Document:

AXION POWER INTERNATIONAL, INC.

 

SALARY DEFERRAL PAYMENT AGREEMENT

 

WHEREAS, upon review and consideration of the financial condition
of Axion Power International, Inc. (the “Company”), and due to the commitment of the Company’s
Chief Executive Officer and Chairman, David DiGiacinto (“CEO”) to providing the Company with the best opportunity for
success based upon limited funds to be available to the Company as a result of its $6,000,000 offering of its common stock and
warrants (“$6,000,000 Offering”), and in consideration of his continued employment and other benefits provided by the
Company, as set forth in his July 1, 2014 Executive Employment Agreement with the Company (“Employment Agreement”),
the CEO has agreed, effective as of October 4, 2014, to forgo receiving 50% of the base salary payments due to him for a period
of one year; and

 

WHEREAS, the Company and the CEO desire to formally document
their agreement with respect to the terms of deferral of payment of the CEO’s salary compensation.

 

NOW, THEREFORE, in consideration of the mutual promises set
forth herein and for other good and valuable consideration, the receipt of which is hereby acknowledged, the CEO and the Company
hereby agree as follows:

 

		1.	In consideration of The CEO’s continued employment
and other benefits provided by the Company, on an ongoing basis from and after October 4, 2014, and through and until October
4, 2015 (the “Deferral Period”), the Company will defer making payment of 50% of the CEO’s otherwise payable
salary compensation, thus the amount of $162,500 shall be paid during the Deferral Period pursuant to the current payroll payment
practices, and the amount of $162,500 shall be deferred during the Deferral Period (the “Deferral Amount”). On each
regularly scheduled payroll date of the Company, that portion of the Deferral Amount which would otherwise be then due, shall
be accrued on the Company’s books as a payable due to the CEO.

 

		2.	Any and the entire Deferral Amount will be paid to
the CEO as soon as practicable after such payments may be made without jeopardizing the Company’s ability to continue as
a going concern, but no later than December 31, 2015.

 

		3.	The Company will resume paying The CEO’s salary
compensation in full on an ongoing basis as of the first payroll due after October 4, 2015.

 

		4.	It is intended that any deferred salary payments will
qualify for the exception from application of Section 409A of the Internal Revenue Code that is available under Treas. Reg.
§1.409A-1(b)(4)(ii).

 

		5.	Notwithstanding anything set forth to the foregoing
above, the CEO’s salary shall commence being paid in full and any accrued and unpaid Deferral Amount immediately due and
payable upon the occurrence of the following: (i) receipt by the Company of gross proceeds of at least $6,000,000 from any one
or more fundings subsequent to the consummation of the $6,000,000 Offering, from any and all sources, and in any one or more combinations
of forms of funding, including, but not limited to, debt, equity and strategic investment or alliance; (ii) a change in control
(at least 50% in number or amount, as appropriate) of the ownership of the Company’s common stock or its Board of Directors;
or (iii) a sale of all or substantially all of the Company’s assets.

 

 

    	 

    	 

    

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date(s) set forth below.

 

	/s/ David DiGiacinto	 	Date:	 Effective as of October _4, 2014
	DAVID DIGIACINTO	 	 	 
	 	 	 	 
	 	 	 	 
	AXION POWER INTERNATIONAL, INC.	 	 	 
	 	 	 	 
	By:	/s/ D. Walker Wainwright	 	Date:	 Effective as of October _4, 2014
	
        D. Walker Wainwright, Compensation Committee

        Chair
	 	 	 
	 	 	 	 	 

 

    	 

    	 

    

 

AXION POWER INTERNATIONAL, INC.

 

SALARY DEFERRAL PAYMENT AGREEMENT

 

WHEREAS, upon review and consideration of the financial condition
of Axion Power International, Inc. (the “Company”), and due to the commitment of the Company’s
Chief Financial Officer, Charles Trego (“CFO”) to providing the Company with the best opportunity for success based
upon limited funds to be available to the Company as a result of its $6,000,000 offering of its common stock and warrants (“$6,000,000
Offering”), and in consideration of his continued employment and other benefits provided by the Company, as set forth in
his November 1, 2014 Executive Employment Agreement with the Company (“Employment Agreement”), the CFO has agreed,
effective as of November 1, 2014, to forgo receiving $50,000 of the base salary payments due to him for a period of one year; and

 

WHEREAS, the Company and the CFO desire to formally document
their agreement with respect to the terms of deferral of payment of the CFO’s salary compensation.

 

NOW, THEREFORE, in consideration of the mutual promises set
forth herein and for other good and valuable consideration, the receipt of which is hereby acknowledged, the CFO and the Company
hereby agree as follows:

 

		1.	In consideration of The CFO’s continued employment
and other benefits provided by the Company, on an ongoing basis from and after November 1, 2014, and through and until November
1, 2015 (the “Deferral Period”), the Company will defer making payment of $50,000 of the CFO’s otherwise payable
salary compensation, thus the amount of $175,000 shall be paid during the Deferral Period pursuant to the current payroll payment
practices, and the amount of $50,000 shall be deferred during the Deferral Period (the “Deferral Amount”). On each
regularly scheduled payroll date of the Company, that portion of the Deferral Amount which would otherwise be then due, shall
be accrued on the Company’s books as a payable due to the CFO.

 

		2.	Any and the entire Deferral Amount will be paid to
the CFO as soon as practicable after such payments may be made without jeopardizing the Company’s ability to continue as
a going concern, but no later than December 31, 2015.

 

		3.	The Company will resume paying the CFO’s salary
compensation in full on an ongoing basis as of the first payroll due after November 1, 2015.

 

		4.	It is intended that any deferred salary payments will
qualify for the exception from application of Section 409A of the Internal Revenue Code that is available under Treas. Reg.
§1.409A-1(b)(4)(ii).

 

		5.	Notwithstanding anything set forth to the foregoing
above, the CFO’s salary shall commence being paid in full and any accrued and unpaid Deferral Amount immediately due and
payable upon the occurrence of the following: (i) receipt by the Company of gross proceeds of at least $6,000,000 from any one
or more fundings subsequent to the consummation of the $6,000,000 Offering, from any and all sources, and in any one or more combinations
of forms of funding, including, but not limited to, debt, equity and strategic investment or alliance; (ii) a change in control
(at least 50% in number or amount, as appropriate) of the ownership of the Company’s common stock or its Board of Directors;
or (iii) a sale of all or substantially all of the Company’s assets.

 

 

    	 

    	 

    

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date(s) set forth below.

 

	/s/ Charles Trego	 	Date:	 Effective as of November 1, 2014
	Charles Trego	 	 	 
	 	 	 	 
	 	 	 	 
	AXION POWER INTERNATIONAL, INC.	 	 	 
	 	 	 	 
	By:	/s/ David DiGiacinto	 	Date:	 Effective as of November 1, 2014
	David DiGiacinto, Chief Executive Officer	 	 	 
	 	 	 	 	 

 

 

    	 

    	 

    

 

 

AXION POWER INTERNATIONAL, INC.

 

SALARY DEFERRAL PAYMENT AGREEMENT

 

WHEREAS, upon review and consideration of the financial condition
of Axion Power International, Inc. (the “Company”), and due to the commitment of the Company’s
Chief Operating Officer, Phillip Baker (“COO”) to providing the Company with the best opportunity for success based
upon limited funds to be available to the Company as a result of its $6,000,000 offering of its common stock and warrants (“$6,000,000
Offering”), and in consideration of his continued employment and other benefits provided by the Company, as set forth in
his April 1, 2013 Executive Employment Agreement with the Company (“Employment Agreement”), the COO has agreed, effective
as of November 1, 2014, to forgo receiving $39,800 of the base salary payments due to him for a period of one year; and

 

WHEREAS, the Company and the COO desire to formally document
their agreement with respect to the terms of deferral of payment of the COO’s salary compensation.

 

NOW, THEREFORE, in consideration of the mutual promises set
forth herein and for other good and valuable consideration, the receipt of which is hereby acknowledged, the COO and the Company
hereby agree as follows:

 

		1.	In consideration of The COO’s continued employment
and other benefits provided by the Company, on an ongoing basis from and after November 1, 2014, and through and until November
1, 2015 (the “Deferral Period”), the Company will defer making payment of $39,800 of the COO’s otherwise payable
salary compensation, thus the amount of $160,000 shall be paid during the Deferral Period pursuant to the current payroll payment
practices, and the amount of $39,800 shall be deferred during the Deferral Period (the “Deferral Amount”). On each
regularly scheduled payroll date of the Company, that portion of the Deferral Amount which would otherwise be then due, shall
be accrued on the Company’s books as a payable due to the COO.

 

		2.	Any and the entire Deferral Amount will be paid to
the COO as soon as practicable after such payments may be made without jeopardizing the Company’s ability to continue as
a going concern, but no later than December 31, 2015.

 

		3.	The Company will resume paying the COO’s salary
compensation in full on an ongoing basis as of the first payroll due after November 1, 2015.

 

		4.	It is intended that any deferred salary payments will
qualify for the exception from application of Section 409A of the Internal Revenue Code that is available under Treas. Reg.
§1.409A-1(b)(4)(ii).

 

		5.	Notwithstanding anything set forth to the foregoing
above, the COO’s salary shall commence being paid in full and any accrued and unpaid Deferral Amount immediately due and
payable upon the occurrence of the following: (i) receipt by the Company of gross proceeds of at least $6,000,000 from any one
or more fundings subsequent to the consummation of the $6,000,000 Offering, from any and all sources, and in any one or more combinations
of forms of funding, including, but not limited to, debt, equity and strategic investment or alliance; (ii) a change in control
(at least 50% in number or amount, as appropriate) of the ownership of the Company’s common stock or its Board of Directors;
or (iii) a sale of all or substantially all of the Company’s assets.

 

    	 

    	 

    

  

IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date(s) set forth below.

 

	/s/ Phillip Baker	 	Date:	 Effective as of November 1, 2014
	Phillip Baker	 	 	 
	 	 	 	 
	 	 	 	 
	AXION POWER INTERNATIONAL, INC.	 	 	 
	 	 	 	 
	By:	/s/ David DiGiacinto	 	Date:	 Effective as of November 1, 2014
	David DiGiacinto, Chief Executive Officer	 	 	 
	 	 	 	 	 

 

 

    	 

    	 

    

  

AXION POWER INTERNATIONAL, INC.

 

SALARY DEFERRAL PAYMENT AGREEMENT

 

WHEREAS, upon review and consideration of the financial condition
of Axion Power International, Inc. (the “Company”), and due to the commitment of the Company’s
Senior Vice President, Vani Dantam (“Officer”) to providing the Company with the best opportunity for success based
upon limited funds to be available to the Company as a result of its $6,000,000 offering of its common stock and warrants (“$6,000,000
Offering”), and in consideration of his continued employment and other benefits provided by the Company, as set forth in
his Executive Employment Agreement with the Company (“Employment Agreement”), the OFFICER has agreed, effective as
of November 1, 2014, to forgo receiving $45,000 of the base salary payments due to him for a period of one year; and

 

WHEREAS, the Company and the OFFICER desire to formally document
their agreement with respect to the terms of deferral of payment of the OFFICER’s salary compensation.

 

NOW, THEREFORE, in consideration of the mutual promises set
forth herein and for other good and valuable consideration, the receipt of which is hereby acknowledged, the OFFICER and the Company
hereby agree as follows:

 

		1.	In consideration of The OFFICER’s continued
employment and other benefits provided by the Company, on an ongoing basis from and after November 1, 2014, and through and until
November 1, 2015 (the “Deferral Period”), the Company will defer making payment of $45,000 of the OFFICER’s
otherwise payable salary compensation, thus the amount of $180,000 shall be paid during the Deferral Period pursuant to the current
payroll payment practices, and the amount of $45,000 shall be deferred during the Deferral Period (the “Deferral Amount”).
On each regularly scheduled payroll date of the Company, that portion of the Deferral Amount which would otherwise be then due,
shall be accrued on the Company’s books as a payable due to the OFFICER.

 

		2.	Any and the entire Deferral Amount will be paid to
the OFFICER as soon as practicable after such payments may be made without jeopardizing the Company’s ability to continue
as a going concern, but no later than December 31, 2015.

 

		3.	The Company will resume paying the OFFICER’s
salary compensation in full on an ongoing basis as of the first payroll due after November 1, 2015.

 

		4.	It is intended that any deferred salary payments will
qualify for the exception from application of Section 409A of the Internal Revenue Code that is available under Treas. Reg.
§1.409A-1(b)(4)(ii).

 

		5.	Notwithstanding anything set forth to the foregoing
above, the OFFICER’s salary shall commence being paid in full and any accrued and unpaid Deferral Amount immediately due
and payable upon the occurrence of the following: (i) receipt by the Company of gross proceeds of at least $6,000,000 from any
one or more fundings subsequent to the consummation of the $6,000,000 Offering, from any and all sources, and in any one or more
combinations of forms of funding, including, but not limited to, debt, equity and strategic investment or alliance; (ii) a change
in control (at least 50% in number or amount, as appropriate) of the ownership of the Company’s common stock or its Board
of Directors; or (iii) a sale of all or substantially all of the Company’s assets.

 

    	 

    	 

    

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date(s) set forth below.

 

	/s/  Vani Dantam	 	Date:	 Effective as of November 1, 2014
	Vani Dantam	 	 	 
	 	 	 	 
	 	 	 	 
	AXION POWER INTERNATIONAL, INC.	 	 	 
	 	 	 	 
	By:	/s/ David DiGiacinto	 	Date:	 Effective as of November 1, 2014
	David DiGiacinto, Chief Executive OfficerExhibit 4.1 

 

MEMBER CAPITAL SECURITIES, SERIES 2013,
MAY NOT BE TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION (“NATIONAL
RURAL”) AND ONLY NATIONAL RURAL’S VOTING MEMBERS MAY PURCHASE AND HOLD THE MEMBER CAPITAL SECURITIES, SERIES 2013.
ANY PURPORTED TRANSFER OF MEMBER CAPITAL SECURITIES, SERIES 2013, WITHOUT NATIONAL RURAL’S PRIOR WRITTEN CONSENT WILL BE
VOID AB INITIO. 

 

Certificate No.:

 

PRINCIPAL AMOUNT:

 

INTEREST RATE:

 

MATURITY DATE:

 

ISSUE DATE:

 

INTEREST PAYMENT DATES:

 

REGULAR RECORD DATES:

 

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE
CORPORATION

 

MEMBER CAPITAL SECURITIES

 

SERIES 2013

 

National Rural Utilities
Cooperative Finance Corporation, a cooperative association duly organized and existing under the laws of the District of Columbia
(herein referred to as the “Company,” which term includes any successor Person under the Indenture), for value received,
hereby promises to pay to              , or registered assigns, the
principal sum of                  on the Maturity
Date set forth above and to pay interest thereon as set forth below, until the principal hereof is paid or made available for payment.

 

Interest on the member
capital securities, series 2013 (the “Securities”), will be payable in arrears on the Interest Payment Dates set forth
above of each year, and at maturity, commencing on                 
    , 20XX, at the rate of     % per annum.

 

The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will be payable to, as provided in such Indenture, the Person
in whose name this Security is registered at the close of business on the Regular Record Dates set forth above of each year. Interest
will be paid on such principal sum from the Maturity Date or from the most recent Interest Payment Date until the principal amount
thereof becomes due and payable.

 

Reference is hereby made
to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have
the same effect as if forth at this place.

 

Unless the certificate
of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

    	 

    	 

    

 

IN WITNESS WHEREOF, the Company has caused
this instrument to be duly executed.

 

	 	 	 	 
	 	NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
	 	 
	 	 
	 	 	 
	 	By:	 	

	 	Name:	 	 
	 	Title:	 	 

 

	 
	ATTEST:
	
	

 

    	 

    	 

    

 

CERTIFICATE OF AUTHENTICATION 

Dated:                     

 

This is one of the Securities
of the series designated herein referred to in the within-mentioned Indenture.

 

	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION
	 	 	 
	 	By:	 	

	 	 	 
	 	 	 	Authorized Signatory

 

    	 

    	 

    

 

REVERSE OF SECURITY 

 

This Security is one
of a duly authorized issue of subordinated debt securities of the Company (the “Series 2013 member capital securities,”
and, herein called the “Securities”), issued and to be issued in one or more series under an Indenture, dated as of
October 15, 1996, as amended (herein called the “Indenture,” which term shall have the meaning assigned to it
in such instrument), between the Company and U.S. Bank National Association, as successor trustee (herein called the “Trustee,”
which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of
the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of
the series designated on the face hereof.

 

The amount of interest
payable on any Interest Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months.

 

In the event that
any date on which interest is payable on the Securities is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day is in the following month, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made on such date. A “Business Day” is
any week day other than a day on which banking institutions in the Borough of Manhattan, City and State of New York are
authorized by law to close or on which the Company is closed.

 

Any such interest not
so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either
be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other
lawful manner, as more fully provided in the Indenture referred to on the reverse hereof.

 

Each Security will be
issued in certificated form. Payment of the principal of and any interest on this Security payable at maturity or upon redemption
will be made in immediately available funds at the office of the paying agent in the Borough of Manhattan, City and State of New
York. Payments in immediately available funds will be made only if the certificated Security is presented to the paying agent in
time for the paying agent to make payments in immediately available funds in accordance with normal procedures. Interest on the
Security will be paid by wire transfer in immediately available funds, but only if appropriate instructions have been received
in writing by the paying agent on or prior to the applicable regular record date for the payment of interest. If no instructions
have been received in writing by the paying agent, the funds will be paid by check mailed to the address of the person entitled
to such interest.

 

The Securities of this
series are subject to redemption upon not less than 30 nor more than 60 days’ notice by mail, at any time on or after the
date that is ten years from the Issue Date set forth on the front of this Security, as a whole or in part, at the election of the
Company, at a Redemption Price equal to 100% of the principal amount to be redeemed, together in the case of any such redemption
with accrued interest to, but not including, the Redemption Date, but interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holder of such Security, or one or more Predecessor Securities, of record at the
close of business on the related Regular Record Date referred to on the face hereof, all as provided in the Indenture.

 

In the event of redemption
of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.

 

The indebtedness evidenced
by this Security is unsecured and subordinated and subject in right of payment to the prior payment in full of all Senior Indebtedness,
which shall include all subordinated indebtedness of the Company that may be held by or transferred to non-members of the Company,
and this Security is issued subject to the provisions of the Indenture with respect thereto. The Securities of this series will
rank (i) pari passu with the Company’s member subordinated certificates and the Company’s other subordinated indebtedness
that may only be held by or transferred to the Company’s members, including previously issued and outstanding member capital

 

    	 

    	 

    

 

securities and (ii) senior to the Company’s unretired patronage capital. Each Holder of this Security, by accepting
the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his behalf to
take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints
the Trustee his attorney-in-fact for any and all such purposes. Each Holder hereof, by his acceptance hereof, hereby waives all
notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of such Senior Indebtedness,
whether now outstanding or hereafter incurred, and waives reliance by each such Holder upon said provisions.

 

The Indenture contains
provisions for defeasance at any time of the entire indebtedness of this Security upon compliance with certain conditions set forth
in the Indenture.

 

If an Event of Default
with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the Indenture.

 

In addition to the events
of default set forth in the Indenture, the following will constitute an Event of Default under the Indenture with respect to the
Securities: the Company shall pay any dividend or interest on, or principal of, or redeem, purchase, acquire, retire or make a
liquidation payment with respect to, any Members’ Subordinated Certificates, Members’ Equity or patronage capital,
if such payment is made during an Extension Period, and either (i) such Extension Period has not expired or been terminated
or (ii) the Company has not made all payments due on the Securities as a result of such expiration or termination.

 

No payment will be made
in respect of the Securities if, at the time of such payment or immediately after giving effect thereto, (i) there exists
a default by the Company in the payment of principal or mandatory prepayments or premium, if any, of sinking funds or interest
on any senior or subordinated indebtedness (as defined in the instrument under which the same is outstanding) of the Company, or
(ii) there shall have occurred an event of default (other than a default in the payment of principal, premium, if any, mandatory
prepayments, sinking funds or interest) with respect to any senior or subordinated indebtedness (as defined in the instrument under
which the same is outstanding) permitting the holders thereof (or of the indebtedness secured thereby) to accelerate the maturity
thereof, and such event of default shall not have been cured or waived or shall not have ceased to exist.

 

The Indenture permits,
with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company
and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities at the
time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of not less than
a majority in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities
of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon
such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

 

As provided in and subject
to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have
previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the
Holders of not less than 33 1/3% in aggregate principal amount of the Securities of this series at the time Outstanding
shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered
the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in aggregate principal
amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to
institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or interest
hereon on or after the respective due dates expressed herein.

 

    	 

    	 

    

 

No reference herein to
the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this Security at the times, place and rate, and in the coin
or currency, herein prescribed.

 

The Company may at its
option at any time and from time to time during the term of the Securities of this series defer the interest payment period for
a period not exceeding 10 consecutive semi-annual interest payments (or an equivalent period of quarterly or other interest payment
periods) (a “Deferral Period”), and at the end of such Deferral Period, the Company shall pay all interest then accrued
and unpaid (together with interest thereon at the same rate as specified for the Securities of this series to the extent permitted
by applicable law) through the last day of such Deferral Period, provided that if any principal amount of this Security is paid
on such day, then not including interest for such day with respect to such principal amount; provided, that during such Deferral
Period the Company may not declare or pay any dividend or interest on, or principal of, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its Members’ Subordinated Certificates, Members’ Equity or patronage capital.
Prior to the termination of any such Deferral Period, the Company may further defer the payment of interest, provided that such
Deferral Period, together with all such previous and further deferrals thereof, may not exceed 10 consecutive semi-annual interest
payment periods (or an equivalent period of quarterly or other interest payment periods) or extend beyond the Stated Maturity of
the Securities of this series. Upon the termination of any such Deferral Period and the payment of all amounts then due, the Company
may elect a new Deferral Period, subject to the above conditions. No interest during a Deferral Period, except at the end thereof,
shall be due and payable. The Company shall give the Holder of this Security notice of its intent to defer payment of interest
in writing at least ten Business Days before the earlier of (i) the next interest payment due date and (ii) the date
CFC is required to give notice to holders of the Securities of the record or payment date for such interest payment.

 

The Securities of this
series are issuable only in registered form without coupons and in minimum denominations of $25,000 and integral multiples of $5,000
in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series
are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor and of authorized denominations,
as requested by the Holder surrendering the same.

 

No service charge shall
be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

 

The Company, the Trustee
and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the absolute owner
hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall
be affected by notice to the contrary.

 

The Securities may not
be transferred without the Company’s prior written consent and only the Company’s voting members may purchase and hold
the securities. Any purported transfer of the Securities without the Company’s prior written consent will be void ab initio.

 

All terms used in this
Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

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