Document:

4.12 - Series B Bond Guarantee Agreement

                                                                                                                    EXECUTION
COPY

		
			
			__________________________________________________________

			
			 

			 

			 

			 

			SERIES B BOND GUARANTEE AGREEMENT

			dated as of April 28, 2006

			between

			UNITED STATES OF AMERICA

			acting through the 

			Rural Utilities Service

			as guarantor,

			and

			NATIONAL RURAL UTILITIES

			COOPERATIVE FINANCE CORPORATION,

			as the Borrower

			 

			 

			 

			
			
			__________________________________________________________

			 

		
			TABLE OF CONTENTS

	
			 
	
			                                                                                                                               Page
	
			 	 	
			 
	
			RECITALS	
			 	
			1

	
			 	 	
			 
	
			ARTICLE I

	
			    
	
			DEFINITIONS

	
			   
	
			Section 1.1.
	Definitions 	
			2

	 	 	 
	
			Section 1.2.
	Principles of Construction	
			6

	 	 	 
	
			ARTICLE II

	 
	
			THE GUARANTEE

	 
	Section 2.1.	Execution of Guarantee	6
	 	 	 
	Section 2.2.	Coverage of Guarantee	6
	 	 	 
	Section 2.3.	Payment on the Guarantee	6
	   
	
			ARTICLE III

	    
	
			CONDITIONS PRECEDENT

	    
	Section 3.1.	Conditions Precedent to Issuance of the Guarantee	7
	 	 	 
	Section 3.2.	Conditions Precedent to each Advance	8
	   
	
			ARTICLE IV

	   
	
			GUARANTEE FEE

	    
	Section 4.1.	Guarantee Fee	9
	 	 	 
	Section 4.2.	Amount of Guarantee Fee; Dates of Payment	9
	   
	
			i

	

		 
	
			ARTICLE V

	    
	
			SERVICING OF THE GUARANTEED BOND

	    
	Section 5.1.	Servicing	9
	    
	
			ARTICLE VI

	    
	
			REPORTING REQUIREMENTS

	    
	Section 6.1.	Annual Reporting Requirements	10
	 	 	 
	Section 6.2.	Trigger Event Notices	11
	 	 	 
	Section 6.3.	Default Notices	11
	  
	
			ARTICLE VII

	   
	
			LIMITATIONS ON AMENDMENTS TO THE GUARANTEED BOND

	   
	Section 7.1.	Limitations on Amendments to the Guaranteed Bond	11
	  
	
			ARTICLE VIII

	  
	
			REPRESENTATIONS OF THE PARTIES

	   
	Section 8.1.	Representation of RUS	11
	 	 	 
	Section 8.2.	Representations of the Borrower	11
	    
	
			ARTICLE IX

	  
	
			AGREEMENTS OF THE BORROWER

	   
	Section 9.1.	Patronage Refunds	13
	 	 	 
	Section 9.2.	Security and Collateral 	13
	 	 	 
	Section 9.3.	Use of Savings 	14
	 	 	 
	Section 9.4.	Subrogation 	14
	 	 	 
	Section 9.5.	Use of Proceeds	14
	   
	
			ii

		 
	Section 9.6.	Compliance with Covenants in Other Agreements	14
	 	 	 
	Section 9.7.	Ratings	15
	 	 	 
	Section 9.8.	Acknowledgement of Borrower 	15
	 	 	 
	Section 9.9.	Financial Expert	15
	    
	
			ARTICLE X

	    
	
			EVENTS OF DEFAULT

	    
	Section 10.1.	Events of Default	15
	 	 	 
	Section 10.2.	Compulsory Redemption	16
	 	 	 
	Section 10.3.	Acceleration by RUS's Purchase of the Bond	16
	 	 	 
	Section 10.4.	Effect of Payments by RUS pursuant to the RUS
			Guarantee	16
	 	 	 
	Section 10.5.	Remedies Not Exclusive	16
	  
	
			ARTICLE XI

	   
	
			MISCELLANEOUS

	   
	Section 11.1.	GOVERNING LAW	16
	 	 	 
	Section 11.2.	WAIVER OF JURY TRIAL	16
	 	 	 
	Section 11.3.	Method of Payment	17
	 	 	 
	Section 11.4.	Notices	17
	 	 	 
	Section 11.5.	Benefit of Agreement	17
	 	 	 
	Section 11.6.	Entire Agreement	17
	 	 	 
	Section 11.7.	Amendments and Waivers	17
	 	 	 
	Section 11.8.	Counterparts	18
	 	 	 
	Section 11.9.	Termination of Agreement	18
	 	 	 
	Section 11.10.	Survival	18
	 	 	 
	Section 11.11.	Severability	18
	   
	
			iii

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

		
			                                                            SERIES B
			BOND GUARANTEE AGREEMENT

			                                                    dated as of
			April 28, 2006, between the UNITED

			                                                    STATES OF
			AMERICA (the "Government"), acting

			                                                    through the
			Rural Utilities Service, a Rural Development

			                                                    agency of the
			United States Department of Agriculture,

			                                                    and its
			successors and assigns ("RUS"); and

			                                                    NATIONAL RURAL
			UTILITIES COOPERATIVE

			                                                    FINANCE
			CORPORATION, a cooperative association

			                                                    existing under
			the laws of the District of Columbia (the

			                                                    "Borrower").
	   
	
			RECITALS 

	   
	          1. 
			On July 8, 2005, the Borrower applied to RUS (the "Application"),
			in accordance with Section 313A of the Rural Electrification Act of
			1936, as amended (the "RE Act") and the regulations
			promulgated thereunder (as set forth in Section 1720 of Part 7 of
			the Code of Federal Regulations (the "Regulations")), for RUS
			to guarantee a second loan from the Federal Financing Bank, a body
			corporate and instrumentality of the Government under the general
			supervision of the Secretary of the Treasury, and its permitted
			successors and assigns, ("FFB"), to the Borrower, the
			proceeds of which would be used by the Borrower to fund new Eligible
			Loans (as defined herein) or to refinance existing debt instruments
			of the Borrower used to fund Eligible Loans.
	   
	          2. RUS has
			determined that the Borrower is eligible for guarantees under
			Section 313A of the RE Act.
	   
	          3. 
			FFB is willing to make a loan to the Borrower in the aggregate
			principal amount of up to $1,500,000,000 upon the terms and subject
			to the conditions set out in the Series B Bond Purchase Agreement
			among FFB, the Borrower and the Government dated as of the date
			hereof (such agreement being in the form of Annex A attached hereto,
			as the same may be amended, supplemented, consolidated or restated
			from time to time in accordance with the terms thereof and hereof
			being hereinafter called the "Bond Purchase Agreement"), and
			upon the terms and subject to the conditions set out in the Series B
			Future Advance Bond issued by the Borrower to FFB and dated as of
			the date hereof (such bond being in the form attached to the Bond
			Purchase Agreement, as the same may be amended, supplemented,
			consolidated or restated from time to time in accordance with the
			terms thereof and hereof being hereinafter called the "Bond").
	    
	          4. RUS is willing to
			issue its guarantee of the Bond, as contemplated by Section 313A of
			the RE Act, upon the terms and subject to the conditions hereinafter
			provided.
	    
	          NOW, THEREFORE, in consideration of the mutual
			agreements herein contained, RUS and the Borrower agree as follows:
	    
	
			1

	

	
			Series B Bond Guarantee Agreement

	    
	ARTICLE I
	    
	DEFINITIONS
	   
	          SECTION 1.1. Definitions.
			As used in this Agreement, the following terms shall have the
			following meanings:

			"91-day Treasury-Bill Rate" shall mean, for any date, the
			rate equal to the weighted average per annum discount rate
			(expressed as a bond equivalent yield and applied on a daily basis)
			for direct obligations of the United States with a maturity of
			thirteen weeks ("91-day Treasury-Bills") sold at the
			applicable 91-day Treasury-Bill auction on or most recently prior to
			such date, as published on the website http://wwws.publicdebt.treas.gov/AI/OFBills
			or otherwise as reported by the U.S. Department of the Treasury. In
			the event that the results of the auctions of 91-day Treasury Bills
			cease to be published or reported as provided above, or that no
			91-day Treasury Bill auction is held in a particular week, then the
			91-day Treasury-Bill Rate in effect as a result of the last such
			publication or report will remain in effect until such time, if any,
			as the results of auctions of 91-day Treasury-Bills will again be so
			published or reported or such auction is held, as the case may be.

			"Administrator" shall mean the Administrator of RUS.

			"Advance" shall have the meaning given to that term in the
			Bond.

			"Agreement" shall mean this Series B Bond Guarantee
			Agreement, as the same may be amended, supplemented, consolidated or
			restated from time to time.

			"Application" shall have the meaning given to that term in
			Recital 1.

			"Bond" shall have the meaning given to that term in
			Recital 3.

			"Bond Fee" shall mean the fee applicable to each Advance
			as calculated in accordance with paragraph 9(b) of the Bond.

			"Bond Purchase Agreement" shall have the meaning given to
			that term in Recital 3.

			"Bond Documents" shall mean the Bond, the Bond Purchase
			Agreement, the Guarantee, this Agreement, the Pledge Agreement and
			the Reimbursement Note.

			"Borrower" shall have the meaning given to that term in
			the Preamble.

			"Borrower Notice" shall have the meaning given to that
			term in the Pledge Agreement.

			"Business Day" shall mean any day other than a Saturday, a
			Sunday, a legal public holiday under 5 U.S.C. 6103 for the purpose
			of statutes relating to pay and leave of employees or any other day
			declared to be a legal holiday for the purpose of

	      
	
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			Series B Bond Guarantee Agreement

	    
	
			statutes relating to pay and leave of employees by Federal statute
			or Federal Executive Order."Certificate of Available
			Securities" shall have the meaning given to that term in the
			Pledge Agreement.

			"Certificate of Pledged Collateral" shall have the meaning
			given to that term in the Pledge Agreement.

			"Closing Date" shall mean April 28, 2006.

			"Concurrent Loan" shall mean a Loan that the Borrower has
			extended or extends for the cost of an eligible electrification or
			telephone purpose under the RE Act, concurrently with an insured
			loan made by the Secretary, as provided in Section 307 of the RE
			Act.

			"Consolidated Subsidiary" means at any date any Subsidiary
			and any other entity the accounts of which would be combined or
			consolidated with those of the Borrower in its combined or
			consolidated financial statements if such statements were prepared
			as of such date.

			"Eligible Loan" shall mean all or part of any Loan that
			the Borrower has made for any electrification or telephone purpose
			eligible under the RE Act, to the extent the Loan is not used
			directly or indirectly to fund projects for the generation of
			electricity.

			"Event of Default" shall have the meaning given to that
			term in Section 10.1.

			"FFB" shall have the meaning given to that term in Recital
			1.

			A "Financial Expert Trigger Event" shall exist at any time
			when the Borrower has failed to comply with the covenant contained
			in Section 9.9 hereof.

			"Financial Statements", in respect of a Fiscal Year, shall
			mean the consolidated financial statements (including footnotes) of
			the Borrower for that Fiscal Year as audited by independent
			certified public accountants appointed by the Borrower.

			"Fiscal Year" shall mean the fiscal year of the Borrower,
			as such may be changed from time to time, which at the date hereof
			commences on June 1 of each calendar year and ends on May 31 of the
			following calendar year.

			"Government" shall have the meaning given to that term in
			the Preamble.

			"Guarantee" shall mean the guarantee to be executed by the
			Secretary, in the form attached to the Bond.

			"Guarantee Fee" shall have the meaning given to that term
			in Section 4.1.

	 
	
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			Series B Bond Guarantee Agreement

	   
	"Guaranteed Bond" shall mean the Bond with the executed
			Guarantee attached thereto."Indebtedness" with respect to
			any Person shall mean without duplication:

			(a) all indebtedness which would appear as indebtedness on a
			balance sheet of such Person prepared in accordance with generally
			accepted accounting principles (i) for money borrowed, (ii) which is
			evidenced by securities sold for money or (iii) which constitutes
			purchase money indebtedness;

			(b) all indebtedness of others guaranteed by such Person (not
			including endorsements for collection or deposit in the ordinary
			course of business);

			(c) all indebtedness secured by any mortgage, lien, pledge,
			charge or encumbrance upon property owned by such Person, even
			though such Person has not assumed or become liable for the payment
			of such indebtedness; and

			(d) all indebtedness of such Person created or arising under any
			conditional sale or other title retention agreement (including any
			lease in the nature of a title retention agreement) with respect to
			property acquired by such Person (even though the rights and
			remedies of the seller or lender under such agreement in the event
			of default are limited to repossession of such property), but only
			if such property is included as an asset on the balance sheet of
			such Person, 

			
			provided that, in computing the "Indebtedness" of such
			Person, there shall be excluded any particular indebtedness if, upon
			or prior to the maturity thereof, there shall have been deposited
			with the proper depositary in trust money (or evidences of such
			indebtedness) in the amount necessary to pay, redeem or satisfy such
			indebtedness; and provided further that no provision of this
			definition shall be construed to include as "Indebtedness" of the
			Borrower or its Consolidated Subsidiaries any indebtedness by virtue
			of any agreement by the Borrower or its Consolidated Subsidiaries to
			advance or supply funds to Members or Consolidated Subsidiary
			members.

			"Investment Grade Rating" shall mean, in respect of any
			ratable instrument, a rating for that instrument in one of the four
			highest rating categories (within which there may be subcategories
			or gradations which are to be ignored for the purposes of this
			definition) of a Rating Agency. At the date hereof, this would
			require the following: (i) a BBB- rating or higher from Standard &
			Poor's, a division of The McGraw-Hill Companies, Inc.; (ii) a Baa3
			rating or higher from Moody's Investors Service, Inc.; or (iii) a
			BBB- rating or higher from Fitch, Inc.

			"Loan" shall mean a loan that the Borrower has or will
			have outstanding to any of its Members or associates.

			"Member" shall mean any Person who is member or patron of
			the Borrower, as the case may be.

	   
	
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			Series B Bond Guarantee Agreement

	   
	"Person" means an individual, a corporation, a
			partnership, an association, a trust or any other entity or
			organization, including a government or political subdivision or an
			agency or instrumentality thereof."Pledge Agreement" shall
			mean the Pledge Agreement dated as of April 28, 2006, entered into
			by the Borrower, RUS and U.S. Bank Trust National Association, in
			the form of Annex B attached hereto, as the same may be amended,
			supplemented, consolidated or restated from time to time in
			accordance with the terms thereof and hereof.

			"Program" shall mean the guarantee program for bonds and
			notes issued for electrification or telephone purposes authorized by
			Section 313A of the RE Act.

			"Rating Agency" shall mean (i) Standard & Poor's, a
			division of The McGraw-Hill Companies, Inc., Moody's Investors
			Service, Inc., Fitch, Inc; and (ii) their respective successor
			rating agencies.

			A "Rating Trigger Event" shall exist at any time when the
			Borrower has any Senior Secured Debt (without regard to the
			Guarantee or any other third party credit support) that does not
			have at least two of the following ratings: (i) A- or higher from
			Standard & Poor's, a division of The McGraw-Hill Companies, Inc.;
			(ii) A3 or higher from Moody's Investors Service, Inc.; (iii) A- or
			higher from Fitch, Inc.; and (iv) an equivalent rating from a
			successor rating agency to any of those Rating Agencies.

			"RE Act" shall have the meaning given to that term in
			Recital 1.

			"Regulations" shall have the meaning given to that term in
			Recital 1.

			"Reimbursement Note" shall mean the note issued by the
			Borrower to RUS, in the form of Annex C attached hereto, as the same
			may be amended, supplemented, consolidated or restated from time to
			time in accordance with the terms thereof and hereof.

			"Requested Advance Date" shall have the meaning given to
			that term in the Bond.

			"RUS" shall have the meaning given to that term in the
			Preamble.

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

			"Senior Secured Debt" of the Borrower means
			non-subordinated secured bonds or notes of the Borrower having an
			aggregate principal amount of at least $100,000,000 which, at the
			date hereof, means the Borrower's collateral trust bonds, 
			provided, however, that "Senior Secured Debt" shall not
			include (i) any bonds issued by the Borrower to FFB that are
			guaranteed by RUS under the Program; (ii) up to $500,000,000 of debt
			designated by the Borrower as not being "Senior Secured Debt";

	    
	
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			Series B Bond Guarantee Agreement

	    
	and (iii) any other debt of the Borrower that RUS agrees shall
			not be "Senior Secured Debt"."Subrogation Claim" shall
			have the meaning given to that term in Section 9.4(a).

			"Subsidiary" of any Person means (i) any corporation more
			than 50% of whose stock of any class or classes having by the terms
			thereof ordinary voting power to elect a majority of the directors
			of such corporation (irrespective of whether or not at the time
			stock of any class or classes of such corporation shall have or
			might have voting power by reason of the happening of any
			contingency) is at the time owned by such Person directly or
			indirectly through its Subsidiaries; and (ii) any other Person in
			which such Person directly or indirectly through Subsidiaries has
			more than a 50% voting and equity interest; provided that no
			Person shall be deemed a Subsidiary whose only assets are (A) loans
			guaranteed, in whole or in part, as to principal and interest by the
			Government through RUS pursuant to a guarantee; and (B) investments
			incidental thereto.

			"Termination Date" shall mean the date upon which this
			Agreement terminates in accordance with Section 11.9.

			SECTION 1.2. Principles of
			Construction. Unless the context shall otherwise indicate, the
			terms defined in Section 1.1 hereof include the plural as well as
			the singular and the singular as well as the plural. The words
			"hereafter", "herein", "hereof", "hereto" and "hereunder", and words
			of similar import, refer to this Agreement as a whole. The
			descriptive headings of the various articles and sections of this
			Agreement were formulated and inserted for convenience only and
			shall not be deemed to affect the meaning or construction of the
			provisions hereof.

			ARTICLE II

			

			THE GUARANTEE

			SECTION 2.1. Execution of Guarantee.
			Upon presentation to RUS of the Bond, and upon satisfaction of the
			conditions set forth in Section 3.1 of this Agreement, and subject
			to Section 2.2, the Secretary shall execute, pursuant to the RE Act,
			the Guarantee.

			SECTION 2.2. Coverage of Guarantee.
			The Guarantee shall be an obligation supported by the full faith and
			credit of the Government and incontestable except for fraud or
			misrepresentation of which FFB had actual knowledge at the time it
			extended the loan represented by the Guaranteed Bond.

			SECTION 2.3. Payment on the Guarantee.
			RUS guarantees the full repayment of the principal, interest, late
			payment charges, Bond Fees and discount or prepayment premiums, if
			any, when and as due on the Guaranteed Bond in accordance with the
			terms of the Guarantee, provided, however, that any
			payment by RUS under the

	   
	
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			Series B Bond Guarantee Agreement

	    
	
			Guarantee does not relieve the Borrower of
			any of its obligations or liabilities under or in respect of this
			Agreement or any of the Bond Documents.ARTICLE
			III

			

			CONDITIONS PRECEDENT

			SECTION 3.1. Conditions Precedent to
			Issuance of the Guarantee. RUS shall be under no obligation to
			execute and deliver the Guarantee unless and until the following
			conditions have been satisfied or waived in writing:

			
					(a) Bond Documents. RUS shall have received
					originals of: (i) the Bond (with an unexecuted Guarantee
					attached thereto) duly executed on behalf of the Borrower,
					identical in all respects to the form of Bond attached to
					the Bond Purchase Agreement except to the extent that RUS
					may have approved changes therein, (ii) the Bond Purchase
					Agreement duly executed on behalf of the Borrower and FFB,
					identical in all respects to the form of Bond Purchase
					Agreement in Annex A attached hereto except to the extent
					that RUS may have approved changes therein, (iii) the Pledge
					Agreement duly executed on behalf of the Borrower and the
					Collateral Agent (as defined therein), identical in all
					respects to the form of Pledge Agreement in Annex B attached
					hereto except to the extent that RUS may have approved
					changes therein, and (iv) the Reimbursement Note duly
					executed on behalf of the Borrower, identical in all
					respects to the form of Reimbursement Note in Annex C
					attached hereto except to the extent that RUS may have
					approved changes therein.

					
					(b) Amount of Concurrent Loans. (i) The
					Borrower shall have provided a certified list of Concurrent
					Loans and their outstanding principal balances as of the
					last day of the month immediately preceding the Closing
					Date; and (ii) on the Closing Date the maximum principal
					amount of the Guaranteed Bond plus the outstanding amount
					and the committed but undrawn amount of any other guaranteed
					bonds issued by the Borrower under the Program shall not
					exceed the total principal amount of Concurrent Loans
					outstanding on the last day of the month immediately
					preceding the Closing Date as certified pursuant to
					paragraph (i) of this subsection.

					
					(c) Opinion of Counsel. Counsel to the
					Borrower shall have furnished an opinion substantially as to
					each of the matters listed in Annex D attached hereto.

					
					(d) No material adverse change. The
					Borrower shall have certified to the Secretary (in the
					manner specified in paragraph (g) of this Section 3.1), and
					the Secretary shall be satisfied, that no material adverse
					change shall have occurred in the financial condition of the
					Borrower between the date of the Application and the date of
					execution of the Guarantee.

				
			
			
	   
	
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			Series B Bond Guarantee Agreement

	    
	
			
					(e) Investment Grade Rating of Bond. The
					Borrower shall have provided evidence of an Investment Grade
					Rating from a Rating Agency for the Bond, without regard to
					the Guarantee.

					
					(f) Rating of Senior Secured Debt. The
					Borrower shall have provided evidence satisfactory to the
					Secretary of a credit rating on its Senior Secured Debt,
					without regard to the Guarantee and without regard to any
					third party credit support.

					
					(g) Certification of Senior Management. The
					Borrower shall have provided RUS a certification by its
					Governor and its Chief Financial Officer (or other senior
					management acceptable to the Secretary), substantially in
					the form attached of Annex E attached hereto, of the
					following: (i) that the Borrower is a lending institution
					organized as a private, not-for-profit, cooperative
					association with the appropriate expertise, experience and
					qualifications to make loans for electrification or
					telephone purposes; (ii) the matter to be certified under
					paragraph (d) of this Section 3.1; (iii) acknowledgment of
					the Borrower's commitment to comply with the reporting
					requirements specified in Article VI; and (iv) to the effect
					that no Rating Trigger Event or Financial Expert Trigger
					Event exists.

					
					(h) UCC Filing. The Borrower shall have
					provided RUS with evidence that the Borrower has filed the
					financing statement required pursuant to Section 2.05(i) of
					the Pledge Agreement.

				
			
			SECTION 3.2. Conditions Precedent to
			each Advance. The following conditions shall be fulfilled to the
			satisfaction of RUS or waived in writing by RUS prior to the
			drawdown of each Advance under the Guaranteed Bond:

			
					(a) Existing Loans. The Borrower shall have
					certified to the Secretary (in the manner specified in
					paragraph (d) of this Section 3.2): (i) the total aggregate
					principal amount of outstanding Eligible Loans as at the
					Requested Advance Date; (ii) the total aggregate principal
					amount of outstanding Loans as at the Requested Advance
					Date; and (iii) the percentage the amount in subparagraph (i)
					comprises of the amount in subparagraph (ii).

					
					(b) Use of Proceeds. The Borrower shall
					have certified to the Secretary (in the manner specified in
					paragraph (d) of this Section 3.2) that the Advance will be
					applied: (i) to fund new Eligible Loans under the RE Act;
					and/or (ii) to refinance existing debt instruments of the
					Borrower, in the case of each such debt instrument up to the
					percentage certified by the Borrower in accordance with
					Section 3.2(a)(iii) hereof of such debt instrument.

					
					(c) No material adverse change. The
					Borrower shall have certified to the Secretary (in the
					manner specified in paragraph (d) of this Section 3.2), and
					the Secretary shall be satisfied, that no material adverse
					change shall have occurred in the financial condition of the
					Borrower between the Closing Date and the applicable
					Requested Advance Date.

				
			
			
	   
	
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			Series B Bond Guarantee Agreement

	   
	
			
					(d) Certification of Senior Management. The
					Borrower shall have provided RUS a certification by its
					Governor and its Chief Financial Officer (or other senior
					management acceptable to the Secretary), substantially in
					the form attached of Annex F attached hereto, of the matters
					to be certified under paragraphs (a), (b) and (c) of this
					Section 3.2.

					
					(e) Certificate of Available Securities/Pledged
					Collateral. The Borrower shall have provided RUS a copy
					of a Certificate of Available Securities or Certificate of
					Pledged Collateral, as applicable, in accordance with the
					terms of the Pledge Agreement.

				
			
			ARTICLE IV

			

			GUARANTEE FEE

			SECTION 4.1. Guarantee Fee. The
			Borrower shall pay a guarantee fee (the "Guarantee Fee"), to
			the RUS for deposit into the Rural Economic Development Subaccount
			maintained under Section 313(b)(2)(A) of the RE Act.

			SECTION 4.2. Amount of Guarantee Fee;
			Dates of Payment. (a) The Guarantee Fee will be in the amount of 30
			basis points (0.30 percent) of the unpaid principal amount of the
			Bond, payable as provided in paragraph (b) of this Section 4.2.

			
					(b) The Guarantee Fee will be payable, in advance,
					on each January 15 and July 15 in the amount of 15 basis
					points (0.15 percent) of the outstanding principal amount of
					the Bond on that date. In addition, on the date of each
					Advance under the Bond, the Borrower will pay to RUS the
					Guarantee Fee on the principal amount of such advance in the
					amount of (i) 30 basis points (0.30 percent) of the
					principal amount of such advance multiplied by (ii) the
					ratio of (x) the actual amount of days from the date of such
					advance until the next January 15 or July 15, whichever
					comes first, to (y) 365 (except in calendar years including
					February 29, when the number shall be 366).

					
					(c) Payments of the Guarantee Fee are
					non-refundable as of the date and in the amount required to
					be paid hereunder, without regard to any reduction in the
					principal amount of the Bond after that date.

				
			
			ARTICLE V

			

			SERVICING OF THE GUARANTEED BOND

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

	   
	
			9

	

	
			Series B Bond Guarantee Agreement

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

			

			REPORTING REQUIREMENTS

			SECTION 6.1. Annual Reporting
			Requirements. Until the Termination Date, the Borrower shall
			provide the Secretary with the following items within 90 days of the
			end of each Fiscal Year, in each case, in form and substance
			satisfactory to the Secretary:

			
					(a) the Financial Statements for such Fiscal Year;

					
					(b) a Certificate of Available Securities or
					Certificate of Pledged Collateral, as applicable, as of the
					end of such Fiscal Year;

					
					(c) a letter substantially in the form of Annex G
					attached hereto, by Deloitte & Touche LLP or by such other
					reputable, independent certified public accountants proposed
					by the Borrower, who in the judgment of the Secretary have
					the requisite skills, knowledge, reputation and experience
					to provide such letter, such letter to be based upon
					Schedule A to the applicable certificate delivered under
					paragraph (b) of this Section 6.1;

					
					(d) a receipt from the Collateral Agent (as
					defined in the Pledge Agreement), or such other evidence as
					is satisfactory to the Secretary, as to the Available
					Securities or Pledged Collateral, as applicable, held by the
					Collateral Agent at the end of such Fiscal Year, such
					Available Securities or Pledged Collateral, as applicable,
					to agree with Schedule A to the applicable certificate
					delivered under paragraph (b) of this Section 6.1;

					
					(e) a projection of the Borrower's balance sheet,
					income statement and statement of cash flows over the
					ensuing five years, pro forma assuming the full principal
					amount of the Bond is advanced;

					
					(f) the most recent credit assessment of the
					Borrower issued by a Rating Agency;

					
					(g) a credit rating, issued by a Rating Agency, of
					the Senior Secured Debt, without regard to the Guarantee and
					without regard to third party credit support; and

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

				
			
			
	   
	
			10

	

	
			Series B Bond Guarantee Agreement

	   
	SECTION 6.2. Trigger Event Notices.
			If the Borrower becomes aware that a Rating Trigger Event or a
			Financial Expert Trigger Event has occurred, the Borrower shall
			deliver a Borrower Notice of such event to RUS and to the Collateral
			Agent (as defined in the Pledge Agreement) before 4:00 p.m. District
			of Columbia time on the Business Day following the date the Borrower
			has become aware of such event, specifying the existence of such
			event.SECTION 6.3. Default Notices.
			If an action, occurrence or event shall happen that is, or with
			notice and the passage of time would become, an Event of Default,
			the Borrower shall deliver a Borrower Notice of such action,
			occurrence or event to RUS before 4:00 p.m. District of Columbia
			time on the Business Day following the date the Borrower becomes
			aware of such action, occurrence or event, and, if such Event of
			Default should occur, shall submit to RUS, as soon as possible
			thereafter, a report setting forth its views as to the reasons for
			the Event of Default, the anticipated duration of the Event of
			Default and what corrective actions the Borrower is taking to cure
			such Event of Default.

			ARTICLE VII

			

			LIMITATIONS ON AMENDMENTS TO THE GUARANTEED BOND

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

			ARTICLE VIII

			

			REPRESENTATIONS OF THE PARTIES

			SECTION 8.1. Representation of RUS.
			RUS represents that the Guarantee endorsed on the original of the
			Guaranteed Bond constitutes a legal, valid and binding obligation
			supported by the full faith and credit of the Government,
			incontestable except for fraud or misrepresentation of which FFB had
			actual knowledge at the time it extended the loan represented by the
			Guaranteed Bond.

			SECTION 8.2. Representations of the
			Borrower. The Borrower hereby represents to RUS that on the date
			hereof, the Closing Date, and each Requested Advance Date:

	   
	
			11

	

	
			Series B Bond Guarantee Agreement

	   
	 
	(a) the Borrower has been duly
			organized and is validly existing and in good standing as a
			cooperative association under the laws of the District of Columbia;
			(b) the Borrower has the corporate power and authority to
			execute and deliver this Agreement and each of the other Bond
			Documents to which the Borrower is a party, to consummate the
			transactions contemplated hereby and thereby and to perform its
			obligations hereunder and thereunder;

			
			(c) the Borrower has taken all necessary corporate action
			to authorize the execution and delivery of this Agreement and each
			of the other Bond Documents to which the Borrower is a party, the
			consummation by the Borrower of the transactions contemplated hereby
			and thereby and the performance by the Borrower of its obligations
			hereunder and thereunder;

			
			(d) this Agreement and each of the other Bond Documents to
			which the Borrower is a party have been duly authorized, executed
			and delivered by the Borrower and constitute the legal, valid and
			binding obligations of the Borrower, enforceable against the
			Borrower in accordance with their respective terms, subject to: (i) applicable
			bankruptcy, reorganization, insolvency, moratorium and other laws of
			general applicability relating to or affecting creditors' rights
			generally; and (ii) the application of general principles of equity
			regardless of whether such enforceability is considered in a
			proceeding in equity or at law;

			
			(e) no approval, consent, authorization, order, waiver,
			exemption, variance, registration, filing, notification,
			qualification, license, permit or other action is now, or under
			existing law in the future will be, required to be obtained, given,
			made or taken, as the case may be, with, from or by any regulatory
			body, administrative agency or governmental authority having
			jurisdiction over the Borrower to authorize the execution and
			delivery by the Borrower of this Agreement or any of the other Bond
			Documents to which the Borrower is a party, or the consummation by
			the Borrower of the transactions contemplated hereby or thereby or
			the performance by the Borrower of its obligations hereunder or
			thereunder;

			
			(f) neither the execution or delivery by the Borrower of
			this Agreement or any of the other Bond Documents to which the
			Borrower is a party nor the consummation by the Borrower of any of
			the transactions contemplated hereby or thereby nor the performance
			by the Borrower of its obligations hereunder or thereunder,
			including, without limitation, the pledge of the Pledged Securities
			(as such term is defined in the Pledge Agreement) to RUS if
			required, conflicts with or will conflict with, violates or will
			violate, results in or will result in a breach of, constitutes or
			will constitute a default under, or results in or will result in the
			imposition of any lien or encumbrance pursuant to any term or
			provision of the articles of incorporation or the bylaws of the
			Borrower or any provision of any existing law or any rule or
			regulation currently applicable to the Borrower or any judgment,
			order or decree of any court or any regulatory body, administrative

	
			   
	
			12

	

	
			Series B Bond Guarantee Agreement

	   
	
			agency or governmental authority having jurisdiction over
					the Borrower or the terms of any mortgage, indenture,
					contract or other agreement to which the Borrower is a party
					or by which the Borrower or any of its properties is bound;

					
					(g) there is no action, suit, proceeding or
					investigation before or by any court or any regulatory body,
					administrative agency or governmental authority presently
					pending or, to the knowledge of the Borrower, threatened
					with respect to the Borrower, this Agreement or any of the
					other Bond Documents to which the Borrower is a party
					challenging the validity or enforceability of this Agreement
					or any of the other Bond Documents to which the Borrower is
					a party or seeking to restrain, enjoin or otherwise prevent
					the consummation by the Borrower of the transactions
					contemplated by this Agreement or any of the other Bond
					Documents to which the Borrower is a party or which, if
					adversely determined, would have a material adverse effect
					on the Borrower's financial condition or its ability to
					perform its obligations under this Agreement or any of the
					other Bond Documents to which the Borrower is a party;

					
					(h) the Borrower is a lending institution
					organized as a private, not-for-profit, cooperative
					association with the appropriate expertise, experience and
					qualifications to make loans for electrification or
					telephone purposes;

					
					(i) the total principal amount of the Guaranteed
					Bond plus the outstanding amount of any other guaranteed
					bonds issued by the Borrower under the Program does not
					exceed the total principal amount of Concurrent Loans
					outstanding on the last day of the month immediately
					preceding the Closing Date; and

					
					(j) no material adverse change has occurred in the
					financial condition of the Borrower between the date of the
					Application and the date this representation is given.

				
			
			ARTICLE IX

			

			AGREEMENTS OF THE BORROWER

			SECTION 9.1. Patronage Refunds.
			During any portion of a Fiscal Year when a Rating Trigger Event
			exists, the Borrower shall not make cash patronage refunds in excess
			of five percent of its total patronage capital, as disclosed in its
			most recent Financial Statements. While the Borrower is subject to
			such restriction, equity securities issued as part of a patronage
			refund shall not be redeemed in cash, and, if the Borrower shall
			have outstanding any common stock or preferred stock, the Borrower
			shall not issue any dividends on any such stock.

			SECTION 9.2. Security and Collateral.
			(a) If a Rating Trigger Event or Financial Expert Trigger Event exists,
			the Pledged Securities (as such term is defined in the Pledge
			Agreement) shall be pledged in accordance with the terms and
			conditions of the Pledge Agreement to secure the payment obligations
			of the Borrower under this 

	    
	
			13

	

	
			Series B Bond Guarantee Agreement

	   
	Agreement and any other bond guarantee
			agreement under the Program (in the case of a Financial Expert
			Trigger Event, if that bond guarantee agreement has a covenant to
			the effect of Section 9.9 hereof) and under the Reimbursement Note
			and any other reimbursement note issued under the Program.
					(b) Until the Termination Date, the Borrower shall
					cause the Available Securities or Pledged Collateral (as
					such terms are defined in the Pledge Agreement), as the case
					may be, to be at all times not less than 100% of the
					aggregate principal amount of the Guaranteed Bond and any
					other guaranteed bonds issued by the Borrower under the
					Program and, except as provided for in paragraph (a) of this
					Section 9.2 or otherwise permitted by the Pledge Agreement,
					shall not create, or permit to exist, any pledge, lien,
					charge, mortgage, encumbrance, debenture, hypothecation or
					other similar security instrument that secures, or in any
					way attaches to, such Available Securities or Pledged
					Collateral, as the case may be, without the prior written
					consent of RUS.

				
			
			SECTION 9.3. Use of Savings. The
			Borrower will not use any amounts obtained from the reduction in
			funding costs provided by the Program to reduce the interest rates
			the Borrower's Members or associates are paying on new or
			outstanding Loans, other than new Concurrent Loans as provided for
			in Part 1710 of the Regulations.

			SECTION 9.4. Subrogation. (a) The
			Borrower agrees that RUS shall be subrogated to the rights of FFB to
			the extent of any and all payments made by RUS under the Guarantee
			(herein called the "Subrogation Claim"). The Borrower agrees
			to pay directly to RUS all amounts due on the Guaranteed Bond as to
			which RUS is so subrogated, together with interest thereon (to the
			extent permitted by applicable law) at a rate determined by the
			following paragraph, and such payments shall satisfy the obligations
			of the Borrower hereunder with respect to such amounts paid by RUS.

			
					(b) The Subrogation Claim of RUS shall bear
					interest from the date of payment by RUS under the Guarantee
					until the date such claim is satisfied. Interest shall
					accrue at an annual rate of the greater of 1.5 times the
					91-day Treasury-Bill Rate or 200 basis points (2.00%) above
					the interest rate on the Guaranteed Bond.

				
			
			SECTION 9.5. Use of Proceeds. (a) The
			Borrower shall only apply the proceeds of the Guaranteed Bond to
			finance new Eligible Loans or, subject to paragraph (b), to
			refinance existing debt instruments of the Borrower.

			
					(b) The Borrower may only apply the proceeds of
					each Advance to refinance any of the Borrower's indebtedness
					up to the percentage certified by the Borrower under
					Section 3.2(a)(iii) hereof of the amount of such
					indebtedness being refinanced.

				
			
			SECTION 9.6. Compliance with Covenants
			in Other Agreements. The Borrower and each of its Subsidiaries
			will observe and perform within any applicable grace period all
			covenants and agreements (as the same may be from time to time
			amended or waived) contained in any agreement or instrument relating
			to any

	   
	
			14

	

	
			Series B Bond Guarantee Agreement

	   
	Indebtedness of the Borrower or any of
			its Subsidiaries, aggregating for the Borrower and its Subsidiaries
			in excess of $50,000,000, if the effect of the failure to observe or
			perform such covenant or agreement is to accelerate, or to permit
			the holder of such Indebtedness or any other Person to accelerate,
			the maturity of such Indebtedness.SECTION 9.7.
			Ratings. For the term of the Bond,
			the Borrower shall request, and do all things reasonably within its
			power to obtain (including paying all fees incidental thereto),
			credit ratings on its Senior Secured Debt from at least two Rating
			Agencies on at least an annual basis.

			SECTION 9.8. Acknowledgement of
			Borrower. The Borrower acknowledges and agrees that failure by
			the Borrower to receive any repayment under a Loan, does not affect
			the Borrower's obligations to make payments under this Agreement or
			any other Bond Document.

			SECTION 9.9. Financial Expert. The
			Borrower will cause a financial expert (within the meaning of
			Section 407 of the Sarbanes-Oxley Act of 2002) to serve on the audit
			committee of its board of directors commencing with the
			organizational meeting of the new board of directors held no later
			than 30 days after the March 2007 annual meeting of its members and
			continuing until the Termination Date; and shall not allow the
			financial expert position on the audit committee to remain vacant
			for more than 90 consecutive days.

			ARTICLE X

			

			EVENTS OF DEFAULT

			SECTION 10.1. Events of Default.
			Each of the following actions, occurrences or events shall, but only
			(except in the case of subsections (a), (c) and (e) below) if the
			Borrower does not cure such action, occurrence or event within
			30 days of notice from RUS requesting that it be cured, constitute
			an "Event of Default" under the terms of this Agreement:

			
					(a) A failure by the Borrower to make a payment of
					principal, interest or a Bond Fee when due on the Guaranteed
					Bond;

					
					(b) The issuance of the Guaranteed Bond in
					violation of the terms and conditions of this Agreement or
					any of the other Bond Documents;

					
					(c) A failure by the Borrower to make payment of
					the Guarantee Fee required by Article IV when due;

					
					(d) A misrepresentation by the Borrower to the
					Secretary in any material respect in connection with this
					Agreement, the Guaranteed Bond or the information reported
					pursuant to Article VI; 

				
			
			
	   
	
			15

	

	
			Series B Bond Guarantee Agreement

	   
	
			
					(e) A failure by the Borrower to comply with the
					covenant contained in Section 9.6 hereof; or

					
					(f) A failure by the Borrower to comply with any
					other material covenant or provision contained in this
					Agreement or any of the other Bond Documents, except that
					the failure of the Borrower to comply with Section 9.9
					hereof shall not constitute such an Event of Default.

				
			
			SECTION 10.2. Compulsory Redemption.
			If an Event of Default occurs, the Secretary may demand that the
			Borrower redeem the Guaranteed Bond in accordance with its terms.
			

			SECTION 10.3. Acceleration by RUS's
			Purchase of the Bond. If an Event of Default occurs, and RUS
			purchases from FFB the Bond in its entirety in the manner provided
			in Section 13.5 of the Bond Purchase Agreement, then the entire
			purchase price shall be included in the Principal Amount of the
			Reimbursement Note as defined therein and shall be immediately due
			and payable to RUS. Payment to RUS of all amounts due under the
			Reimbursement Note after such an acceleration shall satisfy in full
			all obligations of the Borrower under the Bond and Reimbursement
			Note and all corresponding obligations under the other Bond
			Documents, including any obligations to reimburse RUS for any
			payments thereafter made by RUS under the RUS Guarantee.

			SECTION 10.4. Effect of Payments by
			RUS pursuant to the RUS Guarantee. No payment by RUS pursuant to
			the RUS Guarantee shall (i) be considered a payment for purposes of
			determining the existence of a failure of the Borrower to perform
			its obligations to RUS under the Bond Documents, or (ii) relieve the
			Borrower of its obligations to reimburse RUS for payments made by
			RUS pursuant to the RUS Guarantee. Payment by the Borrower to RUS of
			amounts due under the Reimbursement Note shall satisfy pro tonto
			the corresponding obligations of the Borrower under the Bond.

			SECTION 10.5. Remedies Not Exclusive.
			Upon the occurrence of an Event of Default, the Secretary shall be
			entitled to take such other action as is provided for by law, in
			this Agreement, or in any of the other Bond Documents, including
			injunctive or other equitable relief.

			ARTICLE XI

			

			MISCELLANEOUS

			SECTION 11.1. GOVERNING LAW. THIS
			AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
			ACCORDANCE WITH, THE LAWS OF THE UNITED STATES OF AMERICA, TO THE
			EXTENT APPLICABLE, AND OTHERWISE THE LAWS OF THE DISTRICT OF
			COLUMBIA.

			SECTION 11.2. WAIVER OF JURY TRIAL.
			EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
			APPLICABLE

	   
	
			16

	

	
			Series B Bond Guarantee Agreement

	   
	LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
			JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
			OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
			HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
			PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
			OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
			SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
			ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
			OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
			BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
			THIS SECTION 11.2.SECTION 11.3. 
			Method of Payment. All payments to be made by the Borrower to
			RUS hereunder, shall be made in the manner notified to the Borrower
			by RUS from time to time in accordance with Section 11.4. 

			SECTION 11.4. Notices. All notices
			and other communications hereunder to be made to any party shall be
			in writing and shall be addressed as specified in Schedule I
			attached hereto as appropriate. The address, telephone number, or
			facsimile number for any party may be changed at any time and from
			time to time upon written notice given by such changing party to the
			other parties hereto. A properly addressed notice or other
			communication to the Borrower shall be deemed to have been delivered
			at the time it is sent by facsimile (fax) transmission. A properly
			addressed notice or other communication to RUS shall be deemed to
			have been delivered at the time it is sent by facsimile (fax)
			transmission, provided that the original of such faxed notice or
			other communication shall have been received by RUS within five
			Business Days.

			SECTION 11.5. Benefit of Agreement.
			This Agreement shall become effective when it shall have been
			executed by RUS and the Borrower, and thereafter shall be binding
			upon and inure to the respective benefit of the parties and their
			permitted successors and assigns.

			SECTION 11.6. Entire Agreement.
			This Agreement, including Schedule I hereto and Annexes A to G
			hereto, and the other Bond Documents, constitutes the entire
			agreement between the parties hereto concerning the matters
			contained herein and supersedes all prior oral and written
			agreements and understandings between the parties.

			SECTION 11.7. Amendments and Waivers.
			(a) No failure or delay of RUS or the Borrower in exercising any power
			or right hereunder shall operate as a waiver thereof, nor shall any
			single or partial exercise of any such right or power, or any
			abandonment or discontinuance of steps to enforce such a right or
			power, preclude any other or further exercise thereof or the
			exercise of any other right or power. No waiver of any provision of
			this Agreement or consent to any departure by the Borrower therefrom
			shall in any event be effective unless the same shall be authorized
			as provided in paragraph (b) of this Section 11.7, and then such
			waiver or consent shall be effective only in the specific instance
			and for the purpose for which given. No notice or demand on the 

	   
	
			17

	

	
			Series B Bond Guarantee Agreement

	   
	Borrower in any case shall entitle the
			Borrower to any other or further notice or demand in similar or
			other circumstances.
					(b) No provision of this Agreement may be amended
					or modified except pursuant to an agreement in writing
					entered into by RUS and the Borrower. No provision of this
					Agreement may be waived except in writing by the party or
					parties receiving the benefit of and under such provision.

				
			
			SECTION 11.8. Counterparts. This
			Agreement may be executed in two or more counterparts, each of which
			shall be an original, but all of which together shall constitute one
			and the same instrument.

			SECTION 11.9. Termination of Agreement.
			This Agreement shall terminate upon the indefeasible payment in full
			of all amounts payable hereunder, under the Reimbursement Note and
			under the Guaranteed Bond.

			SECTION 11.10. Survival. The
			representations and warranties of each of the parties hereto
			contained in this Agreement and contained in each of the other Bond
			Documents to which such party hereto is a party thereto, and the
			parties' obligations under any and all thereof, shall survive and
			shall continue in effect following the execution and delivery of
			this Agreement, any disposition of the Guaranteed Bond and the
			expiration or other termination of any of the other Bond Documents,
			but, in the case of each Bond Document, shall not survive the
			expiration or the earlier termination of such Bond Document, except
			to the extent expressly set forth in such Bond Document.

			SECTION 11.11. Severability. If
			any term or provision of this Agreement or any Bond Document or the
			application thereof to any circumstance shall, in any jurisdiction
			and to any extent, be invalid or unenforceable, such term or such
			provision shall be ineffective as to such jurisdiction to the extent
			of such invalidity or unenforceability without invalidating or
			rendering unenforceable any remaining terms or provisions of such
			Bond Document or the application of such term or provision to
			circumstances other than those as to which it is held invalid or
			unenforceable.

	   
	
			18

	

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

 

		UNITED STATES OF
			AMERICA,

			acting through the Administrator of the Rural 

			Utilities Service
	   
	By
	 	
			
/s/ James M. Andrew

			
	 	 
	Title:	Administrator of the
			Rural Utilities 

			Service

 

		NATIONAL RURAL UTILITIES

			COOPERATIVE FINANCE CORPORATION,

			as the Borrower
	   
	By
	 	
			
/s/ Sheldon C. Petersen

			
	 	 
	Title: 	CEO and Governor

 

[Signature Page to Series B Bond Guarantee Agreement]

									

											
										SCHEDULE I
TO

										SERIES B BOND GUARANTEE AGREEMENT

	    
	
										   Addresses for Notices

	    
	1.     The
										addresses referred to in Section 11.4
										hereof, for purposes of delivering
										communications and notices, are as
										follows:If to RUS:

														Rural
																Utilities
																Service

																United States
																Department of
																Agriculture

																1400
																Independence
																Avenue, SW

																Washington, DC
																20250

																Fax:
																202-720-1725

																Attention of:
																The
																Administrator

																Subject: 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

															
														
													
												
											
										
										
	   
	
										1

	

				
			ANNEX A

				    

				
			Form of Bond Purchase Agreement

				  

			

			

			

			

			

			

			

			

			

			

			

			

			

			

 
	
			A-1

	

				
			ANNEX B

				    

				
			Form of Pledge Agreement

				    

	
		
			
			__________________________________________________________

			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 

			April 28, 2006

			
			__________________________________________________________

			 

	
			   
	
			B-1

		
			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
				6
	Section 2.03.	 Maintenance of Available Securities 	6
	Section 2.04.	 Existence of Trigger Event	6
	Section 2.05.	 UCC Filings 	7
	Section 2.06. 	APPLICATION OF ARTICLES III, IV AND V OF THIS PLEDGE
				 
	 	AGREEMENT	7
	    
	
			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	9
	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	11
	Section 3.10.	Maintenance of Pledged Collateral	11
	Section 3.11.	Representations, Warranties and Covenants 	12
	Section 3.12.	Further Assurances	12
	   
	
			ARTICLE IV

	   
	
			Application of Moneys
			Included in Pledged Collateral

	    
	Section 4.01.	Investment of Moneys by Collateral Agent	13
	Section 4.02.	Collateral Agent To Retain Moneys during Event of
			Default	14
	   
	
			B-i

	

		TABLE OF CONTENTS
	(Continued)
	 
	
			
			                                                                                                                   Page

	
			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	17
	    
	
			ARTICLE VI

	    
	
			The Collateral Agent

	    
	Section 6.01.	Certain Duties and Responsibilities	18
	Section 6.02.	Certain Rights of Collateral Agent	19
	Section 6.03.	Money Held by Collateral Agent 	20
	Section 6.04.	Compensation and Reimbursement 	20
	Section 6.05.	Corporate Collateral Agent Required; Eligibility	21
	Section 6.06.	Resignation and Removal; Appointment of Successor	21
	Section 6.07.	Acceptance of Appointment by Successor	22
	Section 6.08.	Merger, Conversion, Consolidation or Succession to
			Business	22
	  
	
			ARTICLE VII

	   
	
			Miscellaneous

	   
	Section 7.01.	Notices	23
	Section 7.02.	Waivers; Amendment	23
	Section 7.03.	Successors and Assigns	23
	Section 7.04.	Counterparts; Effectiveness 	24
	Section 7.05.	Severability	24
	Section 7.06.	GOVERNING LAW	24
	Section 7.07.	WAIVER OF JURY TRIAL	24
	Section 7.08.	Headings	24
	Section 7.09.	Security Interest Absolute	25
	Section 7.10. 	Termination or Release	25
	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 III - Addresses for Notices
	   
	
			B-ii

		                                                            PLEDGE AGREEMENT, dated as of April 28,

			                                                  2006, 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 $1,500,000,000, hereinafter called the "Series B
			Bond"); and the Series B Bond has been guaranteed by RUS
			pursuant to the Series B Bond Guarantee Agreement dated as of
			April 28, 2006, between the Borrower and RUS (the "Series B 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 pursuant to Section 313A of the Rural Electrification Act of
			1936, as amended, and benefit from a covenant to the effect of
			Section 9.9 of the Series B Bond Guarantee Agreement (together with
			the Series B Bond, the "Bonds") and pursuant to any
			subsequent bond guarantee agreement similar to the Series B Bond
			Guarantee Agreement (together with the Series B Bond Guarantee
			Agreement, the "Bond Guarantee Agreement"); and
	   
	          WHEREAS, the Borrower is required pursuant to the
			terms of the Series B Bond Guarantee Agreement to pledge certain
			property to the Collateral Agent for the benefit of RUS if a Rating
			Trigger Event or a Financial Expert 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 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 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 
	    
	
			B-1

	

	
			Pledge Agreement

	    
	received, receivable or otherwise distributed in respect of, in
			exchange for, and all other Proceeds received in respect of, the
			Pledged Securities 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

				
			
			
	    
	
			B-2

	

	
			Pledge Agreement

	    
	
			
					          (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-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.

	   
	
			B-3

	

	
			Pledge Agreement

	   
	          "Financial Expert Trigger Event" has the
			meaning given to that term in the Bond Guarantee 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.   
			

	   
	
			B-4

	

	
			Pledge Agreement

	   
	          "RUS Notice of Default" has the meaning given
			to that term in Section 5.02.          "Secretary" shall
			mean the Secretary of Agriculture acting through the Administrator
			of RUS.

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

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

			          "Trigger Event" means a Rating Trigger Event or
			a Financial Expert Trigger Event.

			          "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 Trigger Event;

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

					
					(c) upon cessation of all the Trigger Events, 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.

				
			
			
	    
	
			B-5

	

	
			Pledge Agreement

	    
	          Section 2.02.
			Delivery of Certificates of Available
			Securities. Each time money is advanced under the Bonds prior to
			the existence of a Trigger Event, the Borrower shall deliver, and
			from time to time prior to the existence of a Trigger Event the
			Borrower may deliver, a Certificate of Available Securities to the
			Collateral Agent and RUS, showing that the aggregate principal
			amount of Eligible Securities specified in Schedule A thereto that
			have been delivered to the Collateral Agent as of the last day of
			the most recent month ended more than 10 business days before the
			date thereof 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
			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 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 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 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 Trigger Event has
					ceased to exist until (i) such time as the Collateral Agent
					receives an 

				
			
			
	   
	
			B-6

	

	
			Pledge Agreement

	    
	
			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 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
			OF SUCH ARTICLES SHALL NOT APPLY, EXCEPT DURING THE CONTINUANCE OF A
			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 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 Trigger
					Event; and

					
					(b) upon and from delivery of the first
					Certificate of Pledged Collateral until the cessation of all
					Trigger Events, 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 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 

	   
	
			B-7

	

	
			Pledge Agreement

	    
	
			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.

			          (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
					

				
			 
	   
	
			B-8

	

	
			Pledge Agreement

	   
	
			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.

			          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.

			
	  
	
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			Pledge Agreement

	    
	
			          Section 3.08. Voting
			Rights; Interest and Principal. (A) 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 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 
 
	   
	
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			Pledge Agreement

	   
	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 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).

			
	  
	
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			Pledge Agreement

	   
	          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;

					
					(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 

	    
	
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			Pledge Agreement

	   
	 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;

					
					(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 

	   
	
			B-13

	

	
			Pledge Agreement

	   
	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.

			
			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 

				
			
	   
	
			B-14

	

	
			Pledge Agreement

	   
	
			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 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

	   
	
			B-15

	

	
			Pledge Agreement

	   
	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 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)
					

				
			
	   
	
			B-16

	

	
			Pledge Agreement

	   
	
			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 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 

	   
	
			B-17

	

	
			Pledge Agreement

	   
	
			 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. (a) 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.

				
			
			
			          (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.

				
			
			
	   
	
			B-18

	

	
			Pledge Agreement

	   
	
			
			          (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;

					
					          (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

				
			
			
	   
	
			B-19

	

	
			Pledge Agreement

	   
	
			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 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 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 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.

				
			
			          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. (a) 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 

				
			
			
	   
	
			B-20

	

	
			Pledge Agreement

	   
	
			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 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 

	    
	
			B-21

	

	
			Pledge Agreement

	  
	 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 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.

			
	   
	
			B-22

	

	
			Pledge Agreement

	   
	          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.

			          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 

	   
	
			B-23

	

	
			Pledge Agreement

	   
	 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.

			          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 

	   
	
			B-24

	

	
			Pledge Agreement

	   
	 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.

			
			          (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
			

	   
	
			B-25

	

	
			Pledge Agreement

	   
	 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.
	   
	
			B-26

	

	
			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
	 	
			
 

			
	 	Name: 
	 	Title:

 

		UNITED STATES OF AMERICA,
			ACTING THROUGH THE ADMINISTRATOR OF THE RURAL UTILITIES SERVICE,
	by
	 	
			
 

			
	 	Name: 
	 	Administrator of the Rural Utilities
			Service

 

		U.S. BANK TRUST NATIONAL ASSOCIATION
	by
	 	
			
 

			
	 	Name: 
	 	Title: 

 

[Signature Page to Pledge Agreement]

		
			SCHEDULE I

			TO

			PLEDGE AGREEMENT

	   
	
			NATIONAL RURAL UTILITIES

			COOPERATIVE FINANCE CORPORATION

			PLEDGE AGREEMENT DATED AS OF APRIL 28, 2006

			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 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)	 	 
	  
	 

		
			SCHEDULE II

			TO

			PLEDGE AGREEMENT

	   
	
			NATIONAL RURAL UTILITIES

			COOPERATIVE FINANCE CORPORATION

			PLEDGE AGREEMENT DATED AS OF APRIL 28, 2006

			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 	$

	

		
			SCHEDULE II

			TO

			PLEDGE AGREEMENT

	    
	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 	$
	 	 	 
	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

						
					
				
			
			 

			
	 
	
			 

		    
			
	ANNEX C
	    
			
	Form of Reimbursement Note

	
		
			 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

	
			   
	
			C-1

	
			

	
			
			ANNEX D

	
			   
	
			
			Opinion of Counsel to the Borrower

	
			   
	
			
			(1)         The Borrower has been duly
			incorporated and is validly existing as a not-for-profit corporation
			in good standing under the laws of the District of Columbia with
			corporate power and authority to execute and perform its obligations
			under the Bond Documents.

			
			2)        
			The Bond Documents have been duly
			authorized, executed and delivered by the Borrower, and such
			documents constitute the legal, valid and binding agreements of the
			Borrower, enforceable against the Borrower in accordance with their
			respective terms subject to (a) applicable bankruptcy,
			reorganization, insolvency, moratorium and other laws of general
			applicability relating to or affecting creditors' rights generally,
			and (b) the application of general principles of equity regardless
			of whether such enforceability is considered in a proceeding in
			equity or at law.

			
			(3)         Neither the execution nor
			the delivery by the Borrower of any of the Bond Documents nor the
			consummation by the Borrower of any of the transactions contemplated
			therein, including, without limitation, the pledge of the Pledged
			Securities (as such term is defined in the Pledge Agreement) to RUS
			if required, nor the fulfillment by the Borrower of the terms of any
			of the Bond Documents will conflict with or violate, result in a
			breach of or constitute a default under any term or provision of the
			Articles of Incorporation or By-laws of the Borrower or any law or
			any regulation or any order known to Counsel currently applicable to
			the Borrower of any court, regulatory body, administrative agency or
			governmental body having jurisdiction over the Borrower or the terms
			of any indenture, deed of trust, note, note agreement or instrument
			to which the Borrower is a party or by which the Borrower or any of
			its properties is bound.
			

			(4)         No approval, authorization,
			consent, order, registration, filing, qualification, license or
			permit of or with any state or Federal court or governmental agency
			or body including, without limitation, RUS, having jurisdiction over
			the Borrower is required for any consummation by the Borrower of the
			transactions contemplated by the Bond Documents except such as have
			been obtained from RUS; provided, however, no opinion is expressed
			as to the applicability of any Federal or state securities law to
			any sale, transfer or other disposition of the Guaranteed Bond after
			the date hereof.

			
			(5)         There is no pending or, to
			the best of Counsel's knowledge, threatened action, suit or
			proceeding before any court or governmental agency, authority or
			body or any arbitrator with respect to the Borrower, or any of the
			Bond Documents, or which, if adversely determined, would have a
			material adverse effect on the Borrower's financial condition or its
			ability to perform its obligations under any of the Bond Documents.

	
			   
	
			D-1

	
			

	
			
			ANNEX E

	
			   
	
			
			Officers' Closing Certificate

	
			   
	
			
			TO:                  The United States
			of America acting through the Rural Utilities Service.

			
			          We, [                           ], Governor, and
			[                           ], Chief Financial Officer, of National
			Rural Utilities Cooperative Finance Corporation (the "Borrower"),
			pursuant to the Series B Bond Guarantee Agreement dated as of April
			28, 2006, between the Borrower and the United States of America
			acting through Rural Utilities Service (the "Bond Guarantee
			Agreement"), hereby certify on behalf of the Borrower that as at
			the date hereof:

			
			          (1)         the Borrower is a lending institution
			organized as a private, not-for-profit, cooperative association with
			the appropriate expertise, experience and qualifications to make
			loans for electrification or telephone purposes; 

			
			          (2)         no material adverse change has occurred in
			the financial condition of the Borrower between the date of the
			Application and the date hereof; 

			
			          (3)         we acknowledge the commitment of the Borrower
			to submit to the Secretary the documents required under Article VI
			of the Bond Guarantee Agreement in accordance with the terms
			thereof;

			
			          (4)         all of the representations contained in
			Section 8.2 of the Bond Guarantee Agreement remain true and correct
			in all respects; and

			
			          (5)         no Rating Trigger Event or Financial Expert
			Trigger Event exists.

			
			Capitalized terms used in this
			certificate shall have the meanings given to those terms in the Bond
			Guarantee Agreement.

			
			DATED as of this __ day of  April 28,
			2006.

	
			 
	
			
			                                                                                    NATIONAL
			RURAL UTILITIES 

                                                                              COOPERATIVE
			FINANCE 

                                                             CORPORATION

			
			                                                                      
			___________________

                                                Governor

			
			                                                                         
			____________________

                                                                     Chief
			Financial Officer

	
			   
	
			E-1

	
			

	
			
			ANNEX F

	
			  
	
			
			Officers' Advance Certificate

	
			
			TO:                  The United States
			of America acting through the Rural Utilities Service.

			
			            We, [                           ], Governor, and
			[                           ], Chief Financial Officer, of National
			Rural Utilities Cooperative Finance Corporation (the "Borrower"),
			pursuant to the Series B Bond Guarantee Agreement dated as of
			April 28, 2006, between the Borrower and the United States of
			America acting through Rural Utilities Service (the "Bond Guarantee
			Agreement"), hereby certify on behalf of the Borrower that:

			
			            (1)         (i) as at the last day of the most recent
			month ended more than 10 business days before the date hereof, the
			total aggregate principal amount of outstanding Eligible Loans is: 
			$                        ;

			

			            (ii) as at the last day of the most recent month ended
			more than 10 business days before the date hereof, the total
			aggregate principal amount of outstanding Loans is:
			$                        ;

			

			            (iii) the percentage the amount under (i) comprises of
			the amount under (ii) is:               %;

			

			            (2)            the Advance will be applied to: (i) fund
			new Eligible Loans under the RE Act; or (ii) to refinance existing
			debt instruments of the Borrower, in the case of each such debt
			instrument up to the percentage set forth in clause (1)(iii) above;

			
			            (3)         as at the date hereof, no material adverse
			change has occurred in the financial condition of the Borrower
			between the Closing Date and the applicable Requested Advance Date;
			and

			
			            (4)         as at the date hereof, all of the
			representations contained in Section 8.2 of the Bond Guarantee
			Agreement remain true and correct in all respects. 

	
			   
	
			F-1

	
			

	
			
				
				Capitalized terms used in this
				certificate shall have the meanings given to those terms in the
				Bond Guarantee Agreement.

				
				DATED as of this         day of
				                     , 20     .

			
			                                                                                    NATIONAL
			RURAL UTILITIES 

                                                                              COOPERATIVE
			FINANCE 

                                                             CORPORATION

			
			                                                                      
			___________________

                                                Governor

			
			                                                                         
			____________________

                                                                     Chief
			Financial Office

			 

	
			  
	
			F-2

	
			

	
			
			ANNEX G

	
			   
	
			
			
			Auditors' Letter

	
			   
	
			To the Board of
			Directors of

			National Rural Utilities Cooperative Finance Corporation

			Herndon, Virginia

			
			We have performed the procedures
			enumerated below, which were agreed to by National Rural Utilities
			Cooperative Finance Corporation (the "Company") and the Rural
			Utilities Service (the "RUS"), solely to assist in evaluating the
			Company's compliance with Section 6.1(b) of the Series B Bond
			Guarantee Agreement between the Company and the United States of
			America, acting through the RUS, dated April 28, 2006 (the "Bond
			Guarantee Agreement"), as of [last day of preceding fiscal year]. 
			The Company's management is responsible for the Company's compliance
			with those requirements.  This agreed-upon procedures engagement was
			conducted in accordance with attestation standards established by
			the American Institute of Certified Public Accountants.  The
			sufficiency of these procedures is solely the responsibility of
			those parties specified in this report.  Consequently, we make no
			representation regarding the sufficiency of the procedures described
			below either for the purpose for which this report has been
			requested or for any other purpose.

			The procedures
			that we performed and our findings are as follows:

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

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

	
			   
	
			G-1

	
			

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

			
			July    , 20

			 

			
			Yours truly, 

			
			_____________________________

			
			DELOITTE & TOUCHE LLP

			 

	
			   
	
			G-24.13 - Series B Pledge Agreement

                                                                                                                    EXECUTION
COPY

		
			
			__________________________________________________________

			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 

			April 28, 2006

			
			__________________________________________________________

			 

		
			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
				6
	Section 2.03.	 Maintenance of Available Securities 	6
	Section 2.04.	 Existence of Trigger Event	6
	Section 2.05.	 UCC Filings 	7
	Section 2.06. 	APPLICATION OF ARTICLES III, IV AND V OF THIS PLEDGE
				 
	 	AGREEMENT	7
	    
	
			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	9
	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	11
	Section 3.10.	Maintenance of Pledged Collateral	11
	Section 3.11.	Representations, Warranties and Covenants 	12
	Section 3.12.	Further Assurances	12
	   
	
			ARTICLE IV

	   
	
			Application of Moneys
			Included in Pledged Collateral

	    
	Section 4.01.	Investment of Moneys by Collateral Agent	13
	Section 4.02.	Collateral Agent To Retain Moneys during Event of
			Default	14
	   
	
			-i-

	

		TABLE OF CONTENTS
	(Continued)
	 
	
			Page           

	   
	
			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	17
	    
	
			ARTICLE VI

	    
	
			The Collateral Agent

	    
	Section 6.01.	Certain Duties and Responsibilities	18
	Section 6.02.	Certain Rights of Collateral Agent	19
	Section 6.03.	Money Held by Collateral Agent 	20
	Section 6.04.	Compensation and Reimbursement 	20
	Section 6.05.	Corporate Collateral Agent Required; Eligibility	21
	Section 6.06.	Resignation and Removal; Appointment of Successor	21
	Section 6.07.	Acceptance of Appointment by Successor	22
	Section 6.08.	Merger, Conversion, Consolidation or Succession to
			Business	22
	  
	
			ARTICLE VII

	   
	
			Miscellaneous

	   
	Section 7.01.	Notices	23
	Section 7.02.	Waivers; Amendment	23
	Section 7.03.	Successors and Assigns	23
	Section 7.04.	Counterparts; Effectiveness 	24
	Section 7.05.	Severability	24
	Section 7.06.	GOVERNING LAW	24
	Section 7.07.	WAIVER OF JURY TRIAL	24
	Section 7.08.	Headings	24
	Section 7.09.	Security Interest Absolute	25
	Section 7.10. 	Termination or Release	25
	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 III - Addresses for Notices
	   
	
			-ii-

		                                                            PLEDGE AGREEMENT, dated as of April 28,

			                                                  2006, 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 $1,500,000,000, hereinafter called the "Series B
			Bond"); and the Series B Bond has been guaranteed by RUS
			pursuant to the Series B Bond Guarantee Agreement dated as of
			April 28, 2006, between the Borrower and RUS (the "Series B 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 pursuant to Section 313A of the Rural Electrification Act of
			1936, as amended, and benefit from a covenant to the effect of
			Section 9.9 of the Series B Bond Guarantee Agreement (together with
			the Series B Bond, the "Bonds") and pursuant to any
			subsequent bond guarantee agreement similar to the Series B Bond
			Guarantee Agreement (together with the Series B Bond Guarantee
			Agreement, the "Bond Guarantee Agreement"); and
	   
	          WHEREAS, the Borrower is required pursuant to the
			terms of the Series B Bond Guarantee Agreement to pledge certain
			property to the Collateral Agent for the benefit of RUS if a Rating
			Trigger Event or a Financial Expert 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 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 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 
	    
	
			1

	

	
			Pledge Agreement

	    
	received, receivable or otherwise distributed in respect of, in
			exchange for, and all other Proceeds received in respect of, the
			Pledged Securities 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

				
			
			
	    
	
			2

	

	
			Pledge Agreement

	    
	
			
					          (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-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.

	   
	
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			Pledge Agreement

	   
	          "Financial Expert Trigger Event" has the
			meaning given to that term in the Bond Guarantee 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.   
			

	   
	
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			Pledge Agreement

	   
	          "RUS Notice of Default" has the meaning given
			to that term in Section 5.02.          "Secretary" shall
			mean the Secretary of Agriculture acting through the Administrator
			of RUS.

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

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

			          "Trigger Event" means a Rating Trigger Event or
			a Financial Expert Trigger Event.

			          "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 Trigger Event;

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

					
					(c) upon cessation of all the Trigger Events, 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.

				
			
			
	    
	
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			Pledge Agreement

	    
	          Section 2.02.
			Delivery of Certificates of Available
			Securities. Each time money is advanced under the Bonds prior to
			the existence of a Trigger Event, the Borrower shall deliver, and
			from time to time prior to the existence of a Trigger Event the
			Borrower may deliver, a Certificate of Available Securities to the
			Collateral Agent and RUS, showing that the aggregate principal
			amount of Eligible Securities specified in Schedule A thereto that
			have been delivered to the Collateral Agent as of the last day of
			the most recent month ended more than 10 business days before the
			date thereof 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
			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 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 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 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 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 Trigger Event. Upon

				
			
			
	   
	
			6

	

	
			Pledge Agreement

	    
	
			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
			OF SUCH ARTICLES SHALL NOT APPLY, EXCEPT DURING THE CONTINUANCE OF A
			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 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 Trigger
					Event; and

					
					(b) upon and from delivery of the first
					Certificate of Pledged Collateral until the cessation of all
					Trigger Events, 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 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

	   
	
			7

	

	
			Pledge Agreement

	    
	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.
			          (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 

	   
	
			8

	

	
			Pledge Agreement

	   
	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.

			          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 

				
			
			
	  
	
			9

	

	
			Pledge Agreement

	    
	
			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 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 

	   
	
			10

	

	
			Pledge Agreement

	   
	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 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.

	  
	
			11

	

	
			Pledge Agreement

	   
	          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;

					
					(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,

	    
	
			12

	

	
			Pledge Agreement

	   
	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;

					
					(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

	   
	
			13

	

	
			Pledge Agreement

	   
	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.

			
			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 

	   
	
			14

	

	
			Pledge Agreement

	   
	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 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 

	   
	
			15

	

	
			Pledge Agreement

	   
	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 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

	   
	
			16

	

	
			Pledge Agreement

	   
	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 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.

	   
	
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			Pledge Agreement

	   
	
			ARTICLE VI

			

			The Collateral Agent

			
			          Section
			6.01. 
			Certain Duties and Responsibilities. (a) 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.

				
			
			
			          (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.

	   
	
			18

	

	
			Pledge Agreement

	   
	          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;

					
					          (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 

				
			
			
	   
	
			19

	

	
			Pledge Agreement

	   
	
			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 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 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 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.

				
			
			          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

				
			
			
	   
	
			20

	

	
			Pledge Agreement

	   
	
			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 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.

	    
	
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			Pledge Agreement

	  
	(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 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

	   
	
			22

	

	
			Pledge Agreement

	   
	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.

			          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 

	   
	
			23

	

	
			Pledge Agreement

	   
	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.

			          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.

	   
	
			24

	

	
			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.

			
			          (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
			

	   
	
			25

	

	
			Pledge Agreement

	   
	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.
	   
	
			26

	

	
			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
			& CEO

 

		UNITED STATES OF AMERICA, acting 

			through the Administrator of the Rural Utilities

			Service,
	by
	 	
			/s/ James M. Andrew                           
			
	 	Name:  James M. Andrew
	 	Administrator of the Rural Utilities
			Service

 

		U.S. BANK TRUST NATIONAL ASSOCIATION
	by
	 	
			/s/ Beverly A. Freeney                         
			
	 	Name:  Beverly A. Freeney
	 	Title:    Vice President

 

[Signature Page to Pledge Agreement]

		
			SCHEDULE I

			TO

			PLEDGE AGREEMENT

	   
	
			NATIONAL RURAL UTILITIES

			COOPERATIVE FINANCE CORPORATION

			PLEDGE AGREEMENT DATED AS OF APRIL 28, 2006

			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 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 APRIL 28, 2006

			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 II

			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

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