Document:

First Supplemental Indenture

	
		Exhibit 4.2

	   
	
		FIRST SUPPLEMENTAL INDENTURE

	 
	          This FIRST SUPPLEMENTAL INDENTURE (the "First Supplemental
		Indenture"), is entered into as of March 12, 2007, by and among NATIONAL
		RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, a cooperative
		association duly organized and existing under the laws of the District
		of Columbia (the "Company"), U.S. BANK NATIONAL ASSOCIATION, a
		national banking association duly organized and existing under the laws
		of the United States of America, as successor trustee (the "Successor
		Trustee"), and THE BANK OF NEW YORK TRUST COMPANY, N.A., a national
		banking association duly organized and existing under the laws of the
		United States of America and ultimate successor in interest to Bank One
		Trust Company, N.A., as resigning trustee (the "Resigning Trustee").
		
	
		    

	
		W I T N E S S E T H:

	          WHEREAS, the Company and the Resigning Trustee are parties to a
		certain Indenture, dated as of May 15, 2000 (the "Indenture"),
		relating to the issuance from time to time by the Company of its
		unsecured variable denomination floating rate demand notes (the "Securities")
		on terms to be specified at the time of issuance;
	          
	          WHEREAS, Section 6.09 of the Indenture provides that the
		Resigning Trustee may resign at any time by giving written notice of
		such resignation to the Company and that the Company may appoint a
		successor trustee upon the resignation or removal of the Resigning
		Trustee;
	
		    

	
		          WHEREAS, Section 8.01 of the Indenture provides
		that the Company and the Trustee may from time to time without the
		consent of any Holder enter into one or more supplemental indentures to
		the Indenture to evidence and provide for the acceptance of appointment
		under the Indenture of a successor trustee with respect to the
		Securities;

	
		    

	
		          WHEREAS, the Company previously filed with the
		Securities and Exchange Commission (the "SEC") a Registration
		Statement on Form S-3 (the "Old Registration Statement") with
		respect to the sale of up to $300,000,000 of Variable Denomination
		Floating Rate Demand Notes (the "Old Notes") issued pursuant to
		the Indenture and offered under the Company's old Daily Liquidity
		Program as described in the Old Registration Statement (the "Old
		Program");

	
		           

	
		          WHEREAS, the Company intends to file with the
		SEC a Registration Statement on Form S-3 (the "New Registration
		Statement") with respect to the sale of up to $20,000,000,000 of
		Variable Denomination Floating Rate Demand Notes issued pursuant to the
		Indenture and offered under the Company's new Daily Liquidity Program as
		described in the New Registration Statement (the "New Program"),
		which New Registration Statement will be automatically effective upon
		filing;

	 
	
		          WHEREAS, in connection with the filing of the
		New Registration Statement and the creation of the New Program, the Old
		Program will be terminated and all of the

	 
	

	
		outstanding Old Notes will be redeemed (the date and
		time of such termination and redemptions, which shall be simultaneous
		with the commencement of the New Program, the "New Program Effective
		Time").

	 
	
		          WHEREAS, the Resigning Trustee desires to resign
		as trustee under the Indenture effective upon the New Program Effective
		Time, the Company desires to appoint the Successor Trustee, effective as
		of the New Program Effective Time, as successor trustee under the
		Indenture and the Successor Trustee desires to accept its appointment as
		successor trustee under the Indenture;

	 
	
		          WHEREAS, the parties hereto deem it advisable to
		enter into this First Supplemental Indenture for the purpose of
		appointing the Successor Trustee as a successor trustee; and

	 
	
		          WHEREAS, all conditions and requirements of the
		Indenture necessary to make this First Supplemental Indenture a valid,
		binding and legal instrument in accordance with its terms have been
		performed and fulfilled by the parties hereto.

	 
	
		          NOW, THEREFORE, in consideration of the premises
		and the covenants and agreements contained herein, and for other good
		and valuable consideration, the receipt of which is hereby acknowledged,
		and for the equal and proportionate benefit of the Holders, the Company,
		the Resigning Trustee, and the Successor Trustee hereby agree as
		follows:

	 
	1.           RESIGNATION
		OF RESIGNING TRUSTEE
	
		    

	
		           1.1          Pursuant
		to Section 6.09(2) of the Indenture, the Resigning Trustee hereby
		resigns as trustee under the Indenture, such resignation to be effective
		as of the New Program Effective Time. The Company hereby waives the
		30-day notice requirement set forth in Section 6.09(2) of the Indenture.

	 
	
		           1.2          The
		Resigning Trustee hereby represents and warrants to the Successor
		Trustee, as successor trustee, and the Company that:

	 
	
		                              
		(a)           This
		First Supplemental Indenture has been duly authorized, executed and
		delivered on behalf of the Resigning Trustee and constitutes a legal,
		valid and binding obligation of the Resigning Trustee.

	 
	
		                              
		(b)           No
		covenant or condition contained in the Indenture has been waived by the
		Resigning Trustee or has been waived in a writing delivered to the
		Resigning Trustee by the Holders pursuant to the Indenture;

	 
	                              
		(c)           There is
		no action, suit or proceeding pending or, to the best of the knowledge
		of the Resigning Trustee, threatened against the Resigning Trustee
		before any court or governmental authority arising out of any action or
		omission by the Resigning Trustee under the Indenture;
	   
	
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		(d)           To the
		best of the knowledge of the Resigning Trustee, there has occurred no
		Event of Default or default under the Indenture, and no event which,
		after notice or lapse of time or both, would become an Event of Default
		or default under the Indenture has occurred and is continuing as of the
		date of this First Supplemental Indenture;

	
		 
	
		                              
		(e)           There are
		no outstanding duties of the Resigning Trustee under the Indenture
		arising prior to the date of this First Supplemental Indenture which
		have not been performed;

	
		 
	
		                              
		(f)          As of the date of this Supplemental
		Indenture, the Indenture is in full force and effect and has not been
		amended or supplemented except as described in the recitals herein;

	
		 
	
		                              
		(g)           All items
		required to be delivered to the trustee under the Indenture have been
		delivered by the Resigning Trustee to the Successor Trustee.

	 
	
		           1.3          The Resigning
		Trustee, effective as of the Effective Time, hereby assigns, transfers,
		delivers and confirms to the Successor Trustee all right, title and
		interest of the Resigning Trustee in and to the trust under the
		Indenture and all the rights, powers, trusts and duties of the Resigning
		Trustee as trustee under the Indenture and all property held by such
		Resigning Trustee under the Indenture. The Resigning Trustee shall
		execute and deliver such further instruments and shall do such other
		things as the Successor Trustee may request at the requesting party's
		expense so as to more fully and certainly vest and confirm in the
		Successor Trustee all the rights, powers, trusts and duties hereby
		assigned, transferred, delivered and confirmed to the Successor Trustee
		as trustee under the Indenture.

	   
	
		          1.4          The Resigning Trustee shall deliver to
		the Successor Trustee, as of or promptly after the date of this
		Supplemental Indenture hereof, all property held by it as trustee under
		the Indenture and all documents required to be delivered under the
		Indenture.

	   
	2.          ACCEPTANCE OF RESIGNATION AND
		APPOINTMENT
	
		 
	
		          2.1          The Company hereby accepts and confirms
		the resignation and removal of the Resigning Trustee as trustee under
		the Indenture, such resignation and removal to become effective as of
		the New Program Effective Time. The Company hereby appoints, effective
		as of the New Program Effective Time, the Successor Trustee as successor
		trustee under the Indenture to succeed to the Resigning Trustee, and
		hereby vests the Successor Trustee with, all the rights, powers, trusts
		and duties of the Resigning Trustee under the Indenture with like effect
		as if originally named as trustee under the Indenture. The Company
		agrees to give the Resigning Trustee and the Successor Trustee at least
		five New York banking days prior written notice of the occurrence of the
		New Program Effective Time, specifying an exact date.

	 
	
		3

	

	
		          2.2          The Company hereby represents and
		warrants to the Resigning Trustee and the Successor Trustee that:

	
		 
	
		                    
		(a)          The Company is a cooperative association duly and validly
		organized and existing pursuant to the laws of the District of Columbia.

	 
	
		                    
		(b)          The Indenture has been duly authorized, executed and delivered
		by the Company and constitutes a legal, valid and binding obligation of
		the Company.

	 
	
		                    
		(c)          No event has occurred and is continuing which is, or after
		notice or lapse of time, or both, would become, an Event of Default or
		default under the Indenture.

	 
	
		                    
		(d)          There is no action, suit or proceeding pending or, to the
		Company's best knowledge, threatened against the Company before any
		court or any governmental authority arising out of any action or
		omission by the Company under the Indenture.

	 
	
		                    
		(e)          This First Supplemental Indenture has been duly authorized,
		executed and delivered on behalf of the Company and constitutes a legal,
		valid and binding obligation of the Company.

	 
	
		                    
		(f)          All conditions precedent relating to the appointment of U.S.
		Bank National Association, as successor trustee under the Indenture have
		been complied with by the Company.

	 
	
		                    
		(g)          $194,688,176 aggregate principal amount of Securities are
		outstanding as of the close of business on the business day immediately
		prior to the date hereof.

	 
	
		                    
		(h)          The Security Register maintained by the Company accurately
		reflect the amount of Securities issued and outstanding under the
		Indenture.

	 
	
		                    
		(i)          The Company reaffirms its obligation to indemnify the Resigning
		Trustee pursuant to the terms of the Indenture.

	 
	
		3.          ACCEPTANCE OF APPOINTMENT OF SUCCESSOR
		TRUSTEE

	 
	
		          3.1          The Successor Trustee hereby represents
		and warrants to the Company that:

	 
	
		                    
		(a)          The Successor Trustee is a national banking association duly
		organized and existing under the laws of the United States of America,
		is authorized to exercise corporate trust powers, and is qualified and
		eligible under the provisions of the Indenture to act as a successor
		trustee under the Indenture.

	 
	
		                    
		(b)          This First Supplemental Indenture has been duly authorized,
		executed and delivered on behalf of the Successor Trustee, as successor
		trustee, and constitutes a legal, valid and binding obligation of the
		Successor Trustee.

	 
	
		4

	

	
		          3.2          The Successor Trustee hereby accepts its
		appointment as successor trustee under the Indenture and accepts the
		rights, powers, trusts and duties of the Resigning Trustee as trustee
		under the Indenture, upon the terms and conditions set forth therein,
		with like effect as if originally named as trustee under the Indenture,
		such appointment to be effective as of the New Program Effective Time.

	 
	
		          3.3          For purposes other than with respect to
		the Old Program, references in the Indenture to "Corporate Trust Office"
		or other similar terms shall be deemed to refer to the corporate trust
		office of the Successor Trustee, as successor trustee, located at 100
		Wall Street, 16th Floor, New York, New York 10005, or any other office
		of the Successor Trustee which the Successor Trustee from time to time
		shall designate in a written notice to the Company.

	 
	
		          3.4           Effective as
		of the New Program Effective Time, references in the Indenture to "Bank
		One Trust Company, N.A." shall be deemed to refer to "U.S. Bank National
		Association" for purposes other than with respect to the Old Program.

	 
	
		          3.5           On and after
		the New Program Effective Time, each reference in the Indenture to "this
		Indenture," "hereunder," "hereof" or words of like import referring to
		the Indenture, shall mean and be a reference to the Indenture as amended
		hereby.

	 
	
		          3.6           Pursuant to
		Section 6.9(6) of the Indenture, the Company shall give or cause to be
		given notice of the resignation of the Resigning Trustee and the
		appointment of the Successor Trustee by mailing notice of such event by
		first-class mail, postage prepaid, to all Holders as their names appear
		in the Securities Register. Each notice shall include the name of the
		Successor Trustee and the address of its corporate trust office set
		forth in Section 3.3 hereof.

	 
	
		4.          MISCELLANEOUS

	 
	
		          4.1.          Ratification of Indenture; First
		Supplemental Indenture as Part of Indenture. Except as expressly amended
		hereby, the Indenture is in all respects ratified and confirmed and all
		the terms, conditions and provisions thereof shall remain in full force
		and effect. Upon the execution and delivery of this First Supplemental
		Indenture by the Company, the Resigning Trustee, and the Successor
		Trustee, this First Supplemental Indenture shall form a part of the
		Indenture for all purposes, and each Holder heretofore or hereafter
		authenticated and delivered shall be bound hereby. Any and all
		references, whether within the Indenture or in any notice, certificate
		or other instrument or document, shall be deemed to include a reference
		to this First Supplemental Indenture (whether or not made), unless the
		context shall otherwise require.

	 
	
		          4.2.          New York Law to Govern. THE INTERNAL
		LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS
		FIRST SUPPLEMENTAL INDENTURE, INCLUDING, WITHOUT LIMITATION, SECTIONS
		5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

	 
	
		5

	

	
		          4.3.          Counterparts. The parties may
		sign any number of copies of this First Supplemental Indenture. Each
		signed copy shall be an original, but all of them together represent the
		same agreement.

	 
	
		          4.4.          Effect of Headings. The Section
		headings herein have been inserted for convenience only and shall not
		affect the construction hereof. 

	 
	
		          4.5.          Entire Agreement. This First
		Supplemental Indenture, together with the Indenture as amended hereby,
		contains the entire agreement of the parties, and supersedes all other
		representations, warranties, agreements and understandings between the
		parties, oral or otherwise, with respect to the matters contained herein
		and therein.

	 
	
		          4.6.          Benefits of First Supplemental
		Indenture. Nothing in this First Supplemental Indenture or the
		Indenture, express or implied, shall give to any person, other than the
		parties hereto and thereto and their successors hereunder and
		thereunder, and the Holders, any benefit of any legal or equitable
		right, remedy or claim under the Indenture or this First Supplemental
		Indenture.

	
		   

	
		          4.7.          Defined Terms. Unless otherwise
		indicated, capitalized terms used herein and not defined shall have the
		respective meanings given such terms in the Indenture.

	 
	
		          4.8.          Trust Indenture Act Controls. If
		any provision of this First Supplemental Indenture limits, qualifies or
		conflicts with another provision of this First Supplemental Indenture or
		the Indenture that is required to be included by the Trust Indenture Act
		of 1939, as amended (the "Act"), as in force at the date of this
		First Supplemental Indenture is executed, the provision required by the
		Act shall control. 

	 
	
		          4.9.          Severability. In case any one or
		more of the provisions of this First Supplemental Indenture shall be
		held invalid, illegal or unenforceable, in any respect for any reason,
		the validity, legality and enforceability of any such provision in every
		other respect and of the remaining provisions shall not in any way be
		affected or impaired thereby, it being intended that all of the
		provisions hereof shall be enforceable to the full extent permitted by
		law. 

	 
	
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		          IN WITNESS WHEREOF, the parties hereto have
		caused this First Supplemental Indenture to be duly executed, all as of
		the date first above written.

	
		   

	 	NATIONAL RURAL UTILITIES 

		COOPERATIVE FINANCE CORPORATION
	 	 
	 	
		By:     /s/ Steven L. Lilly

	 	          Name:
		Steven L. Lilly
	 	          Title:  
		Chief Financial Officer
	 	 
	 	 
	 	U.S. BANK NATIONAL 

		ASSOCIATION
	  	
		  
	 	
		By:     /s/ Beverly A.
		Freeney 
		

	 	          Name: 
		Beverly A. Freeney
	 	          Title:   
		Vice President
	 	 
	 	 
	 	THE BANK OF NEW YORK 

		TRUST COMPANY, N.A.
	 	 
	 	By:     /s/ Alma Marcella
		Burgess
	 	          Name: 
		Alma Marcella Burgess
	 	          Title:   
		Assistant TreasurerUNITED MOBILE HOMES, INC

UMH PROPERTIES, INC.

(formerly United Mobile Homes, Inc.)

AGREEMENT EFFECTIVE January 1, 2006

BY AND BETWEEN:

UMH Properties, Inc., a Maryland

Corporation (“Corporation”)

AND:

Anna T. Chew (“Employee”)

Corporation desires to employ Employee in the business of the Corporation and Employee desires to be so employed.  The parties agree as follows:

1.

Employment.  The Corporation hereby employs Employee, and Employee hereby accepts employment with the Corporation, upon the terms and subject to the conditions set forth in this Employment Agreement.

2.

Description of Employment.  Employee is employed as Vice President, Chief Financial Officer and Treasurer of the Corporation.  Employee shall diligently and conscientiously devote her time and attention and put her best efforts to the discharge of her duties.  It is agreed that Employee may also serve as an officer of Monmouth Real Estate Investment Corporation and of Monmouth Capital Corporation.

3.

Term of Employment.  Unless sooner terminated in accordance with the provisions hereof, the term of this Employment Agreement shall be for a three-year period commencing January 1, 2006 and terminating December 31, 2008.  Thereafter, the term of this Employment Agreement shall be automatically renewed and extended for successive one-year periods except that either party may, at least ninety (90) days prior to such expiration date or any anniversary thereof, give written notice to the other party electing that this Employment Agreement not be renewed or extended, in which event this Employment Agreement shall expire as of the expiration date or anniversary date, respectively.  In the event of a merger of the Corporation, sale or change of control, defined as either voting control or control of 25% of the Board of Directors by other than the existing directors, Employee shall have the right to extend and renew this Employment Agreement so that the expiration date will be three years from the date of merger, sale or change of control.

4.

Place of Employment.  Employee’s principal place of employment shall be located at such offices of the Corporation in central New Jersey as the Board of Directors may, from time to time, determine.

5.

Compensation.  As compensation for all services to be rendered by Employee under this Employment Agreement, the Corporation shall pay to Employee a base salary of $225,133 for 2006 with an increase of 5% per year thereafter.  Said base salaries are to be paid in such intervals (at least monthly) as salaries are paid generally to other executive officers of the Corporation.  Any bonus will be at the discretion of the President.

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a.

Severance.

As compensation on severance of employment for any reason, including death, Employee shall be entitled to the payment of one year’s salary.  

b.

Disability.

The employee shall purchase a disability insurance policy so that in the event of disability exceeding ninety days, during which period employee’s salary will continue, the employee will receive lost wages from the disability policy.  The Corporation will reimburse the employee for the cost of such insurance.

c.

Bonuses.

Bonuses shall be paid at the discretion of the President.  Employee shall also receive an annual stock option bonus to purchase 10,000 shares of UMH Properties, Inc. at market price or the price required by law each year unless grant of the option exceeds the number of shares allowed by the option plan.  

6.

Benefits.  Employee shall participate in all health, insurance and similar plans of the Corporation and shall also be eligible to participate in the Corporation’s 401(k) or other plan established by the Corporation.  

a.

Vacation and Holidays.

Employee shall be entitled to four (4) weeks vacation and the same holidays as provided for the other members of the staff

b.

Automobile.

Corporation will provide the Employee with an automobile including maintenance, repairs, insurance, and all costs incident thereto, all comparable to those presently provided to Employee by the Corporation.

7.  

Expenses.

Corporation will reimburse Employee for reasonable and necessary expenses by her in carrying out her duties under this agreement.  Employee shall present to the Corporation from time-to-time, an itemized account of such expenses in such forms as may be required by the Corporation.

8.

Review of Performance.  The President of the Corporation may annually review and evaluate the performance of Employee under this Employment Agreement with Employee.

9.

Termination.  This Employment Agreement may be terminated by the Corporation at any time by reason of the death or disability of Employee or for cause.  A termination with “cause” shall mean a termination of this Employment Agreement by reason of a good faith determination by the Board of Directors of the Corporation that Employee (i) failed to substantially perform her duties with the Corporation (if not due to death or disability), or (ii) has engaged in conduct, the consequences of which are materially adverse to the Corporation, monetarily or otherwise.  “Disability” shall mean a physical or mental illness which, in the judgment of the Corporation after consultation with the licensed physician attending the Employee, impairs Employee’s ability to substantially perform her duties under this Employment Agreement as an employee, and as a result of which she shall have been absent from her duties with the Corporation on a full time basis for six (6) consecutive months.

The termination provisions shall not, in any way, affect the disability benefits provided for in this Employment Agreement.

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10.

Indemnification and Attorneys Fees.  The Corporation agrees to indemnify the Employee from any and all lawsuits filed directly against the Employee in either her capacity as Employee or as a Director of the Corporation.  The Corporation will pay all attorney fees and costs to defend the Employee from any such lawsuits.

11.

Notices.  For the purpose of this Employment Agreement, notices and all other communications provided for in this Employment Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, or by expedited (overnight) courier with an established national reputation, shipping prepaid or billed to sender, to the following address or to such other address as either party may have furnished to the other in writing in accordance herewith.

Corporation:  UMH Properties, Inc.

                       3499 Route 9 North, Suite 3-C

           Freehold, NJ 07728

Employee:      Anna T. Chew

6 David Court

Millstone Township, NJ  07726

12.

Successors.  This Employment Agreement shall be binding on the Corporation and any successor to any of its businesses or assets.

13.

Binding Effect.  This Employment Agreement shall insure to the benefit of and be enforceable by Employee’s personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

14.

Modification and Waiver.  No provision of this Employment Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Employee and such officer as may be specifically designated by the Board of Directors of the Corporation.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Employment Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

15.

Headings.  Headings used in this Employment Agreement are for convenience only and shall not be used to interpret its provisions.

16.

Waiver of Breach.  The waiver of either the Corporation or Employee of a breach of any provision of this Employment Agreement shall not operate or be construed as a waiver of any subsequent breach by either the Corporation or Employee.

17.

Amendments.  No amendments or variations of the terms and conditions of this Employment Agreement shall be valid unless the same is in writing and signed by all of the parties hereto.

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18.

Severability.  The invalidity or unenforceability of any provision of this Employment Agreement, whether in whole or in part, shall not in any way affect the validity and/or enforceability of any other provision herein contained.  Any invalid or unenforceable provision shall be deemed severable to the extent of any such invalidity or enforceability.  It is expressly understood and agreed that, while the Corporation and Employee consider the restrictions contained in this Employment Agreement reasonable for the purpose of preserving for the Corporation the good will, other proprietary rights and intangible business value of the corporation if a final judicial determination is made by a court having jurisdiction that the time or territory or any other restriction contained in this Employment Agreement is an unreasonable or otherwise unenforceable restriction against Employee, the provisions of such clause shall not be rendered void but shall be deemed amended to apply as to maximum time and territory and to such other extent as such court may judicially determine or indicate to be reasonable.

19.

Governing Law.  This Employment Agreement shall be construed and enforced pursuant to the laws of the State of New Jersey.

20.

Binding Arbitration and Damages Limitation.  It is expressly agreed by all parties to this contract that any dispute between the parties will be determined by binding arbitration performed under the rules of The American Arbitration Association.  It is expressly agreed that in no event can the Employee seek damages exceeding the greater of the dollar amount of salary and benefits from the time of the dispute to the end of the contract employment period; or one year’s pay.  This provision applies to any and all claims arising from Employee’s employment except for matters solely and directly caused by workers compensation insurance.

IN WITNESS WHEREOF, this Employment Agreement has been duly executed by the Corporation and Employee as of the date first above written.

UMH PROPERTIES, INC.

WITNESS:

By       /S/ Samuel A. Landy

_______________________

Samuel A. Landy

President

WITNESS:

By       /S/ Anna T. Chew

       

_______________________

    

Anna T. Chew

           

Employee

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