Document:

Pledge Agreement - Exhibit 4.14

       

      THE UNITED STATES OF AMERICA

      acting through the Rural Utilities Service

       

      NATIONAL RURAL UTILITIES

      COOPERATIVE FINANCE CORPORATION

       

      U.S. BANK TRUST NATIONAL ASSOCIATION

       

      _______________________________

      

      PLEDGE AGREEMENT

      

      _______________________________

       

Dated as of June 14, 2005

       

	TABLE OF
      CONTENTS

		
      
	Page
	  	  	  
	
      ARTICLE I

	
        
	
       
	
        

	
      Definitions and Other Provisions of General Application

	
       
	
       
	
       

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

	  	  	  
	
      ARTICLE II

	  	  	  
	
      Application of this Pledge Agreement

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

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

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

	 	 	 
	
      ARTICLE III

	 	 	 
	
      Provisions as to Pledged Collateral

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

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

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

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

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

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

	   
	
      ARTICLE IV

	 	 	 
	
      Application of Moneys Included in Pledged Collateral

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

	
      TABLE OF CONTENTS

	
      (continued)

	  
	
      ARTICLE V

	   	  	  
	
      Remedies

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

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

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

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

	 	 	 
	
      ARTICLE VI

	 	 	 
	
      The Collateral Agent

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

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

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

	 	 	 
	
      ARTICLE VII

	 	 	 
	
      Miscellaneous

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

                                                                                   
            PLEDGE AGREEMENT, dated as of June 14, 2005, 

                                                               
            among NATIONAL
            RURAL UTILITIES COOPERATIVE FINANCE

                                                               
            CORPORATION, a District of
            Columbia cooperative association and its 

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

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

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

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

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

                                                               
            TRUST NATIONAL
            ASSOCIATION, a national association and its 

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

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

RECITALS OF THE BORROWER

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

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

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

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

  1

Pledge Agreement

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

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

ARTICLE I

Definitions and Other Provisions of General Application

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

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

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

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

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

              "Allowable Amount" on any date, means:

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

            

            

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

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

2

 

            

            

Pledge Agreement

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

  

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

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

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

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

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

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

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

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

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

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

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

3

Pledge Agreement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  4

Pledge Agreement

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

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

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

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

ARTICLE II

Application of this Pledge Agreement

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

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

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

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

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

5

 Pledge Agreement

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

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

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

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

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

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

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

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

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

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

6

Pledge Agreement

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

ARTICLE III

Provisions as to Pledged Collateral

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

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

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

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

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

7

    
Pledge Agreement

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

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

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

  

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

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

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

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

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

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

8

Pledge Agreement

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

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

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

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

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

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

    9

     Pledge Agreement

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

    

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

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

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

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

    10

    

    Pledge Agreement

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

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

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

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

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

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

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

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

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Pledge Agreement

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

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

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

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

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

ARTICLE IV

Application of Moneys Included in Pledged Collateral

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

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

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    Pledge Agreement

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

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

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

    

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

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

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Pledge Agreement

ARTICLE V

Remedies

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

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

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

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

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

14

 Pledge Agreement

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

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

15

 Pledge Agreement

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

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

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

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

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

    

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

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

16

    

Pledge Agreement

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

ARTICLE VI

The Collateral Agent

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

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

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

    17

    

Pledge Agreement

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

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

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

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

    

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

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

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

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

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

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

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

    18

    

    
    Pledge Agreement

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

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

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

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

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

    19

    

Pledge Agreement

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

              SECTION 6.04. Compensation
and Reimbursement. The Borrower agrees:

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

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

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

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

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

20

    

Pledge Agreement

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

              SECTION 6.06. Resignation
and Removal; Appointment of Successor.   

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

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

              (c) If at any time:

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

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

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

    

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

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

21

Pledge Agreement

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

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

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

ARTICLE VII

Miscellaneous

              
SECTION 7.01. Notices.
All notices and other communications hereunder to be made to any party shall
be in writing and shall be addressed as specified in Schedule III attached
hereto as appropriate. The address, telephone number, or facsimile number for
any party may be changed at any time and from time to time upon written notice
given by such changing party to the other parties hereto. A properly addressed
notice or other communication to the Borrower shall be deemed to have been
delivered at the time it is sent by facsimile (fax) transmission. A properly
addressed notice or other communication to the Collateral Agent shall be deemed
to have been delivered at the time it is sent by facsimile (fax) transmission. A
properly addressed notice or other communication to RUS shall be deemed to have
been delivered at the time it is sent by facsimile (fax) transmission, provided
that the original of such faxed notice or other communication shall have been
received by RUS within five Business Days.

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

22

    

Pledge Agreement

              
SECTION 7.02. Waivers;
Amendment. (a) No failure or delay by a party in exercising any right or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
each party hereunder are cumulative and are not exclusive of any rights or
remedies that such party would otherwise have. No waiver of any provision of
this Pledge Agreement or consent to any departure by any party therefrom shall
in any event be effective unless the same shall be permitted by
paragraph (b) of this Section 7.02, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given.
No notice or demand on any party in any case shall entitle any party to any
other or further notice or demand in similar or other circumstances.

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

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

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

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

              
SECTION 7.06. GOVERNING
LAW. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE UNITED STATES OF AMERICA, TO THE EXTENT
APPLICABLE, AND OTHERWISE THE LAWS OF THE STATE OF NEW YORK.

23

    

Pledge Agreement

              
SECTION 7.07. WAIVER
OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS PLEDGE
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 7.07.

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

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

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

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

24

    

Pledge Agreement

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

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

25

    

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

 

 
    

	
      NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION,

	
        
    
	
       by

    	 
		
      ________________________________
	 	
      Name:

	 	
      Title: 

    

 

 
    

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

	
          
    
	
      by 

    	
		/s/ Curtis M. Anderson                          
	 	
      Name: 

	 	
       Acting Administrator of the Rural Utilities Service

    

 

    
	
      U.S. BANK TRUST NATIONAL ASSOCIATION

	
          
    
	
      by 

    	
		
      ________________________________
	 	
      Name: 

		
      Title:

    

 

[Signature Page to Pledge Agreement]

    

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

 

 

    
	
      NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION,

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

	 	
      Title:    Governor

    

 

 
    

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

	
          
    
	by 	
		________________________________
	 	
      Name:

	 	
      
 Acting Administrator of the Rural Utilities Service

    

 

    
	
      U.S. BANK TRUST NATIONAL ASSOCIATION

	
          
    
	
      by 

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

		
      Title:  Vice President

    

     

    

SCHEDULE I

TO

PLEDGE AGREEMENT

NATIONAL RURAL UTILITIES

COOPERATIVE FINANCE CORPORATION

PLEDGE AGREEMENT DATED AS OF JUNE 14, 2005

CERTIFICATE OF AVAILABLE SECURITIES FILED WITH

U.S. BANK TRUST NATIONAL ASSOCIATION, Collateral Agent

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

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

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

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

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

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

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

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

               
Dated:

 
    

	
      ________________________________________

	
      

      ________________________________________

	
      

      OF NATIONAL RURAL UTILITIES

      COOPERATIVE FINANCE CORPORATION

    

 

SCHEDULE I

TO

PLEDGE AGREEMENT

 

AVAILABLE SECURITIES

SCHEDULE A TO OFFICERS' CERTIFICATE

DATED

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

	
         
	 	 	 	 
	
        Available Securities

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

      
 

2

    

SCHEDULE II

TO

PLEDGE AGREEMENT

NATIONAL RURAL UTILITIES

COOPERATIVE FINANCE CORPORATION

PLEDGE AGREEMENT DATED AS OF JUNE 14, 2005

CERTIFICATE OF PLEDGED COLLATERAL FILED WITH

U.S. BANK TRUST NATIONAL ASSOCIATION, Collateral Agent

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

 

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

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

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

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

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

 

    

 

    
SCHEDULE II

TO

PLEDGE AGREEMENT

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

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

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

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

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

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

               
Dated:

 
    

	
      ________________________________________

	
      

      ________________________________________

	
      

      OF NATIONAL RURAL UTILITIES

      COOPERATIVE FINANCE CORPORATION

    

      
2

 

SCHEDULE II

TO

PLEDGE AGREEMENT

 

PLEDGED COLLATERAL ON DEPOSIT

SCHEDULE A TO OFFICERS' CERTIFICATE

DATED

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

      (Decrease)

      in such

      Allowable

      Amount (Items 2

      and 3)
		
      Current Allowable Amount (Item 4)

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

    
		                       		                    		                      		                       
	
         	 	 	 	 	 	 	 	  
	
        
        Permitted Investments

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

      
		 		 		 		 
	
        
          	 	   	 	   	 	    	 	     
	
        
        Pledged Securities 

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

                            
              
      
		 		 		 		 

      
3

 

SCHEDULE II

TO

PLEDGE AGREEMENT

 

PLEDGED COLLATERAL BEING DEPOSITED

SCHEDULE B TO OFFICERS' CERTIFICATE

DATED

        
	
      Pledged Collateral
		
      Name of Issuer
		
      Allowable Amount

      (Item 5)

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

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

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

                            
              
      
				 

      
4

      

SCHEDULE II

TO

PLEDGE AGREEMENT

 

PLEDGED COLLATERAL BEING WITHDRAWN

SCHEDULE C TO OFFICERS' CERTIFICATE

DATED

      

  
	
      Pledged Collateral
		
      Name of Issuer
		
      Allowable Amount

      (Item 7)

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

    				
	
        
        Permitted Investments

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

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

    				

      
  
  5

    

SCHEDULE III

TO

PLEDGE AGREEMENT

Addresses for Notices

  
  1. The addresses referred to in Section 7.01 hereof, for purposes of
  delivering communications and notices, are as follows:

  
          If to RUS:

      
        
          Rural Utilities Service

          United States Department of Agriculture

          1400 Independence Avenue, SW

          Washington, DC 20250

          Fax: 202-720-1725

          Attention of: The Administrator

          Subject: REDLG Program

        

      

              If to the Borrower:

      
        
          National Rural Utilities Cooperative Finance Corporation

          2201 Cooperative Way

          Herndon, VA 20171-3025

          Telephone: 703-709-6718

          Fax: 703-709-6819

          Attention of: Steven L. Lilly, Chief Financial Officer

        

      

              With a copy to:

      
        
          National Rural Utilities Cooperative Finance Corporation

          2201 Cooperative Way

          Herndon, VA 20171-3025

          Telephone: 703-709-6712

          Fax: 703-709-6811

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

        

      

          If to the Collateral Agent:

      
        
          U.S. Bank Trust National Association

          100 Wall Street

          Suite 1600

          New York, NY 10005-3701

          Fax: 212-509-3384

          Attention of: Beverly A. FreeneySERIES A BOND PURCHASE AGREEMENT - Exhibit 4.12

RUS

SERIES A BOND PURCHASE AGREEMENT

by and among

FEDERAL FINANCING BANK,

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION,

and

ADMINISTRATOR of the RURAL UTILITIES SERVICE

made as of

June 14, 2005

RUS

TABLE OF CONTENTS

		
Page

	
TITLE/PARTIES.............................................................................................................................

	
1

	
RECITAL PARAGRAPHS..............................................................................................................

	
1

	
ARTICLE 1  DEFINITIONS AND RULES OF INTERPRETATION...........................................

	
2

	
          Section 1.1  Definitions...........................................................................................................

	
2

	
          Section 1.2  Rules of Interpretation.........................................................................................

	
5

	
ARTICLE 2  FFB COMMITMENT TO PURCHASE THE BOND................................................

	
6

	
ARTICLE 3  COMMITMENT CONDITIONS.................................................................................

	
6

	
          Section 3.1  Commitment Amount Limit................................................................................

	
6

	
          Section 3.2  Borrower Instruments..........................................................................................

	
6

	
          Section 3.3  RUS Instruments..................................................................................................

	
7

	
ARTICLE 4  OFFER OF THE BOND FOR PURCHASE................................................................

	
7

	
          Section 4.1  Delivery of Borrower Instruments to RUS..........................................................

	
7

	
          Section 4.2  Delivery of Principal Instruments by RUS to FFB.............................................

	
8

	
ARTICLE 5  PURCHASE OF THE BOND BY FFB........................................................................

	
8

	
          Section 5.1  Acceptance or Rejection of Principal Instruments..............................................

	
8

	
          Section 5.2  Purchase...............................................................................................................

	
9

	
ARTICLE 6  LOST, STOLEN, DESTROYED, OR MUTILATED BOND.....................................

	
9

	
          Section 6.1  Borrower's Agreement.........................................................................................

	
9

	
          Section 6.2  RUS's Agreement................................................................................................

	
9

	
          Section 6.3  FFB's Agreement.................................................................................................

	
9

	
ARTICLE 7 ADVANCES..................................................................................................................

	
10

	
          Section 7.1  Commitment.......................................................................................................

	
10

	
          Section 7.2  Treasury Policies Applicable to Advances.........................................................

	
10

BOND PURCHASE AGREEMENT - page i

RUS

	
          Section 7.3  Conditions to Making Advances..........................................................................

	
10

	
          Section 7.4  Amount and Timing of Advances.........................................................................

	
13

	
          Section 7.5  Type of Funds and Means of Advance..................................................................

	
14

	
          Section 7.6  Interest Rate Applicable to Advances...................................................................

	
14

	
          Section 7.7  Interest Rate Confirmation Notices.......................................................................

	
15

	
          Section 7.8  Borrower's Agreement...........................................................................................

	
15

	
ARTICLE 8  REPRESENTATIONS AND WARRANTIES BY THE BORROWER.......................

	
15

	
ARTICLE 9  BILLING BY FFB.........................................................................................................

	
16

	
          Section 9.1  Billing Statements to the Borrower and RUS.......................................................

	
16

	
          Section 9.2  Failure to Deliver or Receive Billing Statements No Release..............................

	
16

	
          Section 9.3  FFB Billing Determinations Conclusive...............................................................

	
16

	
ARTICLE 10  PAYMENTS TO FFB AND RUS...............................................................................

	
17

	
          Section 10.1  Manner and Timing of Payment.........................................................................

	
17

	
          Section 10.2  Application of Payments.....................................................................................

	
17

	
ARTICLE 11  BORROWER'S PRIVILEGES TO PREPAY OR REFINANCE ADVANCES.........

	
17

	
          Section 11.1  Automatic Application or Required Election......................................................

	
17

	
          Section 11.2  "Market Value Prepayment/Refinancing Privilege"...........................................

	
18

	
          Section 11.3  "Fixed Premium Prepayment/Refinancing Privilege".........................................

	
19

	
          Section 11.4  New Notices and Billing Statements After Refinancings...................................

	
22

	
ARTICLE 12  BOND SERVICING AND RELATED DUTIES AND RIGHTS...............................

	
22

	
          Section 12.1  Custody of Bond..................................................................................................

	
22

	
          Section 12.2  RUS Duties as Bond Servicer and Guarantor.....................................................

	
22

	
          Section 12.3  Bond Servicing Fee.............................................................................................

	
23

BOND PURCHASE AGREEMENT - page ii

RUS

	
          Section 12.4  Liability and Rights of RUS as Guarantor...........................................................

	
23

	
          Section 12.5  Bond Payments Made by  RUS..........................................................................

	
23

	
ARTICLE 13  AGREEMENTS AND OTHER RIGHTS OF RUS.....................................................

	
25

	
          Section 13.1  Delivery of Replacement Certificates

	
	
                                Specifying Authorized RUS
Officials.................................................................

	
25

	
          Section 13.2  Certain Agreements of RUS and FFB..................................................................

	
25

	
          Section 13.3  Reimbursement.....................................................................................................

	
26

	
          Section 13.4  Effect of RUS's Nonperformance.........................................................................

	
27

	
          Section 13.5  Right of RUS to Purchase Advances and Bonds..................................................

	
27

	
ARTICLE 14  EFFECTIVE DATE, TERM, SURVIVAL...................................................................

	
27

	
          Section 14.1  Effective Date.......................................................................................................

	
27

	
          Section 14.2  Term of Commitment to Make Advances............................................................

	
27

	
          Section 14.3  Survival.................................................................................................................

	
27

	
ARTICLE 15 MISCELLANEOUS.......................................................................................................

	
28

	
          Section 15.1  Notices..................................................................................................................

	
28

	
          Section 15.2  Amendments.........................................................................................................

	
30

	
          Section 15.3  Successors and Assigns........................................................................................

	
30

	
          Section 15.4  Sale or Assignment of Bond.................................................................................

	
30

	
          Section 15.5  Forbearance Not a Waiver....................................................................................

	
32

	
          Section 15.6  Rights Confined to Parties....................................................................................

	
32

	
          Section 15.7  Governing Law.....................................................................................................

	
32

	
          Section 15.8  Severability...........................................................................................................

	
32

	
          Section 15.9  Headings...............................................................................................................

	
33

	
          Section 15.10  Counterparts.......................................................................................................

	
33

	
SIGNATURES.....................................................................................................................................

	
34

          EXHIBIT A     FORM OF ADVANCE REQUEST

BOND PURCHASE AGREEMENT - page iii

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          EXHIBIT B      FORM OF BOND

          EXHIBIT C     FORM OF CERTIFICATE SPECIFYING AUTHORIZED BORROWER

                                  OFFICIALS

          EXHIBIT D      FORM OF CERTIFICATE SPECIFYING AUTHORIZED RUS OFFICIALS

          EXHIBIT E     FORM OF OPINION OF BORROWER'S COUNSEL re: BORROWER'S

                                  INSTRUMENTS

          EXHIBIT F      FORM OF OPINION OF RUS'S COUNSEL re: RUS GUARANTEE

          EXHIBIT G      FORM OF RUS CERTIFICATE

          EXHIBIT H      FORM OF RUS GUARANTEE

BOND PURCHASE AGREEMENT - page iv

RUS

                                                            
SERIES A BOND PURCHASE AGREEMENT made as

                                                   of
June 14, 2005, by and among the FEDERAL FINANCING

                                                  
BANK ("FFB"), a body corporate and instrumentality of the

                                                   United
States of America, the NATIONAL RURAL

                                                  
UTILITIES COOPERATIVE FINANCE CORPORATION

                                                   (the
"Borrower"), a cooperative association organized and

                                                   
existing under the laws of the District of Columbia, and the

                                                   
ADMINISTRATOR of the RURAL UTILITIES SERVICE

                                                   
("RUS"), a Rural Development agency of the United States

                                                   
Department of Agriculture.

          WHEREAS, RUS is authorized, pursuant to the Guarantee Authority (as hereinafter defined), to guarantee loans that meet the requirements of the Guarantee
Authority; and

          WHEREAS, FFB is authorized, under section 6(a) of the FFB Act (as hereinafter defined), to make commitments to purchase, and to purchase on terms and
conditions determined by FFB, any obligation that is issued, sold, or guaranteed by an agency of the United States of America; and

          WHEREAS, FFB is entering into this Series A Bond Purchase Agreement, as authorized by section 6(a) of the FFB Act, setting out, among other things, FFB's
agreement to purchase, pursuant to the FFB Act, the Bond (as hereinafter defined) to be issued by the Borrower, when the terms and conditions specified herein have been satisfied, as hereinafter provided; and

          WHEREAS, RUS has determined that the Borrower meets the qualifications for being a "lender," as that term is used in the Guarantee Authority, and for being a
"Guaranteed Lender," as that term is used in the regulations promulgated by RUS to carry out the Guarantee Authority; and

          WHEREAS, RUS is authorized to enter into this Series A Bond Purchase Agreement; and

          WHEREAS, the Borrower is authorized to enter into this Series A Bond Purchase Agreement.

          NOW, THEREFORE, for and in consideration of the mutual agreements herein contained and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, FFB, RUS, and the Borrower agree as follows:

BOND PURCHASE AGREEMENT - page 1

RUS

ARTICLE 1

DEFINITIONS AND RULES OF INTERPRETATION

          Section 1.1  Definitions. 

          As used in this Agreement, the following terms shall have the respective meanings specified in this section 1.1, unless the context clearly requires
otherwise.

          "Advance" shall mean an advance of funds made by FFB under the Bond in accordance with the provisions of article 7 of this Agreement.

          "Advance Identifier" shall mean, for each Advance, the particular sequence of letters and numbers constituting the Bond Identifier plus the particular sequence
of additional numbers assigned by FFB to the respective Advance in the interest rate confirmation notice relating to such Advance delivered by FFB in accordance with section 7.7 of this Agreement.

          "Advance Request" shall mean a letter from a Borrower requesting an Advance under the Bond, in the form of letter attached as Exhibit A to this
Agreement.

          "Advance Request Approval Notice" shall mean the written notice from RUS located at the end of an Advance Request advising FFB that such Advance Request has
been approved on behalf of RUS.

          "Bond" shall mean a future advance bond of the Borrower payable to FFB, in the form of bond that is attached as Exhibit B to this Agreement, as
such bond may be amended, supplemented, and restated from time to time in accordance with its terms.

          "Bond Guarantee Agreement" shall mean the Series A Bond Guarantee Agreement dated as of even date herewith, made between RUS and the Borrower, as such
agreement may be amended, supplemented, and restated from time to time in accordance with its terms.

          "Bond Identifier" shall mean the particular sequence of letters and numbers assigned by FFB to the Bond in the Principal Instruments acceptance notice relating
to the Bond delivered by FFB in accordance with section 5.1 of this Agreement.

BOND PURCHASE AGREEMENT - page 2

RUS

          "Borrower Instruments" shall have the meaning specified in section 3.2.1 of this Agreement.

          "Business Day" shall mean any day on which FFB and the Federal Reserve Bank of New York are both open for business.

          "Certificate Specifying Authorized Borrower Officials" shall mean a certificate of the Borrower specifying the names and titles of those officials of the
Borrower who are authorized to execute and deliver from time to time Advance Requests on behalf of the Borrower, and containing the original signature of each of those officials, substantially in the form of the Certificate Specifying Authorized Borrower Officials
attached as Exhibit C to this Agreement.

          "Certificate Specifying Authorized RUS Officials" shall mean a certificate specifying the names and titles of those officials of RUS who are authorized to
execute and deliver Advance Request Approval Notices from time to time on behalf of RUS and setting out the original signature of each of those authorized officials, and specifying the name and title of those officials of RUS who are authorized to confirm
telephonically the authenticity of the Advance Request Approval Notices from time to time on behalf of RUS and setting out the telephone number of each of those authorized officials, in the form of the Certificate Specifying Authorized RUS Officials attached as
Exhibit D to this Agreement.

          "FFB Act" shall mean the Federal Financing Bank Act of 1973 (Pub. L. No. 93-224, 87 Stat. 937, codified at 12 U.S.C. § 2281 et seq.),
as amended.

          "FFB Financing Options Fee" shall mean the fee, expressed in terms of a basis point increment in the basic interest rate established for an Advance, payable by
the Borrower to the Holder if the Borrower elects to have a Fixed Premium Prepayment/Refinancing Privilege apply to such Advance, as described in section 11.3 of this Agreement.

          "First Call Date" shall have the meaning specified in section 11.3.2(a) of this Agreement.

          "Fixed Premium Prepayment/Refinancing Privilege" shall have the meaning specified in section 11.3.1 of this Agreement.

          "Governmental Authority" shall mean any federal, state, county, municipal, or regional authority, or any other entity of a similar nature, exercising any
executive,

BOND PURCHASE AGREEMENT - page 3

RUS

legislative, judicial, regulatory, or administrative function of government.

          "Guarantee Authority" shall mean section 313A of the Rural Electrification Act of 1936, as amended (codified at 7 U.S.C. § 940c-1).

          "Holder" shall mean FFB, for so long as it shall be the holder of the Bond, and any successor or assignee of FFB, for so long as such successor or assignee
shall be the holder of the Bond.

          "Loan Commitment Amount" shall mean $1,000,000,000.00.

          "Market Value Premium (or Discount)" shall have the meaning specified in section 11.2 of this Agreement.

          "Market Value Prepayment/Refinancing Privilege" shall have the meaning specified in section 11.2 of this Agreement.

          "Maturity Date" shall have the meaning specified in section 7.3.1(a)(5) of this Agreement.

          "No-Call Period" shall have the meaning specified in section 11.3.2 of this Agreement.

          "Opinion of Borrower's Counsel re: Borrower Instruments" shall mean an opinion of counsel from the General Counsel of the Borrower, substantially in the form
of opinion that is attached as Exhibit E to this Agreement.

          "Opinion of RUS's Counsel re: RUS Guarantee" shall mean an opinion of counsel from the Acting General Counsel of the Department of Agriculture to the Acting
Administrator of RUS, substantially in the form of opinion that is attached as Exhibit F to this Agreement.

          "Payment Date" shall mean January 15, April 15, July 15, and October 15 of each year.

          "Person" shall mean any individual, corporation, partnership, joint venture, association, joint-stock company, trust, trust company, unincorporated
organization or Governmental Authority.

          "Pledge Agreement" shall mean the Pledge Agreement dated as of even date herewith, made among the Borrower, RUS, and U.S. Bank Trust National Association, a
national association, as such agreement may be amended, supplemented, and restated from time to time in accordance with its terms.

BOND PURCHASE AGREEMENT - page 4

RUS

          "Principal Instruments" shall have the meaning specified in section 4.2 of this Agreement.

          "Requested Advance Amount" shall have the meaning specified in section 7.3.1(a)(2) of this Agreement.

          "Requested Advance Date" shall have the meaning specified in section 7.3.1(a)(3) of this Agreement.

          "RUS Certificate" shall mean a certificate relating to the RUS Guarantee and other matters, in the form of certificate that is attached as Exhibit G to
this Agreement.

          "RUS Guarantee" shall mean a guarantee of the Bond issued by RUS, in the form of guarantee that is attached as Exhibit H to this Agreement.

          "RUS Instruments" shall have the meaning specified in section 3.3.1 of this Agreement.

          "this Agreement" shall mean this Series A Bond Purchase Agreement between FFB, RUS, and the Borrower.

          "Uncontrollable Cause" shall mean, for FFB, an unforeseeable cause beyond the control and without the fault of FFB, being:  act of God, fire, flood,
severe weather, epidemic, quarantine restriction, explosion, sabotage, act of war, act of terrorism, riot, civil commotion, lapse of the statutory authority of the United States Department of the Treasury to raise cash through the issuance of Treasury debt
instruments, disruption or failure of the Treasury Financial Communications System, closure of the Federal Government, or an unforeseen or unscheduled closure or evacuation of the FFB offices; and shall mean, for RUS, an unforeseeable cause beyond the control and
without the fault of RUS, being:  act of God, fire, flood, severe weather, epidemic, quarantine restriction, explosion, sabotage, act of war, act of terrorism, riot, civil commotion, closure of the Federal Government, or an unforeseen or unscheduled closure or
evacuation of the RUS offices.

          Section 1.2  Rules of Interpretation. 

          Unless the context shall otherwise indicate, the terms defined in section 1.1 of this Agreement shall include the plural as well as the singular and the singular as
well as the plural.  The words "herein," "hereof," and "hereto," and words of similar import, refer to this Agreement as a whole.

BOND PURCHASE AGREEMENT - page 5

RUS

ARTICLE 2

FFB COMMITMENT TO PURCHASE THE BOND

          Subject to the terms and conditions of this Agreement, FFB agrees to purchase the Bond that is offered by the Borrower to FFB for purchase under this
Agreement.

ARTICLE 3

COMMITMENT CONDITIONS

          FFB shall be under no obligation to purchase the Bond under this Agreement unless and until each of the conditions specified in this article 3 has been
satisfied.

          Section 3.1  Commitment Amount Limit.

          The maximum principal amount of the Bond that is offered for purchase shall not exceed the Loan Commitment Amount.

          Section 3.2  Borrower Instruments.

                    3.2.1  Borrower Instruments.  FFB shall have received from the Borrower the

           following instruments (such instruments being, collectively, the "Borrower Instruments"):

                               (a) an original counterpart of this
Agreement, duly executed by the

                    Borrower; and

                               (b) the original Bond, duly executed by the
Borrower.

                    3.2.2  Opinion of Borrower's Counsel re: Borrower Instruments.  FFB shall have

           received from the Borrower an Opinion of Borrower's Counsel re: Borrower Instruments.

                    3.2.3  Certificate Specifying Authorized Borrower Officials.  FFB shall have

           received from the Borrower a completed and signed Certificate Specifying Authorized

           Borrower Officials.

BOND PURCHASE AGREEMENT - page 6

RUS

          Section 3.3  RUS Instruments.

                    3.3.1  RUS Instruments.  FFB shall have received from RUS the following

           instruments (such instruments being, collectively, the "RUS Instruments"):

                               (a) an original counterpart of this
Agreement, duly executed by RUS;

                               (b) the original RUS Guarantee relating to
the Bond, duly executed by

                     RUS and

                               (c) an original RUS Certificate relating to
the RUS Guarantee and other

                     matters, duly executed by RUS.

                    3.3.2  Opinion of RUS's Counsel re: RUS Guarantee. FFB shall have received a

           copy of the Opinion of RUS's Counsel re: RUS Guarantee.

                    3.3.3  Certificate Specifying Authorized RUS Officials. FFB shall have received

           from RUS a completed and signed Certificate Specifying Authorized RUS Officials.

ARTICLE 4

OFFER OF THE BOND FOR PURCHASE

          The Bond that is to be offered to FFB for purchase under this Agreement shall be offered

          in accordance with the procedures described in this article 4.

          Section 4.1  Delivery of Borrower Instruments to RUS. 

          The Borrower shall deliver to RUS, for redelivery to FFB, the following:

                               (a) all of the Borrower Instruments, each
duly executed by the Borrower;

                               (b) an Opinion of Borrower's Counsel re:
Borrower Instruments; and

                               (c) a completed and signed Certificate
Specifying Authorized Borrower

                     Officials.

BOND PURCHASE AGREEMENT - page 7

RUS

          Section 4.2  Delivery of Principal Instruments by RUS to FFB. 

          RUS shall deliver to FFB all of the following instruments (collectively being the "Principal Instruments":

                               (a) all of the instruments described in
section 4.1 of this Agreement;

                               (b) all of the RUS Instruments, each duly
executed by RUS;

                               (c) a copy of the Opinion of RUS's Counsel
re: RUS Guarantee; and

                               (d) a completed and signed Certificate
Specifying Authorized RUS Officials.

ARTICLE 5

PURCHASE OF THE BOND BY FFB

          Section 5.1  Acceptance or Rejection of Principal Instruments. 

          Within 5 Business Days after delivery to FFB of the Principal Instruments relating to the Bond that is offered for purchase under this Agreement, FFB shall deliver by
facsimile transmission (fax) to RUS one of the following:

                               (a) an acceptance notice, which notice
shall:

                                         (1) state that the
Principal Instruments meet the terms and conditions

                               detailed in article 3 of this Agreement, or are otherwise acceptable to
FFB;

                               and

                                         (2) assign a Bond
Identifier to the Bond for use by the Borrower and

                               RUS in all communications to FFB making reference to the Bond; or

                               (b) a rejection notice, which notice shall
state that one or more of the

                     Principal Instruments does not meet the terms and conditions of this Agreement and

                     specify how such instrument or instruments does not meet the terms and conditions

                     of this Agreement.

BOND PURCHASE AGREEMENT - page 8

RUS

          Section 5.2  Purchase. 

          FFB shall not be deemed to have accepted the Bond offered for purchase under this Agreement until such time as FFB shall have delivered an acceptance notice accepting
the Principal Instruments relating to the Bond; provided, however, that in the event that FFB shall make an Advance under the Bond, then FFB shall be deemed to have accepted the Bond offered for purchase.

ARTICLE 6

LOST, STOLEN, DESTROYED, OR MUTILATED BOND

          Section 6.1  Borrower's Agreement.

          In the event that the Bond purchased under this Agreement shall become lost, stolen, destroyed, or mutilated, the Borrower shall, upon the written request of FFB,
execute and deliver, in replacement thereof, a new Bond of like tenor, dated and bearing interest from the date to which interest has been paid on such lost, stolen, destroyed, or mutilated Bond or, if no interest has been paid thereon, dated the same date as such
lost, stolen, destroyed, or mutilated Bond.  Upon delivery of such replacement Bond, the Borrower shall be released and discharged from any further liability on account of the lost, stolen, or destroyed Bond.  If the Bond being replaced has been mutilated,
such mutilated Bond shall be surrendered to the Borrower for cancellation.

          Section 6.2  RUS's Agreement.

          In the event that the Borrower delivers a replacement Bond for a lost, stolen, destroyed, or mutilated Bond, as provided in section 6.1 of this Agreement, RUS shall
execute and deliver an RUS Guarantee of the replacement Bond in replacement of the RUS Guarantee of the lost, stolen, destroyed, or mutilated Bond.

          Section 6.3  FFB's Agreement.

          FFB agrees that, upon delivery by RUS of a replacement RUS Guarantee as provided in section 6.2 of this Agreement, RUS shall be released and discharged from any
further liability on account of the RUS Guarantee of the lost, stolen, destroyed, or mutilated Bond.

BOND PURCHASE AGREEMENT - page 9

RUS

ARTICLE 7

ADVANCES

          Section 7.1  Commitment. 

          Subject to the terms and conditions of this Agreement, FFB agrees to make Advances under the Bond for the account of the Borrower.

          Section 7.2   Treasury Policies Applicable to Advances. 

          Each of the Borrower and RUS understands and consents to the following Treasury financial management policies generally applicable to all advances of
funds:

                               (a) each Advance will be requested by the
Borrower, and each Advance

                     Requestwill be approved by RUS, only at such time and in such amount as shall be

                     necessary to meet the immediate payment or disbursing need of the Borrower;

                               (b) Advances for investment purposes, other
than to make loans permitted by

                     the Guarantee Authority, will not be requested by the Borrower or approved by

                     RUS;  and

                               (c) all interest earned on any lawful and
permitted investment of Advances,

                     other than loans permitted by the Guarantee Authority to be made, in excess of the

                     interest accrued on such Advances, the fee payable under paragraph 9 of the Bond

                     accrued on such Advances, and the guarantee fee payable on such Advances under

                     article IV of the Bond Guarantee Agreement, will be remitted to FFB.

Section 7.3  Conditions to Making Advances.

           FFB shall be under no obligation to make any Advance under the Bond unless and until each of the conditions specified in this section 7.3 is satisfied.

                     7.3.1  Advance Requests.  For each Advance, the Borrower shall have delivered to RUS,
for review and approval before being forwarded to FFB, an Advance Request, which Advance Request:

                               (a) shall specify, among other
things:

                                        (1) the particular
"Bond Identifier" that FFB assigned to this Bond (as

                                provided in section 5.1 of this Agreement;

BOND PURCHASE AGREEMENT - page 10

RUS

                                        (2) the particular
amount of funds that the Borrower requests to be

                                advanced (such amount being the "Requested Advance Amount" for the

                                respective Advance);

                                        (3) the particular
calendar date that the Borrower requests to be the

                               date on which the respective Advance is to be made (such date being the

                               "Requested Advance Date" for such Advance), which date:

                                                  
(A) must be a Business Day; and

                                                  
(B) shall be a date that meets the advance notice  requirements

                                          prescribed in section
7.3.2(b) of this Agreement;

                                        (4) the particular
bank account to which the Borrower requests that

                                the respective Advance be made; and

                                        (5) the particular
calendar date that the Borrower selects to be the

                                date on which the respective Advance is to mature (such date being the

                                "Maturity Date" for such Advance), which date must meet all of the following
criteria:

                                                  
(A) the Maturity Date for the respective Advance must be

                                          a"Payment Date" (as
that term is defined in paragraph 7 of the Bond);

                                                  
(B) the Maturity Date for the respective Advance may not be a

                                          date that will occur
after the twentieth anniversary of the Requested

                                          Advance Date specified in
the respective Advance Request;

                                                  
(C) the Maturity Date for the respective Advance may not be a

                                          date that will occur
after the particular date specified on page 1 of the

                                         Bond as being the "Final
Maturity Date"; and

                                                  
(D) the period of time between the Requested Advance Date for

                                          the respective Advance
and the Maturity Date for such Advance may

                                          not be less than the
period from the Requested Advance Date (if such

                                          date is a Payment Date)
or the Payment Date immediately following

                                          the Requested Advance
Date (if the Requested Advance Date is not a

                                          Payment Date) to the next
Payment Date; and

BOND PURCHASE AGREEMENT - page 11

RUS

                                           
(6) with respect to each Advance for which the Borrower selects a

                                  Maturity Date that will occur on or after the fifth anniversary of the

                                Requested Advance Date specified in the respective Advance Request, the

                                particular prepayment/ refinancing privilege that the Borrower elects to apply

                                to the respective Advance (i.e. either the Market Value

                                Prepayment/Refinancing Privilege described in section 11.2 of this

                                Agreement or the Fixed Premium Prepayment/Refinancing Privilege

                                described in section 11.3 of this Agreement); and

                          (b) shall have been duly executed by an official of the Borrower whose
name

              and signature appear on the Certificate Specifying Authorized Borrower Officials

              delivered by the Borrower to FFB pursuant to section 3.2.3 of this Agreement; and

                          (c) shall have been received by FFB not later than a Business Day that
meets the

             advance notice requirements prescribed in section 7.3.2(b) of this Agreement.

                    7.3.2  Advance Request Approval Notice.  For each Advance, RUS shall have delivered to
FFB the Borrower's executed Advance Request, together with RUS's executed Advance Request Approval Notice, which Advance Request Approval Notice:

                           (a) shall have been duly executed on behalf of RUS by an official of
RUS

              whose name and signature appear on the Certificate Specifying Authorized

              RUS Officials delivered to FFB pursuant to section 3.3.3  of this Agreement; and

                           (b) shall have been received by FFB consistent with the following
advance

              notice requirements:

                                        (1) if the Requested
Advance Amount specified in the respective                           Advance Request is less than $500,000,000, the Advance Request and
the

                           related Advance Request Approval Notice must be received by FFB on or before

                           the third Business Day before the Requested Advance Date specified in such

                           Advance Request; and

                                        (2) if the Requested
Advance Amount specified in the respective

                           Advance Request is equal to or greater than $500,000,000, the Advance Request

                          and the Related Advance Request Approval Notice must be received by FFB on

                           or before the fifth Business

BOND PURCHASE AGREEMENT - page 12

RUS

                          Day before the Requested Advance Date specified in such Advance
Request.

                          7.3.3  Telephonic Confirmation of Authenticity of Advance
Request Approval

              Notices.  For each Advance, FFB shall have obtained telephonic confirmation of the

              authenticity of the related Advance Request Approval Notice from an official of RUS (a)

              whose name, title, and telephone number appear on the Certificate Specifying

             Authorized RUS Officials that has been delivered by RUS to FFB pursuant to section

              3.3.3 of this Agreement; and (b) who is not the same official of RUS who executed the

              Advance Request Approval Notice on behalf of RUS.

                    7.3.4  Bond Maximum Principal Amount Limit.  At the time of making any

              Advance under the Bond, the amount of such Advance, when added to the aggregate

              amount of all Advances previously made under the Bond, shall not exceed the maximum

              principal amount of the Bond.

                    7.3.5  Conditions Specified in Other Agreement.  Each of the conditions specified
in

             the Bond Guarantee Agreement as being conditions to making Advances under the Bond

              shall have been satisfied or waived in writing.

          Section 7.4  Amount and Timing of Advances. 

          FFB shall make each Advance in the Requested Advance Amount specified in the respective Advance Request and on the Requested Advance Date specified in the respective
Advance Request, subject to satisfaction of the conditions specified in section 7.3 of this Agreement and subject to the following additional limitations:

                    (a) in the event that the Requested Advance Date specified in the respective

           Advance Request is not a Business Day, FFB shall make the respective Advance on the

           first day thereafter that is a Business Day;  

                     (b) in the event that the respective Advance Request and the related

           Advance Request Approval Notice are not received by FFB consistent with the

           applicable advance notice requirement prescribed in section 7.3.2(b) of this

           Agreement, FFB shall make the respective Advance as soon as practicable

           thereafter, but in any event not later than the expiration of the applicable advance

           notice period, unless the Borrower delivers to FFB and RUS a written

           cancellation of such Advance Request or a replacement Advance Request

           specifying a Requested Advance Date later than the expiration of the applicable

           advance notice period; and

BOND PURCHASE AGREEMENT - page 13

RUS

                     (c) in the event that the respective Advance Request and the related

          Advance Request Approval Notice are received by FFB, and the Requested

          Advance Amount specified in such Advance Request, when added to the

          aggregate principal amount of:

                               (1) all Advances made to the Borrower under
the Bond, and

                               (2) all advances of funds made by FFB to the
Borrower under any other

                     future advance bond issued by the Borrower to FFB and guaranteed by RUS

                     under the Guarantee Authority,

          during the immediately preceding 10 Business Days, shall cause the resulting

           sum to exceed $2,000,000,000, then FFB shall make the Advance as soon as

           practicable thereafter, but in any event not later than the tenth Business Day after

           the date of receipt, unless the Borrower delivers to FFB and RUS a written

           cancellation of such Advance Request or a replacement Advance Request

           specifying a Requested Advance Date later than the tenth Business Day after the

           date of receipt; and

                     (d) in the event that an Uncontrollable Cause prevents FFB from making the

           respective Advance on the Requested Advance Date specified in the respective Advance

           Request, FFB shall make such Advance as soon as such Uncontrollable Cause ceases to

           prevent FFB from making such Advance, unless the Borrower delivers to FFB and RUS

           a written cancellation of such Advance Request or a replacement Advance Request

           specifying a Requested Advance Date later than when such Uncontrollable Cause ceases

           to prevent FFB from making such Advance.  

          Section 7.5  Type of Funds and Means of Advance. 

          Each Advance shall be made in immediately available funds by electronic funds transfer to such bank account(s) as shall have been specified in the respective Advance
Request.

          Section 7.6  Interest Rate Applicable to Advances.

                    7.6.1  Initial Rate Determinations.  The rate of interest applicable to each
Advance

           made under the Bond shall be established as provided in paragraph 6 of the Bond, subject

           to section 7.6.2 of this Agreement.

                    7.6.2  Rate Re-determinations.  In the event the Borrower elects to extend the

           maturity of all or any portion of the outstanding principal amount of any Advance, as

           provided in paragraph 15 of the Bond, or to refinance all or

BOND PURCHASE AGREEMENT - page 14

RUS

          any portion of the outstanding principal amount of any Advance, as provided in paragraph

           17 of the Bond, then the rate of interest applicable to the outstanding principal amount of

          such Advance shall be re-determined by FFB in accordance with the terms of paragraph 15

          or 17 of the Bond, as the case may be.

          Section 7.7  Interest Rate Confirmation Notices.

          7.7.1  Initial Rates.  After making each Advance, FFB shall deliver, by facsimile

           transmission, to the Borrower and RUS written confirmation of the making of the

           respective Advance, which confirmation shall:

                               (a) state the date on which such Advance
was made;

                               (b) state the interest rate applicable to
such Advance; and

                               (c) assign an Advance Identifier to such
Advance for use by the Borrower and

                     RUS in all communications to FFB making reference to such Advance.

                    7.7.2  Re-determined Rates.  In the event that the rate of interest applicable to
the

           outstanding principal amount of any Advance is re-determined as provided in

           section 7.6.2. of this Agreement, FFB shall deliver, by facsimile transmission, to the

          Borrower and RUS written confirmation of the re-determination of such interest rate,

          which confirmation shall state the date on which the applicable interest rate was re-

          determined for such Advance and the re-determined interest rate.

          Section 7.8  Borrower's Agreement.

          The Borrower hereby agrees that each Advance made by FFB in accordance with an RUS-approved Advance Request delivered to FFB shall reduce, by the amount of the
respective Advance made, FFB's remaining commitment in section 7.1 of this Agreement to make Advances under the Bond.

ARTICLE 8

REPRESENTATIONS AND WARRANTIES BY THE BORROWER

          The Borrower makes to FFB each of the representations and warranties made by the Borrower to RUS in paragraphs (a), (b), (c), (d), (e), (f), (g), and (j) of section
8.2 of the Bond Guarantee Agreement, and each of those representations and

BOND PURCHASE AGREEMENT - page 15

RUS

warranties of the Borrower are incorporated herein by reference as if set out in full herein.

ARTICLE 9

BILLING BY FFB

          Section 9.1  Billing Statements to the Borrower and RUS.

          After making each Advance, FFB shall prepare a billing statement detailing the amounts owed on the respective Advance and when such amounts are due.  FFB shall
deliver, by facsimile transmission, each such billing statement to the Borrower and RUS.

          Section 9.2  Failure to Deliver or Receive Billing Statements No Release.  

          Failure on the part of FFB to deliver any billing statement or failure on the part of the Borrower or RUS to receive any billing statement shall not, however, relieve
the Borrower of any of its payment obligations under the Bond or this Agreement or relieve RUS from any of its payment obligations under the RUS Guarantee or this Agreement.

          Section 9.3   FFB Billing Determinations Conclusive.

                    9.3.1  Acknowledgment and Consent.  The Borrower and RUS each acknowledge

          that FFB has described to it the rounding methodology employed by FFB in calculating the

           amount of accrued interest owed at any time on the Bond, and the Borrower and RUS each

           consent to this methodology.

                    9.3.2  Agreement.  The Borrower and RUS each agree that any and all

           determinations made by FFB shall be conclusive and binding upon the Borrower and RUS

            with respect to the amount of accrued interest owed on the Bond determined using this

            rounding methodology.

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ARTICLE 10

PAYMENTS TO FFB AND RUS

          Section 10.1  Manner and Timing of Payment.

          Each amount that becomes due and owing on the Bond purchased under this Agreement shall be paid when and as due, as provided in the Bond.

          Section 10.2  Application of Payments.

                    10.2.1  Priority of Payments.  Each payment made on the Bond shall be applied,

           first, to the payment of Late Charges (if any) payable under paragraphs 11 and 18 of the

           Bond, then to the payment of premiums (if any) payable under paragraphs 16 and 17 of the

           Bond, then to the payment of unpaid accrued interest, then on account of outstanding

           principal, and then to the payment of the fee payable under paragraph 9 of the Bond.

                    10.2.2  Agreement between FFB and RUS.  RUS agrees to transfer to FFB payments

           received by RUS under the Bond in such amounts as may be necessary to conform with

           the priority of payment requirements contained in section 10.2.1 of this Agreement.

ARTICLE 11

BORROWER'S PRIVILEGES TO PREPAY OR REFINANCE ADVANCES

          Section 11.1  Automatic Application or Required Election.

          The prepayment/refinancing privilege described in section 11.2 of this Agreement shall apply automatically to each Advance that has a Maturity Date that will
occur before the fifth anniversary of the Requested Advance Date specified in the respective Advance Request.  With respect to each Advance for which the Borrower has selected a Maturity Date that will occur on or after the fifth anniversary of the
Requested Advance Date specified in the respective Advance Request, the Borrower must elect, at the time of requesting the respective Advance, the particular prepayment/refinancing privilege that is to apply to such Advance from between the options described in
sections 11.2 and 11.3 of this Agreement.

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          Section 11.2  "Market Value Prepayment/Refinancing Privilege".

          If the prepayment/refinancing privilege described in this section 11.2 applies to an Advance (such privilege being the  "Market Value
Prepayment/Refinancing Privilege"), the Borrower shall have the privilege to prepay such Advance (as provided in paragraph 16 of the Bond) or to refinance such Advance (as provided in paragraph 17 of the Bond) at a prepayment or refinancing price that will
include, in either case, a premium (or discount credit) equal to the difference between:

                     (a) the price for such Advance that would, if such Advance (including all unpaid

           interest accrued thereon through the date of prepayment or refinancing, as the case may

           be) were purchased by a third party and held to the "Maturity Date" applicable to the

           Advance, produce a yield to the third-party purchaser for the period from the date of

           purchase to such Maturity Date substantially equal to the interest rate that would be set on

           a loan from the Secretary of the Treasury to FFB to purchase an obligation having a

           payment schedule identical to the payment schedule of such Advance for the period from

           the date of prepayment or refinancing, as the case may be, to such Maturity Date; and

                     (b) the sum of:

                               (1) the outstanding principal amount of such
Advance on the date of

                     prepayment or refinancing, as the case may be; and

                               (2) all unpaid interest accrued on such
Advance through the date of

                     prepayment or refinancing, as the case may be,

(the difference between the price described in paragraph (a) of this section 11.2 and the sum of the amounts described in paragraph (b) of this section 11.2 being the "Market Value Premium (or Discount)"; if the
price described in paragraph (a) is greater than the sum of the amounts described in paragraph (b), that difference is the premium; if the price described in paragraph (a) is less than the sum of the amounts described in paragraph (b), that difference is
the discount credit).  The price described in paragraph (a) of this section 11.2 shall be calculated by the United States Department of the Treasury as of the close of business on the second Business Day before the date of prepayment or refinancing, as the
case may be, using standard calculation methods of the United States Department of the Treasury.  FFB shall provide the Borrower and RUS with written notice of the price described in paragraph (a) of this section 11.2 promptly upon completing the
calculation.

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          Section 11.3  "Fixed Premium Prepayment/Refinancing Privilege".

                    11.3.1 Required Election and Selection.  If the prepayment/refinancing privilege

           described in this section 11.3 applies to such Advance (such privilege being the "Fixed

           Premium Prepayment/Refinancing Privilege"), the Borrower shall have the privilege to

           prepay such Advance (as provided in paragraph 16 of the Bond) or to refinance such

           Advance (as provided in paragraph 17 of the Bond) at a prepayment or refinancing price

           that will include, in either case, a fixed premium determined by FFB at the time of such

           prepayment or refinancing, based on both the no-call period election described in section

           11.3.2 of this Agreement and the premium selection described in section 11.3.3 of this

           Agreement made by the Borrower at the time of requesting such Advance.

                    11.3.2  "No-Call Period Election".  First, the Borrower must elect whether or not
the

           Fixed Premium Prepayment/ Refinancing Privilege that is to apply to the respective

           Advance shall include a 5-year period during which such Advance shall not be eligible for

           any prepayment or refinancing (such time period being a "No-Call Period").  The options

           are: 

                               (a) "yes" -- the Borrower elects to
have the Fixed Premium

                     Prepayment/Refinancing Privilege include a 5‐year No‐Call Period, i.e., the

                     Borrower shall have the privilege to prepay the respective Advance (as provided in

                     paragraph 16 of the Bond) or to refinance such Advance (as provided in paragraph

                     17 of the Bond) on or after (but not before):

                                         (1) the fifth
anniversary of the Requested Advance Date for such

                               Advance (if such fifth anniversary date is a Payment Date); or

                                         (2) the first
Payment Date to occur after the fifth anniversary of the

                               Requested Advance Date for such Advance (if such fifth anniversary date is

                               not a Payment Date),

           (in either case, such date being the "First Call Date" for such Advance); or

                               (b) "no" -- the Borrower elects to
have the Fixed Premium

                     Prepayment/Refinancing Privilege not include a 5-year No-Call Period, i.e., the

                     Borrower shall have the privilege to prepay the respective Advance (as provided in

                     paragraph 16 of the Bond) or to refinance

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RUS

                    such Advance (as provided in paragraph 17 of the Bond) on any Business Day.

                    11.3.3  "Premium Selection".  Second, the Borrower must select the particular fixed

           premium that will be required in connection with any prepayment or refinancing of the

           respective Advance.  The options are:

                               (a) "10 percent premium declining over 10
years" ‐‐ the price for any

                     prepayment or refinancing of the respective Advance shall include a premium equal

                     to 10 percent of the amount of principal being prepaid or refinanced, as the case may

                     be, multiplied by a fraction:

                                         (1) the numerator
of which is the number of Payment Dates that occur

                               between:

                                                  
(A) in the case of a prepayment, the date of prepayment (if such

                                         date is a Payment Date) or
the Payment Date immediately preceding the

                                         date of prepayment (if the
date of prepayment is not a Payment Date),

                                         and, in the case of a
refinancing, the date of refinancing, which date, in

                                        either case, shall be
included in computing the number of Payment

                                         Dates; and

                                                  
(B) the tenth anniversary of the applicable First Call Date (if the

                                         Borrower elected to have
the prepayment/refinancing privilege include

                                         a 5-year No- Call Period)
or the tenth anniversary of the Requested

                                         Advance Date (if the
Borrower elected to have the 

                                         prepayment/refinancing
privilege not include a 5‐year No-Call Period),

                                        which date, in either case,
shall be excluded in computing the number of

                                         Payment Dates;
and

                                         (2) the denominator
of which is 40,

                    and no premium on or after the tenth anniversary of the applicable First Call Date (if

                     the Borrower elected to have the prepayment/refinancing privilege include a 5‐year

                     No-Call Period) or the tenth anniversary of the Requested Advance Date (if the

                     Borrower elected to have the prepayment/refinancing privilege not include a 5‐year

                     No-Call Period);

                               (b) "5 percent premium declining over 5
years" -- the price for any

                     prepayment or refinancing of the respective Advance shall include a premium equal

                     to

BOND PURCHASE AGREEMENT - page 20

RUS

                    5 percent of the amount of principal being prepaid or refinanced, as the case may be,

                     multiplied by a fraction:

                                         (1) the numerator
of which is the number of Payment Dates that

                                occur between:

                                         (A) in the case of
a prepayment, the date of prepayment (if

                                such date is a Payment Date) or the Payment Date immediately

                                preceding the date of prepayment (if the date of prepayment is not

                                a Payment Date), and, in the case of a refinancing, the date of

                                refinancing, which date, in either case, shall be included in

                                computing the number of Payment Dates; and

                                         (B) the fifth
anniversary of the applicable First Call Date

                               (if the Borrower elected to have the prepayment/refinancing

                                privilege include a 5-year No-Call Period) or the fifth anniversary

                                of the Requested Advance Date (if the Borrower elected to have

                                the prepayment/refinancing privilege not include a 5‐year No-

                               Call Period), which date, in either case, shall be excluded in

                                computing the number of  Payment Dates; and

                                         (2) the denominator
of which is 20,

          and no premium on or after the fifth anniversary of the applicable First Call Date (if the

           Borrower elected to have the prepayment/refinancing privilege include a 5‐year No-Call

           Period) or the fifth anniversary of the Requested Advance Date (if the Borrower elected to

           have the prepayment/refinancing privilege not include a 5‐year No-Call Period); or

                     (c) "par" -- the price for any prepayment or refinancing of the respective Advance

           shall include no premium.

                    11.3.4  Standard for Calculating FFB Financing Options Fee for Fixed-Premium

           Prepayment/Refinancing Privilege.  The fee assessed by FFB and payable by the Borrower

           to have the Fixed-Premium Prepayment/Refinancing Privilege described in this

           section 11.3 to apply to any Advance (such fee being an "FFB Financing Options Fee")

           shall be established on the basis of the determination made by FFB described in paragraph

           6(d) of the Bond.

BOND PURCHASE AGREEMENT - page 21

RUS

                    11.3.5  Calculation and Notification of FFB Financing Options Fee for Fixed-

          Premium Prepayment/Refinancing Privilege.  FFB shall make the determination described

           in section 11.3.4 of this Agreement for each Advance to which the Borrower has elected to

           have the Fixed-Premium Prepayment/Refinancing Privilege apply, at the time of the

           establishment of the particular basic interest rate that is to apply to the respective Advance. 

           After making such determination for each Advance, FFB shall notify the Borrower and

           RUS of the particular FFB Financing Options Fee (expressed in terms of a basis point

           increment) that is assessed by FFB and payable by such Borrower for such Fixed-Premium

           Prepayment/Refinancing Privilege in the particular interest rate confirmation notice

           relating to such Advance to be delivered by FFB in accordance with section 7.7 of this

           Agreement.

          Section 11.4  New Notices and Billing Statements After Refinancings.

          In the event of a refinancing of any Advance, FFB shall provide the Borrower and RUS with a new interest rate confirmation notice and a new billing statement
reflecting the new interest rate applicable to such Advance.

ARTICLE 12

BOND SERVICING AND RELATED DUTIES AND RIGHTS

          Section 12.1  Custody of Bond.

          Subject to section 15.4 of this Agreement, RUS shall have custody, as agent for FFB, of the original Bond that has been purchased by FFB under this Agreement until
all amounts that are owed under the Bond have been paid in full or until such time as actual possession of the original Bond has been requested by FFB. If FFB requests RUS for actual possession of the original Bond, RUS shall promptly deliver the original Bond to
FFB.

          Section 12.2  RUS Duties as Bond Servicer and Guarantor.

                    12.2.1  Bond Servicing To Be Performed by RUS.  Bond servicing shall be

           performed by RUS, as agent for FFB, for so long as FFB shall be the Holder of the Bond.

           Payment by FFB for RUS's servicing of the Bond shall be made in accordance with section

           12.3 hereof.

                    12.2.2  Bond Servicing Duties.  As a part of servicing the Bond, RUS shall:

BOND PURCHASE AGREEMENT - page 22

RUS

                               (a) serve as principal point of contact for
the Borrower with respect to any

                     questions that the Borrower may have about its borrowings from FFB;

                               (b) hold, as agent for FFB, the original Bond
in accordance with the terms of

                     section 12.1 hereof;

                               (c) prepare and deliver to the Borrower
billing statements, which billing

                     statements shall reflect the terms of the billing statements prepared by FFB and

                     delivered to RUS showing amounts owed with respect to each Advance made under

                     the Bond;

                               (d) collect, as agent for FFB, all amounts
paid by the Borrower under the

                    Bond; and

                               (e) turn over to FFB all amounts collected
under clause (d) of this

                     section 12.2.2 when and as due under the Bond.

          Section 12.3  Bond Servicing Fee.

          RUS shall be compensated for performing the bond servicing described in this article 12 by deducting from the fee assessed by FFB under paragraph 9 of the Bond
and collected by RUS an amount equal to the cost to RUS, as determined by RUS, of performing the bond servicing, provided, however, that the cost to RUS of performing bond servicing for any time period shall not exceed the fee assessed by FFB under
paragraph 9 of the Bond for the same time period.

          Section 12.4  Liability and Rights of RUS as Guarantor.

                    12.4.1   Liability as Guarantor.  If the Bond is in payment default, RUS shall be

           liable to FFB in accordance with the terms of the RUS Guarantee, without regard to the

           sufficiency of the security or the remedies RUS may enforce against the Borrower.

                    12.4.2  Rights as Guarantor.  In consideration of the RUS Guarantee, RUS shall

           have the sole authority (vis-a-vis FFB), if the Bond is in payment default, in respect of

           acceleration of the Bond, the exercise of other available remedies, and the disposition of

           sums or property recovered.

          Section 12.5  Bond Payments Made by RUS.

                    12.5.1  General.  RUS and FFB understand and agree that RUS, in its combined

           capacity as both bond servicer and guarantor of the Bond, shall pay to FFB all amounts

           due and

BOND PURCHASE AGREEMENT - page 23

RUS

          owing under the Bond, when and as those amounts are due and payable under the terms of

           the Bond.

                               (a) Bond Servicing Payments.  As bond
servicer, RUS shall make payments

                     by turning over to FFB, when and as due under the Bond, all amounts that have been

                     collected by RUS under section 12.2.2(d) of this Agreement. 

                               (b) Bond Guarantee Payments.  As
guarantor, RUS shall pay to FFB, when

                     and as due under the Bond, the difference, if any, between the amounts that are

                     owed to FFB under the terms of the Bond and the amounts that have been collected

                     under section 12.2.2(d) of this Agreement. 

                    12.5.2  RUS Payments To Be Made by Book Transfer.  RUS shall make each

           payment under section 12.5.1 of this Agreement by internal transfer of funds on the books

           of the United States Department of the Treasury from the account of RUS to the account of

           FFB specified by FFB from time to time.

                    12.5.3  Late Charges.  Subject to section 12.5.4 of this Agreement, in the event
that

           RUS shall fail to make any payment under section 12.5.1 of this Agreement when and as

           that payment by RUS to FFB is due (any such amount being then an "Overdue Amount"),

           the amount payable shall be that Overdue Amount with interest thereon (such interest

           being the "Late Charge").  The Late Charge shall accrue from the scheduled date of

           payment for the Overdue Amount (taking into account any Business Day adjustments

           under the Bond) to the actual date on which payment is made.  The Late Charge applicable

           to RUS shall be calculated in the same manner as Late Charges applicable to the Borrower

           are calculated under the Bond.

                    12.5.4  Uncontrollable Cause.  In the event that RUS is prevented by an

           Uncontrollable Cause from making any payment under section 12.5.1 of this Agreement at

           the time or in the manner as RUS is required to make that payment, then RUS shall make

           that payment as soon as the respective Uncontrollable Cause ceases to prevent RUS from

           making that payment.  The amount that is then due and owing that is not paid due to an

           Uncontrollable Cause for RUS shall bear interest at the 91-day loan rate then established

           by FFB based on a determination made by the Secretary of the Treasury pursuant to

           section 6(b) of the FFB Act, such rate being subject to re-determination at 91-day intervals

           if the amount due and owing is not paid.

                    12.5.5  No Modification of Times for Payment. Nothing in section 12.5.3 or

           section 12.5.4 of this

BOND PURCHASE AGREEMENT - page 24

RUS

          Agreement shall be construed as permitting or implying that RUS may, without the

           prior written consent of FFB, modify, extend, alter, or affect in any manner

           whatsoever (except as explicitly provided herein) the right of FFB to receive any

           and all payments on account of the Bond when and as due under the Bond.

                    12.5.6  Bond Assignment upon Payment in Full.  Upon payment by RUS to FFB of

           all amounts required to be paid by RUS to FFB under section 12.5.1 of this Agreement

           with respect to the Bond , FFB shall assign and transfer to RUS all rights held by FFB in

           that Bond.

ARTICLE 13

AGREEMENTS AND OTHER RIGHTS OF RUS

          Section 13.1  Delivery of Replacement Certificates Specifying Authorized RUS Officials. 

                    13.1.1  Annual Replacement Certificates.  Promptly after the commencement of

           each fiscal year, RUS shall deliver to FFB a Certificate Specifying Authorized RUS

           Officials, updated as appropriate, in replacement of the original such certificate delivered

           pursuant to section 4.2(d) hereof.

                    13.1.2  Replacement Certificates within any Fiscal Year.   RUS may at any time

           within any fiscal year deliver to FFB a revised Certificate Specifying Authorized RUS

           Officials, updated as appropriate, in replacement of the annual certificate delivered

           pursuant to section 13.1.1 hereof.

          Section 13.2  Certain Agreements of RUS and FFB. 

                    13.2.1  Agent for Compliance Purposes.  In the event that FFB shall become subject

           to any duties under any applicable law or regulation solely because of its providing or

           having provided financing under the Bond, RUS shall serve as agent for FFB to the fullest

           extent permitted under that law or regulation in connection with satisfying the

           requirements of that law or regulation.

                    13.2.2  RUS's Agreement Regarding Its Appointment as Agent for FFB. 

           Recognizing the legitimate needs of FFB to ensure that RUS, as compliance agent for

           FFB, has performed all duties to which FFB becomes subject under any applicable law or

           regulation solely because of providing or having provided financing under the Bond, and

           with RUS and FFB

BOND PURCHASE AGREEMENT - page 25

RUS

          expressing their intent to cooperate in connection with the exchange of information related

           thereto, RUS agrees:

                               (a) to deliver to representatives of FFB or
its designate, when requested to do

                     so by FFB or its designate, actual possession of the original of any certificate, report,

                     document, or paper collected or prepared by RUS, as compliance agent for FFB; or

                               (b) at the option of FFB, to permit
representatives of FFB or its designate,

                     during reasonable business hours, to have access to, and to inspect and make copies

                     of, any and all certificates, reports, documents, or papers collected or prepared by

                     RUS, as compliance agent for FFB.

                    13.2.3  Litigation Cooperation.  When requested to do so by FFB, RUS shall

           cooperate with FFB in the prosecution or defense of any litigation that FFB may institute

           against any Person other than RUS or to which FFB is named as a party, as the case may

           be, arising out of FFB providing or having provided financing under the Bond. 

          Section 13.3  Reimbursement.

          13.3.1  RUS's Agreement to Reimburse.  To the extent permitted by applicable law and

           subject to the availability of funds, RUS agrees to reimburse FFB (but not any successor,

           assignee or transferee of FFB) for any and all liabilities, losses, costs, or expenses of any

           nature that may be imposed upon, incurred by, or asserted against FFB by any Person

           other than RUS in any way relating to or arising out of FFB providing or having provided

           financing under the Bond, but specifically excluding any liability, loss, cost or expense

           relating to or arising out of any sale, assignment, or other transfer by FFB, pursuant to

           section 15.4 hereof, of all or any part of the Bond.

                    13.3.2  RUS's Agreement to Seek Appropriations.  In the event that no funds are

          available to RUS at the time that RUS needs funds to reimburse FFB as contemplated by

           section 13.3.1 hereof, RUS agrees that it will diligently seek to obtain additional

           appropriations for that purpose.

                    13.3.3  FFB's Agreement to Deliver Notice.  Solely for the purpose of assisting RUS

           in mitigating the extent of any reimbursement contemplated by section 13.3.1 hereof, FFB

           agrees that it will deliver notice to RUS of any and all liabilities, losses, costs, or expenses

           imposed upon, incurred by, or asserted against FFB promptly after FFB has actual

           knowledge of the imposition, incurrence, or assertion of such liability, loss, cost, or

           expense.

BOND PURCHASE AGREEMENT - page 26

RUS

          Section 13.4  Effect of RUS's Nonperformance.

          In the event that RUS shall fail to fulfill any of its agreements in this article 13, FFB shall nevertheless continue to make Advances under the Bond before the date
of the respective failure. 

          Section 13.5  Right of RUS to Purchase Advances and Bonds.

                    13.5.1  RUS's Right.  Notwithstanding the provisions of the Bond, RUS may

           purchase from FFB all or any portion of any Advance that has been made under the Bond,

           or may purchase from FFB the Bond in its entirety, in either case in the same manner, at

           the same price, and subject to the same limitations as shall be applicable, under the terms

           of the Bond, to a prepayment by the Borrower of all or any portion of any Advance that

           has been made under the Bond, or a prepayment by the Borrower of the Bond in its

           entirety, as the case may be.

                    13.5.2  Borrower's Acknowledgement of RUS's Right.  Notwithstanding the

           provisions of the Bond, the Borrower acknowledges that RUS may purchase from FFB all

           or any portion of any Advance that has been made under the Bond, or may purchase from

           FFB the Bond in its entirety, in the same manner, at the same price, and subject to the

           same limitations as shall be applicable, under the terms of the Bond, to a prepayment by

           the Borrower of all or any portion of any Advance made under the Bond, or a prepayment

           by the Borrower of the Bond in its entirety, as the case may be.

ARTICLE 14

EFFECTIVE DATE, TERM, SURVIVAL

          Section 14.1  Effective Date. 

          This Agreement shall be effective as of the date first above written.

          Section 14.2  Term of Commitment to Make Advances. 

          The obligation of FFB under this Agreement to make Advances under the Bond issued by the Borrower shall expire on the "Last Day for an Advance" specified in the
Bond.

          Section 14.3  Survival. 

                    14.3.1  Representations, Warranties, and Certifications.  All representations,

           warranties, and

BOND PURCHASE AGREEMENT - page 27

RUS

          certifications made by the Borrower in this Agreement, or in any agreement, instrument, or

           certificate delivered pursuant hereto, shall survive the execution and delivery of this

           Agreement, the purchasing of the Bond hereunder, and the making of Advances

           thereunder.

                    14.3.2  Remainder of Agreement.  Notwithstanding the occurrence and passage of

           the Last Day for an Advance, the remainder of this Agreement shall remain in full force

           and effect until all amounts owed under this Agreement and the Bond purchased by FFB

           under this Agreement have been paid in full.

ARTICLE 15

MISCELLANEOUS

          Section 15.1  Notices. 

                    15.1.1  Addresses of the Parties. All notices and other communications

          hereunder or under the Bond to be made to any party shall be in writing and shall be

           addressed as follows:

                               To FFB:

                                             
Federal Financing Bank

                                             Main Treasury Building

                                             1500 Pennsylvania Avenue, NW

                                             Washington, DC  20220

                                             
Attention:  Manager

                                             
Telephone No.     (202) 622-2470

                                             Facsimile No.      (202) 622-0707

                               To the
Borrower:

                                             
National Rural Utilities Cooperative

      
                                             Finance Corporation

                                             2201 Cooperative Way

                                             Herndon, VA  20171-3025

                                             
Attention:  Chief Financial Officer

 

                                             
Telephone:     (703) 709-6718

                                             Facsimile:       (703) 709-6779

                                  with a copy to:

BOND PURCHASE AGREEMENT - page 28

RUS

                                             
National Rural Utilities Cooperative

                                                  Finance Corporation

                                             2201 Cooperative Way

                                             Herndon, VA  20171-3025

                                             
Attention:  General Counsel

 

                                             
Telephone:  (703) 709-6712

                                             Facsimile:  (703) 709-6811

                               To RUS:

                                             
Rural Utilities Service

                                             U.S. Department of Agriculture

                                             1400 Independence Avenue, SW

                                             Washington, DC  20250

                                             
Attention:  Administrator

                                             
Telephone:  (202) 720-9540

                                             Facsimile:  (202) 720-1725

          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

           party hereto.

                    15.1.2  Permitted Means of Delivery.  A properly addressed Advance Request,

           Advance Request Approval Notice, other notice, or other communication to FFB shall be

           deemed to have been delivered if it is sent by facsimile (fax) transmission.  A properly

           addressed notice or other communication to the Borrower shall be deemed to have been

           delivered if it is sent by facsimile (fax) transmission.  A properly addressed Advance

           Request, notice, or other communication to RUS shall be deemed to have been delivered if

           it is sent by facsimile (fax) transmission, provided that RUS shall receive the original of

           such faxed Advance Request, notice, or other communication within 5 Business Days.

                    15.1.3  Effective Date of Delivery.  A properly addressed notice or other

           communication shall be deemed to have been "delivered" for purposes of this Agreement:

                               (a) if made by personal delivery, on the date
of such personal delivery;

                               (b) if mailed by first class mail, registered
or certified mail, express mail, or

                     by any commercial overnight courier service, on the date that such mailing is

                     received;

BOND PURCHASE AGREEMENT - page 29

RUS

                               (c) if sent by facsimile (fax)
transmission:

                                         (1) if the
transmission is received and receipt confirmed before 4:00

                               p.m. (Washington, DC, time) on any Business Day, on the date of such

                               transmission; and

                                         (2) if the
transmission is received and receipt confirmed after 4:00 p.m.

                                (Washington, DC, time) on any Business Day or any day that is not a

                               Business Day, on the next Business Day.

                    15.1.4  Notices to FFB to Contain FFB Identification References.  All notices to

           FFB making any reference to either the Bond or any Advance made thereunder shall

           identify the Bond or such Advance by the Bond Identifier or the respective Advance

           Identifier, as the case may be, assigned by FFB to the Bond or such Advance.

          Section 15.2  Amendments.

          No provision of this Agreement may be amended, modified, supplemented, waived, discharged, or terminated orally but only by an instrument in writing duly executed by
each of the parties hereto.

          Section 15.3  Successors and Assigns. 

          This Agreement shall be binding upon and inure to the benefit of each of FFB, the Borrower, and RUS, and each of their respective successors and assigns.

          Section 15.4  Sale or Assignment of Bond.

                    15.4.1  Sale or Assignment Permitted.  Subject to the agreement in the immediately

           following sentence, FFB may sell, assign, or otherwise transfer all or any part of the Bond

           or any participation share thereof.  FFB agrees not to sell, assign, or otherwise transfer all

           or any part of the Bond or all or any part of the right to receive the principal of and interest

           on the Bond or any participation share thereof to a purchaser, assignee, or transferee that is

           not an agency or instrumentality of the United States or a trust fund or other government

           account under the authority or control of the United States or any officer or officers thereof

           until such time as FFB and RUS have agreed upon mutually satisfactory arrangements for

           the servicing of the right to receive principal and interest payments on the Bond or Bonds

           and for making claims under the RUS Guarantee when FFB is not the Holder.

BOND PURCHASE AGREEMENT - page 30

RUS

                    15.4.2  Notice of Sale, Etc.  FFB will deliver to the Borrower and RUS written

           notice of any sale, assignment, or other transfer of the Bond promptly after any such sale,

           assignment, or other transfer.

                    15.4.3  Manner of Payment after Sale.  Any sale, assignment, or other transfer of
all

           or any part of the Bond may provide that, following such sale, assignment, or other

           transfer, payments on the Bond, with the exception of the fee described in paragraph 9 of

           the Bond, shall be made in the manner specified by the respective purchaser, assignee, or

           transferee, as the case may be.  Payments of the fee described in paragraph 9 of the Bond

           shall be made in the manner specified by FFB in the written notice of the sale, assignment,

           or other transfer delivered by FFB to the Borrower and RUS as provided in section 15.4.2

           of this Agreement.

                    15.4.4  Replacement Bonds. 

                               (a) Borrower's Agreement.  The Borrower
agrees:

                                         (1) to issue a
replacement Bond or Bonds with the same aggregate

                               principal amount, interest rate, maturity, and other terms as each respective

                               Bond or Bonds sold, assigned, or transferred pursuant to section 15.4.1 of this

                               Agreement; provided, however, that, when requested by the
respective

                               purchaser, assignee, or transferee, such replacement Bond or Bonds shall

                               provide that payments thereunder shall be made in the manner specified by

                               such purchaser, assignee, or transferee; and provided, further,
however, that

                               upon delivery of such replacement Bond, the Borrower shall be released and

                               discharged from any further liability on account of the sold, assigned, or

                               transferred Bond; and provided, further, however, that the Bond
being

                               replaced shall be surrendered to the Borrower for cancellation; and

                                         (2) to effect
the change in ownership on its records and on the face of

                               each such replacement Bond issued, upon receipt of each Bond or Bonds so

                               sold, assigned, or transferred.

                               (b) RUS's Agreement.  If FFB elects to
sell, assign, or transfer all or any part

                     of the Bond or any participation share thereof, and if the respective purchaser,

                     assignee, or transferee requests the Borrower to issue a replacement Bond or Bonds

                     as provided in section 15.4.4(a)_of this Agreement, RUS agrees that it will, upon the

                     written request of FFB,

 

BOND PURCHASE AGREEMENT - page 31

RUS

                    execute and deliver an RUS Guarantee of the replacement Bond in replacement of

                     the RUS Guarantee of the sold, assigned, or transferred Bond. 

                               (c) FFB's Agreement.  FFB agrees that,
upon delivery by RUS of a

                     replacement RUS Guarantee as provided in section 15.4.4(b) of this Agreement,

                     RUS shall be released and discharged from any further liability on account of the

                     RUS Guarantee of the sold, assigned, or transferred Bond. 

          Section 15.5  Forbearance Not a Waiver.

          Any forbearance on the part of FFB from enforcing any term or condition of this Agreement shall not be construed to be a waiver of such term or condition or
acquiescence by FFB in any failure on the part of Borrower to comply with or satisfy such term or condition.

          Section 15.6  Rights Confined to Parties.

          Nothing expressed or implied herein is intended or shall be construed to confer upon, or to give to, any Person other than FFB, the Borrower, and RUS, and their
respective successors and permitted assigns, any right, remedy, or claim under or by reason of this Agreement or of any term, covenant, or condition hereof, and all of the terms, covenants, conditions, promises, and agreements contained herein shall be for the sole
and exclusive benefit of FFB, the Borrower, and RUS, and their respective successors and permitted assigns.

          Section 15.7  Governing Law. 

          This Agreement and the rights and obligations of the parties hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the United
States of America and not the law of the several States.

          Section 15.8  Severability. 

          Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not of itself invalidate or render unenforceable such provision in any other jurisdiction.

BOND PURCHASE AGREEMENT - page 32

RUS

          Section 15.9  Headings. 

          The descriptive headings of the various articles, sections, and subsections 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.

          Section 15.10  Counterparts. 

          This Agreement may be executed in separate counterparts, each of which when so executed and delivered shall be an original, but all of which together shall constitute
but one and the same instrument.

BOND PURCHASE AGREEMENT - page 33

RUS

          IN WITNESS WHEREOF, FFB, the Borrower, and RUS have each caused this Agreement to be executed as of the day and year first above mentioned.

                                                            
FEDERAL FINANCING BANK

                                                                 ("FFB")

                                                            By:   
/s/ Roger E. Kodat                          .

                                                            Name: 
Roger E. Kodat

                                                            Title:
Vice President and Treasurer

                                                            
NATIONAL RURAL UTILITIES

                                                            
COOPERATIVE FINANCE CORPORATION

                                                            
    (the "Borrower")

                                                            By:    
/s/ Sheldon C. Petersen                     .

                                                            Name:  
Sheldon C. Petersen

                                                            Title: 
Governor and

                                                                      Chief
Executive Officer

                                                            
ADMINISTRATOR of the

                                                             
RURAL UTILITIES SERVICE

                                                                  ("RUS")

                                                            By:    
/s/ Curtis M. Anderson                        .

                                                            Name:  
Curtis M. Anderson

                                                            Title: 
Acting Administrator

BOND PURCHASE AGREEMENT - page 34

RUS

EXHIBIT A

TO

BOND PURCHASE AGREEMENT

FORM

OF

ADVANCE REQUEST

RUS

          ADVANCE REQUEST

          (RUS APPROVAL REQUIRED)

****************************************************************

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

DIRECT ALL QUESTIONS ON HOW TO COMPLETE THIS FORM TO THE ASSIGNED CONTACT OFFICE FOR THE BORROWER: 

                                             Chief 

Policy Analysis and Loan Management Staff

Telephone:  (202) 720-0424

WHEN COMPLETED, DELIVER THIS ORIGINAL FORM (TOGETHER WITH ALL OTHER FORMS AND MATERIAL REQUIRED BY RUS) TO RUS AT THE ADDRESS OF THE CONTACT OFFICE INDICATED BELOW:

                                             Chief 

Policy Analysis and Loan Management Staff

Rural Utilities Service

U.S. Department of Agriculture

Mail Stop 1560

1400 Independence Avenue, SW

Washington, DC  20250-1560

Reference:  Section 313A Loan Guarantee 

Telephone:  (202) 720-0424

Facsimile:   (202) 690-0717

****************************************************************

ADVANCE REQUEST (RUS APPROVAL REQ'D) - page 1

RUS

          ADVANCE REQUEST

Manager 

Federal Financing Bank

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

          Name of Borrower (the "Borrower"): 

          National Rural Utilities Cooperative Finance Corporation 

          FFB Bond Identifier:           _____________________1

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

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

1.          Requested Advance Amount:          $_____________________2

2.          Requested Advance Date:               $_____________________
3

3.          Wire Instructions:

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

Name of financial institution                              ______________________________

Address of financial institution                    ______________________________

1Insert the Bond Identifier that FFB assigned to the Bond (as provided in section 5.1(a)(2) of the Bond Purchase Agreement referred to in the Bond).

2Insert the particular amount of funds that the Borrower requests to be advanced, which amount must satisfy the condition specified in section 7.3.4 of the Bond Purchase Agreement referred to in the Bond.

3Insert the particular calendar date that the Borrower requests to be date on which this Advance is to be made, which date must meet the criteria for Requested Advance Dates specified in section 7.3.1(a)(3) of the Bond Purchase Agreement referred to in the Bond.

ADVANCE REQUEST (RUS APPROVAL REQ'D) - page 2

RUS

          

ABA number of financial institution              ______________________________

          B.  PAYEE'S BANK AND ACCOUNT:

Name of financial institution                       ______________________________

Address of financial institution                    ______________________________

ABA number of financial institution             ______________________________

Account name                   ______________________________

Account number                ______________________________

Taxpayer ID number           ______________________________

4.          Maturity Date:                                       
4

5.          Prepayment/Refinancing Privilege:                           

          If (and only if) the Borrower selects, as the "Maturity Date" for this Advance, a date 

          that will occur on or after the fifth anniversary of the "Requested Advance Date," 

          then the Borrower must elect 1 of the following 2 alternative prepayment/refinancing 

           privileges.

          l          Alternative Prepayment/Refinancing Privileges:

                        "M" for the "Market Value Prepayment/                                           
5

                              Refinancing Privilege                

                         "F" for the "Fixed Premium Prepayment/ 

                              Refinancing Privilege

_________________

          4Insert the particular calendar date that the Borrower selects to be the date on which this Advance is to mature, which date must meet all of the criteria for Maturity Dates specified in section 7.3.1(a)(5) of the Bond Purchase Agreement referred to in the Bond.

          5Insert in the box "M" if the Borrower elects to have the Market Value Prepayment/Refinancing Privilege apply to this Advance.  Insert in the box "F" if the Borrower elects to have a Fixed Premium Prepayment/Refinancing Privilege apply to this Advance.

ADVANCE REQUEST (RUS APPROVAL REQ'D) - page 3

RUS

          If (and only if) the Borrower elects the "Fixed Premium Prepayment/

          Refinancing Privilege," then the Borrower must elect 1 of the 

           following 2alternative no-call period options.

          ¡          Alternative No-Call Period Options:

                              "Y" for "yes," if the privilege 
is                                                   
6 

                                     to include a 5-year No-Call Period    

                              "N" for "no," if the privilege is 
not  

                                      to include a 5-year No-Call Period

          If (and only if) the Borrower elects the "Fixed Premium Prepayment/ 

          Refinancing Privilege, then the borrower must select 1 of the following 3 

           alternative premium options.

          ¡          Alternative Premium Options:

                              "X" for 10% premium declining over                                           

                                        10 years 

                              "V" for 5% premium declining over

                                        5 years 

                              "P" for par (no premium)   

_____________________

          6Insert in the box "Y" if the Borrower elects to have the Fixed Premium Prepayment/Refinancing Privilege include a 5-year No-Call Period during which this Advance will not be eligible for prepayment or refinancing.  Insert in the box "N" if the Borrower elects to have the Fixed Premium Prepayment/Refinancing Privilege 
not include any 5-year No-Call Period, i.e. this Advance will be eligible for prepayment or refinancing on any Business day.

          7Insert in the box "X" if the Borrower selects a 10% premium declining over 10 years as the premium option for the Fixed Premium Prepayment/Refinancing Privilege that is to apply to this Advance.  Insert in the box "V" if the Borrower selects a 5% premium declining over 5 years as the premium option for the Fixed Premium Prepayment/Refinancing Privilege that is to apply to this Advance.  Insert in the box "P" if the Borrower selects par (no premium) as the premium option for the Fixed Premium Prepayment/Refinancing Privilege that is to apply to this Advance.

ADVANCE REQUEST (RUS APPROVAL REQ'D) - page 4

RUS

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

                                                  NATIONAL RURAL UTILITIES COOPERATIVE

                                                  FINANCE CORPORATION

                                                  
(the "Borrower")

By:       _______________________

Name:   _______________________

Title:   _______________________

Date:   _______________________

NOTICE OF RUS APPROVAL OF

ADVANCE REQUEST

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

              

             ADMINISTRATOR of the

             RURAL UTILITIES SERVICE, 

             acting through his or her

             duly authorized designee

              

                                                             By:       _______________________

                                                             Name:   _______________________

                                                             Title:     _______________________

                                                             Date:     _______________________

ADVANCE REQUEST (RUS APPROVAL REQ'D) - page 5

RUS

EXHIBIT B

TO

BOND PURCHASE AGREEMENT

FORM

OF

BOND

     Bond            

     Date                  June 14, 2005                       

     Place

     of

     Issue                 Washington, DC          

                        

     Last Day

     for an

     Advance (¶3)    July 15, 2008

                       

     Maximum

     Principal 

     Amount (¶4)     $1,000,000,000.00

                                                            Final  

                                                            Maturity    

                                                            Date (¶5)           
July 15, 2028

FUTURE ADVANCE BOND

1.       Promise to Pay.

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

2.        Reference to Certain Agreements.

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

BOND - page 1

RUS

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

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

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

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

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

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

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

4.       Principal Amount of Advances; Maximum Principal Amount.

          The principal amount of each Advance shall be the particular dollar amount that the Borrower specified in the respective Advance Request as the "Requested Advance Amount" for the 

BOND - page 2

RUS

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

5.       Maturity Dates for Advances.

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

6.       Computation of Interest on Advances.

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

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

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

 

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

BOND - page 3

RUS

estimated market yield of a notional obligation if such obligation were to (i) be issued by the Secretary of the Treasury, (ii) have a maturity comparable to the maturity of such Advance, and (iii) include a prepayment and refinancing privilege identical to the particular prepayment/refinancing privilege that the Borrower elected for such Advance, and (B) the estimated market yield of a notional obligation if such obligation were to (i) be issued by the Secretary of the Treasury, (ii) have a maturity comparable to the maturity of such Advance, but (iii) not include such prepayment and refinancing privilege. 

7.       Payment of Interest; Payment Dates.

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

8.       Repayment of Principal.

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

9.       Fee.

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

          (b) The fee on each Advance shall be:  

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

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

BOND - page 4

RUS

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

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

 

10.      Business Days.

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

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

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

11.      Late Payments.

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

                    (1) The Late Charge shall accrue from the scheduled date of payment for the Overdue Amount (taking into account paragraph 10 of this Bond) to the date on which payment is made.

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

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

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

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

12.          Final Due Date.

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

13.     Manner of Making Payments.

          (a) For so long as FFB is the Holder of this Bond and RUS is the bond servicing agent for FFB (as provided in the Bond Purchase Agreement), each payment under this Bond shall be paid 

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in immediately available funds by electronic funds transfer to the account of the United States Treasury (for credit to the subaccount of RUS, as bond servicing agent for FFB) maintained at the Federal Reserve Bank of New York specified by RUS in a written notice to the Borrower, or to such other account as may be specified from time to time by RUS in a written notice to the Borrower.

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

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

14.     Application of Payments.

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

15.     Maturity Extensions.

          (a) With respect to each Advance (1) for which the Borrower has selected a Maturity Date that will occur before the twentieth anniversary of the Requested Advance Date specified in the respective Advance Request, or (2) for which a Maturity Date that will occur before the twentieth anniversary of the Requested 

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

                    (1) Except under the circumstances described in clause (3) of this subparagraph (a), 

          the Borrower shall deliver to FFB (with a copy to RUS) written notification of each 

          Maturity Extension Election, in the form of notification attached to this Bond as 

          Annex 1-A (each such notification being a "Maturity Extension Election Notice"), making

          reference to the "Advance Identifier" (as that term is defined in the Bond Purchase 

          Agreement) that FFB assigned to such Advance (as provided in the Bond Purchase 

          Agreement) and specifying, among other things, the following: 

                              (A) the amount of the outstanding principal of the such Advance with respect 

                    to which the Borrower elects to extend the maturity; and

                              (B) the new Maturity Date that the Borrower selects to be in effect for such 

                    principal amount after the respective Maturity Extension Effective Date, which date:

                                        (i) may be either (I) a new Interim Maturity Date, or (II) the twentieth 

                              anniversary of the Requested Advance Date specified in the original Advance 

                              Request (if such twentieth anniversary date is a Payment Date) or the Payment

                              Date immediately preceding such twentieth anniversary date (if such twentieth

                              anniversary date is not a Payment Date); and

                                        (ii) in the event that the Borrower selects a new Interim Maturity Date 

                              as the new Maturity Date for any Advance, must meet the criteria for Maturity

                               Dates prescribed in section 7.3.1(a)(5) of the Bond Purchase Agreement 

                              (provided,
however, that, for purposes of selecting a new Maturity Date in

                              connection with a Maturity Extension Election, each of the references to 

                              the "Requested Advance Date" for the respective Advance in 

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                              section 7.3.1(a)(5)(D) of the Bond Purchase Agreement shall be deemed to 

                              be a reference to the "respective Maturity Extension Effective Date").

                    (2) To be effective, a Maturity Extension Election Notice must be received by FFB 

          on or before the third Business Day before the Interim Maturity Date in effect for the 

          respective Advance immediately before such Maturity Extension. 

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

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

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

          (b) With respect to any Advance that has an Interim Maturity Date, in the event that FFB does not receive a Maturity Extension Election Notice (and, if required under subparagraph (a)(3) of this paragraph 15, written notification of RUS's approval thereof) on or before the third Business Day before such Interim Maturity Date, then the maturity of such Advance shall be extended automatically in the manner and subject to the limitations specified in this subparagraph (b) (each such automatic extension of the maturity of any Advance that has an Interim Maturity Date also being a "
Maturity Extension"; and the Interim Maturity Date that is in effect for an Advance immediately before any such automatic Maturity Extension also being, from and after such Maturity Extension, the "
Maturity Extension Effective Date").  The new Maturity Date for such

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Advance shall be the immediately following Payment Date.  The amount of principal that will have its maturity extended automatically shall be the entire outstanding principal amount of such Advance on such Maturity Extension Effective Date, less the amount of any payment of principal made on such Maturity Extension Effective Date.          

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

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

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

          (f) In the event that (1) the Borrower makes a Maturity Extension Election with respect to any Advance that has an Interim Maturity Date, and (2) the Borrower selects as the Maturity Date for such extended Advance a new Maturity Date that will occur 
on or after the fifth anniversary of the respective Maturity Extension Effective Date, then the Borrower must elect a prepayment/refinancing privilege for such extended Advance from between the options described in sections 11.2 and 11.3 of the Bond Purchase Agreement (
provided, however, that each of the references to "the Requested Advance Date for such Advance" in  section 11.3 of the Bond Purchase Agreement shall be deemed to be a reference to "the respective Maturity Extension Effective Date").  The Maturity Extension Election Notice delivered by the Borrower in connection with each such Maturity Extension Election must also specify the particular prepayment/refinancing privilege that the Borrower elects for the respective extended Advance.  In the event that the Borrower elects for any such extended Advance a prepayment/refinancing privilege described in section 11.3 of the Bond Purchase Agreement, then the interest rate for such 

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extended Advance, from and after the respective Maturity Extension Effective Date, shall include a price (expressed in terms of a basis point increment to the applicable basic interest rate) for the particular prepayment/refinancing privilege that the Borrower elects, which price shall be established by FFB, as of such Maturity Extension Effective Date, in accordance with the principles of paragraph 6(d) of this Bond.  

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

16.  Prepayments.

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

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

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

          (A) must be a Business Day; and 

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

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

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

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

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

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

          (A) must be a Business Day; and 

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

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

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

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

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

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

 

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

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

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

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

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

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

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

17.  Refinancings.

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

          (b) Except under the circumstances described in subparagraph (d) of this paragraph 17, the Borrower shall deliver to FFB (with a copy to RUS) written notification of each 

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Refinancing Election, in the form of notification attached to this Bond as Annex 3-A (each such notification being a "
Refinancing Election Notice"), making reference to the Advance Identifier that FFB assigned to the respective Advance (as provided in the Bond Purchase Agreement) and specifying, among other things, the following: 

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

          (A) must be a Payment Date; and

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

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

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

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

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

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

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

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specified therein to be the Intended Refinancing Date.  RUS approval of a Refinancing Election Notice will be required under either of the following circumstances:

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

  

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

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

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

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

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

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

          (g) In the event that a Refinancing Election Notice (and, if required under subparagraph (d) of this paragraph 17, written notification of RUS's approval thereof) is received by FFB on or before the fifth Business Day before the Intended Refinancing Date specified therein, then the refinancing of the respective Advance shall become effective on such Intended Refinancing Date (in such event, the Intended Refinancing Date being the "
Refinancing Effective Date").  In the event that a Refinancing Election Notice (and, if required under subparagraph (d) of this paragraph 17, written notification of RUS's approval thereof) is received by FFB after the fifth Business Day before the Intended 

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

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

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

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

          (k) In the event that (1) the Borrower makes a Refinancing Election with respect to any Advance, and (2) the Borrower selects as the Maturity Date for such refinanced Advance either (A) the Maturity Date that is in effect for such Advance immediately before such refinancing, and such Maturity Date will occur 
on or after the fifth anniversary of the respective Refinancing Effective Date, or (B) a new Maturity Date that will occur 
on or after the fifth anniversary of the respective Refinancing Effective Date, then the Borrower must elect a prepayment/refinancing privilege for such refinanced Advance from between the options described in sections 11.2 and 11.3 of the

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

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

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

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

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

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

          (2) the RUS account number for such Advance.  

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

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

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

19.          Amendments to Bond.

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

20.          Certain Waivers.

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

21.          Bond Effective Until Paid.

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

22.          RUS Guarantee of Bond.

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

23.          Pledge Agreement.

          This Bond is one of several Bonds referred to in the Pledge Agreement, wherein the Borrower made provision for the pledge and grant of a security interest in, under certain circumstances 

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described therein, certain property of the Borrower, described therein, to secure the payment of and performance of certain obligations owed to RUS, as set forth in the Pledge Agreement.

24.  Guarantee Payments; Reimbursement.

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

25.          Default and Enforcement.

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

26.          Acceleration.

          The entire unpaid principal amount of this Bond, and all interest thereon, may be declared, and upon such declaration shall become, due and payable to RUS, under the circumstances described, and in the manner and with the effect provided, in the Bond Guarantee Agreement.

BOND - page 19

RUS

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

                                                      
NATIONAL RURAL UTILITIES

                                                           COOPERATIVE FINANCE CORPORATION

                    (the "Borrower")

                                                                                   

                                                 BY:

                                                                      

                                                           Signature:   _________________________

            

                                                           Print Name:  Sheldon C. Petersen

                              

                                                           Title:       Governor and

                                                                                                     Chief Executive Officer

      

                                                 ATTEST:

                                                                      

                                                           Signature:   _________________________

(SEAL)      

                                                           Print Name:  John J. List 

                              

                                                           Title:       Assistant Secretary-Treasurer

                          

BOND - page 20

RUS

ANNEX 1-A

TO

FUTURE ADVANCE BOND

FORM

OF

MATURITY EXTENSION ELECTION NOTICE

RUS

          MATURITY EXTENSION ELECTION NOTICE

****************************************************************

PART 1 OF THIS FORM HAS BEEN COMPLETED BY RUS.  THE BORROWER SHOULD COMPLETE PART 2 OF THIS FORM 
ONLY FOR THOSE PARTICULAR ADVANCES IDENTIFIED IN PART 1 OF THIS FORM WITH RESPECT TO WHICH THE BORROWER ELECTS TO HAVE THE MATURITY EXTENDED TO A NEW MATURITY DATE 
OTHER THAN THE IMMEDIATELY FOLLOWING QUARTERLY PAYMENT DATE.

DIRECT ALL QUESTIONS ON HOW TO COMPLETE THIS FORM TO THE ASSIGNED CONTACT OFFICE FOR THE BORROWER:  

                                                 Chief 

Policy Analysis and Loan Management Staff

Telephone:  (202) 720-0424

WHEN COMPLETED, DELIVER THIS ORIGINAL FORM TO FFB AT THE FOLLOWING ADDRESS:

                                                 
Manager 

                                                 Federal Financing Bank 

                                                 Main Treasury Building

                                                 1500 Pennsylvania Avenue, NW 

                                                 Washington, DC  20220

          Telephone:  (202) 622-2470

          Facsimile:   (202) 622-0707

 DELIVER A COPY OF THIS FORM TO RUS AT THE ADDRESS OF THE CONTACT OFFICE INDICATED BELOW:

 

                                                 Chief 

Policy Analysis and Loan Management Staff

Rural Utilities Service

U.S. Department of Agriculture

Mail Stop 1560

1400 Independence Avenue, SW

Washington, DC  20250-1560

Reference:  Section 313A Loan Guarantee 

Telephone:  (202) 720-0424

Facsimile:   (202) 690-0717

THE BORROWER SHOULD NOT COMPLETE THIS FORM OR DELIVER IT TO FFB  IF THE BORROWER DESIRES TO HAVE THE MATURITY OF ALL OF THE ADVANCES IDENTIFIED IN PART 1 OF THIS FORM EXTENDED AUTOMATICALLY TO THE IMMEDIATELY FOLLOWING QUARTERLY PAYMENT DATE.

IF THE BORROWER DOES NOT RETURN THIS FORM TO FFB, THE MATURITY OF ALL OF THE ADVANCES IDENTIFIED IN PART 1 OF THIS FORM WILL BE EXTENDED AUTOMATICALLY TO THE IMMEDIATELY FOLLOWING QUARTERLY PAYMENT DATE.

*****************************************************************

MATURITY EXTENSION ELECTION NOTICE - page 1

RUS

          MATURITY EXTENSION ELECTION NOTICE

Manager

Federal Financing Bank

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

Name of Borrower (the "Borrower"): 

          National Rural Utilities Cooperative Finance Corporation 

FFB Bond Identifier:           _____________________

RUS Bond Number:          _____________________

Part 1 (To be completed by RUS):

          Each of the advances of funds ("Advances") identified in this Part 1 will mature on _______________ (the "Maturity Date").

    FFB                             RUS                ORIGINAL          ORIGINAL    OUTSTANDING

  ADVANCE                ACCOUNT             ADVANCE          ADVANCE          PRINCIPAL   

 IDENTIFIER              NUMBER              
DATE                    AMOUNT       AMOUNT      

 
___________             _______             _________  $___________  $___________  

          

 ___________             _______             _________  $___________  $___________  

 ___________             _______             _________  $___________  $___________  

 ___________             _______             _________  $___________  $___________  

 MATURITY EXTENSION ELECTION NOTICE - page 2

RUS

Part 2:

          Notice is hereby given to FFB (and RUS) of the Borrower's election that the maturity of each of the Advances identified in this Part 2 be extended as follows:

class=Section2>

    AMOUNT OF                        TYPE OF

    FFB                       OPTIONAL    PRINCIPAL   NEW              PREPAYMENT/          5-YEAR   

  ADVANCE             PRINCIPAL   TO BE            MATURITY  REFINANCING           NO-CALL  PREMIUM

 IDENTIFIER1   PAYMENT2          
EXTENDED3    DATE4          
PRIVILEGE5  PERIOD6  OPTION7

                                             

 __________              $________                      _________             _________         

 __________              $________                      _________             _________         

 __________              $________                      _________             _________         

 __________              $________                      _________             _________         

______________________

1Complete 1 line in Part 2 for each Advance identified in Part 1 with respect to which the Borrower elects to have the maturity extended to a new Maturity Date 
other than the next Payment Date.  Insert the FFB Advance Identifier that FFB assigned to the respective Advance for each Advance identified in Part 1 with respect to which the Borrower elects to have the maturity so extended. 

2The Borrower has the option of making a payment of principal on the Maturity Date without any premium being charged.  For each Advance, insert the amount of any such optional principal payment that will be paid on the Maturity Date.

3For each Advance, insert the amount of principal for which the maturity is to be extended.  That amount must equal the 
difference between the outstanding principal amount for the respective Advance, as specified in Part 1, and the optional principal payment (if any) for such Advance inserted by the Borrower in Part 2.

4For each Advance, insert the particular calendar date that the Borrower selects to be the new Maturity Date to be in effect for the respective Advance after the Maturity Extension, which new Maturity Date must meet all the criteria for Maturity Dates specified in section 7.3.1(a)(5) of the Bond Purchase Agreement referred to in the Bond.

5Elect 1 of the following 2 types of prepayment/refinancing privilege for an Advance only if the new Maturity Date selected for such Advance will occur 
on or after the fifth anniversary of the effective date of this Maturity Extension.  The 2 types of prepayment/refinancing privilege are: the market value premium (or discount) privilege ("M") and a fixed premium privilege ("F").  Insert in the box the letter-symbol for the particular type of prepayment/refinancing privilege elected.

5Elect 1 of the following 2 no-call period options for an Advance only if a fixed premium privilege is elected as the prepayment/refinancing privilege for such Advance.  The 2 no-call period options are: yes ("Y"), if the Borrower elects to have the fixed premium prepayment/refinancing privilege include a 5-year period during which the Advance will not be eligible for prepayment or refinancing, and no ("N"), if the Borrower elects to have the fixed premium prepayment/refinancing privilege 
not include any such a 5-year no-call period.  Insert in the box the letter-symbol for the particular no-call period option elected. 

6Select 1 of the following 3 premium options for an Advance only if a fixed premium privilege is elected as the prepayment/refinancing privilege for such Advance.  The 3 premium options are: a 10% premium declining over 10 years ("X"), a 5% premium declining over 5 years ("V"), and par (no premium) ("P").  Insert in the box the letter-symbol for the particular premium option selected.

RUS

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

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

                                                                     (the "Borrower")

By:     _______________________

Name:   _______________________

Title:  _______________________

   

Date:   _______________________

MATURITY EXTENSION ELECTION NOTICE - page 4

RUS

ANNEX 1-B

TO

FUTURE ADVANCE BOND

FORM

OF

MATURITY EXTENSION ELECTION NOTICE

(RUS APPROVAL REQUIRED)

RUS

          MATURITY EXTENSION ELECTION NOTICE

(RUS APPROVAL REQUIRED)

****************************************************************

PART 1 OF THIS FORM HAS BEEN COMPLETED BY RUS.  THE BORROWER SHOULD COMPLETE PART 2 OF THIS FORM 
ONLY FOR THOSE PARTICULAR ADVANCES IDENTIFIED IN PART 1 OF THIS FORM WITH RESPECT TO WHICH THE BORROWER ELECTS TO HAVE THE MATURITY EXTENDED TO A NEW MATURITY DATE 
OTHER THAN THE IMMEDIATELY FOLLOWING QUARTERLY PAYMENT DATE.

DIRECT ALL QUESTIONS ON HOW TO COMPLETE THIS FORM TO THE ASSIGNED CONTACT OFFICE FOR THE BORROWER: 

                                                 Chief 

Policy Analysis and Loan Management Staff

Telephone:  (202) 720-0424

WHEN COMPLETED, DELIVER THIS ORIGINAL FORM TO RUS AT THE ADDRESS OF THE CONTACT OFFICE INDICATED BELOW:

                                                 Chief 

Policy Analysis and Loan Management Staff

Rural Utilities Service

U.S. Department of Agriculture

Mail Stop 1560

1400 Independence Avenue, SW

Washington, DC  20250-1560

Reference:  Section 313A Loan Guarantee 

Telephone:  (202) 720-0424

Facsimile:   (202) 690-0717

THE BORROWER SHOULD NOT COMPLETE THIS FORM OR DELIVER IT TO RUS  IF THE BORROWER DESIRES TO HAVE THE MATURITY OF ALL OF THE ADVANCES IDENTIFIED IN PART 1 OF THIS FORM EXTENDED AUTOMATICALLY TO THE IMMEDIATELY FOLLOWING QUARTERLY PAYMENT DATE.

IF THE BORROWER DOES NOT RETURN THIS FORM TO RUS, THE MATURITY OF ALL OF THE ADVANCES IDENTIFIED IN PART 1 OF THIS FORM WILL BE EXTENDED AUTOMATICALLY TO THE IMMEDIATELY FOLLOWING QUARTERLY PAYMENT DATE.

*****************************************************************

MATURITY EXTENSION ELECTION NOTICE (RUS APPROVAL REQ'D) - page 1 

RUS

MATURITY EXTENSION ELECTION NOTICE

Manager

Federal Financing Bank

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

Name of Borrower (the "Borrower"): 

          National Rural Utilities Cooperative Finance Corporation 

FFB Bond Identifier:           _____________________

RUS Bond Number:          _____________________

Part 1 (To be completed by RUS):

          Each of the advances of funds ("Advances") identified in this Part 1 will mature on _______________ (the "Maturity Date").

    FFB                             RUS                ORIGINAL           ORIGINAL    OUTSTANDING   

  ADVANCE                ACCOUNT             ADVANCE            ADVANCE     PRINCIPAL   

 IDENTIFIER              NUMBER               
DATE                 AMOUNT               
AMOUNT

 
___________             _______             _________           $___________  $___________  

 ___________             _______             _________           $___________  $___________  

 ___________             _______             _________           $___________  $___________  

                    

 ___________             _______             _________           $___________  $___________  

 Part 2:

          Notice is hereby given to FFB (and RUS) of the Borrower's election that the maturity of each of the Advances identified in this Part 2 be extended as follows:

class=Section4>

MATURITY EXTENSION ELECTION NOTICE (RUS APPROVAL REQ'D) - page 2

RUS

                        AMOUNT OF              TYPE OF

    FFB      OPTIONAL   PRINCIPAL     NEW    PREPAYMENT/  5-YEAR   

  ADVANCE    PRINCIPAL    TO BE     MATURITY REFINANCING NO-CALL  PREMIUM

 IDENTIFIER1  PAYMENT2   EXTENDED3    DATE4    PRIVILEGE
5  PERIOD6  OPTION7

                                             

 __________  $________  _________   _________         

						
		
					
	

 __________  $________  _________   _________         

						
				
				
	

 __________  $________  _________   _________         

						
				
				
	

 __________  $________  _________   _________         

1The Borrower has the option of making a payment of principal on the Maturity Date without any premium being charged.  For each Advance, insert the amount of any such optional principal payment that will be paid on the Maturity Date.

2For each Advance, insert the amount of principal for which the maturity is to be extended.  That amount must equal the 
difference between the outstanding principal amount for the respective Advance, as specified in Part 1, and the optional principal payment (if any) for such Advance inserted by the Borrower in Part 2.

3For each Advance, insert the particular calendar date that the Borrower selects to be the new Maturity Date" to be in effect for the respective Advance after the Maturity Extension, which new Maturity Date must meet all the criteria for Maturity Dates specified in section 7.3.1(a)(5) of the Bond Purchase Agreement referred to in the Bond.

4Elect 1 of the following 2 types of prepayment/refinancing privilege for an Advance only if the new Maturity Date selected for such Advance will occur 
on or after the fifth anniversary of the effective date of this Maturity Extension.  The 2 types of prepayment/refinancing privilege are: the market value premium (or discount) privilege ("M") and a fixed premium privilege ("F").  Insert in the box the letter-symbol for the particular type of prepayment/refinancing privilege elected.

5Elect 1 of the following 2 no-call period options for an Advance only if a fixed premium privilege is elected as the prepayment/refinancing privilege for such Advance.  The 2 no-call period options are: yes ("Y"), if the Borrower elects to have the fixed premium prepayment/refinancing privilege include a 5-year period during which the Advance will not be eligible for prepayment or refinancing, and no ("N"), if the Borrower elects to have the fixed premium prepayment/refinancing privilege 
not include any such a 5-year no-call period.  Insert in the box the letter-symbol for the particular no-call period option elected. 

6Select 1 of the following 3 premium options for an Advance only if a fixed premium privilege is elected as the prepayment/refinancing privilege for such Advance.  The 3 premium options are: a 10% premium declining over 10 years ("X"), a 5% premium declining over 5 years ("V"), and par (no premium) ("P").  Insert in the box the letter-symbol for the particular premium option selected. 

 

MATURITY EXTENSION ELECTION NOTICE (RUS APPROVAL REQ'D) - page 3

RUS

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

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

                                                                     (the "Borrower")

By:     _______________________

Name:   _______________________

Title:  _______________________

   

Date:   _______________________

          NOTICE OF RUS APPROVAL OF

          MATURITY EXTENSION ELECTION NOTICE

          Notice is hereby given to FFB that the preceding Maturity Extension Election Notice made by the Borrower identified therein has been approved by RUS for purposes of the Bond identified therein.

                                                                     ADMINISTRATOR of the

RURAL UTILITIES SERVICE, 

acting through his or her

duly authorized designee

               

By:     _______________________

Name:   _______________________

Title:  _______________________

   

Date:   _______________________

MATURITY EXTENSION ELECTION NOTICE (RUS APPROVAL REQ'D) - page 4

RUS

ANNEX 2-A

TO

FUTURE ADVANCE BOND

FORM

OF

PREPAYMENT ELECTION NOTICE

SPECIFIED PRINCIPAL AMOUNT(S)

(RUS APPROVAL REQUIRED)

RUS

          PREPAYMENT ELECTION NOTICE

          SPECIFIED PRINCIPAL AMOUNT(S)

          (RUS APPROVAL REQUIRED)

****************************************************************

DIRECT ALL QUESTIONS ON HOW TO COMPLETE THIS FORM TO THE ASSIGNED CONTACT OFFICE FOR THE BORROWER: 

                                                 Chief 

Policy Analysis and Loan Management Staff

Telephone:  (202) 720-0424

WHEN COMPLETED, DELIVER THIS ORIGINAL FORM TO RUS AT THE ADDRESS OF THE CONTACT OFFICE INDICATED BELOW:

                                                 Chief 

Policy Analysis and Loan Management Staff

Rural Utilities Service

U.S. Department of Agriculture

Mail Stop 1560

1400 Independence Avenue, SW

Washington, DC  20250-1560

Reference:  Section 313A Loan Guarantee 

Telephone:  (202) 720-0424

Facsimile:   (202) 690-0717

                    

****************************************************************

          PREPAYMENT ELECTION NOTICE

          SPECIFIED PRINCIPAL AMOUNT(S)

Manager

Federal Financing Bank

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

Name of Borrower (the "Borrower"): 

          National Rural Utilities Cooperative Finance Corporation

PREPAYMENT ELECTION NOTICE - SP PRN (RUS APPROVAL REQ'D) - page 1

RUS

FFB Bond Identifier:           _____________________1

Part 1:

          Notice is hereby given to FFB (and RUS) of the Borrower's election to prepay all or a portion of the outstanding principal amount of the advances of funds ("Advances") identified in this Part 1:

   FFB                                                 RUS                 ORIGINAL     ORIGINAL      OUTSTANDING 

 ADVANCE                    ACCOUNT    ADVANCE      ADVANCE        PRINCIPAL 

IDENTIFIER2          NUMBER3     DATE4        
AMOUNT5         AMOUNT6   

___________   _______   _________                       $___________   $___________ 

___________   _______   _________                       $___________   $___________ 

___________   _______   _________                       $___________   $___________ 

Part 2:

          The Borrower intends to prepay all or a portion of the outstanding principal amount of each of the Advances identified in Part 1 on the following date (such date being the "Intended Prepayment Date"):

                    ____________________________________7

_________ 

1Insert the FFB Bond Identifier that FFB assigned to the Bond (as provided in the Bond Purchase Agreement referred to in the Bond).

2Complete 1 line in Part 1 for each Advance that the Borrower intends to prepay in whole or in part.  For each Advance, insert the FFB Advance Identifier for the respective Advance as specified in the most recent billing notice delivered by RUS to the Borrower.

3For each Advance, insert the RUS Account Number for the respective Advance as specified in the most recent billing notice delivered by RUS to the Borrower.

4For each Advance, insert the date on which FFB made the respective Advance to the Borrower.

5For each Advance, insert the original principal amount of the respective Advance that FFB made to the Borrower.

6Insert the outstanding principal amount of each Advance specified in Part 1 as of the day before the date on which the Borrower intends to make a prepayment on the respective Advances.

7Insert the particular calendar date that the Borrower selects to be the date on which the Borrower intends to prepay the Advances specified in Part 1, which date must meet the criteria for Intended Prepayment Date prescribed in paragraph 16(b)(1) of the Bond.

PREPAYMENT ELECTION NOTICE - SP PRN (RUS APPROVAL REQ'D) - page 2

RUS

Part 3:

          For each of the Advances identified in Part 1, the respective amount of principal that the Borrower intends to prepay on the Intended Prepayment Date is as follows:

                                         

         FFB                        AMOUNT OF      

       ADVANCE                    PRINCIPAL TO      

     IDENTIFIER8                    BE PREPAID
9    

     __________                   $____________

     __________                   $____________

     __________                   $____________

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

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

                                                                     (the "Borrower")

By:     _______________________

Name:   _______________________

Title:  _______________________

   

Date:   _______________________

1Complete 1 line in Part 3 for each Advance identified in Part 1.

2For each Advance, insert the amount of principal that will be prepaid on the Intended Prepayment Date.

PREPAYMENT ELECTION NOTICE - SP PRN (RUS APPROVAL REQ'D) - page 3

RUS

          NOTICE OF RUS APPROVAL OF

          PREPAYMENT ELECTION NOTICE

          Notice is hereby given to FFB that the preceding Prepayment Election Notice made by the Borrower identified therein has been approved by RUS for purposes of the Bond identified therein.

                                                                     ADMINISTRATOR of the

RURAL UTILITIES SERVICE, 

acting through his or her

duly authorized designee

               

By:     _______________________

Name:   _______________________

Title:  _______________________

   

Date:   _______________________

PREPAYMENT ELECTION NOTICE - SP PRN (RUS APPROVAL REQ'D) - page 4

RUS

ANNEX 2-B

TO

FUTURE ADVANCE BOND

FORM

OF

PREPAYMENT ELECTION NOTICE

FIXED SUM TO BE APPLIED

(RUS APPROVAL REQUIRED)

RUS

          PREPAYMENT ELECTION NOTICE

          FIXED SUM TO BE APPLIED

          (RUS APPROVAL REQUIRED)

****************************************************************

DIRECT ALL QUESTIONS ON HOW TO COMPLETE THIS FORM TO THE ASSIGNED CONTACT OFFICE FOR THE BORROWER: 

                                                 Chief 

Policy Analysis and Loan Management Staff

Telephone:  (202) 720-0424

WHEN COMPLETED, DELIVER THIS ORIGINAL FORM TO RUS AT THE ADDRESS OF THE CONTACT OFFICE INDICATED BELOW:

                                                 Chief 

Policy Analysis and Loan Management Staff

Rural Utilities Service

U.S. Department of Agriculture

Mail Stop 1560

1400 Independence Avenue, SW

Washington, DC  20250-1560

Reference:  Section 313A Loan Guarantee 

Telephone:  (202) 720-0424

Facsimile:   (202) 690-0717

*****************************************************************

PREPAYMENT ELECTION NOTICE

FIXED SUM TO BE APPLIED

Manager

Federal Financing Bank

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

Name of Borrower (the "Borrower"): 

          National Rural Utilities Cooperative Finance Corporation

PREPAYMENT ELECTION NOTICE - FX SUM (RUS APPROVAL REQ'D) - page 1

RUS

FFB Bond Identifier:           _____________________1

Part 1:

          Notice is hereby given to FFB (and RUS) of the Borrower's election to prepay all or a portion of the outstanding principal amount of the advances of funds ("Advances") identified in this Part 1:

   FFB         RUS       ORIGINAL     ORIGINAL      OUTSTANDING 

 ADVANCE      ACCOUNT    ADVANCE      ADVANCE        PRINCIPAL 

IDENTIFIER2   NUMBER3    DATE4       AMOUNT5        
AMOUNT6   

___________   _______   _________   $___________   $___________ 

___________   _______   _________   $___________   $___________ 

___________   _______   _________   $___________   $___________ 

Part 2:

          The Borrower intends to prepay all or a portion of the outstanding principal amount of the Advances identified in Part 1 on the following date (such date being the "Intended Prepayment Date"):

____________________________________7

_____________

1Insert the FFB Bond Identifier that FFB assigned to the Bond (as provided in the Bond Purchase Agreement referred to in the Bond).

2Complete 1 line in Part 1 for each Advance that the Borrower intends to prepay in whole or in part.  For each Advance, insert the FFB Advance Identifier for the respective Advance as specified in the most recent billing notice delivered by RUS to the Borrower.

3For each Advance, insert the RUS Account Number for the respective Advance as specified in the most recent billing notice delivered by RUS to the Borrower.

4For each Advance, insert the date on which FFB made the respective Advance to the Borrower.

5For each Advance, insert the original principal amount of the respective Advance that FFB made to the Borrower.

6Insert the outstanding principal amount of each Advance specified in Part 1 as of the day before the date on which the Borrower intends to make a prepayment on the respective Advances.

7Insert the particular calendar date that the Borrower selects to be the date on which the Borrower intends to prepay the Advances specified in Part 1, which date must meet the criteria for Intended Prepayment Date prescribed in paragraph 16(b)(1) of the Bond.

PREPAYMENT ELECTION NOTICE - FX SUM (RUS APPROVAL REQ'D) - page 2

RUS

Part 3:

          The Borrower elects to have the following amount of funds applied by FFB toward a prepayment of the outstanding principal amount of the Advances identified in Part 1, in the order in which they appear in Part 1:

____________________________________8

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

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

                                                                     (the "Borrower")

By:     _______________________

Name:   _______________________

Title:  _______________________

   

Date:   _______________________

________________________

8Insert the particular amount of funds that the Borrower elects to be applied by FFB toward a prepayment of the outstanding principal amount of the Advances identified in Part 1, in the order in which they appear in Part 1.

PREPAYMENT ELECTION NOTICE - FX SUM (RUS APPROVAL REQ'D) - page 3

RUS

          NOTICE OF RUS APPROVAL OF

          PREPAYMENT ELECTION NOTICE

          Notice is hereby given to FFB that the preceding Prepayment Election Notice made by the Borrower identified therein has been approved by RUS for purposes of the Bond identified therein.

                                                                     ADMINISTRATOR of the

RURAL UTILITIES SERVICE, 

acting through his or her

duly authorized designee

               

By:     _______________________

Name:   _______________________

Title:  _______________________

   

Date:   _______________________

PREPAYMENT ELECTION NOTICE - FX SUM (RUS APPROVAL REQ'D) - page 4

RUS

ANNEX 3-A

TO

FUTURE ADVANCE BOND

FORM

OF

REFINANCING ELECTION NOTICE

RUS

          REFINANCING ELECTION NOTICE

****************************************************************

DIRECT ALL QUESTIONS ON HOW TO COMPLETE THIS FORM TO THE ASSIGNED CONTACT OFFICE FOR THE BORROWER:  

                                                 Chief 

Policy Analysis and Loan Management Staff

Telephone:  (202) 720-0424

WHEN COMPLETED, DELIVER THIS ORIGINAL FORM TO FFB AT THE FOLLOWING ADDRESS:

                                                 
Manager 

                                                 Federal Financing Bank 

                                                 Main Treasury Building

                                                 1500 Pennsylvania Avenue, NW 

                                                 Washington, DC  20220

          Telephone:  (202) 622-2470

          Facsimile:   (202) 622-0707

 DELIVER A COPY OF THIS FORM TO RUS AT THE ADDRESS OF THE CONTACT OFFICE INDICATED BELOW:

 

                                                 Chief 

Policy Analysis and Loan Management Staff

Rural Utilities Service

U.S. Department of Agriculture

Mail Stop 1560

1400 Independence Avenue, SW

Washington, DC  20250-1560

Reference:  Section 313A Loan Guarantee 

Telephone:  (202) 720-0424

Facsimile:   (202) 690-0717

******************************************************************************

          REFINANCING ELECTION NOTICE

Manager

Federal Financing Bank

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

Name of Borrower (the "Borrower"): 

          National Rural Utilities Cooperative Corporation

REFINANCING ELECTION NOTICE - page 1

RUS

FFB Bond Identifier:           ______________________1

Part 1:

          Notice is hereby given to FFB (and RUS) of the Borrower's election to refinance the outstanding principal amount of each of the advances of funds ("Advances") identified in this Part 1:

   FFB                                                 RUS              ORIGINAL          ORIGINAL          OUTSTANDING 

 ADVANCE                     ACCOUNT    ADVANCE          ADVANCE          PRINCIPAL 

IDENTIFIER2          NUMBER3           DATE4          
AMOUNT5          AMOUNT6   

___________   _______   _________                       $___________   $___________ 

___________   _______   _________                       $___________   $___________ 

___________   _______   _________                       $___________   $___________ 

Part 2:

          The Borrower intends to refinance the outstanding principal amount of each of the Advances identified in Part 1 on the following date (such date being the "Intended Refinancing Date"):

____________________________________7

_______________

1Insert the FFB Bond Identifier that FFB assigned to the Bond (as provided in the Bond Purchase Agreement referred to in the Bond).

2Complete 1 line in Part 1 for each Advance that the Borrower intends to refinance.  For each Advance, insert the FFB Advance Identifier for the respective Advance as specified in the most recent billing notice delivered by RUS to the Borrower.

3For each Advance, insert the RUS Account Number for the respective Advance as specified in the most recent billing notice delivered by RUS to the Borrower.

4For each Advance, insert the date on which FFB made the respective Advance to the Borrower.

5For each Advance, insert the original principal amount of the respective Advance that FFB made to the Borrower.

6For each Advance, insert the outstanding principal amount of the respective Advance as of the day before the intended refinancing.

7Insert the particular calendar date that the Borrower selects to be the date on which the Borrower intends to refinance the Advances specified in Part 1, which date must meet the criteria for Intended Refinancing Date prescribed in paragraph 17(b)(1) of the Bond.  

REFINANCING ELECTION NOTICE - page 2

RUS

Part 3:

          Notice is hereby given to FFB (and RUS) of the Borrower's election that each of the Advances identified in Part 1 is to be refinanced as follows:

class=Section6>

                                        AMOUNT OF                                                 TYPE OF

       FFB                    PRINCIPAL                    NEW                    PREPAYMENT/            5-YEAR   

     ADVANCE          TO BE                    MATURITY          REFINANCING           NO-CALL            PREMIUM

    IDENTIFIER8               REFINANCED9          
DATE10          PRIVILEGE11            PERIOD
12            OPTION13

                                            

    __________    $___________    _________      

						
		
					
	

    __________    $___________    _________         

						
				
				
	

    __________    $___________    _________         

						
				
				
	

    __________    $___________    _________         

_________________________

8Complete 1 line in Part 3 for each Advance identified in Part 1 as being an Advance the Borrower elects to refinance.  Insert the FFB Advance Identifier that FFB assigned to the respective Advance. 

9For each Advance, insert the amount of principal that is to be refinanced.  This will be the same amount as the outstanding principal amount of the respective Advance inserted in Part 1. 

10For each Advance, insert the particular calendar date that the Borrower selects to be the new Maturity Date to be in effect for the respective Advance after the refinancing, which new Maturity Date must meet all the criteria for Maturity Dates specified in section 7.3.1(a)(5) of the Bond Purchase Agreement referred to in the Bond.

11Elect 1 of the following 2 types of prepayment/refinancing privilege for an Advance only if the new Maturity Date selected for such Advance will occur 
on or after the fifth anniversary of the effective date of this Maturity Extension.  The 2 types of prepayment/refinancing privilege are: the market value premium (or discount) privilege ("M") and a fixed premium privilege ("F").  Insert in the box the letter-symbol for the particular type of prepayment/refinancing privilege elected.

12Elect 1 of the following 2 no-call period options for an Advance only if a fixed premium privilege is elected as the prepayment/refinancing privilege for such Advance.  The 2 no-call period options are: yes ("Y"), if the Borrower elects to have the fixed premium prepayment/refinancing privilege include a 5-year period during which the Advance will not be eligible for prepayment or refinancing, and no ("N"), if the Borrower elects to have the fixed premium prepayment/refinancing privilege 
not include any such a 5-year no-call period.  Insert in the box the letter-symbol for the particular no-call period option elected. 

13Select 1 of the following 3 premium options for an Advance only if a fixed premium privilege is elected as the prepayment/refinancing privilege for such Advance.  The 3 premium options are: a 10% premium declining over 10 years ("X"), a 5% premium declining over 5 years ("V"), and par (no premium) ("P").  Insert in the box the letter-symbol for the particular premium option selected.

          REFINANCING ELECTION NOTICE - page 3

RUS

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

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

                                                                     (the "Borrower")

By:     _______________________

Name:   _______________________

Title:  _______________________

   

Date:   _______________________

REFINANCING ELECTION NOTICE - page 4

RUS

ANNEX 3-B

TO

FUTURE ADVANCE BOND

FORM

OF

REFINANCING ELECTION NOTICE

(RUS APPROVAL REQUIRED)

RUS

REFINANCING ELECTION NOTICE

(RUS APPROVAL REQUIRED)

****************************************************************

DIRECT ALL QUESTIONS ON HOW TO COMPLETE THIS FORM TO THE ASSIGNED CONTACT OFFICE FOR THE BORROWER: 

                                                 Chief 

Policy Analysis and Loan Management Staff

Telephone:  (202) 720-0424

WHEN COMPLETED, DELIVER THIS ORIGINAL FORM TO RUS AT THE ADDRESS OF THE CONTACT OFFICE INDICATED BELOW:

                                                 Chief 

Policy Analysis and Loan Management Staff

Rural Utilities Service

U.S. Department of Agriculture

Mail Stop 1560

1400 Independence Avenue, SW

Washington, DC  20250-1560

Reference:  Section 313A Loan Guarantee 

Telephone:  (202) 720-0424

Facsimile:   (202) 690-0717

******************************************************************************

          REFINANCING ELECTION NOTICE

Manager

Federal Financing Bank

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

Name of Borrower (the "Borrower"): 

          National Rural Utilities Cooperative Corporation

FFB Bond Identifier:           ______________________1

____________________

Insert the FFB Bond Identifier that FFB assigned to the Bond (as provided in the Bond Purchase Agreement referred to in the Bond).

          REFINANCING ELECTION NOTICE (RUS APPROVAL REQ'D) - page 1

RUS

Part 1:

          Notice is hereby given to FFB (and RUS) of the Borrower's election to refinance the outstanding principal amount of each of the advances of funds ("Advances") identified in this Part 1:

   FFB                                                 RUS                    ORIGINAL          ORIGINAL             OUTSTANDING 

 ADVANCE                    ACCOUNT          ADVANCE          ADVANCE           PRINCIPAL 

IDENTIFIER2          NUMBER3          DATE4          
AMOUNT5          AMOUNT6   

___________   _______   _________                       $___________   $___________ 

___________   _______                       $___________   $___________ 

                    

___________   _______   _________$___________   $___________ 

Part 2:

          The Borrower intends to refinance the outstanding principal amount of each of the Advances identified in Part 1 on the following date (such date being the "Intended Refinancing Date"):

____________________________________7

_____

2Complete 1 line in Part 1 for each Advance that the Borrower intends to refinance.  For each Advance, insert the FFB Advance Identifier for the respective Advance as specified in the most recent billing notice delivered by RUS to the Borrower.

3For each Advance, insert the RUS Account Number for the respective Advance as specified in the most recent billing notice delivered by RUS to the Borrower.

4For each Advance, insert the date on which FFB made the respective Advance to the Borrower.

5For each Advance, insert the original principal amount of the respective Advance that FFB made to the Borrower.

6For each Advance, insert the outstanding principal amount of the respective Advance as of the day before the intended refinancing.

7Insert the particular calendar date that the Borrower selects to be the date on which the Borrower intends to refinance the Advances specified in Part 1, which date must meet the criteria for Intended Refinancing Date prescribed in paragraph 17(b)(1) of the Bond.  

REFINANCING ELECTION NOTICE (RUS APPROVAL REQ'D) - page 2

RUS

Part 3:

          Notice is hereby given to FFB (and RUS) of the Borrower's election that each of the Advances identified in Part 1 is to be refinanced as follows:

class=Section7>

AMOUNT OF                                                 TYPE OF

       FFB                    PRINCIPAL                    NEW                PREPAYMENT/          5-YEAR   

     ADVANCE          TO BE                    MATURITY          REFINANCING          NO-CALL          PREMIUM

    IDENTIFIER8          REFINANCED9          
DATE10          PRIVILEGE11          PERIOD12          
OPTION13

                                            

    __________              $___________              _________      

								
					
	
		
					
	
	
					
	
	
					
	

    __________              $___________              _________         

    __________              $___________              _________         

				
			
	
		
	
		

    __________              $___________              _________         

_________________

8Complete 1 line in Part 3 for each Advance identified in Part 1 as being an Advance the Borrower elects to refinance.  Insert the FFB Advance Identifier that FFB assigned to the respective Advance. 

9For each Advance, insert the amount of principal that is to be refinanced.  This will be the same amount as the outstanding principal amount of the respective Advance inserted in Part 1. 

10For each Advance, insert the particular calendar date that the Borrower selects to be the new Maturity Date" to be in effect for the respective Advance after the refinancing, which new Maturity Date must meet all the criteria for Maturity Dates specified in section 7.3.1(a)(5) of the Bond Purchase Agreement referred to in the Bond.

11Elect 1 of the following 2 types of prepayment/refinancing privilege for an Advance only if the new Maturity Date selected for such Advance will occur 
on or after the fifth anniversary of the effective date of this Maturity Extension.  The 2 types of prepayment/refinancing privilege are: the market value premium (or discount) privilege ("M") and a fixed premium privilege ("F").  Insert in the box the letter-symbol for the particular type of prepayment/refinancing privilege elected.

12Elect 1 of the following 2 no-call period options for an Advance only if a fixed premium privilege is elected as the prepayment/refinancing privilege for such Advance.  The 2 no-call period options are: yes ("Y"), if the Borrower elects to have the fixed premium prepayment/refinancing privilege include a 5-year period during which the Advance will not be eligible for prepayment or refinancing, and no ("N"), if the Borrower elects to have the fixed premium prepayment/refinancing privilege 
not include any such a 5-year no-call period.  Insert in the box the letter-symbol for the particular no-call period option elected. 

13Select 1 of the following 3 premium options for an Advance only if a fixed premium privilege is elected as the prepayment/refinancing privilege for such Advance.  The 3 premium options are: a 10% premium declining over 10 years ("X"), a 5% premium declining over 5 years ("V"), and par (no premium) ("P").  Insert in the box the letter-symbol for the particular premium option selected. 

REFINANCING ELECTION NOTICE (RUS APPROVAL REQ'D) - page 3

RUS

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

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

                                                                     (the "Borrower")

By:     _______________________

Name:   _______________________

Title:  _______________________

   

Date:   _______________________

          NOTICE OF RUS APPROVAL OF

          REFINANCING ELECTION NOTICE

          Notice is hereby given to FFB that the preceding Refinancing Election Notice made by the Borrower identified therein has been approved by RUS for purposes of the Bond identified therein.

                                                                     ADMINISTRATOR of the

RURAL UTILITIES SERVICE, 

acting through his or her

duly authorized designee

               

By:     _______________________

Name:   _______________________

Title:  _______________________

   

Date:   _______________________

REFINANCING ELECTION NOTICE (RUS APPROVAL REQ'D) - page 4

RUS

EXHIBIT C

TO

BOND PURCHASE AGREEMENT

FORM

OF

CERTIFICATE SPECIFYING AUTHORIZED BORROWER OFFICIALS

RUS

CERTIFICATE SPECIFYING

          AUTHORIZED BORROWER OFFICIALS

Federal Financing Bank

Main Treasury Building

1500 Pennsylvania Avenue, NW

Washington, DC  20220

          Reference is made to the Series A Bond Purchase Agreement dated as of June 14, 2005 (the "Bond Purchase Agreement"), by and among the Federal Financing Bank ("FFB"), National Rural Utilities Cooperative Finance Corporation (the "Borrower"), and the Administrator of the Rural Utilities Service ("RUS").  Capitalized terms used herein and not defined herein shall have the respective meanings ascribed to them in the Bond Purchase Agreement. 

          This Certificate Specifying Authorized Borrower Officials is delivered to FFB pursuant to section 4.1(c) of the Bond Purchase Agreement.

          The undersigned, on behalf of the Borrower, hereby certifies that:

          a.          each of the individuals named below is the duly qualified and incumbent official of the Borrower holding the position title set out opposite the respective individual’s name; 

          b.          each of the individuals named below is authorized to execute and deliver Advance Requests from time to time on behalf of the Borrower; and

          c.          the signature of each such individual set out opposite the respective individual's name and title is the genuine signature of such individual:

       Name                                                    
Title                                                      
Signature

 Sheldon C. Petersen          Governor and

                                                              Chief Executive Officer      ____________________

 Steven L. Lilly             Senior Vice President and

                             Chief Financial Officer      ____________________

 John J. List                     Senior Vice President,

                                                           Assistant Secretary-Treasurer

                                                           and General Counsel          ____________________

CERTIFICATE SPECIFYING AUTHORIZED BORROWER OFFICIALS - page 1

RUS

          The undersigned certifies that the undersigned has been given the authority to execute this Certificate Specifying Authorized Borrower Officials on behalf of the Borrower and to deliver it to FFB, and that this authority is valid and in full force and effect on the date hereof.

          IN WITNESS WHEREOF, the undersigned has executed this Certificate Specifying Authorized Borrower Officials and caused it to be delivered to FFB.

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

                                                                     (the "Borrower")

By:     _______________________

Name:   John J. List

Title:  Assistant Secretary-Treasurer

   

Date:   June 14, 2005

CERTIFICATE SPECIFYING AUTHORIZED BORROWER OFFICIALS - page 2

RUS

EXHIBIT D

TO

BOND PURCHASE AGREEMENT

FORM

OF

CERTIFICATE SPECIFYING AUTHORIZED RUS OFFICIALS

RUS

          CERTIFICATE SPECIFYING

          AUTHORIZED RUS OFFICIALS

Federal Financing Bank

Main Treasury Building

1500 Pennsylvania Avenue, NW                                                 

Washington, DC  20220

          Reference is made to the Series A Bond Purchase Agreement dated as of June 14, 2005 (the "Bond Purchase Agreement"), by and among the Federal Financing Bank ("FFB"), National Rural Utilities Cooperative Finance Corporation (the "Borrower"), and the Administrator of the Rural Utilities Service ("RUS").  Capitalized terms used herein and not defined herein shall have the respective meanings ascribed to them in the Bond Purchase Agreement. 

          This Certificate Specifying Authorized RUS Officials is delivered to FFB pursuant to section 4.2 or 13.1 of the Bond Purchase Agreement.

1.          The undersigned, on behalf of RUS, hereby certifies that:

          a.          each of the individuals named below is the duly qualified and incumbent official of RUS holding the position title set out opposite the respective individual's name; 

          b.          each of the individuals named below is authorized to execute and deliver Advance Request Approval Notices from time to time on behalf of RUS; and

          c.          the signature of each such individual set out opposite the respective individual's name and title is the genuine signature of such individual:

     Name                                                                
Title                                                      
Signature

 James R. Newby                       Assistant Administrator--

                                                              Electric Program            _____________________

 Doris A. Nolte                       Chief

                             Policy Analysis and

                            Loan Management Staff       _____________________

 William E. Railey            Chief 

                                                             Financial Operations Branch

                                                             Power Supply Division       _____________________

CERTIFICATE SPECIFYING AUTHORIZED RUS OFFICIALS - page 1

RUS

2.          The undersigned, on behalf of RUS, hereby certifies that:

          a.          each of the individuals named below is the duly qualified and incumbent official of RUS holding the position title set out opposite the respective individual’s name; 

          b.          each of the individuals named below is authorized to confirm telephonically the authenticity of Advance Request Approval Notices from time to time on behalf of RUS; and

          c.          the telephone number of each such individual is set out opposite the respective individual's name and title:

            Name                                                    
Title                                                  
Telephone Number

 James R. Newby                    Assistant Administrator--    (202) 720-9545

                                                           Electric Program

 Doris A. Nolte                    Chief                        (202) 720-0424

                                                           Policy Analysis and

                      Loan Management Staff

 William E. Railey          Chief                        (202) 720-1968

                                                           Financial Operations Branch

                                                           Power Supply Division

                    IN WITNESS WHEREOF, the undersigned has executed this Certificate Specifying Authorized RUS Officials and caused it to be delivered to FFB.

                                                                     ADMINISTRATOR of the

RURAL UTILITIES SERVICE, 

By:     _______________________

Name:   Curtis M. Anderson

Title:  Acting Administrator

   

Date:   June 14, 2005

CERTIFICATE SPECIFYING AUTHORIZED RUS OFFICIALS - page 2

RUS

EXHIBIT E

TO

BOND PURCHASE AGREEMENT

FORM

OF

OPINION OF BORROWER'S COUNSEL

re:

BORROWER'S INSTRUMENTS

June 14, 2005

Acting Administrator

Rural Utilities Service

United States Department of Agriculture

1400 Independence Avenue, S.W.

Washington, DC 20250-1414

Federal Financing Bank

Main Treasury Building

1500 Pennsylvania Avenue, N.W.

Washington, DC 20220

Gentlemen:

I am delivering this opinion as general counsel (“Counsel”) of National Rural Utilities Cooperative Finance Corporation, a District of Columbia cooperative association (“Borrower”), and am familiar with matters pertaining to the loan to Borrower in the principal amount of $1,000,000,000.00, 
provided for in the Series A Bond Purchase Agreement ("Bond Purchase Agreement"), dated as of June 14, 2005 
made by and among Borrower, the Federal Financing Bank (“FFB”), and the United States of America, acting through the Rural Utilities Service, a Rural Development agency of the United States Department of Agriculture (“RUS”), which loan has been guaranteed by RUS.

I have examined such corporate records and proceedings of Borrower, and such other documents as I have deemed necessary as a basis for the opinions hereinafter expressed.

I have also examined the following documents as executed and delivered: (a) the Bond Purchase Agreement, (b) the Future Advance Bond, dated as of June 14, 2005, 
in the maximum principal amount of $1,000,000,000.00 (“Guaranteed Bond”), said Guaranteed Bond payable to FFB, (c) the Series A Bond Guarantee Agreement, dated as of June 14, 2005, made by and between RUS and Borrower (“Guarantee Agreement”), (d) the Pledge Agreement, dated as of June 14, 2005, made by and among Borrower, RUS and U.S. Bank Trust National Association (“Pledge Agreement”), and (e) the Series A Reimbursement Note, dated as of June 14, 2005, issued by Borrower to RUS (“Reimbursement Note”).  The documents described in items (a) through (e) above are collectively referred to herein as the "Bond Documents."

Based on the foregoing, but subject to the assumptions, exceptions, qualifications and limitations hereinafter expressed, I am of the opinion that: 

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.

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.

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.

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.

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.

          The foregoing opinions are subject to the following assumptions, exceptions, qualifications and limitations:

          A.          I am a member of the Bar of the District of Columbia and render no opinion on the laws of any jurisdiction other than the laws of the District of Columbia, the federal laws of the United States of America and the General Corporation Law of the District of Columbia.

          B.          My opinions are limited to the present laws and to the facts, as they presently exist.  I assume no obligation to revise or supplement this opinion should the present laws of the jurisdictions referred to in paragraph A above be changed by legislative action, judicial decision or otherwise.

C.          This letter is rendered to you in connection with the Bond Documents and the transactions related thereto, and may not be relied upon by any other person or by you in any other context or for any other purpose.  

          D.          I have assumed with your permission (i) the genuineness of all signatures by each party other than the Borrower, (ii) the authenticity of documents submitted to me as originals and the conformity to authentic original documents of all documents submitted to me as copies, and (iii) the due execution and delivery, pursuant to due authorization, of the Bond Documents by each party other than the Borrower. 

Yours sincerely,

John J. List

General Counsel

RUS

EXHIBIT F

TO

BOND PURCHASE AGREEMENT

FORM

OF

OPINION OF RUS'S COUNSEL

re:

RUS GUARANTEE

June 14, 2005

MEMORANDUM FOR CURTIS M. ANDERSON

    ACTING ADMINISTRATOR

    RURAL UTILITIES SERVICE

FROM:                        James Michael Kelly

                                                     Acting General Counsel

SUBJECT:                        Section 313A Legal Opinion

 

This is in response to your letter of June 10, 2005, in which you requested an opinion from this office concerning your authority to execute and deliver a certain guarantee (the “Guarantee”) pursuant to the Rural Electrification Act of 1936, as amended, and whether the Guarantee when executed by you will be an incontestable obligation of the United States of America, acting through the Rural Utilities Service (“RUS”), a Rural Development agency of the United States Department of Agriculture, supported by the full faith and credit of the United States.

          More particularly, the Guarantee is endorsed on a Future Advance Bond (the “Bond”) dated June 14, 2005, being issued by the National Rural Utilities Cooperative Finance Corporation  (the “Borrower”), a District of Columbia cooperative association, to the Federal Financing Bank (the “FFB”), a body corporate and instrumentality of the United States of America.  We understand that the Borrower is using the proceeds of the Bond for purposes specified in section 313A of the Act.

We have examined the following:

1.          The Rural Electrification Act of 1936, 7 U.S.C. §§ 901-950bb (2005) (the “Act”);

2.           The Consolidated Appropriations Act, 2005, Pub. L. No. 108-447, 118 Stat. 2831, 2845 (§ 747) (2004) (the “Appropriations Act”);

3.          Delegations of authority from the Secretary of Agriculture to the Under Secretary for Rural Development, 7 C.F.R. § 2.17 (2005), and redelegations from the Under Secretary for Rural Development to the Administrator, Rural Utilities Service, 7 C.F.R. § 2.47 (2005);

4.          The executed Bond of the Borrower in the maximum principal amount of one billion dollars ($1,000,000,000.00), having a final maturity date of July 15, 2028, and payable to FFB and any successor or assign of FFB; and

5.          The Guarantee endorsed by the Acting Administrator of RUS which is attached to the Bond.

Based upon the foregoing, having regard to legal considerations which we deem relevant, we are of the opinion that:

1.          You are authorized under the Act and the Appropriations Act to execute and deliver the Guarantee;

2.          The Guarantee has been executed by you pursuant to section 313A of the Act; and

3.          The Guarantee is an enforceable obligation of RUS supported by the full faith and credit of the United States and incontestable except for fraud or misrepresentation of which the holder of the Guarantee had actual knowledge at the time it became a holder.

Based on the foregoing and upon such further investigation as I have deemed necessary, we are of the opinion that:

The execution and delivery of the RUS Guarantee by the Acting Administrator is authorized by applicable law.

The RUS Guarantee has been executed and delivered by an official of RUS who is duly authorized to execute and deliver such document on behalf of the Acting Administrator.

The RUS Guarantee is a valid obligation of the United States of America for which the full faith and credit of the United States of America are pledged.

RUS

EXHIBIT G

TO

BOND PURCHASE AGREEMENT

FORM

OF

RUS CERTIFICATE

RUS

RUS CERTIFICATE

Federal Financing Bank

Main Treasury Building

1500 Pennsylvania Avenue, NW

Washington, DC  20220

          Reference is made to: 

(a)          the Series A Bond Purchase Agreement dated as of June 14, 2005 (the "Bond Purchase Agreement"), by and among the Federal Financing Bank ("FFB"), National Rural Utilities Cooperative Finance Corporation (the "Borrower"), and the Administrator of the Rural Utilities Service ("RUS");

(b)          the Series A Bond dated as of June 14, 2005 (the "Bond"), issued by the Borrower payable to FFB in the maximum principal amount of $1,000,000,000.00; and

(c)          the RUS Guarantee dated as of June 14, 2005 (the "RUS Guarantee").

          Pursuant to sections 3.3.1(c) and 4.2(b) of the Bond Purchase Agreement, the undersigned hereby certifies the following:

          
1.          I am the Acting Administrator of RUS. 

2.          I am furnishing this RUS Certificate to FFB with the intent that it be relied upon by FFB as a basis for taking or withholding action pursuant to the Bond Purchase Agreement.

3.          
As the Administrator or Acting Administrator of RUS, I have executed the RUS Guarantee and caused it to be attached to the Bond.

4.          The executed RUS Guarantee conforms exactly to the form of "RUS Guarantee" prescribed in the Bond Purchase Agreement. 

5.          RUS retains custody of the executed original Bond as agent for FFB under the terms of the Bond Purchase Agreement, subject to delivery of actual possession of the original Bond to FFB upon request by FFB.

6.          RUS, as agent for FFB, has received from the Borrower the certification regarding lobbying that is required 

to be filed by recipients of federal loans, in the form 

RUS CERTIFICATE - page 1

RUS

of certificate set forth in Appendix A to 31 C.F.R. Part 21, and, if required under 31 C.F.R. Part 21, the disclosure form to report lobbying, in the form of disclosure form set forth in Appendix B to 31 C.F.R. Part 21.  RUS retains custody of the executed original certificate (and, if applicable, disclosure form) as agent for FFB under the terms of the Bond Purchase Agreement, subject to delivery of actual possession of the original certificate (and, if applicable, disclosure form) to FFB or its designate upon request by FFB or its designate.

7.          The Borrower does not have a judgment lien against any of the Borrower's property for a debt owed to the United States of America.

          

          IN WITNESS WHEREOF, the undersigned has executed this RUS Certificate and caused it to be delivered to FFB.

                                                                     ADMINISTRATOR of the

RURAL UTILITIES SERVICE, 

By:     _______________________

Name:   Curtis M. Anderson

Title:  Acting Administrator

   

Date:   June 14, 2005

RUS CERTIFICATE - page 2

RUS

EXHIBIT H

TO

BOND PURCHASE AGREEMENT

FORM

OF

RUS GUARANTEE

RUS

          RUS GUARANTEE

          The United States of America, acting through the Administrator of the Rural Utilities Service ("RUS"), hereby guarantees to the Federal Financing Bank, its successors and assigns ("FFB"), all payments of principal, interest, premium (if any), and late charges (if any), when and as due in accordance with the terms of the Series A Bond dated June 14, 2005, issued by National Rural Utilities Cooperative Finance Corporation (the "Borrower") payable to FFB in the maximum principal amount of $1,000,000,000.00, to which this RUS Guarantee is attached (such bond being the "Bond"), with interest on the principal until paid, irrespective of (i) acceleration of such payments under the terms of the Bond, or (ii) receipt by RUS of any sums or property from its enforcement of its remedies for the Borrower's default.

          This RUS Guarantee is issued pursuant to section 313A of the Rural Electrification Act of 1936, as amended (7 U.S.C. § 940c‐1), section 6 of the Federal Financing Bank Act of 1973 (12 U.S.C. § 2285), and the Series A Bond Purchase Agreement dated as of June 14, 2005, between FFB, the Borrower, and RUS. 

                                                                     UNITED STATES OF AMERICA

                                                                     By:     _______________________________

                                                                     Name:   Curtis M. Anderson

                                                                     Title:  Acting Administrator of 

                                                                                                     the Rural Utilities Service 

                                                                     Date:   June 14, 2005

RUS GUARANTEE

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00089-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00089-of-00352.parquet"}]]