Document:

EX-10.12: EXECUTIVE CHANGE OF CONTROL AGREEMENT

 

EXECUTIVE CHANGE OF CONTROL AGREEMENT

October 3. 2001

	 	 	 	 	 
	 	 	
Julia Harper
	 	Executive
	
	
	
	

	 	 	
2 Othello Street	 	 
	
	
	
	

	 	 	
Lake Oswego. OR 97035	 	 
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
RadiSys Corporation	 	 
	
	
	
	

	 	 	
an Oregon corporation	 	 
	
	
	
	

	 	 	
5445 NE Dawson Creek Parkway	 	 
	
	
	
	

	 	 	
Hiilsboro . Oregon 97124
	 	the Company

         1.     Employment Relationship. Executive is currently employed by the Company
as Chief Financial Officer. Executive and the Company acknowledge
that either party may
terminate this employment relationship at any time and for any or no
reason, provided that each
party complies with the terms of this Agreement.

         2.     Release of Claims. In consideration for and as a condition precedent to
receiving the severance benefits outlined in this Agreement. Executive
agrees to execute a
Release of Claims in the form attached as Exhibit A (“Release of Claims”).
Executive promises
to execute and deliver the Release of Claims to the Company within the
later of (a) 45 days from
the date Executive receives the Release of Claims or (b) the last day of
Executive’s active
employment.

         3.     Additional Compensation Upon Certain Termination Events.

                  3.1.  Change of Control. In the event of a Termination of Executive’s
Employment (as defined in Section 6.1) other than for Cause (as defined in
Section 6.2) death or
Disability (as defined in Section 6.4). within 12 months following a
Change of Control (as
defined in Section 6.3 of this Agreement) or within three months preceding
a Change of Control,
and contingent upon Executive’s execution of the Release of Claims without
revocation, and
compliance with Section 8. Executive shall be entitled to the following
benefits:

                           (a) As severance pay and in lieu of any other compensation for periods
subsequent to the date of termination, the Company shall pay
Executive, in
a single payment after
employment has ended and eight days have passed following execution of the
Release of Claims
without revocation, an amount in cash equal to 12 months of Executive’s
annual base pay at the
rate in effect immediately prior to the date of termination.

                           (b) Executive is entitled to extend coverage under any group health
plan in which Executive and Executive’s dependents are enrolled at the
time of termination of

 

 

employment under the COBRA continuation laws for
the 18-month statutory
period, or so long
as Executive remains eligible under COBRA. The Company will pay
Executive a lump sum
payment in an amount equivalent to the reasonably estimated cost Executive
may incur to extend
for a period of 12 months under the COBRA continuation laws Executive’s
group health and
dental plan coverage in effect at the time of termination. Executive may
use this payment, as
well as any payment made under Section 3.1 (a), for such COBRA
continuation coverage or for
any other purpose.

                           (c) All stock options granted to the Executive under the Company’s
1995 Stock Incentive Plan or any other equity plan shall become
immediately exercisable in full
in accordance with the applicable provisions of the relevant option
agreement and plan, and such
stock options that are not Incentive Stock Options under the Internal
Revenue Code or 1986, as
amended, shall also be amended to permit the Executive to exercise such
stock options for a
period of 90 days after the effective date of the Executive’s
termination.

                  3.2  Notwithstanding
the foregoing, if the total payments and benefits to
be
paid to or for the benefit of Executive under this Agreement would cause
any portion of those
payments and benefits to be “parachute payments” as defined in section
280G(b)(2) of the
Internal Revenue Code of 1986, as amended, or any successor provision, the
total payments and
benefits to be paid to or for the benefit of Executive under this
Agreement shall be reduced to an
amount that would not cause any portion of those payments and benefits to
constitute “parachute
payments.”

         4.     Withholding; Subsequent Employment.

                  4.1  Withholding. All payments provided for in this Agreement are subject
to
applicable withholding obligations imposed by federal, state and local
laws and regulations.

                  4.2  Offset. The amount of any payment provided for in this Agreement shall
not be reduced, offset or subject to recovery by the Company by reason of
any compensation
earned by Executive as the result of employment by another employer after
termination.

         5.      Other Agreements. If that severance benefits are payable to Executive
under any
other agreement with the Company in effect at the time of termination
(including but not limited
to any employment agreement. but excluding for this purpose any stock
option agreement that
may provide for accelerated vesting or related benefits upon the
occurrence of a change in
control), the benefits provided in this Agreement shall not be payable to
Executive. Executive
may, however, elect to receive all of the benefits provided for in this
Agreement in lieu of all of
the benefits provided in all such other agreements. Any such election
shall be made with respect
to the agreements as a whole, and Executive cannot select some benefits
from one agreement and
other benefits from this Agreement.

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         6.     Definitions.

                  6.1      Termination of Executive’s Employment. Termination of Executive’s
Employment means that the Company has terminated Executive’s employment
with the
Company (including any subsidiary of the Company). Termination of
Executive’s Employment
shall also include termination by Executive by written notice to the
Company also for “Good
Reason” based on:

		
	 	         (a) a significant reduction by the Company or the
surviving company in Executive’s base pay as in effect
immediately prior to the Change of Control, other than a salary
reduction that is part of a general salary reduction affecting
employees generally:
	 
	 	         (b) a significant reduction by the Company or the
surviving company in total benefits available to Executive under
cash incentive, stock incentive and other employee benefit plans
after the Change of Control compared to the total package of such
benefits as in effect prior to the Change of Control:
	 
	 	         (c) The Company or the surviving company requires
Executive to be based more than 50 miles from where
Executive’s office is located immediately, prior to the Change of
Control except for required travel on company business to an
extent substantially consistent with the business travel obligations
which Executive undertook on behalf of the Company prior to the
Change of Control: or
	 
	 	         (d) The assignment of Executive to a different title, job
or responsibilities that results in a material decrease in the level of
responsibility of Executive with respect to the surviving company
after the Change of Control when compared to Executive’s level of
responsibility for the Company’s operations prior to the Change of
Control: provided, that Good Reason shall not exist if Executive
continues to have substantially the same or a greater general level
of responsibility with respect to the former operations of the
Company after the Change of Control as Executive had prior to the
Change of Control even if the former such operations are a
subsidiary or division of the surviving company.

                  6.2      Cause.
Termination of Executive’s Employment for “Cause” shall mean
termination upon (a) the willful and continued failure by Executive to perform
substantially
Executive’s reasonably assigned duties with the Company (other than any such
failure resulting
from Executive’s incapacity due to physical or mental illness) after a demand
for substantial
performance is delivered to Executive by the Board of Directors, the Chief
Executive Officer or

3

 

the President of the Company which specifically identifies the manner in which
the Board of
Directors or the Company believes that Executive has not substantially
performed Executive’s
duties or (b) the willful engaging by Executive in illegal conduct which is
materially and
demonstrably injurious to the Company. No act, or failure to act, on
Executive’s part shall be
considered “willful” unless done, or omitted to be done, by Executive without
reasonable belief
that Executive’s action or omission was in, or not opposed to, the best
interests of the Company.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the
Board of Directors shall be conclusively presumed to be done, or omitted to be
done, by
Executive in the best interests of the Company.

                  6.3      Change of Control. A Change of Control shall mean that one of the
following events has taken place:

		
	 	         (a)    The shareholders of the Company approve one of
the following:

		
	 	         (i) Any merger or statutory plan of exchange
involving the Company (“Merger”) in which the Company is not
the continuing or surviving corporation or pursuant to which
Common Stock would be converted into cash, securities or other
property, other than a Merger involving the Company in which the
holders of Common Stock immediately prior to the Merger
continue to represent more than 50 percent of the voting securities
of the surviving corporation after the Merger; or
	 
	 	         (ii) Any
sale, lease, exchange, or other transfer
(in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company.

		
	 	         (b)    A tender or exchange offer, other than one made by
the Company, is made for Common Stock (or securities convertible
into Common Stock) and such offer results in a portion of those
securities being purchased and the offeror after the consummation
of the offer is the beneficial owner (as determined pursuant to
Section 13(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)), directly or indirectly, of securities
representing more than 50 percent of the voting power of
outstanding securities of the Company.
	 
	 	         (c)    The Company receives a report on Schedule 13D of
the Exchange Act reporting the beneficial ownership by any person
of securities representing more than 50 percent of the voting power
of outstanding securities of the Company, except that if such
receipt shall occur during a tender offer or exchange offer

4

 

		
	 	         described in (b) above, a Change of Control shall not take place
until the conclusion of such offer.

Notwithstanding anything in the foregoing to the
contrary, no Change of
Control shall be deemed
to have occurred for purposes of this Agreement by virtue of any
transaction which results in
Executive, or a group of persons which includes Executive, acquiring,
directly, or indirectly,
securities representing 20 percent or more of the voting power of
outstanding securities of the
Company.

                  6.4      Disability. “Disability” means Executive’s absence from Executive’s
full-time duties with the Company for 180 consecutive days as a result of
Executive’s incapacity due
to physical or mental illness, unless within 30 days after notice of
termination by the Company
following such absence Executive shall have returned to the full-time
performance of
Executive’s duties. This Agreement does not apply if the Executive is
terminated due to
Disability.

         7.      Successors; Binding Agreement. This Agreement shall be binding on and
inure
to the benefit of the Company and its successors and assigns. This
Agreement shall inure to the
benefit of and be enforceable by Executive and Executive’s legal
representatives, executors,
administrators and heirs.

         8.      Resignation of Corporate Offices; Reasonable Assistance. Executive will
resign Executive’s office, if any, as a director, officer or trustee of
the Company, its subsidiaries
or affiliates and of any other corporation or trust of which Executive
serves as such at the request
of the Company, effective as of the date of termination of employment.
Executive further agrees
that, if requested by the Company or the surviving company following a
Change of Control,
Executive will continue his employment with the Company or the surviving
company for a
period of up to six months following the Change of Control in any capacity
requested, consistent
with Executive’s area of expertise, provided that the Executive receives
the same salary and
substantially the same benefits as in effect prior to the Change of
Control. Executive agrees to
provide the Company such written resignation(s) and assistance upon
request and that no
severance will be paid until after such resignation(s) or services are
provided.

         9.      Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Oregon.

         10.      Amendment. No provision of this Agreement may be modified unless such
modification is agreed to in a writing signed by Executive and the
Company.

5

 

         11.      Severability. If any of the provisions or terms of this Agreement
shall for any
reason be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any
other terms of this Agreement, and this Agreement shall be construed as if such
unenforceable
term had never been contained in this Agreement.

RADISYS CORPORATION

	 	 	 	 	 
	By:	 	
/s/ Terri Timberman

	 	/s/ Julia A. Harper

	
	
	
	

	 	 	
10/4/01
	 	10/4/01

6

 

EXHIBIT A

RELEASE OF CLAIMS

1.              Parties.

                  The
parties to Release of Claims (hereinafter “Release”)
are
                and
RadiSys Corporation, an Oregon corporation, as hereinafter defined.

                  1.1  Executive.

                  For
the purposes of this Release, “Executive” means
and his or her attorneys, heirs, executors, administrators, assigns, and
spouse.

                  1.2  The Company.

                           For
purposes of this Release the “Company” means RadiSys Corporation, an
Oregon corporation, its predecessors and successors, corporate
affiliates,
and all of each
corporation’s officers, directors, employees, insurers, agents, or
assigns, in their individual and
representative capacities.

2.    Background And Purpose.

                  Executive was employed by Company. Executive’s employment is ending
effective
                under the conditions described in Section 3.1 of the Executive
Severance
Agreement (“Agreement”).

                  The
purpose of this Release is to settle, and the parties hereby settle,
fully and
finally, any and all claims Executive may have against Company, whether
asserted or not, known
or unknown, including, but not limited to, claims arising out of or related
to Executive’s
employment, any claim for reemployment, or any other claims whether
asserted or not, known or
unknown, past or future, that relate to Executive’s employment,
reemployment, or application for
reemployment.

3.    Release.

                  Executive
waives, acquits and forever discharges Company from any
obligations
Company has and all claims Executive may have including but not limited to
obligations and/or
claims arising from the Agreement or any other document or oral agreement
relating to
employment compensation, benefits, severance or post-employment issues.
Executive, hereby
releases Company from any, and all claims, demands, actions, or causes of
action, whether known
or unknown, arising from or related in any way to any employment of or
past or future failure or
refusal to employ Executive by Company, or any other past or future claim
(except as reserved by
this Release or where expressly prohibited by law) that relates in any way to
Executive’s

A- 1

 

employment, compensation, benefits, reemployment, or application for
employment, with the
exception of any claim Executive may have against Company for enforcement
of this Release.
This release includes any, and all claims, direct or indirect, which might
otherwise be made under
any applicable local, state or federal authority, including but not
limited to any claim arising
under state statutes dealing with employment, discrimination in
employment, Title VII of the
Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With
Disabilities Act, the
Family and Medical Leave Act of 1993, the Equal Pay Act of 1963, Executive
Order 11246, the
Rehabilitation Act of 1973, the Uniformed Services Employment and
Reemployment Rights Act
of 1994, the Age Discrimination in Employment Act, the Fair Labor
Standards Act, state wage
and hour statutes, all as amended, any regulations under such
authorities,
and any applicable
contract, tort, or common law theories.

         3.1  Reservations Of Rights.

                  This Release shall not affect any rights which Executive may have under
any
medical insurance, disability plan, workers- compensation, unemployment
compensation,
indemnifications, applicable company stock incentive plan(s), or the
401(k) plan maintained by
the Company.

         3.2  No Admission Of Liability.

                  It is understood and agreed that the acts done and evidenced hereby and
the
release granted hereunder is not an admission of liability on the part of
Executive or Company,
by whom liability has been and is expressly denied.

4.    Consideration To Executive.

                  After
receipt of this Release signed by Executive, and the expiration of
the seven-day revocation period provided by the Older Workers Benefit Protection
Act without Executive’s revocation. Company shall pay the Executive the severance benefits as provided
in Section 3 of
the Agreement.

5.    No Disparagement

                           Executive agrees that henceforth Executive will not disparage or make
false or
adverse statements about Company. The Company should report to Executive any
actions or
statements that are attributed to Executive that the Company believes are
disparaging. The
Company may take actions consistent with breach of this Release should it
determine that
Executive has disparaged or made false or adverse statements about Company. The
Company
agrees to follow the applicable policy(ies) regarding release of employment
reference
information.

A- 2

 

6.    Confidentiality, Proprietary, Trade Secret And Related Information

                           Executive acknowledges the duty and agrees not to make unauthorized use or
disclosure of any confidential, proprietary or trade secret information
learned as an employee
about Company, its products, customers and suppliers, and covenants not to
breach that duty.
Moreover, Executive acknowledges that, subject to the enforcement
limitations of applicable
law, the Company reserves the right to enforce the terms of Executive’s
Employee Agreement
with Company and any paragraph(s) therein. Should Executive, Executive’s
attorney or agents
be requested in any judicial, administrative, or other proceeding to
disclose confidential,
proprietary or trade secret information Executive learned as an employee of
Company, Executive
shall promptly notify the Company of such request by the most expeditious
means in order to
enable the Company to take any reasonable and appropriate action to limit
such disclosure.

7.    Scope Of Release

                           The
provisions of this Release shall be deemed to obligate, extend to, and
inure to
the benefit of the parties: Company’s parents, subsidiaries,
affiliates,
successors, predecessors,
assigns, directors, officers, and employees; and each parties
insurers,
transferees, grantees,
legatees, agents and heirs, including those who may assume any and all of the
above-described
capacities subsequent to the execution and effective date of this Release.

8.    Opportunity For Advice Of Counsel.

                           Executive acknowledges that Executive has been encouraged to seek advice
of
counsel with respect to this Release and has had the opportunity to do so.

9.    Entire Release.

                           This Release and the Agreement signed by Executive contain the entire
agreement
and understanding between the parties and, except as reserved in
paragraph 3,
supersede and
replace all prior agreements, written or oral, prior negotiations and proposed
agreements, written
or oral. Executive and Company acknowledge that no other party, nor agent nor
attorney of any
other party, has made any promise, representation, or warranty, express or
implied, not contained
in this Release concerning the subject matter of this Release to induce this
Release, and
Executive and Company acknowledge that they have not executed this Release in
reliance upon
any such promise, representation, or warranty not contained in this
Release.

A- 3

 

10.    Severability.

                           Every provision of this Release is intended to be severable. In the event
any term
or provision of this Release is declared to be illegal or invalid for any
reason whatsoever by a
court of competent jurisdiction or by final and unappealed order of an
administrative
agency of competent jurisdiction, such illegality or invalidity should
not affect the balance of the
terms and provisions of this Release, which terms and provisions shall
remain binding and
enforceable.

11.    Parties May Enforce Release.

                           Nothing in this Release shall operate to release or discharge any parties
to this
Release or their successors, assigns, legatees, heirs, or personal
representatives from any rights,
claims, or causes of action arising out of, relating to, or connected with
a breach of any obligation
of any party contained in this Release.

12.    Costs And Attorney’s Fees.

                           In
the event of any administrative or civil action to enforce the
provisions of this
Release, the Company shall pay Executive’s reasonable
attorney’s fees through
trial and/or on
appeal.

13.    Acknowledgment.

                           Executive acknowledges that the Release provides severance pay and
benefits
which the Company would otherwise have no obligation to
provide.

A- 4

 

14.    Revocation.

                           As
provided by the Older Workers Benefit Protection Act, Executive is
entitled to
have forty-five (45) days to consider this Release, For a period of seven
(7) days from execution
of this Release. Executive may revoke this Release. Upon receipt of
Executive’s signed Release
and the end of the revocation period, payment by Company as described in
paragraph 4 above
will be forwarded by mail in a timely manner as provided herein.

	 	 	 	 	 
	
	 	
Dated:
	 	                        ,                        
	
	
	
	

	[Name of Executive]	 	 	 	 

	 
	STATE OF OREGON )
	
	
	
	

	                                      ) ss.
	
	
	
	

	County of                    )

         Personally appeared the above named                                       and
acknowledged the foregoing instrument to be his or her voluntary act and deed.

	 	 	 
	Before me:	 	 
	
	
	
	

	 	 	

Notary Public for                                              
	
	
	
	

	 	 	
My commission expires:                                

COMPANY

	 	 	 	 	 
	By:	 	
                                                 
	 	Dated:                                                 
	
	
	
	

	Its:	 	
                                                 	 	 
	
	
	
	

	 	 	
On Behalf of “Company”	 	 

A- 5<PAGE>
                                                                  CONFORMED COPY

                               U.S. $6,000,000,000

                            NATIONAL RURAL UTILITIES
                         COOPERATIVE FINANCE CORPORATION

                           Medium-Term Notes, Series C

                           CALCULATION AGENT AGREEMENT

                         This AGREEMENT dated March 27, 2002, between National
                  Rural Utilities Cooperative Finance Corporation, a District of
                  Columbia cooperative association (hereinafter called the
                  "Issuer"), whose principal office is at Woodland Park, 2201
                  Cooperative Way, Herndon, Virginia 20171, and Lehman Brothers
                  Inc., a Delaware corporation (hereinafter sometimes called the
                  "Calculation Agent" which term shall, unless the context shall
                  otherwise require, include its successors and assignees),
                  whose principal office is at 745 Seventh Avenue, New York, New
                  York 10019.

            WHEREAS (A) The Issuer proposes to issue from time to time an
aggregate principal amount of up to $6,000,000,000 of Medium-Term Notes, Series
C (the "Notes") entitled to the benefits of the Indenture dated as of December
15, 1987 (as supplemented by the First Supplemental Indenture dated as of
October 1, 1990, and as it may be supplemented or amended from time to time, the
"Indenture"), between the Issuer and State Street Bank and Trust Company, as
successor trustee;

            (B) Each Note will bear interest at either (a) a fixed rate or (b) a
floating rate determined by reference to an interest rate formula (the "Floating
Rate Notes");

            NOW IT IS HEREBY AGREED THAT,

            1. Terms defined in the "Description of Debt Securities" and
"Description of the Medium-Term Notes" shall bear the same meanings herein
unless the context otherwise requires. The "Description of Debt Securities"
means the terms and conditions of the Notes as set forth in the Prospectus,
dated March 22, 2002, as supplemented by a Prospectus Supplement, dated March
25, 2002, relating to the Notes. The "Description of the Medium-Term Notes"
means the terms and conditions of the Notes as set forth in the Prospectus
Supplement, dated March 25, 2002, relating to the
<PAGE>
                                                                               2

Notes. Such Prospectus Supplement will be supplemented or amended by one or more
Pricing Supplements (each a "Supplement") setting forth additional terms and
conditions of the Notes.

            2. The Issuer hereby appoints Lehman Brothers Inc. as Calculation
Agent for the Notes, upon the terms and subject to the conditions herein
mentioned, and Lehman Brothers Inc. hereby accepts such appointment. The
Calculation Agent shall act as an agent of the Issuer for the purpose of
determining the interest rate of the Floating Rate Notes in accordance with the
Description of the Medium-Term Notes and the provisions of this Agreement.

            3. The Calculation Agent shall calculate the applicable interest
rates for the Floating Rate Notes in accordance with the provisions set forth in
the Prospectus Supplement relating to the Notes dated March 25, 2002, under the
heading "Description of the Medium-Term Notes--Floating Rate Notes" which
provisions are incorporated by reference herein as if set forth in full in this
Agreement.

            4. In no event shall the interest rate be less than the floor, if
any, or more than the ceiling, if any, designated in the applicable Supplement.

            5. The Calculation Agent will, as soon as practicable after (i)
3:00 p.m., New York City time, on the Calculation Date pertaining to each
Interest Determination Date relating to Commercial Paper Rate Notes, Fed Funds
Rate Notes, CD Rate Notes and Treasury Rate Notes or (ii) 11:00 a.m., London
time, on each Interest Determination Date relating to LIBOR Notes, determine
(and notify the Issuer and the Trustee of) the interest rate applicable during
the next succeeding interest period (if the interest rate cannot be determined
in accordance with the provisions set forth in the Prospectus Supplement
relating to the Notes dated March 25, 2002, in clause (i) under the heading
"Description of the Medium-Term Notes--Floating Rate Notes--LIBOR", the
Calculation Agent agrees to determine (and notify the Issuer and Trustee of) the
interest rate in accordance with the provisions in clause (ii) of such heading).

            6. As soon as determined after each Interest Determination Date, the
Calculation Agent will cause to be forwarded to the Issuer, the Trustee and the
Paying Agent information regarding the interest rates and the interest periods
for each interest period and the relevant Interest Payment Date.
<PAGE>
                                                                               3

            7. The Issuer will pay such compensation as shall be agreed upon and
the expenses, including reasonable counsel fees, properly incurred by the
Calculation Agent in connection with its duties hereunder, upon receipt of such
invoices as the Issuer shall reasonably require.

            8. The Issuer will indemnify the Calculation Agent against any
losses, liabilities, costs, claims, actions or demands which it may incur or
sustain or which may be made against it in connection with its appointment or
the exercise of its powers and duties hereunder as well as the reasonable costs,
including the expenses and fees of counsel in defending any claim, action or
demand, except such as may result from the negligence, wilful default or bad
faith of the Calculation Agent or any of its employees. The Calculation Agent
shall incur no liability and shall be indemnified and held harmless by the
Issuer for, or in respect of, any actions taken or suffered to be taken in good
faith by the Calculation Agent in reliance upon (i) the written opinion or
advice of counsel or (ii) written instructions from the Issuer.

            9. The Calculation Agent accepts its obligations herein (and agrees
to act in good faith in the performance of its obligations) set forth upon the
terms and conditions hereof, including the following, to all of which the Issuer
agrees:

            (i) in acting under this Agreement and in connection with the
      Notes, the Calculation Agent, acting as agent for the Issuer, does not
      assume any obligation towards, or any relationship of agency or trust for
      or with, any of the holders of the Notes;

            (ii) unless herein otherwise specifically provided, any order,
      certificate, notice, request or communication from the Issuer made or
      given under any provision of this Agreement shall be sufficient if signed
      by any person whom the Calculation Agent reasonably believes to be a duly
      authorized officer of the Issuer;

            (iii) the Calculation Agent shall be obligated to perform only such
      duties as are set forth specifically herein and any duties necessarily
      incidental thereto; and

            (iv) the Calculation Agent shall be protected and shall incur no
      liability for or in respect of any action taken or omitted to be taken by
      it in reliance
<PAGE>
                                                                               4

      upon anything contained in a Floating Rate Note, the Description of Debt
      Securities, the Description of the Medium-Term Notes or one or more
      Prospectus Supplements.

            10. (A) The Issuer agrees to notify the Calculation Agent at least
five London Business Days prior to the issuance of any LIBOR Note. The
Calculation Agent agrees to select four Reference Banks prior to the issuance of
the first LIBOR Note by the Issuer; to make all appropriate arrangements for
such banks to act as Reference Banks; and to notify the Issuer, the Trustee and
each of the Agents as to the names and addresses of such Reference Banks. The
Calculation Agent covenants that, for so long as it is required so to do in
accordance with the applicable Description of the Medium-Term Notes, it shall
ensure that there shall at all times be four Reference Banks. Forthwith upon any
change in the identity of the Reference Banks, the Calculation Agent shall
notify the Issuer, the Trustee and the Agents of such change. If fewer than two
Reference Banks are quoting, the Calculation Agent agrees to select three major
banks in The City of New York in accordance with the applicable Description of
the Medium-Term Notes. The Calculation Agent shall not be responsible to the
Issuer or any third party for any failure of the Reference Banks to fulfill
their duties or meet their obligations as Reference Banks or as a result of the
Calculation Agent having acted (except in the event of negligence, wilful
default or bad faith) on any certificate given by any Reference Bank which
subsequently may be found to be incorrect.

            (B) If necessary, in accordance with the provisions set forth in
the Prospectus Supplement relating to the Notes dated March 25, 2002, under the
Heading "Description of the Medium-Term Notes--Floating Rate Notes--Prime Rate",
the Calculation Agent agrees to select a substitute major bank or trust company
(meeting the requirements specified under such heading). The Calculation Agent
shall not be responsible to the Issuer or any third party for the failure of
such bank or trust company to fulfill any duty or obligation contemplated under
such heading.

            (C) Except as provided below, the Calculation Agent may at any time
resign as Calculation Agent by giving written notice to the Issuer and the
Trustee of such intention on its part, specifying the date on which its
desired resignation shall become effective, provided that such notice shall be
given not less than two months prior to the said effective date unless the
Issuer and the Trustee otherwise agree in writing. Except as provided below, the
<PAGE>
                                                                               5

Calculation Agent may be removed by the filing with it of an instrument in
writing signed by the Issuer specifying such removal and the date when it shall
become effective (such effective date being at least 20 days after said filing).
Such resignation or removal shall take effect upon:

            (i) the appointment by the Issuer as hereinafter provided of a
      successor Calculation Agent approved by the Trustee, which shall be a
      responsible financial firm or institution having an established place of
      business in The City of New York;

            (ii) the acceptance of such appointment by such successor
      Calculation Agent; and

            (iii) the giving of notice of such appointment to the holders of the
      Notes, provided that if the Calculation Agent fails duly to establish the
      amount of interest for any interest period, such removal will take effect
      immediately upon such appointment of, and acceptance thereof by, a
      successor Calculation Agent approved by the Trustee and qualified as
      aforesaid, in which event notice of such appointment shall be given to the
      holders of the Notes as soon as practicable thereafter. Upon its
      resignation or removal becoming effective, the retiring Calculation Agent
      shall be entitled to the payment of its compensation and the reimbursement
      of all expenses incurred by such retiring Calculation Agent pursuant to
      paragraph 7 hereof.

            (D) If at any time the Calculation Agent shall resign or be removed,
or shall become incapable of acting or shall be adjudged bankrupt or insolvent,
or liquidated or dissolved, or an order is made or an effective resolution is
passed to wind up the Calculation Agent, or if the Calculation Agent shall file
a voluntary petition in bankruptcy or make an assignment for the benefit of
its creditors, or shall consent to the appointment of a receiver,
administrator or other similar official of all or any substantial part of its
property, or shall admit in writing its inability to pay or meet its debts as
they mature, or if a receiver, administrator or other similar official of the
Calculation Agent or of all or any substantial part of its property shall be
appointed, or if any order of any court shall be entered approving any petition
filed by or against the Calculation Agent under the provisions of any applicable
bankruptcy or insolvency law, or if any public officer shall take charge or
control of the Calculation Agent or its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then a successor Calculation Agent,
approved by the Trustee, shall be appointed by the Issuer by an instrument in
writing filed with the successor Calculation Agent. Upon the appointment as
aforesaid of a successor Calculation
<PAGE>
                                                                               6

Agent and acceptance by the latter of such appointment and (except in cases of
removal for failure to establish the amount of interest) the giving of notice to
the holders of the Notes, the former Calculation Agent shall cease to be
Calculation Agent hereunder.

            (E) Any successor Calculation Agent appointed hereunder shall
execute and deliver to its predecessor and the Issuer an instrument, in the form
acceptable to the Trustee, accepting such appointment hereunder, and thereupon
such successor Calculation Agent, without any further act, deed or conveyance,
shall become vested with all the authority, rights, powers, trusts,
immunities, duties and obligations of such predecessor with like effect as if
originally named as the Calculation Agent hereunder, and such predecessor
shall thereupon become obliged to transfer and deliver, and such successor
Calculation Agent shall be entitled to receive, copies of any relevant records
maintained by such predecessor Calculation Agent.

            (F) Any corporation into which the Calculation Agent may be merged
or converted or any corporation with which the Calculation Agent may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Calculation Agent shall be a party shall, to the
extent permitted by applicable law and provided that it shall be a responsible
financial firm or institution having an established place of business in The
City of New York, be the successor Calculation Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. Notice of any such merger, conversion or
consolidation shall forthwith be given to the Issuer and the Trustee.

            11. Any notice required to be given hereunder shall be delivered in
person, sent by letter or telex or communicated by telephone (subject, in the
case of communication by telephone, to confirmation dispatched within two
business days by letter or telex), in the case of the Issuer, to it at Woodland
Park, 2201 Cooperative Way, Herndon, Virginia 20171, Attention: Chief Financial
Officer; in the case of the Calculation Agent, to it at 745 Seventh Avenue, New
York, New York 10019, Attention: Medium-Term Note Department; and in the case of
the Trustee, to it at State Street Bank and Trust Company, 61 Broadway, 15th
Floor, New York, New York 10006, Attention: Trust Administrator or, in any case,
to any other address of which
<PAGE>
                                                                               7

the party receiving notice shall have notified the party giving such notice in
writing.

            12. This Agreement may be amended only by a writing duly executed
and delivered by each of the parties signing below.

            13.THE PROVISIONS OF THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

            14. This Agreement may be executed in counterparts and the executed
counterparts shall together constitute a single instrument.
<PAGE>
                                                                               8

               IN WITNESS WHEREOF, this Agreement has been executed and
delivered as of the day and year first above written.

                        NATIONAL RURAL UTILITIES COOPERATIVE
                        FINANCE CORPORATION,

                              by /s/ Steven L. Lilly
                                 -----------------------------------------------
                                 Name:  Steven L. Lilly
                                 Title: Sr. Vice President &
                                             Chief Financial Officer

                        LEHMAN BROTHERS INC.,

                             by  /s/ Gregory J. Hall
                                 -----------------------------------------------
                                 Name:  Gregory J. Hall
                                 Title: Managing Director

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