borrower makes a Refinancing Election with respect to any
Advance, then the fee for such Advance, from and after the respective
Refinancing Effective Date, shall be the particular fee that is assessed by FFB,
as of such Refinancing Effective Date, with the new Advance Period being the
period from the Refinancing Effective Date through the new Maturity Date, in
accordance with the principles of paragraphs 9(b) and (c) of this
Bond.

      


      (j) In the event that (1) the Borrower
makes a Refinancing Election with respect to any Advance, and (2) the Borrower
selects as the Maturity Date for such refinanced Advance either (A) the Maturity
Date that is in effect for such Advance immediately before such refinancing, and
such Maturity Date will occur before the fifth
anniversary of the respective Refinancing Effective Date, or (B) a new Maturity
Date that will occur before the fifth
anniversary of the respective Refinancing Effective Date, then the
prepayment/refinancing privilege described in section 11.2 of the Bond Purchase
Agreement shall apply automatically to such Advance. 

      


      
        
          
          

        

        
          Bond
- page 16

          
            

          

        

        
          
          

        

      

      (k) In the event that (1) the Borrower
makes a Refinancing Election with respect to any Advance, and (2) the Borrower
selects as the Maturity Date for such refinanced Advance either (A) the Maturity
Date that is in effect for such Advance immediately before such refinancing, and
such Maturity Date will occur on or after the fifth
anniversary of the respective Refinancing Effective Date, or (B) a new Maturity
Date that will occur on or after the fifth
anniversary of the respective Refinancing Effective Date, then the Borrower must
elect a prepayment/refinancing privilege for such refinanced Advance from
between the options described in sections 11.2 and 11.3 of the Bond Purchase
Agreement (provided, however, that each of
the references to the "Requested Advance Date for such Advance" in section 11.3
of the Bond Purchase Agreement shall be deemed to be a reference to the
"respective Refinancing Effective Date").  The Refinancing Election
Notice delivered by the Borrower in connection with each such Refinancing
Election must also specify the particular prepayment/refinancing privilege that
the Borrower elects for the respective refinanced Advance.  In the
event that the Borrower elects for any such refinanced Advance a
prepayment/refinancing privilege described in section 11.3 of the Bond
Purchase Agreement, then the interest rate for such refinanced Advance, from and
after the respective Refinancing Effective Date, shall include a price
(expressed in terms of a basis point increment to the applicable basic interest
rate) for the particular prepayment/refinancing privilege that the Borrower
elects, which increment shall be established by FFB, as of such Refinancing
Effective Date, in accordance with the principles of paragraph 6(d) of this
Bond. 

      


      (l) The Borrower may make more than one
Refinancing Election with respect to any Advance.

       

      
        18.    Rescission
of Prepayment Elections and Refinancing Elections; Late Charges for Late
Payments.



      

      (a) The Borrower may rescind any
Prepayment Election made in accordance with paragraph 16 of this Bond or any
Refinancing Election made in accordance with paragraph 17 of this Bond, but only
in accordance with this paragraph 18.

      


      (b) The Borrower shall deliver to both
FFB and RUS written notification of each rescission of a Prepayment Election or
a Refinancing Election (each such notification being an "Election Rescission
Notice") specifying the particular Advance for which the Borrower wishes
to rescind such Prepayment Election or Refinancing Election, as the case may be,
which specification must make reference to both: 

      


      (1) the particular Advance Identifier
that FFB assigned to such Advance (as provided in the Bond Purchase Agreement);
and

      


      
        
          
          

        

        
          Bond
- page 17

          
            

          

        

        
          
          

        

      

      (2) the RUS account number for such
Advance.

      


      The
Election Rescission Notice may be delivered by facsimile transmission to FFB at
(202) 622-0707 and to RUS at (202) 720-1401, or at such other facsimile number
or numbers as either FFB or RUS may from time to time communicate to the
Borrower.

      


      (c) To be effective, an Election
Rescission Notice must be received by both FFB and RUS not later than 3:30 p.m.
(Washington, DC, time) on the second Business Day before the Intended Prepayment
Date or the Intended Refinancing Date, as the case may be.

      


      (d) In the event that the Borrower (1)
makes a Prepayment Election in accordance with paragraph 16 of this Bond or a
Refinancing Election in accordance with paragraph 17 of this Bond; (2) does not
rescind such Prepayment Election or Refinancing Election, as the case may be, in
accordance with this paragraph 18; and (3) does not, before 3:00 p.m.
(Washington, DC, time) on the Intended Prepayment Date or Intended Refinancing
Date, as the case may be, pay to FFB the Prepayment Price described in paragraph
16(e) of this Bond or Refinancing Price described in paragraph 17(e) of
this Bond, as the case may be, then a Late Charge shall accrue on any such
unpaid amount from the Intended Prepayment Date or Intended Refinancing Date, as
the case may be, to the date on which payment is made, computed in accordance
with the principles of paragraph 11 of this Bond.

      


      19.    Amendments to
Bond.

      


      To the extent not inconsistent with
applicable law, this Bond, for so long as FFB or its agent is the holder
thereof, shall be subject to modification by such amendments, extensions, and
renewals as may be agreed upon from time to time by FFB and the Borrower, with
the approval of RUS.

      


      20.    Certain
Waivers.

      


      The Borrower hereby waives any
requirement for presentment, protest, or other demand or notice with respect to
this Bond.

      


      21.    Bond Effective Until
Paid.

      


      This Bond shall continue in full force
and effect until all principal outstanding hereunder, all interest accrued
hereunder, all premiums (if any) payable under paragraphs 16 and 17 of this
Bond, all Late Charges (if any) payable under paragraphs 11 and 18 of this Bond,
and all fees (if any) payable under paragraph 9 of this Bond have been paid in
full.

       

      
        
          
          

        

        
          Bond
- page 18

          
            

          

        

        
          
          

        

      

      

        22.    RUS Guarantee of
Bond.

         

      

      Upon execution of the guarantee set
forth at the end of this Bond (the "RUS Guarantee"), the
payment by the Borrower of all amounts due and payable under this Bond, when and
as due, shall be guaranteed by the United States of America, acting through RUS,
pursuant to the Rural Electrification Act of 1936, as amended (codified at 7
U.S.C. § 901 et
seq.).  In
consideration of the RUS Guarantee, the Borrower promises to RUS to make all
payments due under this Bond when and as due. 

       

      
        23.    Pledge
Agreement.

         

      

      This Bond is one of several Bonds
referred to in the Pledge Agreement, wherein the Borrower made provision for the
pledge and grant of a security interest in, under certain circumstances
described therein, certain property of the Borrower, described therein, to
secure the payment of and performance of certain obligations owed to RUS, as set
forth in the Pledge Agreement.

      


      24.    Guarantee Payments;
Reimbursement.

      


      If RUS makes any payment, pursuant to
the RUS Guarantee, of any amount due and payable under this Bond, when and as
due, each and every such payment so made shall be deemed to be a payment
hereunder; provided, however, that no
payment by RUS pursuant to the RUS Guarantee shall be considered a payment for
purposes of determining the existence of a failure by the Borrower to perform
its obligation to RUS to make all payments under this Bond when and as
due.  RUS shall have any rights by way of subrogation, agreement or
otherwise which arise as a result of such payment pursuant to the RUS
Guarantee.

       

      
        25.    Default and
Enforcement.

      

       

      In case of a default by the Borrower
under this Bond or the occurrence of an event of default under the Bond
Guarantee Agreement, then, in consideration of the obligation of RUS under the
RUS Guarantee, in that event, to make payments to FFB as provided in this Bond,
RUS, in its own name, shall have all rights, powers, privileges, and remedies of
the holder of this Bond, in accordance with the terms of this Bond, the Bond
Guarantee Agreement, and the Pledge Agreement, including, without limitation,
the right to enforce or collect all or any part of the obligation of the
Borrower under this Bond or arising as a result of the RUS Guarantee, to file
proofs of claim or any other document in any bankruptcy, insolvency, or other
judicial proceeding, and to vote such proofs of claim.

      


      26.    Acceleration.

      


      The entire unpaid principal amount of
this Bond, and all interest thereon, may be declared, and upon such declaration
shall become, due and payable to RUS, under the circumstances 

       

      
        
          
          

        

        
          Bond
- page 19

          
            

          

        

        
          
          

        

      

      described,
and in the manner and with the effect provided, in the Bond Guarantee
Agreement.

      


      


      IN WITNESS WHEREOF, the
Borrower has caused this Bond to be signed in its corporate name and its
corporate seal to be hereunder affixed and attested by its officers thereunto
duly authorized, all as of the day and year first above written.

      


      


      


           NATIONAL RURAL UTILITIES


                   COOPERATIVE
FINANCE CORPORATION

                          (the
"Borrower")

      
 

      BY:

       

      


      Signature:   /s/ SHELDON C. PETERSEN

      


      


      Print Name:  Sheldon C.
Petersen

      


      


      Title:       Governor
and

                              Chief
Executive Officer

       

      


      ATTEST:

      
 

      


      Signature:   /s/ JOHN J. LIST

      (SEAL)

      


      Print Name:  John J.
List

      


      


      Title:       Assistant
Secretary-Treasurer

      



      
        
          
            


             

          

           


        

        
          Bond
- page 20