Document:

bond_purchaseagrmt.htm

    RUS

    

    

    

    SERIES
C BOND PURCHASE AGREEMENT

    

    by and
among

    

    FEDERAL
FINANCING BANK,

    

    NATIONAL
RURAL UTILITIES COOPERATIVE FINANCE CORPORATION,

    

    and

    

    ADMINISTRATOR of the RURAL UTILITIES
SERVICE

    

    

     

    

    made as
of

    

    September
19, 2008

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        RUS

      

    

     

    
      
        	
                TABLE
      OF CONTENTS

              
	 
      	
                Page

              
	 
      
	
                TITLE/PARTIES

              	 
      	
                1

              
	 
      	 
      	 
      
	
                RECITAL
      PARAGRAPHS

              	 
      	
                1

              
	 
      
	
                ARTICLE
      1  DEFINITIONS AND RULES OF INTERPRETATION

              	
                2

              
	 
      	 
      	 
      
	 
      	
                Section
      1.1  Definitions

              	
                2

              
	 
      	 
      	 
      
	 
      	
                Section
      1.2  Rules of Interpretation

              	
                6

              
	 
      	 
      	 
      
	
                ARTICLE
      2  FFB COMMITMENT TO PURCHASE THE BOND

              	
                6

              
	 
      	 
      	 
      
	
                ARTICLE
      3  COMMITMENT CONDITIONS

              	
                6

              
	 
      
	 
      	
                Section
      3.1  Commitment Amount Limit

              	
                6

              
	 
      	 
      	 
      
	 
      	
                Section
      3.2  Borrower Instruments

              	
                6

              
	 
      	 
      	 
      
	 
      	
                Section
      3.3  RUS Instruments

              	
                7

              
	 
      	 
      	 
      
	
                ARTICLE
      4  OFFER OF THE BOND FOR PURCHASE

              	
                7

              
	 
      	 
      	 
      
	 
      	
                Section
      4.1  Delivery of Borrower Instruments to RUS

              	
                7

              
	 
      	 
      	 
      
	 
      	
                Section
      4.2  Delivery of Principal Instruments by RUS to

              	 
      
	 
      	
                FFB

              	
                8

              
	 
      	 
      	 
      
	
                ARTICLE
      5  PURCHASE OF THE BOND BY FFB

              	
                8

              
	 
      	 
      	 
      
	 
      	
                Section
      5.1  Acceptance or Rejection of Principal

              	 
      
	 
      	
                Instruments

              	
                8

              
	 
      	 
      	 
      
	 
      	
                Section
      5.2  Purchase

              	
                9

              
	 
      	 
      	 
      
	
                ARTICLE
      6  LOST, STOLEN, DESTROYED, OR MUTILATED BOND

              	
                9

              
	 
      	 
      	 
      
	 
      	
                Section
      6.1  Borrower's Agreement

              	
                9

              
	 
      	 
      	 
      
	 
      	
                Section
      6.2  RUS's Agreement

              	
                9

              
	 
      	 
      	 
      
	 
      	
                Section
      6.3  FFB's Agreement

              	
                10

              
	 
      	 
      	 
      
	
                ARTICLE
      7  ADVANCES

              	
                10

              
	 
      	 
      	 
      
	 
      	
                Section
      7.1  Commitment

              	
                10

              
	 
      	 
      	 
      
	 
      	
                Section
      7.2  Treasury Policies Applicable to Advances

              	
                10

              

      

      
        
           

        

        
          BOND
PURCHASE AGREEMENT - page i

          
            

          

        

        
           

          RUS

        

      

      

      
        	 
      	
                Section
      7.3  Conditions to Making Advances

              	
                11

              
	 
      	 
      	 
      
	 
      	
                Section
      7.4  Amount and Timing of Advances

              	
                13

              
	 
      	 
      	 
      
	 
      	
                Section
      7.5  Type of Funds and Means of Advance

              	
                14

              
	 
      	 
      	 
      
	 
      	
                Section
      7.6  Interest Rate Applicable to Advances

              	
                14

              
	 
      	 
      	 
      
	 
      	
                Section
      7.7  Interest Rate Confirmation Notices

              	
                15

              
	 
      	 
      	 
      
	 
      	
                Section
      7.8  Borrower's Agreement

              	
                15

              
	 
      	 
      	 
      
	
                ARTICLE
      8  REPRESENTATIONS AND WARRANTIES BY THE
BORROWER

              	
                15

              
	 
      	 
      	 
      
	
                ARTICLE
      9  BILLING BY FFB

              	
                16

              
	 
      	 
      	 
      
	 
      	
                Section
      9.1  Billing Statements to the Borrower and

              	 
      
	 
      	
                RUS

              	
                16

              
	 
      	 
      	 
      
	 
      	
                Section
      9.2  Failure to Deliver or Receive Billing

              	 
      
	 
      	
                Statements
      No Release

              	
                16

              
	 
      	 
      	 
      
	 
      	
                Section
      9.3  FFB Billing Determinations Conclusive

              	
                16

              
	 
      	 
      	 
      
	
                ARTICLE
      10  PAYMENTS TO FFB AND RUS

              	
                17

              
	 
      	 
      	 
      
	 
      	
                Section
      10.1  Manner and Timing of Payment

              	
                17

              
	 
      	 
      	 
      
	 
      	
                Section
      10.2  Application of Payments

              	
                17

              
	 
      	 
      	 
      
	
                ARTICLE
      11  BORROWER'S PRIVILEGES TO PREPAY OR REFINANCE

              	 
      
	 
      	
                ADVANCES

              	
                17

              
	 
      	 
      	 
      
	 
      	
                Section
      11.1  Automatic Application or Required

              	 
      
	 
      	
                Election

              	
                17

              
	 
      	 
      	 
      
	 
      	
                Section
      11.2  "Market Value Prepayment/Refinancing

              	 
      
	 
      	
                Privilege"

              	
                19

              
	 
      	 
      	 
      
	 
      	
                Section
      11.3  "Fixed Premium Prepayment/Refinancing

              	 
      
	 
      	
                Privilege"

              	
                22

              
	 
      	 
      	 
      
	 
      	
                Section
      11.4  New Notices and Billing Statements After

              	 
      
	 
      	
                Refinancings

              	
                23

              
	 
      	 
      
	
                ARTICLE
      12  BOND SERVICING AND RELATED DUTIES AND RIGHTS

              	
                23

              
	 
      	 
      	 
      
	 
      	
                Section
      12.1  Custody of Bond

              	
                23

              
	 
      	 
      	 
      
	 
      	
                Section
      12.2  RUS Duties as Bond Servicer and Guarantor

              	
                23

              

      

      
        
           

        

        
          BOND
PURCHASE AGREEMENT - page ii

          
            

          

        

        
           

          RUS

        

      

      

      
        	 
      	
                Section
      12.3  Bond Servicing Fee

              	
                24

              
	 
      	 
      	 
      
	 
      	
                Section
      12.4  Liability and Rights of RUS as Guarantor

              	
                24

              
	 
      	 
      	 
      
	 
      	
                Section
      12.5  Bond Payments Made by RUS

              	
                24

              
	 
      	 
      	 
      
	
                ARTICLE
      13  AGREEMENTS AND OTHER RIGHTS OF RUS

              	
                26

              
	 
      	 
      	 
      
	 
      	
                Section
      13.1  Delivery of Replacement Certificates

              	 
      
	 
      	
                Specifying
      Authorized RUS Officials

              	
                26

              
	 
      	 
      	 
      
	 
      	
                Section
      13.2  Certain Agreements of RUS and FFB

              	
                26

              
	 
      	 
      	 
      
	 
      	
                Section
      13.3  Reimbursement

              	
                27

              
	 
      	 
      	 
      
	 
      	
                Section
      13.4  Effect of RUS's Nonperformance

              	
                27

              
	 
      	 
      	 
      
	 
      	
                Section
      13.5  Right of RUS to Purchase Advances and

              	
                27

              
	 
      	 
      	 
      
	
                ARTICLE
      14  EFFECTIVE DATE, TERM, SURVIVAL

              	
                28

              
	 
      	 
      	 
      
	 
      	
                Section
      14.1  Effective Date

              	
                28

              
	 
      	 
      	 
      
	 
      	
                Section
      14.2  Term of Commitment to Make Advances

              	
                28

              
	 
      	 
      	 
      
	 
      	
                Section
      14.3  Survival

              	
                28

              
	 
      	 
      	 
      
	
                ARTICLE
      15  MISCELLANEOUS

              	
                29

              
	 
      	 
      	 
      
	 
      	
                Section
      15.1  Notices

              	
                29

              
	 
      	 
      	 
      
	 
      	
                Section
      15.2  Amendments

              	
                31

              
	 
      	 
      	 
      
	 
      	
                Section
      15.3  Successors and Assigns

              	
                31

              
	 
      	 
      	 
      
	 
      	
                Section
      15.4  Sale or Assignment of Bond

              	
                31

              
	 
      	 
      	 
      
	 
      	
                Section
      15.5  Forbearance Not a Waiver

              	
                33

              
	 
      	 
      	 
      
	 
      	
                Section
      15.6  Rights Confined to Parties

              	
                33

              
	 
      	 
      	 
      
	 
      	
                Section
      15.7  Governing Law

              	
                33

              
	 
      	 
      	 
      
	 
      	
                Section
      15.8  Severability

              	
                34

              
	 
      	 
      	 
      
	 
      	
                Section
      15.9  Headings

              	
                34

              
	 
      	 
      	 
      
	 
      	
                Section
      15.10  Counterparts

              	
                34

              
	 
      	 
      	 
      
	
                SIGNATURES

              	
                35

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

      

       

    

    
      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page iii

          
            

          

        

        
          
          

          RUS

        

      

      EXHIBIT
A  FORM OF ADVANCE REQUEST

      

      EXHIBIT
B  FORM OF BOND

      

      EXHIBIT
C  FORM OF CERTIFICATE SPECIFYING AUTHORIZED BORROWER

       OFFICIALS

      

      EXHIBIT
D  FORM OF CERTIFICATE SPECIFYING AUTHORIZED RUS

       OFFICIALS

      

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

       INSTRUMENTS

      

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

      

      EXHIBIT
G  FORM OF RUS CERTIFICATE

      

      EXHIBIT
H  FORM OF RUS GUARANTEE

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page iv

          
            

          

        

        
          
          

          RUS

        

      

    

     

    
      SERIES C BOND PURCHASE AGREEMENT
made as of September 19, 2008, by and among the FEDERAL FINANCING BANK ("FFB"), a body
corporate and instrumentality of the United States of America, the NATIONAL RURAL UTILITIES COOPERATIVE
FINANCE CORPORATION (the "Borrower"), a
cooperative association organized and existing under the laws of the District of
Columbia, and the ADMINISTRATOR of the RURAL UTILITIES SERVICE
("RUS"), a
Rural Development agency of the United States Department of
Agriculture.

      

      

      

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

      

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

      

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

      

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

      

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

      

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

      

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

       

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 1

          
            

          

        

        
          
          

          RUS

        

      

      ARTICLE
1

      

      DEFINITIONS
AND RULES OF INTERPRETATION

      

      

      Section 1.1  Definitions.  

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 2

          
            

          

        

        
          
          

          RUS

        

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      "Governmental
Authority" shall mean any federal, state, county, municipal, or regional
authority, or any other entity of a similar nature, exercising any executive,
legislative, judicial, regulatory, or administrative function of
government.    

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 3

          
            

          

        

        
          
          

          RUS

        

      

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

      

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

      

      "Loan Commitment
Amount" shall mean $500,000,000.00.

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 4

          
            

          

        

        
          
          

          RUS

        

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      Section 1.2  Rules of
Interpretation.  

      

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

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 5

          
            

          

        

        
          
          

          RUS

        

      

      

      ARTICLE
2

      

      FFB
COMMITMENT TO PURCHASE THE BOND

      

      

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

      

      

      ARTICLE
3

      

      COMMITMENT
CONDITIONS

      

      

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

      

      Section
3.1  Commitment Amount
Limit.

      

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

      

      Section
3.2  Borrower
Instruments.

      

      3.2.1  Borrower
Instruments.  FFB shall have received from the Borrower the
following instruments (such instruments being, collectively, the "Borrower
Instruments"):

      

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

      

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

      

      3.2.2  Opinion of Borrower's
Counsel re: Borrower Instruments.  FFB shall have received from
the Borrower an Opinion of Borrower's Counsel re: Borrower
Instruments.

      

      3.2.3  Certificate Specifying
Authorized Borrower Officials.  FFB shall have received from
the Borrower a completed and signed Certificate Specifying Authorized Borrower
Officials.

      

      Section
3.3  RUS
Instruments.

      

      3.3.1  RUS
Instruments.  FFB shall have received from RUS the following
instruments (such instruments being, collectively, the "RUS
Instruments"):

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 6

          
            

          

        

        
          
          

          RUS

        

      

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

      

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

      

      (c) an
original RUS Certificate relating to the RUS Guarantee and other matters, duly
executed by RUS.

      

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

      

      3.3.3  Certificate Specifying
Authorized RUS Officials. FFB shall have received from RUS a completed
and signed Certificate Specifying Authorized RUS Officials.

      

      

      ARTICLE
4

      

      OFFER
OF THE BOND FOR PURCHASE

       

      

      The Bond
that is to be offered to FFB for purchase under this Agreement shall be offered
in accordance with the procedures described in this article 4.

      

      Section
4.1  Delivery of Borrower
Instruments to RUS.  

      

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

      

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

      

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

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 7

          
            

          

        

        
          
          

          RUS

        

      

      (c) a
completed and signed Certificate Specifying Authorized Borrower
Officials.

      

      Section
4.2  Delivery of Principal
Instruments by RUS to FFB.  

      

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

      

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

      

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

      

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

      

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

      

      ARTICLE
5

      

      PURCHASE
OF THE BOND BY FFB

       

      Section 5.1  Acceptance
or Rejection of Principal Instruments.  

      

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

      

      (a) an
acceptance notice, which notice shall:

      

      (1) state
that the Principal Instruments meet the terms and conditions detailed in
article 3 of this Agreement, or are otherwise acceptable to FFB;
and

      

      (2)
assign a Bond Identifier to the Bond for use by the Borrower and RUS in all
communications to FFB making reference to the Bond; or

      

      (b) a
rejection notice, which notice shall state that one or more of the Principal
Instruments does not meet the terms and conditions of this Agreement and specify
how such instrument or instruments does not meet the terms and conditions of
this Agreement.

      

      Section 5.2  Purchase.  

      

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

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 8

          
            

          

        

        
          
          

          RUS

        

      

      

      ARTICLE
6

      

      LOST,
STOLEN, DESTROYED, OR MUTILATED BOND

       

      Section 6.1  Borrower's
Agreement.

      

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

      

      Section
6.2  RUS's
Agreement.

      

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

      

      Section
6.3  FFB's
Agreement.

      

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

       

      ARTICLE
7

      

      ADVANCES

      Section 7.1  Commitment.  

      

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

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 9

          
            

          

        

        
          
          

          RUS

        

      

      Section 7.2  Treasury
Policies Applicable to Advances.  

      

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

      

      (a) each
Advance will be requested by the Borrower, and each Advance Request will be
approved by RUS, only at such time and in such amount as shall be necessary to
meet the immediate payment or disbursing need of the Borrower;

      

      (b)
Advances for investment purposes, other than to make loans permitted by the
Guarantee Authority, will not be requested by the Borrower or approved by RUS;
and

      

      (c) all
interest earned on any lawful and permitted investment of Advances, other than
loans permitted by the Guarantee Authority to be made, in excess of the interest
accrued on such Advances, the fee payable under paragraph 9 of the Bond accrued
on such Advances, and the guarantee fee payable on such Advances under article
IV of the Bond Guarantee Agreement, will be remitted to FFB.

      

      Section
7.3  Conditions to Making
Advances.

      

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

      

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

      

      (a) shall
specify, among other things:

      

      (1) the
particular "Bond Identifier" that FFB assigned to this Bond (as provided in
section 5.1 of this Agreement;

      

      (2) the
particular amount of funds that the Borrower requests to be advanced (such
amount being the "Requested Advance
Amount" for the respective Advance);

      

      (3) the
particular calendar date that the Borrower requests to be the date on which the
respective Advance is to be made (such date being the "Requested Advance
Date" for such Advance), which date: 

      

      (A) must
be a Business Day; and

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 10

          
            

          

        

        
          
          

          RUS

        

      

      (B) shall
be a date that meets the advance notice requirements prescribed in section
7.3.2(b) of this Agreement;

      

      (4) the
particular bank account to which the Borrower requests that the respective
Advance be made; and

      

      (5) the particular calendar date that
the Borrower selects to be the date on which the respective Advance is to mature
(such date being the "Maturity Date" for
such Advance), which date must meet all of the following criteria:

      

      (A) the Maturity Date for the
respective Advance must be a "Payment Date" (as that term is defined in
paragraph 7 of the Bond);

      

      (B) the Maturity Date for the
respective Advance may not be a date that will occur after the twentieth
anniversary of the Requested Advance Date specified in the respective Advance
Request;

      

      (C) the Maturity Date for the
respective Advance may not be a date that will occur after the particular date
specified on page 1 of the Bond as being the "Final Maturity Date";
and

      

      (D) the period of time between the
Requested Advance Date for the respective Advance and the Maturity Date for such
Advance may not be less than the period from the Requested Advance Date (if such
date is a Payment Date) or the Payment Date immediately following the Requested
Advance Date (if the Requested Advance Date is not a Payment Date) to the next
Payment Date; and

      

      (6) with
respect to each Advance for which the Borrower selects a Maturity Date that will
occur on or after the fifth anniversary of the Requested Advance Date specified
in the respective Advance Request, the particular prepayment/ refinancing
privilege that the Borrower elects to apply to the respective Advance (i.e.
either the Market Value Prepayment/Refinancing Privilege described in section
11.2 of this Agreement or the Fixed Premium Prepayment/Refinancing Privilege
described in section 11.3 of this Agreement); and

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 11

          
            

          

        

        
          
          

          RUS

        

      

      (b) shall
have been duly executed by an official of the Borrower whose name and signature
appear on the Certificate Specifying Authorized Borrower Officials delivered by
the Borrower to FFB pursuant to section 3.2.3 of this Agreement;
and

      

      (c) shall
have been received by FFB not later than a Business Day that meets the advance
notice requirements prescribed in section 7.3.2(b) of this
Agreement.

      

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

      

      (a) shall
have been duly executed on behalf of RUS by an official of RUS whose name and
signature appear on the Certificate Specifying Authorized RUS Officials
delivered to FFB pursuant to section 3.3.3  of this Agreement;
and

      

      (b) shall
have been received by FFB on or before the third Business Day before the
Requested Advance Date specified in such Advance Request.

      

      7.3.3  Telephonic Confirmation of
Authenticity of Advance Request Approval Notices.  For each
Advance, FFB shall have obtained telephonic confirmation of the authenticity of
the related Advance Request Approval Notice from an official of RUS (a) whose
name, title, and telephone number appear on the Certificate Specifying
Authorized RUS Officials that has been delivered by RUS to FFB pursuant to
section 3.3.3 of this Agreement; and (b) who is not the same official of
RUS who executed the Advance Request Approval Notice on behalf of
RUS.

      

      7.3.4  Bond Maximum Principal
Amount Limit.  At the time of making any Advance under the Bond, the
amount of such Advance, when added to the aggregate amount of all Advances
previously made under the Bond, shall not exceed the maximum principal amount of
the Bond.

      

      7.3.5  Conditions Specified in
Other Agreement.  Each of the conditions specified in the Bond
Guarantee Agreement as being conditions to making Advances under the Bond shall
have been satisfied or waived in writing.

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 12

          
            

          

        

        
          
          

          RUS

        

      

      Section 7.4  Amount
and Timing of Advances. 

      

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

      

      (a) in
the event that the Requested Advance Date specified in the respective Advance
Request is not a Business Day, FFB shall make the respective Advance on the
first day thereafter that is a Business Day;

      

      (b) in
the event that the respective Advance Request and the related Advance Request
Approval Notice are not received by FFB on or before the third Business Day
before the Requested Advance Date specified in such Advance Request, FFB shall
make the respective Advance as soon as practicable thereafter, but in any event
not later than the third Business Day after the Requested Advance Date and the
related Advance Request Approval Notice are received by FFB, unless the Borrower
delivers to FFB and RUS a written cancellation of such Advance Request or a
replacement Advance Request specifying a Requested Advance Date later than the
expiration of the applicable advance notice period; and

      

      (c) in
the event that an Uncontrollable Cause prevents FFB from making the respective
Advance on the Requested Advance Date specified in the respective Advance
Request, FFB shall make such Advance as soon as such Uncontrollable Cause ceases
to prevent FFB from making such Advance, unless the Borrower delivers to FFB and
RUS a written cancellation of such Advance Request or a replacement Advance
Request specifying a Requested Advance Date later than when such Uncontrollable
Cause ceases to prevent FFB from making such Advance.  

      

      Section 7.5  Type of
Funds and Means of Advance.  

      

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

      

      Section 7.6  Interest
Rate Applicable to Advances.

      

      7.6.1  Initial Rate
Determinations.  The rate of interest applicable to each
Advance made under the Bond shall be established as provided in paragraph 6
of the Bond, subject to section 7.6.2 of this Agreement.

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 13

          
            

          

        

        
          
          

          RUS

        

      

      7.6.2  Rate
Re-determinations.  In the event the Borrower elects to extend
the maturity of all or any portion of the outstanding principal amount of any
Advance, as provided in paragraph 15 of the Bond, or to refinance all or any
portion of the outstanding principal amount of any Advance, as provided in
paragraph 17 of the Bond, then the rate of interest applicable to the
outstanding principal amount of such Advance shall be re-determined by FFB in
accordance with the terms of paragraph 15 or 17 of the Bond, as the case may
be.

      

      Section
7.7  Interest Rate Confirmation
Notices.

      

      7.7.1  Initial
Rates.  After making each Advance, FFB shall deliver, by
facsimile transmission, to the Borrower and RUS written confirmation of the
making of the respective Advance, which confirmation shall: 

      

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

      

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

      

      (c)
assign an Advance Identifier to such Advance for use by the Borrower and RUS in
all communications to FFB making reference to such Advance.

      

      7.7.2  Re-determined
Rates.  In the event that the rate of interest applicable to
the outstanding principal amount of any Advance is re-determined as provided in
section 7.6.2. of this Agreement, FFB shall deliver, by facsimile
transmission, to the Borrower and RUS written confirmation of the
re-determination of such interest rate, which confirmation shall state the date
on which the applicable interest rate was re-determined for such Advance and the
re-determined interest rate.

      

      Section 7.8  Borrower's
Agreement.

      

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

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 14

          
            

          

        

        
          
          

          RUS

        

      

      

      ARTICLE 8

      

      REPRESENTATIONS
AND WARRANTIES BY THE BORROWER

      

      

      The
Borrower makes to FFB each of the representations and warranties made by the
Borrower to RUS in paragraphs (a), (b), (c), (d), (e), (f), (g), and (j) of
section 8.2 of the Bond Guarantee Agreement, and each of those representations
and warranties of the Borrower are incorporated herein by reference as if set
out in full herein.

      

      ARTICLE
9

      

      BILLING
BY FFB

      

      Section
9.1  Billing
Statements to the Borrower and RUS.

      

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

      

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

      

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

      

      Section
9.3  FFB
Billing Determinations Conclusive.

      

      9.3.1  Acknowledgment and
Consent.  The Borrower and RUS each acknowledge that FFB has
described to it the rounding methodology employed by FFB in calculating the
amount of accrued interest owed at any time on the Bond, and the Borrower and
RUS each consent to this methodology.

      

      9.3.2  Agreement.  The
Borrower and RUS each agree that any and all determinations made by FFB shall be
conclusive and binding upon the Borrower and RUS with respect to the amount of
accrued interest owed on the Bond determined using this rounding
methodology.

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 15

          
            

          

        

        
          
          

          RUS

        

      

      

      ARTICLE 10

      

      PAYMENTS
TO FFB AND RUS

      

      

      Section 10.1  Manner and Timing of
Payment.

      

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

      

      Section 10.2  Application of
Payments.

      

      10.2.1  Priority of
Payments.  Each payment made on the Bond shall be applied,
first, to the payment of Late Charges (if any) payable under paragraphs 11 and
18 of the Bond, then to the payment of premiums (if any) payable under
paragraphs 16 and 17 of the Bond, then to the payment of unpaid accrued
interest, then on account of outstanding principal, and then to the payment of
the fee payable under paragraph 9 of the Bond.

      

      10.2.2  Agreement between FFB and
RUS.  RUS agrees to 

      transfer
to FFB payments received by RUS under the Bond in such amounts as may be
necessary to conform with the priority of payment requirements contained in
section 10.2.1 of this Agreement.

      

      

      ARTICLE
11

      

      BORROWER'S
PRIVILEGES TO PREPAY OR REFINANCE ADVANCES

      

      

      Section
11.1  Automatic Application or
Required Election.

      

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

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 16

          
            

          

        

        
          
          

          RUS

        

      

      Section
11.2  "Market Value
Prepayment/Refinancing Privilege".

      

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

      

      (a) the
price for such Advance that would, if such Advance (including all unpaid
interest accrued thereon through the date of prepayment or refinancing, as the
case may be) were purchased by a third party and held to the "Maturity Date"
applicable to the Advance, produce a yield to the third-party purchaser for the
period from the date of purchase to such Maturity Date substantially equal to
the interest rate that would be set on a loan from the Secretary of the Treasury
to FFB to purchase an obligation having a payment schedule identical to the
payment schedule of such Advance for the period from the date of prepayment or
refinancing, as the case may be, to such Maturity Date; and

      

      (b) the
sum of:

      

      (1) the
outstanding principal amount of such Advance on the date of prepayment or
refinancing, as the case may be; and

      

      (2) all
unpaid interest accrued on such Advance through the date of prepayment or
refinancing, as the case may be,

      

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

      

      
        
          
          

        

        
           BOND
PURCHASE AGREEMENT - page 17

          
            

          

        

        
          
          

          RUS

        

      

      Section
11.3  "Fixed
Premium Prepayment/Refinancing Privilege".

      

      11.3.1
Required Election and
Selection.  If the prepayment/refinancing privilege described
in this section 11.3 applies to such Advance (such privilege being the
"Fixed Premium
Prepayment/Refinancing Privilege"), the Borrower shall have the privilege
to prepay such Advance (as provided in paragraph 16 of the Bond) or to
refinance such Advance (as provided in paragraph 17 of the Bond) at a
prepayment or refinancing price that will include, in either case, a fixed
premium determined by FFB at the time of such prepayment or refinancing, based
on both the no-call period election described in section 11.3.2 of this
Agreement and the premium selection described in section 11.3.3 of this
Agreement made by the Borrower at the time of requesting such
Advance.

      

      11.3.2  "No-Call Period
Election".  First, the Borrower must elect whether or not the
Fixed Premium Prepayment/ Refinancing Privilege that is to apply to the
respective Advance shall include a 5-year period during which such Advance shall
not be eligible
for any prepayment or refinancing (such time period being a "No-Call
Period").  The options are:  

      

      (a)
"yes" -- the
Borrower elects to have the Fixed Premium Prepayment/Refinancing Privilege
include a 5-year No-Call Period, i.e., the Borrower
shall have the privilege to prepay the respective Advance (as provided in
paragraph 16 of the Bond) or to refinance such Advance (as provided in paragraph
17 of the Bond) on or after (but not before):

      

      (1) the
fifth anniversary of the Requested Advance Date for such Advance (if such fifth
anniversary date is a Payment Date); or

      

      (2) the
first Payment Date to occur after the fifth anniversary of the Requested Advance
Date for such Advance (if such fifth anniversary date is not a Payment
Date),

      

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

      

      (b)
"no" -- the
Borrower elects to have the Fixed Premium Prepayment/Refinancing Privilege not include a 5-year
No-Call Period, i.e., the Borrower
shall have the privilege to prepay the respective Advance (as provided in
paragraph 16 of the Bond) or to refinance 

       

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 18

          
            

          

        

        
          
          

          RUS

        

      

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

      

      11.3.3  "Premium
Selection".  Second, the Borrower must select the particular
fixed premium that will be required in connection with any prepayment or
refinancing of the respective Advance.  The options are:

      

      (a)
"10 percent premium
declining over 10 years" -- the price for any prepayment or refinancing
of the respective Advance shall include a premium equal to 10 percent of the
amount of principal being prepaid or refinanced, as the case may be, multiplied
by a fraction: 

      

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

      

      (A) in
the case of a prepayment, the date of prepayment (if such date is a Payment
Date) or the Payment Date immediately preceding the date of prepayment (if the
date of prepayment is not a Payment Date), and, in the case of a refinancing,
the date of refinancing, which date, in either case, shall be included in
computing the number of Payment Dates; and

      

      (B) the
tenth anniversary of the applicable First Call Date (if the Borrower elected to
have the prepayment/refinancing privilege include a 5-year No-Call Period) or
the tenth anniversary of the Requested Advance Date (if the Borrower elected to
have the prepayment/refinancing privilege not include a 5-year No-Call Period),
which date, in either case, shall be excluded in computing the number of Payment
Dates; and

      

      (2) the
denominator of which is 40,

      

      and no
premium on or after the tenth anniversary of the applicable First Call Date (if
the Borrower elected to have the prepayment/refinancing privilege include a
5-year No-Call Period) or the tenth anniversary of the Requested Advance Date
(if the Borrower elected to have the prepayment/refinancing privilege not
include a 5-year No-Call Period);

      

      (b)
"5 percent premium
declining over 5 years" -- the price for any prepayment or refinancing of
the respective Advance shall include a premium equal to 

       

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 19

          
            

          

        

        
          
          

          RUS

        

      

      5 percent
of the amount of principal being prepaid or refinanced, as the case may be,
multiplied by a fraction: 

       

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

      

      (A) in
the case of a prepayment, the date of prepayment (if such date is a Payment
Date) or the Payment Date immediately preceding the date of prepayment (if the
date of prepayment is not a Payment Date), and, in the case of a refinancing,
the date of refinancing, which date, in either case, shall be included in
computing the number of Payment Dates; and

      

      (B) the
fifth anniversary of the applicable First Call Date (if the Borrower elected to
have the prepayment/refinancing privilege include a 5-year No-Call Period) or
the fifth anniversary of the Requested Advance Date (if the Borrower elected to
have the prepayment/refinancing privilege not include a 5-year No-Call Period),
which date, in either case, shall be excluded in computing the number of Payment
Dates; and

      

      (2) the
denominator of which is 20,

      

      and no
premium on or after the fifth anniversary of the applicable First Call Date (if
the Borrower elected to have the prepayment/refinancing privilege include a
5-year No-Call Period) or the fifth anniversary of the Requested Advance Date
(if the Borrower elected to have the prepayment/refinancing privilege not
include a 5-year No-Call Period); or

      

      (c)
"par" -- the
price for any prepayment or refinancing of the respective Advance shall include
no premium.

      

      11.3.4 
Standard for
Calculating FFB Financing Options Fee for Fixed-Premium Prepayment/Refinancing
Privilege.  The fee assessed by FFB and payable by the Borrower
to have the Fixed-Premium Prepayment/Refinancing Privilege described in this
section 11.3 to apply to any Advance (such fee being an "FFB Financing Options
Fee") shall be established on the basis of the determination made by FFB
described in paragraph 6(d) of the Bond. 

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 20

          
            

          

        

        
          
          

          RUS

        

      

      11.3.5  Calculation and Notification
of FFB Financing Options Fee for Fixed-Premium Prepayment/Refinancing
Privilege.  FFB shall make the determination described in
section 11.3.4 of this Agreement for each Advance to which the Borrower has
elected to have the Fixed-Premium Prepayment/Refinancing Privilege apply, at the
time of the establishment of the particular basic interest rate that is to apply
to the respective Advance.  After making such determination for each
Advance, FFB shall notify the Borrower and RUS of the particular FFB Financing
Options Fee (expressed in terms of a basis point increment) that is assessed by
FFB and payable by such Borrower for such Fixed-Premium Prepayment/Refinancing
Privilege in the particular interest rate confirmation notice relating to such
Advance to be delivered by FFB in accordance with section 7.7 of this
Agreement.

      

      Section
11.4  New
Notices and Billing Statements After Refinancings.

      

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

      

      

      ARTICLE
12

      

      BOND
SERVICING AND RELATED DUTIES AND RIGHTS

      

      Section 12.1  Custody of
Bond.

      

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

      

      Section 12.2  RUS Duties as Bond Servicer
and Guarantor.

      

      12.2.1  Bond Servicing To Be
Performed by RUS.  Bond servicing shall be performed by RUS, as
agent for FFB, for so long as FFB shall be the Holder of the
Bond.  Payment by FFB for RUS's servicing of the Bond shall be made in
accordance with section 12.3 hereof.

      

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

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 21

          
            

          

        

        
          
          

          RUS

        

      

      (a) serve as principal point of contact
for the Borrower with respect to any questions that the Borrower may have about
its borrowings from FFB;

      

      (b) hold, as agent for FFB, the
original Bond in accordance with the terms of section 12.1
hereof;

      

      (c) prepare and deliver to the Borrower
billing statements, which billing statements shall reflect the terms of the
billing statements prepared by FFB and delivered to RUS showing amounts owed
with respect to each Advance made under the Bond;

      

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

      

      (e) turn over to FFB all amounts
collected under clause (d) of this section 12.2.2 when and as due under the
Bond.

      

      Section 12.3  Bond Servicing Fee.

      

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

      

      Section 12.4  Liability and Rights of RUS
as Guarantor.

      

      12.4.1  Liability as
Guarantor.  If the Bond is in payment default, RUS shall be
liable to FFB in accordance with the terms of the RUS Guarantee, without regard
to the sufficiency of the security or the remedies RUS may enforce against the
Borrower.

      

      12.4.2  Rights as
Guarantor.  In consideration of the RUS Guarantee, RUS shall
have the sole authority (vis-a-vis FFB), if the Bond is in payment default, in
respect of acceleration of the Bond, the exercise of other available remedies,
and the disposition of sums or property recovered.

      

      Section 12.5  Bond Payments Made by
RUS.

      

      12.5.1  General.  RUS
and FFB understand and agree that RUS, in its combined capacity as both bond
servicer and guarantor of the Bond, shall pay to FFB all amounts due and owing
under the Bond, when and as those amounts are due and payable under the terms of
the Bond.

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 22

          
            

          

        

        
          
          

          RUS

        

      

      (a) Bond Servicing
Payments.  As bond servicer, RUS shall make payments by turning over
to FFB, when and as due under the Bond, all amounts that have been collected by
RUS under section 12.2.2(d) of this Agreement.

      

      (b) Bond Guarantee
Payments.  As guarantor, RUS shall pay to FFB, when and as due under
the Bond, the difference, if any, between the amounts that are owed to FFB under
the terms of the Bond and the amounts that have been collected under
section 12.2.2(d) of this Agreement.

      

      12.5.2  RUS Payments To Be Made by
Book Transfer.  RUS shall make each payment under section
12.5.1 of this Agreement by internal transfer of funds on the books of the
United States Department of the Treasury from the account of RUS to the account
of FFB specified by FFB from time to time.

      

      12.5.3  Late
Charges.  Subject to section 12.5.4 of this Agreement, in
the event that RUS shall fail to make any payment under section 12.5.1 of
this Agreement when and as that payment by RUS to FFB is due (any such amount
being then an "Overdue
Amount"), the amount payable shall be that Overdue Amount with interest
thereon (such interest being the "Late
Charge").  The Late Charge shall accrue from the scheduled date
of payment for the Overdue Amount (taking into account any Business Day
adjustments under the Bond) to the actual date on which payment is
made.  The Late Charge applicable to RUS shall be calculated in the
same manner as Late Charges applicable to the Borrower are calculated under the
Bond.

      

      12.5.4  Uncontrollable
Cause.  In the event that RUS is prevented by an Uncontrollable
Cause from making any payment under section 12.5.1 of this Agreement at the time
or in the manner as RUS is required to make that payment, then RUS shall make
that payment as soon as the respective Uncontrollable Cause ceases to prevent
RUS from making that payment.  The amount that is then due and owing that
is not paid due to an Uncontrollable Cause for RUS shall bear interest at the
91-day loan rate then established by FFB based on a determination made by the
Secretary of the Treasury pursuant to section 6(b) of the FFB Act, such rate
being subject to re-determination at 91-day intervals if the amount due and
owing is not paid. 

      

      12.5.5  No Modification of Times for
Payment. Nothing in section 12.5.3 or section 12.5.4 of this
Agreement shall be construed as permitting or implying that RUS may, without the
prior written consent of FFB, modify, extend, alter, or affect in any manner

       

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 23

          
            

          

        

        
          
          

          RUS

        

      

      whatsoever
(except as explicitly provided herein) the right of FFB to receive any and all
payments on account of the Bond when and as due under the Bond.

      

      12.5.6  Bond Assignment upon Payment
in Full.  Upon payment by RUS to FFB of all amounts required to
be paid by RUS to FFB under section 12.5.1 of this Agreement with respect to the
Bond , FFB shall assign and transfer to RUS all rights held by FFB in that
Bond.

      

      ARTICLE
13

      

      AGREEMENTS
AND OTHER RIGHTS OF RUS

      

      Section 13.1  Delivery
of Replacement Certificates Specifying Authorized RUS Officials.  

      

      13.1.1  Annual Replacement
Certificates.  Promptly after the commencement of each fiscal
year, RUS shall deliver to FFB a Certificate Specifying Authorized RUS
Officials, updated as appropriate, in replacement of the original such
certificate delivered pursuant to section 4.2(d) hereof.

      

      13.1.2  Replacement Certificates
within any Fiscal Year.  RUS may at any time within any fiscal
year deliver to FFB a revised Certificate Specifying Authorized RUS Officials,
updated as appropriate, in replacement of the annual certificate delivered
pursuant to section 13.1.1 hereof.

      

      Section 13.2  Certain
Agreements of RUS and FFB.  

      

      13.2.1  Agent for Compliance
Purposes.  In the event that FFB shall become subject to any
duties under any applicable law or regulation solely because of its providing or
having provided financing under the Bond, RUS shall serve as agent for FFB to
the fullest extent permitted under that law or regulation in connection with
satisfying the requirements of that law or regulation.

      

      13.2.2  RUS's Agreement Regarding
Its Appointment as Agent for FFB.  Recognizing the legitimate
needs of FFB to ensure that RUS, as compliance agent for FFB, has performed all
duties to which FFB becomes subject under any applicable law or regulation
solely because of providing or having provided financing under the Bond, and
with RUS and FFB expressing their intent to cooperate in connection with the
exchange of information related thereto, RUS agrees: 

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 24

          
            

          

        

        
          
          

          RUS

        

      

      (a) to deliver to representatives of
FFB or its designate, when requested to do so by FFB or its designate, actual
possession of the original of any certificate, report, document, or paper
collected or prepared by RUS, as compliance agent for FFB; or

      

      (b) at the option of FFB, to permit
representatives of FFB or its designate, during reasonable business hours, to
have access to, and to inspect and make copies of, any and all certificates,
reports, documents, or papers collected or prepared by RUS, as compliance agent
for FFB.

      

      13.2.3  Litigation
Cooperation.  When requested to do so by FFB, RUS shall
cooperate with FFB in the prosecution or defense of any litigation that FFB may
institute against any Person other than RUS or to which FFB is named as a party,
as the case may be, arising out of FFB providing or having provided financing
under the Bond.  

      

      Section 13.3  Reimbursement.

      

      13.3.1  RUS's Agreement to
Reimburse.  To the extent permitted by applicable law and
subject to the availability of funds, RUS agrees to reimburse FFB (but not any
successor, assignee or transferee of FFB) for any and all liabilities, losses,
costs, or expenses of any nature that may be imposed upon, incurred by, or
asserted against FFB by any Person other than RUS in any way relating to or
arising out of FFB providing or having provided financing under the Bond, but
specifically excluding any liability, loss, cost or expense relating to or
arising out of any sale, assignment, or other transfer by FFB, pursuant to
section 15.4 hereof, of all or any part of the Bond. 

      

      13.3.2  RUS's Agreement to Seek
Appropriations.  In the event that no funds are available to
RUS at the time that RUS needs funds to reimburse FFB as contemplated by
section 13.3.1 hereof, RUS agrees that it will diligently seek to obtain
additional appropriations for that purpose.

      

      13.3.3  FFB's Agreement to Deliver
Notice.  Solely for the purpose of assisting RUS in mitigating
the extent of any reimbursement contemplated by section 13.3.1 hereof, FFB
agrees that it will deliver notice to RUS of any and all liabilities, losses,
costs, or expenses imposed upon, incurred by, or asserted against FFB promptly
after FFB has actual knowledge of the imposition, incurrence, or assertion of
such liability, loss, cost, or expense. 

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 25

          
            

          

        

        
          
          

          RUS

        

      

      Section 13.4  Effect of RUS's
Nonperformance.

      

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

      

      Section 13.5  Right of RUS to Purchase
Advances and Bonds.

      

      13.5.1  RUS's
Right.  Notwithstanding the provisions of the Bond, RUS may
purchase from FFB all or any portion of any Advance that has been made under the
Bond, or may purchase from FFB the Bond in its entirety, in either case in the
same manner, at the same price, and subject to the same limitations as shall be
applicable, under the terms of the Bond, to a prepayment by the Borrower of all
or any portion of any Advance that has been made under the Bond, or a prepayment
by the Borrower of the Bond in its entirety, as the case may be.

      

      13.5.2  Borrower's Acknowledgement
of RUS's Right.  Notwithstanding the provisions of the Bond,
the Borrower acknowledges that RUS may purchase from FFB all or any portion of
any Advance that has been made under the Bond, or may purchase from FFB the Bond
in its entirety, in the same manner, at the same price, and subject to the same
limitations as shall be applicable, under the terms of the Bond, to a prepayment
by the Borrower of all or any portion of any Advance made under the Bond, or a
prepayment by the Borrower of the Bond in its entirety, as the case may
be.

      

      ARTICLE
14

      

      EFFECTIVE
DATE, TERM, SURVIVAL

      Section 14.1  Effective
Date.  

      

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

      

      Section 14.2  Term of
Commitment to Make Advances.  

      

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

      

      Section 14.3  Survival.  

      

      14.3.1  Representations, Warranties,
and Certifications.  All representations, warranties, and
certifications made by the Borrower in this Agreement, or in 

       

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 26

          
            

          

        

        
          
          

          RUS

        

      

      any
agreement, instrument, or certificate delivered pursuant hereto, shall survive
the execution and delivery of this Agreement, the purchasing of the Bond
hereunder, and the making of Advances thereunder.

      

      14.3.2  Remainder of
Agreement.  Notwithstanding the occurrence and passage of the
Last Day for an Advance, the remainder of this Agreement shall remain in full
force and effect until all amounts owed under this Agreement and the Bond
purchased by FFB under this Agreement have been paid in full.

      

      ARTICLE
15

      

      MISCELLANEOUS

      

      Section 15.1  Notices. 

      

      15.1.1  Addresses of the
Parties.All notices and other communications hereunder or under the Bond
to be made to any party shall be in writing and shall be addressed as
follows:

      

      To
FFB:

      

      Federal
Financing Bank

      Main
Treasury Building

      1500
Pennsylvania Avenue, NW

      Washington,
DC  20220

      

      Attention:  Manager

      

      Telephone
No.(202) 622-2470

      Facsimile
No.(202) 622-0707

      

      To the
Borrower:

      

      National
Rural Utilities Cooperative

        Finance
Corporation

      2201
Cooperative Way

      Herndon,
VA  20171-3025

      

      Attention:  Chief
Financial Officer

      

      Telephone:  (703)
709-6718

      Facsimile:  (703)
709-6779

      

      
        
          
          

        

        
           BOND
PURCHASE AGREEMENT - page 27

          
            

          

        

        
          
          

          RUS

        

      

         with a copy
to:

      

      National
Rural Utilities Cooperative

        Finance
Corporation

      2201
Cooperative Way

      Herndon,
VA  20171-3025

      

      Attention:  General
Counsel

      

      Telephone:  (703)
709-6712

      Facsimile:  (703)
709-6811

      

      To
RUS:

      

      Rural
Utilities Service

      U.S.
Department of Agriculture

      1400
Independence Avenue, SW

      Washington,
DC  20250

      

      Attention:  Administrator

      

      Telephone:  (202)
720-9540

      Facsimile:  (202)
720-1725

      

      

      The
address, telephone number, or facsimile number for any party may be changed at
any time and from time to time upon written notice given by such changing party
to the other party hereto.

      

      15.1.2  Permitted Means of
Delivery.  A properly addressed Advance Request, Advance
Request Approval Notice, other notice, or other communication to FFB shall be
deemed to have been delivered if it is sent by facsimile (fax)
transmission.  A properly addressed notice or other communication to
the Borrower shall be deemed to have been delivered if it is sent by facsimile
(fax) transmission.  A properly addressed Advance Request, notice, or
other communication to RUS shall be deemed to have been delivered if it is sent
by facsimile (fax) transmission, provided that RUS shall receive the original of
such faxed Advance Request, notice, or other communication within 5 Business
Days.

      

      15.1.3  Effective Date of
Delivery.  A properly addressed notice or other communication
shall be deemed to have been "delivered" for purposes of this
Agreement:

      

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

      

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

       

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 28

          
            

          

        

        
          
          

          RUS

        

      

      overnight
courier service, on the date that such mailing is received;

      

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

      

      (1) if
the transmission is received and receipt confirmed before 4:00 p.m. (Washington,
DC, time) on any Business Day, on the date of such transmission;
and

      

      (2) if
the transmission is received and receipt confirmed after 4:00 p.m. (Washington,
DC, time) on any Business Day or any day that is not a Business Day, on the next
Business Day.

      

      15.1.4  Notices to FFB to Contain
FFB Identification References.  All notices to FFB making any
reference to either the Bond or any Advance made thereunder shall identify the
Bond or such Advance by the Bond Identifier or the respective Advance
Identifier, as the case may be, assigned by FFB to the Bond or such
Advance.

      

      Section
15.2  Amendments.

      

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

      

      15.2.2  Bond Guarantee
Agreement.  RUS and the Borrower agree that they will not enter
into any amendment, modification, or waiver of section 9.9 of the Bond Guarantee
Agreement, or the consequences of a breach thereof, without the prior written
consent of FFB.

      

      Section
15.3  Successors and
Assigns.  

      

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

      

      Section
15.4  Sale
or Assignment of Bond.

      

      15.4.1  Sale or Assignment
Permitted.  Subject to the agreement in the immediately
following sentence, FFB may sell, assign, or otherwise transfer all or any part
of the Bond or any participation share thereof.  FFB agrees not to
sell, assign, or otherwise transfer all or any part of the Bond or all or any
part of the right to receive the principal of and interest on the Bond or any
participation share thereof to a purchaser, assignee, or transferee that is not
an agency or instrumentality of the United States or a trust fund or other
government account under the authority 

       

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 29

          
            

          

        

        
          
          

          RUS

        

      

      or
control of the United States or any officer or officers thereof until such time
as FFB and RUS have agreed upon mutually satisfactory arrangements for the
servicing of the right to receive principal and interest payments on the Bond or
Bonds and for making claims under the RUS Guarantee when FFB is not the
Holder.

      

      15.4.2  Notice of Sale,
Etc.  FFB will deliver to the Borrower and RUS written notice
of any sale, assignment, or other transfer of the Bond promptly after any such
sale, assignment, or other transfer.

      

      15.4.3  Manner of Payment after
Sale.  Any sale, assignment, or other transfer of all or any
part of the Bond may provide that, following such sale, assignment, or other
transfer, payments on the Bond, with the exception of the fee described in
paragraph 9 of the Bond, shall be made in the manner specified by the
respective purchaser, assignee, or transferee, as the case may
be.  Payments of the fee described in paragraph 9 of the Bond shall be
made in the manner specified by FFB in the written notice of the sale,
assignment, or other transfer delivered by FFB to the Borrower and RUS as
provided in section 15.4.2 of this Agreement.

      

      15.4.4  Replacement
Bonds.  

      

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

      

      (1) to
issue a replacement Bond or Bonds with the same aggregate principal amount,
interest rate, maturity, and other terms as each respective Bond or Bonds sold,
assigned, or transferred pursuant to section 15.4.1 of this Agreement; provided, however, that, when
requested by the respective purchaser, assignee, or transferee, such replacement
Bond or Bonds shall provide that payments thereunder shall be made in the manner
specified by such purchaser, assignee, or transferee; and provided, further, however, that upon
delivery of such replacement Bond, the Borrower shall be released and discharged
from any further liability on account of the sold, assigned, or transferred
Bond; and provided, further, however, that the
Bond being replaced shall be surrendered to the Borrower for cancellation; and

      

      (2) to
effect the change in ownership on its records and on the face of each such
replacement Bond issued, upon receipt of each Bond or Bonds so sold, assigned,
or transferred.

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 30

          
            

          

        

        
          
          

          RUS

        

      

      (b) RUS's Agreement.  If FFB
elects to sell, assign, or transfer all or any part of the Bond or any
participation share thereof, and if the respective purchaser, assignee, or
transferee requests the Borrower to issue a replacement Bond or Bonds as
provided in section 15.4.4(a) of this Agreement, RUS agrees that it will, upon
the written request of FFB, execute and deliver an RUS Guarantee of the
replacement Bond in replacement of the RUS Guarantee of the sold, assigned, or
transferred Bond.

      

      (c) FFB's Agreement.  FFB
agrees that, upon delivery by RUS of a replacement RUS Guarantee as provided in
section 15.4.4(b) of this Agreement, RUS shall be released and discharged from
any further liability on account of the RUS Guarantee of the sold, assigned, or
transferred Bond.

      

      Section
15.5  Forbearance Not a
Waiver.

      

      Any
forbearance on the part of FFB from enforcing any term or condition of this
Agreement shall not be construed to be a waiver of such term or condition or
acquiescence by FFB in any failure on the part of Borrower to comply with or
satisfy such term or condition.

      

      Section
15.6  Rights
Confined to Parties.

      

      Nothing
expressed or implied herein is intended or shall be construed to confer upon, or
to give to, any Person other than FFB, the Borrower, and RUS, and their
respective successors and permitted assigns, any right, remedy, or claim under
or by reason of this Agreement or of any term, covenant, or condition hereof,
and all of the terms, covenants, conditions, promises, and agreements contained
herein shall be for the sole and exclusive benefit of FFB, the Borrower, and
RUS, and their respective successors and permitted assigns.

      

      Section 15.7  Governing
Law. 

      

      This
Agreement and the rights and obligations of the parties hereunder shall be
governed by, and construed and interpreted in accordance with, the laws of the
United States of America and not the law of the several States.

      

      Section 15.8  Severability.  

      

      Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any

       

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 31

          
            

          

        

        
          
          

          RUS

        

      

      jurisdiction
shall not of itself invalidate or render unenforceable such provision in any
other jurisdiction.

      

      Section 15.9  Headings.  

      

      The
descriptive headings of the various articles, sections, and subsections of this
Agreement were formulated and inserted for convenience only and shall not be
deemed to affect the meaning or construction of the provisions
hereof.

      

      Section 15.10  Counterparts.  

      

      This
Agreement may be executed in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which together shall
constitute but one and the same instrument.

      

      
        
          
          

        

        
          BOND
PURCHASE AGREEMENT - page 32

          
            

          

        

        
          
          

          RUS

        

      

      IN WITNESS WHEREOF, FFB, the
Borrower, and RUS have each caused this Agreement to be executed as of the day
and year first above mentioned.

      

      

      FEDERAL
FINANCING BANK

        ("FFB")

       

      

      By:    /s/ MEREDITH M. BROOME

      

      Name: 
Meredith M. Broome

      

      Title:
Vice President and Treasurer

      

      

      

      NATIONAL
RURAL UTILITIES

      COOPERATIVE
FINANCE CORPORATION

        (the
"Borrower")

      

       

      By:     /s/ SHELDON C. PETERSEN

      

      Name:   Sheldon
C. Petersen

      

      Title:  Governor and

                     
                   Chief
Executive Officer

      

      

      ADMINISTRATOR of the

      RURAL UTILITIES SERVICE

        ("RUS")

      

       

      By:     /s/ JAMES M. ANDREW

      

      Name:   James
M. Andrew

      

      Title: 
Administrator

      
        

        
          
            
            

          

          
            BOND
PURCHASE AGREEMENT - page 33

            
              

            

          

          
            
            

            RUS

            

             

            

            

            

            

            

            

            

            

            EXHIBIT
A

            

            TO

            

            BOND
PURCHASE AGREEMENT

            

            

            

            

            FORM

            

            OF

            

            ADVANCE
REQUEST

             

             

             

             

             

            

            

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

                RUS

              

            

             

            
               

              ADVANCE
REQUEST

              (RUS
APPROVAL REQUIRED)

              

              ****************************************************************

              

              REFER
TO RURAL UTILITIES SERVICE (RUS) REGULATIONS AND INSTRUCTIONS FOR A DESCRIPTION
OF (1) THE OTHER FORMS AND MATERIALS THAT ARE REQUIRED IN CONNECTION WITH
EACH REQUEST FOR AN ADVANCE, AND (2) THE TIME LIMITS FOR SUBMITTING THOSE FORMS
AND MATERIALS AND THIS ADVANCE REQUEST TO RUS.

              

              DIRECT
ALL QUESTIONS
ON HOW TO COMPLETE THIS FORM TO THE ASSIGNED CONTACT OFFICE FOR THE BORROWER:

              

              Chief

              Policy
Analysis and Loan Management Staff

              Telephone:  (202)
720-0424

              

              WHEN
COMPLETED, DELIVER THIS ORIGINAL FORM
(TOGETHER WITH ALL OTHER FORMS AND MATERIAL REQUIRED BY RUS) TO RUS AT THE ADDRESS
OF THE CONTACT OFFICE INDICATED BELOW:

              

              Chief

              Policy
Analysis and Loan Management Staff

              Rural
Utilities Service

              U.S.
Department of Agriculture

              Mail
Stop 1560

              1400
Independence Avenue, SW

              Washington,
DC  20250-1560

              

              Reference:  Section
313A Loan Guarantee

              

              Telephone:  (202)
720-0424

              Facsimile:   (202)
690-0717

              

              ****************************************************************

              

              
                
                  
                  

                

                
                  Advance
Request - page 1

                  
                    

                  

                

                
                  
                  

                  RUS

                

              

              
                ADVANCE
REQUEST

                

                 

                

                Manager

                Federal
Financing Bank

                

                

                

                Reference is made to the
following-described Future Advance Bond (the "Bond") payable to the Federal
Financing Bank ("FFB"), which is guaranteed by the Rural Utilities Service
("RUS"):

                 

                Name of
Borrower (the "Borrower"):

                 

                National Rural Utilities
Cooperative Finance Corporation 

                

                 

                FFB Bond
Identifier:              _____________________1

                

                The undersigned, as an authorized
officer of the Borrower, hereby requests FFB to make an advance of funds ("this
Advance") under, pursuant to, and in accordance with the applicable terms of the
Bond.

                

                The undersigned further requests that
this Advance be made as follows:

                

                

                1.    Requested
Advance Amount:$        _____________________2

                

                

                2.    Requested
Advance
Date:                               
 _____________________3

                

                
 _________________________

              

              
                1Insert
the Bond Identifier that FFB assigned to the Bond (as provided in
section 5.1(a)(2) of the Bond Purchase Agreement referred to in the
Bond).

                2Insert
the particular amount of funds that the Borrower requests to be advanced, which
amount must satisfy the condition specified in section 7.3.4 of the Bond
Purchase Agreement referred to in the Bond.

                      3Insert the particular
calendar date that the Borrower requests to be date on which this Advance is to
be made, which date must meet the criteria for Requested Advance Dates specified
in section 7.3.1(a)(3) of the Bond Purchase Agreement referred to in the
Bond.

              

              

              
                
                  
                  

                

                
                  Advance
Request - page 2

                  
                    

                  

                

                
                  
                  

                  RUS

                

              

              
                3.    Wire
Instructions:

                

                

                A.  CORRESPONDENT BANK (if
any) FOR PAYEE'S BANK:

                

                Name of financial institution
______________________________

                

                Address of financial
institution   ______________________________

                

                ABA number of financial
institution    ______________________________

                

                

                B.  PAYEE'S BANK AND
ACCOUNT:

                

                Name of financial institution
______________________________

                

                Address of financial
institution   ______________________________

                

                ABA number of financial
institution    ______________________________

                

                Account
name    ______________________________

                

                Account
number      ______________________________

                

                Taxpayer ID number
______________________________

                 

                
                  4.Maturity
Date:  _________________________4

                   

                  
                    ____________________

                    4Insert
the particular calendar date that the Borrower selects to be the date on which
this Advance is to mature, which date must meet all of the criteria for Maturity
Dates specified in section 7.3.1(a)(5) of the Bond Purchase Agreement referred
to in the Bond.

                  

                

                
                  
 

                

              

              
                
                  
                  

                

                
                  Advance
Request - page 3

                  
                    

                  

                

                
                  
                  

                  RUS

                

              

              5.    Prepayment/Refinancing
Privilege:

              

              
                	
                         
      

                      	
                        If
      (and only
      if) the Borrower selects, as the "Maturity Date" for this Advance,
      a date that will occur on or after the
      fifth anniversary of the "Requested Advance Date," then the Borrower must elect
      1 of the
      following 2 alternative prepayment/refinancing
  privileges.

                      

              

              

              
                	
                         
      

                      	
                        !Alternative
      Prepayment/Refinancing Privileges:

                      

              

               

                   "M"
for the "Market
Value Prepayment/     _____  5

                      
Refinancing Privilege

              

                   "F"
for the "Fixed
Premium Prepayment/     _____  6

                            Refinancing
Privilege

               

              If
(and only if)
the Borrower elects the "Fixed Premium
Prepayment/ Refinancing Privilege," then the Borrower must elect 1 of the following 2
alternative no-call period options.

              

              
                	
                         
      

                      	
                        "Alternative
      No-Call Period Options:

                      

              

               

              "Y" for "yes," if the privilege is    6

                  to
include a 5-year No-Call Period

              
                	
                      

              

                  

              "N" for "no," if the privilege is
not  

                                 to
include a 5-year No-Call Period

               

              ____________________________

              
                     5Insert in the box "M" if the
Borrower elects to have the Market Value Prepayment/Refinancing Privilege apply
to this Advance.  Insert in the box "F" if the Borrower elects to have
a Fixed Premium Prepayment/Refinancing Privilege apply to this
Advance.

                 

                6Insert
in the box "Y" if the Borrower elects to have the Fixed Premium
Prepayment/Refinancing Privilege include a 5-year No-Call Period during which
this Advance will not be eligible for prepayment or
refinancing.  Insert in the box "N" if the Borrower elects to have the
Fixed Premium Prepayment/Refinancing Privilege not include any
5-year No-Call Period, i.e. this Advance will be eligible for prepayment or
refinancing on any Business day.

              

              
                
                  
                  

                

                
                  Advance
Request - page 4

                  
                    

                  

                

                
                  
                  

                  RUS

                

              

              

              If
(and only if)
the Borrower elects the "Fixed Premium
Prepayment/ Refinancing Privilege, then the borrower must select 1 of the following 3
alternative premium options.

              

              "Alternative
Premium Options:

               

                                                 "X"
for 10% premium declining over   
_____7

              
                	 
      

              

                          10
years                              

                 "V"
for 5% premium declining over

                5 years

              

                 "P" for par (no
premium)

               

              

              The undersigned hereby certifies that
the authority of the undersigned to execute and deliver this Advance Request on
behalf of the Borrower is valid and in full force and effect on the date
hereof.

              

               

              NATIONAL
RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

              (the "Borrower")

              
 

              By:     _______________________

              

              Name:   _______________________

              

              Title: 
_______________________

              

              Date:   _______________________

              __________________________

              
                7Insert
in the box "X" if the Borrower selects a 10% premium declining over 10 years as
the premium option for the Fixed Premium Prepayment/Refinancing Privilege that
is to apply to this Advance.  Insert in the box "V" if the Borrower
selects a 5% premium declining over 5 years as the premium option for the Fixed
Premium Prepayment/Refinancing Privilege that is to apply to this
Advance.  Insert in the box "P" if the Borrower selects par (no
premium) as the premium option for the Fixed Premium Prepayment/Refinancing
Privilege that is to apply to this Advance.

              

              
                
                  
                  

                

                
                  Advance
Request - page 5

                  
                    

                  

                

                
                  
                  

                  RUS

                

              

               

              

              NOTICE
OF RUS APPROVAL OF

              ADVANCE
REQUEST

              

              

              Notice is hereby given to FFB that the
preceding Advance Request made by the Borrower identified therein has been
approved by RUS for purposes of the Bond identified therein.

              

              
                
                  	 
      	 
      	 
      
	
                          FOR
      ACCOUNTING

                        	 
      	 
      
	
                          USE
      ONLY:

                        	 
      	
                          ADMINISTRATOR
      of the

                        
	 
      	 
      	
                          RURAL
      UTILITIES SERVICE,

                        
	 
      	 
      	
                          acting
      through his or her

                        
	
                          RUS
      Budget

                        	 
      	
                          duly
      authorized designee

                        
	
                          Account

                        	 
      	 
      
	
                          Number

                        	 
      	 
      
	 
      	 
      	 
      
	
                           ___________________

                        	 
      	 
      
	 
      	 
      	 
      

                

              

               

              By:     _______________________

              

              Name:   _______________________

              

              Title: 
_______________________

              

              Date:   _______________________

               

              
                
                  
                  

                

                
                  Advance
Request - page 6

                  
                    

                  

                

                
                  
                  

                

              

              

                
 

                 

                 

                

                

                

                

                EXHIBIT
B

                

                TO

                

                BOND
PURCHASE AGREEMENT

                

                

                

                

                FORM

                

                OF

                

                BOND

                
 

              

            

            

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

            

            
              
                
                  	 
      	 
      	
                          Bond

                        
	
                          FOR
      FFB USE ONLY

                        	 
      	
                          Date            September
      9,2008

                        
	 
      	 
      	 
      
	
                          Bond
      Identifier:

                        	 
      	
                          Place

                        
	 
      	 
      	
                          of

                        
	 
      	 
      	
                          Issue           Washington,
      DC

                        
	 
      	 
      	 
      
	
                          Purchase
      Date:

                        	 
      	
                          Last
      Day

                        
	 
      	 
      	
                          for
      an

                        
	 
      	 
      	
                          Advance
      (¶3)    October 15, 2011

                        
	 
      	 
      	 
      
	 
      	 
      	
                          Maximum

                        
	 
      	 
      	
                          Principal

                        
	 
      	 
      	
                          Amount
      (¶4)     $500,000,000.00

                        
	 
      	 
      	 
      
	 
      	 
      	
                          Final

                        
	 
      	 
      	
                          Maturity

                        
	 
      	 
      	
                          Date
      (¶5)       October 15,
    2031

                        

                

                 

              

              
                FUTURE ADVANCE BOND

                SERIES C

                

                

                

                1.    Promise to
Pay.

                

                FOR VALUE RECEIVED, NATIONAL RURAL UTILITIES COOPERATIVE
FINANCE CORPORATION, a cooperative association existing under the laws of
the District of Columbia (the "Borrower," which term
includes any successors or assigns) promises to pay the FEDERAL FINANCING BANK ("FFB"), a body
corporate and instrumentality of the United States of America (FFB, for so long
as it shall be the holder of this Bond, and any successor or assignee of FFB,
for so long as such successor or assignee shall be the holder of this Bond,
being the "Holder"), at the
times, in the manner, and with interest at the rates to be established as
hereinafter provided, such amounts as may be advanced from time to time by FFB
to the Borrower under this Bond (each such amount being an "Advance", and more
than one such amount being "Advances").

                 

                
                  2.    Reference to Certain
Agreements.

                   

                

                (a)  Bond Purchase
Agreement.  This Bond is the "Bond" referred to in, and
entitled to the benefits of, the Series C Bond Purchase Agreement dated as of
even date herewith, made by and among FFB, the Borrower, and the Administrator
of the Rural Utilities Service, a Rural Development agency of the United

                 

                
                  
                    
                    

                  

                  
                    Bond
- page 1

                    
                      

                    

                  

                  
                    
                    

                  

                

                States
Department of Agriculture ("RUS") (such
agreement, as it may be amended, supplemented, and restated from time to time in
accordance with its terms, being the "Bond Purchase
Agreement").

                

                (b) Bond Guarantee
Agreement.  This Bond is the "Bond" referred to in, and
entitled to the benefits of, the Series C Bond Guarantee Agreement dated as of
even date herewith, made between RUS and the Borrower (such agreement, as it may
be amended, supplemented, and restated from time to time in accordance with its
terms, being the "Bond
Guarantee Agreement").

                

                (c) Pledge
Agreement.  This Bond is the "Bond" referred to in the Pledge
Agreement dated as of even date herewith, made among the Borrower, RUS, and U.S.
Bank Trust National Association, a national association (such agreement, as it
may be amended, supplemented, and restated from time to time in accordance with
its terms, being the "Pledge
Agreement").

                 

                
                  3.    Advances; Advance Requests;
RUS Approval Requirement; Last Day for an Advance.

                

                 

                (a) Subject to the terms and conditions
of the Bond Purchase Agreement, FFB shall make Advances to the Borrower from
time to time under this Bond, in each case upon delivery to FFB of a written
request by the Borrower for an Advance under this Bond, in the form of request
attached to the Bond Purchase Agreement as Exhibit A thereto (each such request
being an "Advance
Request") and completed as prescribed in section 7.3.1 of the Bond
Purchase Agreement.

                

                (b) To be effective, an Advance Request
must first be delivered to RUS for approval and be approved by RUS in writing,
and such Advance Request, together with written notification of RUS's approval
thereof (each such notification being an "Advance Request Approval
Notice"), must be received by FFB consistent with the advance notice
requirements prescribed in section 7.3.2(b) of the Bond Purchase Agreement.

                

                (c) FFB shall make each requested
Advance on the particular calendar date that the Borrower requested in the
respective Advance Request to be the date on which the respective Advance is to
be made (such date being the "Requested Advance
Date" for such Advance), subject to the provisions of the Bond Purchase
Agreement describing certain circumstances under which a requested Advance shall
be made on a later date; provided, however, that no
Advance shall be made under this Bond after the particular date specified on
page 1 of this Bond as being the "Last Day for an Advance."

                

                4.    Principal Amount of
Advances; Maximum Principal Amount.

                

                The principal amount of each Advance
shall be the particular dollar amount that the Borrower specified in the

                 

                
                  
                    
                    

                  

                  
                    Bond
- page 2

                    
                      

                    

                  

                  
                    
                    

                  

                

                respective
Advance Request as the "Requested Advance Amount" for the respective Advance;
provided, however, that the
aggregate principal amount of all Advances made under this Bond shall not exceed
the particular amount specified on page 1 of this Bond as being the "Maximum
Principal Amount."  

                 

                
                  5.    Maturity
Dates for Advances.

                

                 

                Subject to paragraph 15 of this Bond,
each Advance shall mature on the particular calendar date that the Borrower
selected in the respective Advance Request to be the date on which the
respective Advance is to mature (such date being the "Maturity Date" for
such Advance), provided that such Maturity Date meets all of the criteria for
Maturity Dates prescribed in section 7.3.1(a)(5) of the Bond Purchase
Agreement.

                

                6.    Computation of Interest on
Advances.

                

                (a) Subject to paragraphs 11 and 16 of
this Bond, interest on the outstanding principal of each Advance shall accrue
from the date on which the respective Advance is made to the date on which such
principal is due.

                

                (b) Interest on each Advance shall be
computed on the basis of (1) actual days elapsed from (but not including) the
date on which the respective Advance is made (for the first payment of interest
due under this Bond for such Advance) or the date on which the payment of
interest was last due (for all other payments of interest due under this Bond
for such Advance), to (and including) the date on which the payment of interest
is next due; and (2) a year of 365 days (except in calendar years including
February 29, when the basis shall be a 366-day year).

                

                (c) The basic interest rate for each
Advance shall be established by FFB, as of the date on which the respective
Advance is made, on the basis of the determination made by the Secretary of the
Treasury pursuant to section 6(b) of the Federal Financing Bank Act of 1973, as
amended (codified at 12 U.S.C. § 2281 et seq.) (the "FFB Act"); provided, however, that the
shortest maturity used as the basis for any rate determination shall be the
remaining maturity of the most recently auctioned  United States
Treasury bills having the shortest maturity of all United States Treasury bills
then being regularly auctioned.  

                

                (d) In
the event that (1) the Borrower has selected for any Advance a Maturity Date
that will occur on or after the fifth anniversary of the Requested Advance Date
for such Advance, and (2) the Borrower has elected for such Advance a
prepayment/ refinancing privilege described in section 11.3 of the Bond Purchase
Agreement, then the interest rate for such Advance shall also include a price
(expressed in terms of a basis point increment to the applicable basic interest
rate) for the particular prepayment/refinancing privilege that the Borrower

                 

                
                  
                    
                    

                  

                  
                    Bond
- page 3

                    
                      

                    

                  

                  
                    
                    

                  

                

                selected,
which price shall be established by FFB on the basis of a determination made by
FFB as to the difference between (A) the estimated market yield of a
notional obligation if such obligation were to (i) be issued by the Secretary of
the Treasury, (ii) have a maturity comparable to the maturity of such Advance,
and (iii) include a prepayment and refinancing privilege identical to the
particular prepayment/refinancing privilege that the Borrower
elected for such Advance, and (B) the estimated market yield of a notional
obligation if such obligation were to (i) be issued by the Secretary of the
Treasury, (ii) have a maturity comparable to the maturity of such Advance, but
(iii) not include such prepayment and refinancing privilege.

                

                7.    Payment of Interest; Payment
Dates.

                

                Interest accrued on the outstanding
principal amount of each Advance shall be due and payable quarterly on January
15, April 15, July 15, and October 15 of each year (each such day being a
"Payment
Date"), beginning on the first Payment Date to occur after the date on
which the respective Advance is made, up through and including the Maturity Date
of such Advance; provided, however, that with
respect to each Advance that is made in the 30-day period immediately preceding
any Payment Date, payments of accrued interest on the outstanding principal
amount of the respective Advance shall be due beginning on the second Payment
Date to occur after the date on which such Advance is made. 

                

                8.    Repayment of
Principal.

                

                Subject to paragraph 15 of this Bond,
the principal amount of each Advance shall be payable on the Maturity Date for
the respective Advance.

                

                9.    Fee.

                

                (a)  A fee to cover expenses
and contingencies, assessed by FFB pursuant to section 6(c) of the FFB Act,
shall accrue on the outstanding principal amount of each Advance for the period
from the date on which the respective Advance is made to the date on which the
principal amount of such Advance is due, not taking into account any maturity
extensions permitted by paragraph 15 of this Bond (such period being the "Advance
Period").  

                

                (b) The fee on each Advance shall
be:

                

                (1) 22.5
basis points (0.225%) per annum of the unpaid
principal balance of such Advance for an Advance Period of a year or
less;

                

                (2) 27.5
basis points (0.275%) per annum of the unpaid
principal balance of such Advance for an Advance Period greater than a year but
no more than 5 years; and 

                

                
                  
                    
                    

                  

                  
                    Bond
- page 4

                    
                      

                    

                  

                  
                    
                    

                  

                

                (3) 35
basis points (0.35%) per annum of the unpaid
principal balance of such Advance for an Advance Period greater than 5
years.  

                

                (c) The
fee on each Advance shall be computed in the same manner as accrued interest is
computed under paragraph 6(b) of this Bond, and shall be due and payable at the
same times as accrued interest is due and payable under paragraph 7 of this Bond
(adjusted as provided in paragraph 10 of this Bond if a Payment Date is not a
Business Day).  The fee on each Advance shall be credited to RUS as
required by section 505(c) of the Federal Credit Reform Act of 1990, as amended
(codified at 2 U.S.C. § 661d(c)).

                

                10.    Business
Days.

                

                (a) Whenever any Payment Date, the
Maturity Date for any Advance, or the Final Maturity Date shall fall on a day on
which either FFB or the Federal Reserve Bank of New York is not open for
business, the payment that would otherwise be due on such Payment Date, Maturity
Date, or Final Payment Date, as the case may be, shall be due on the first day
thereafter on which FFB and the Federal Reserve Bank of New York are both open
for business (any such day being a "Business
Day").  

                

                (b) In the event that any Payment Date
falls on a day other than a Business Day, then the extension of time for making
the payment that would otherwise be due on such Payment Date shall be (1) taken
into account in establishing the interest rate for the respective Advance, (2)
included in computing interest due in connection with such payment, and (3)
excluded in computing interest due in connection with the next
payment.

                

                (c) In the event that the Maturity Date
for any Advance or the Final Maturity Date falls on a day other than a Business
Day, then the extension of time for making the payment that would otherwise be
due on such Maturity Date or the Final Maturity, as the case may be, shall be
(1) taken into account in establishing the interest rate for such Advance, and
(2) included in computing interest due in connection with such
payment.

                

                11.    Late
Payments.

                

                (a) In the event that any payment of
any amount owing under this Bond is not made when and as due (any such amount
being then an "Overdue
Amount"), then the amount payable shall be such Overdue Amount plus
interest thereon (such interest being the "Late Charge")
computed in accordance with this subparagraph (a).

                

                (1) The Late Charge shall accrue from
the scheduled date of payment for the Overdue Amount (taking into account

                 

                
                  
                    
                    

                  

                  
                    Bond
- page 5

                    
                      

                    

                  

                  
                    
                    

                  

                

                paragraph
10 of this Bond) to the date on which payment is made.

                

                (2) The Late Charge shall be computed
on the basis of (A) actual days elapsed from (but not including) the scheduled
date of payment for such Overdue Amount (taking into account paragraph 10 of
this Bond) to (and including) the date on which payment is made, and (B) a year
of 365 days (except in calendar years including February 29, when the basis
shall be a 366-day year).

                

                (3) The Late Charge shall accrue at a
rate (the "Late Charge
Rate") equal to one and one-half times the rate to be determined by the
Secretary of the Treasury taking into consideration the prevailing market yield
on the remaining maturity of the most recent auctioned 13-week United States
Treasury bills.  

                

                (4) The initial Late Charge Rate shall
be in effect until the earlier to occur of either (A) the date on which payment
of the Overdue Amount and the amount of accrued Late Charge is made, or (B) the
first Payment Date to occur after the scheduled date of payment for such Overdue
Amount.  In the event that the Overdue Amount and the amount of the
accrued Late Charge are not paid on or before such Payment Date, then the amount
payable shall be the sum of the Overdue Amount and the amount of the accrued
Late Charge, plus a Late Charge on such sum accruing at a new Late Charge Rate
to be then determined in accordance with the principles of clause (3) of this
subparagraph (a).  For so long as any Overdue Amount remains unpaid,
the Late Charge Rate shall be re-determined in accordance with the principles of
clause (3) of this subparagraph (a) on each Payment Date to occur thereafter,
and shall be applied to the Overdue Amount and all amounts of the accrued Late
Charge to the date on which payment of the Overdue Amount and all amounts of the
accrued Late Charge is made.

                

                (b) Nothing in subparagraph (a) of this
paragraph 11 shall be construed as permitting or implying that the Borrower may,
without the written consent of FFB, modify, extend, alter or affect in any
manner whatsoever (except as explicitly provided herein) the right of FFB to
receive any and all payments on account of this Bond on the dates specified in
this Bond.

                

                12.    Final Due
Date.

                

                Notwithstanding anything in this Bond
to the contrary, all amounts outstanding under this Bond remaining unpaid as of
the Final Maturity Date shall be due and payable on the Final Maturity
Date.

                

                
                  
                    
                    

                  

                  
                    Bond
- page 6

                    
                      

                    

                  

                  
                    
                    

                  

                

                13.    Manner of Making
Payments.

                

                (a) For so long as FFB is the Holder of
this Bond and RUS is the bond servicing agent for FFB (as provided in the Bond
Purchase Agreement), each payment under this Bond shall be paid in immediately
available funds by electronic funds transfer to the account of the United States
Treasury (for credit to the subaccount of RUS, as bond servicing agent for FFB)
maintained at the Federal Reserve Bank of New York specified by RUS in a written
notice to the Borrower, or to such other account as may be specified from time
to time by RUS in a written notice to the Borrower.

                

                (b) In the event that FFB is the Holder
of this Bond and RUS is not the bond
servicing agent for FFB, each payment under this Bond, with the exception of the
fee described in paragraph 9 of this Bond, shall be paid in immediately
available funds by electronic funds transfer to the account of the United States
Treasury (for credit to the subaccount of FFB) maintained at the Federal Reserve
Bank of New York specified by FFB in a written notice to the Borrower, or to
such other account as may be specified from time to time by FFB in a written
notice to the Borrower.  In the event that FFB is the Holder of this
Bond and RUS is not the bond
servicing agent for FFB, each payment of the fee described in paragraph 9 of
this Bond shall be paid in immediately available funds by electronic funds
transfer to the account of the United States Treasury (for credit to the
subaccount of RUS) maintained at the Federal Reserve Bank of New York specified
from time to time by RUS in a written notice delivered by RUS to the
Borrower.

                

                (c) In the event that FFB is not the Holder of
this Bond, then each payment under this Bond, with the exception of the fee
described in paragraph 9 of this Bond, shall be made in immediately
available funds by electronic funds transfer to such account as shall be
specified by the Holder in a written notice to the Borrower.  In the
event that FFB is not the Holder of
this Bond, each payment of the fee described in paragraph 9 of this Bond shall
be made in the manner specified by FFB in the written notice delivered by FFB to
the Borrower and RUS as provided in section 15.4.2 of the Bond Purchase
Agreement.

                

                14.    Application of
Payments.

                

                Each payment made on this Bond shall be
applied, first, to the payment of Late Charges (if any) payable under paragraphs
11 and 18 of this Bond, then to the payment of premiums (if any) payable under
paragraphs 16 and 17 of this Bond, then to the payment of unpaid accrued
interest, then on account of outstanding principal, and then to the payment of
the fee payable under paragraph 9 of this Bond.

                
                  
                    
                    

                  

                  
                    Bond
- page 7

                    
                      

                    

                  

                  
                    
                    

                  

                

                

                15.    Maturity
Extensions.

                

                (a) With respect to each Advance (1)
for which the Borrower has selected a Maturity Date that will occur before the
twentieth anniversary of the Requested Advance Date specified in the respective
Advance Request, or (2) for which a Maturity Date that will occur before the
twentieth anniversary of the Requested Advance Date specified in the respective
Advance Request has been determined as provided in subparagraph (b) of this
paragraph 15 (each such Maturity Date being an "Interim Maturity
Date"), the Borrower may, effective as of such Interim Maturity Date,
elect to extend the maturity of all or any portion of the outstanding principal
amount of the respective Advance to a new Maturity Date to be selected by the
Borrower in the manner and subject to the limitations specified in this
subparagraph (a) (each such election being a "Maturity Extension
Election"; each such elective extension of the maturity of any Advance
that has an Interim Maturity Date being a "Maturity Extension";
and the Interim Maturity Date that is in effect for an Advance immediately
before any such elective Maturity Extension being, from and after such Maturity
Extension, the "Maturity Extension Effective
Date").  

                

                (1) Except under the circumstances
described in clause (3) of this subparagraph (a), the Borrower shall
deliver to FFB (with a copy to RUS) written notification of each Maturity
Extension Election, in the form of notification attached to this Bond as Annex 1-A (each such
notification being a "Maturity Extension Election
Notice"), making reference to the "Advance Identifier" (as that term is
defined in the Bond Purchase Agreement) that FFB assigned to such Advance (as
provided in the Bond Purchase Agreement) and specifying, among other things, the
following: 

                

                (A) the amount of the outstanding
principal of the such Advance with respect to which the Borrower elects to
extend the maturity; and

                

                (B) the new Maturity Date that the
Borrower selects to be in effect for such principal amount after the respective
Maturity Extension Effective Date, which date:

                

                (i) may be either (I) a new Interim
Maturity Date, or (II) the twentieth anniversary of the Requested Advance Date
specified in the original Advance Request (if such twentieth anniversary date is
a Payment Date) or the Payment Date immediately preceding such twentieth
anniversary date (if such twentieth anniversary date is not a Payment Date);
and

                

                
                  
                    
                    

                  

                  
                    Bond
- page 8

                    
                      

                    

                  

                  
                    
                    

                  

                

                (ii) in the event that the Borrower
selects a new Interim Maturity Date as the new Maturity Date for any Advance,
must meet the criteria for Maturity Dates prescribed in section 7.3.1(a)(5) of
the Bond Purchase Agreement (provided, however, that, for
purposes of selecting a new Maturity Date in connection with a Maturity
Extension Election, each of the references to the "Requested Advance Date" for
the respective Advance in section 7.3.1(a)(5)(D) of the Bond Purchase Agreement
shall be deemed to be a reference to the "respective Maturity Extension
Effective Date").

                

                (2) To be effective, a Maturity
Extension Election Notice must be received by FFB on or before the third
Business Day before the Interim Maturity Date in effect for the respective
Advance immediately before such Maturity Extension.

                

                (3) In the event that either of the
circumstances described in subclause (A) or (B) of the next sentence occurs,
then a Maturity Extension Election Notice (in the form of notice attached to
this Bond as Annex
1-B), to be effective, must first be delivered to RUS for approval and be
approved by RUS in writing, and such Maturity Extension Election Notice,
together with written notification of RUS's approval thereof, must be received
by FFB on or before the third Business Day before the Interim Maturity Date in
effect for the respective Advance immediately before such Maturity
Extension.  RUS approval of a Maturity Extension Election Notice will
be required under either of the following circumstances:

                

                (A) (i) any payment of any amount owing
under this Bond is not made by the Borrower when and as due; (ii) payment
is made by RUS in accordance with the guarantee set forth at the end of this
Bond; and (iii) RUS delivers notice to both the Borrower and FFB advising
each of them that each Maturity Extension Election Notice delivered by the
Borrower after the date of such notice shall require the approval of RUS;
or

                

                (B) FFB at any time delivers written
notice to both the Borrower and RUS advising each of them that each Maturity
Extension Election Notice delivered by the Borrower after the date of such
notice shall require the approval of RUS.

                

                (b) With respect to any Advance that
has an Interim Maturity Date, in the event that FFB does not receive a Maturity
Extension Election Notice (and, if required under subparagraph (a)(3) of
this paragraph 15, written notification 

                 

                
                  
                    
                    

                  

                  
                    Bond
- page 9

                    
                      

                    

                  

                  
                    
                    

                  

                

                of RUS's
approval thereof) on or before the third Business Day before such Interim
Maturity Date, then the maturity of such Advance shall be extended automatically
in the manner and subject to the limitations specified in this subparagraph (b)
(each such automatic extension of the maturity of any Advance that has an
Interim Maturity Date also being a "Maturity Extension";
and the Interim Maturity Date that is in effect for an Advance immediately
before any such automatic Maturity Extension also being, from and after such
Maturity Extension, the "Maturity Extension Effective
Date").  The new Maturity Date for such Advance shall be the
immediately following Payment Date.  The amount of principal that will
have its maturity extended automatically shall be the entire outstanding
principal amount of such Advance on such Maturity Extension Effective Date, less
the amount of any payment of principal made on such Maturity Extension Effective
Date.

                

                (c) In the event that the maturity of
any Advance that has an Interim Maturity Date is extended under either
subparagraph (a) or (b) of this paragraph 15, then the basic interest rate
for such Advance, from and after the respective Maturity Extension Effective
Date, shall be the particular rate that is established by FFB, as of such
Maturity Extension Effective Date, in accordance with the principles of
paragraph 6(c) of this Bond.

                

                (d) In
the event that the maturity of any Advance that has an Interim Maturity Date is
extended under either subparagraph (a) or (b) of this paragraph 15, then
the fee for such Advance, from and after the respective Maturity Extension
Effective Date, shall be the particular fee that is assessed by FFB, as of such
Maturity Extension Effective Date, with the new Advance Period being the period
from the Maturity Extension Effective Date through the new Maturity Date, in
accordance with the principles of paragraphs 9(b) and (c) of this
Bond.

                

                (e) In the event that (1) the maturity
of any Advance that has an Interim Maturity Date is extended under either
subparagraph (a) or (b) of this paragraph 15, and (2) the Maturity Date for such
extended Advance is a date that will occur before the fifth
anniversary of the respective Maturity Extension Effective Date, then the
prepayment/refinancing privilege described in section 11.2 of the Bond Purchase
Agreement shall apply automatically to such Advance.

                

                (f) In the event that (1) the Borrower
makes a Maturity Extension Election with respect to any Advance that has an
Interim Maturity Date, and (2) the Borrower selects as the Maturity Date for
such extended Advance a new Maturity Date that will occur on or after the fifth
anniversary of the respective Maturity Extension Effective Date, then the
Borrower must elect a prepayment/refinancing privilege for such extended Advance
from between the options described in sections 11.2 and 11.3 of the Bond
Purchase Agreement (provided, however, that each of
the 

                 

                
                  
                    
                    

                  

                  
                    Bond
- page 10

                    
                      

                    

                  

                  
                    
                    

                  

                

                references
to "the Requested Advance Date for such Advance" in  section 11.3 of
the Bond Purchase Agreement shall be deemed to be a reference to "the respective
Maturity Extension Effective Date").  The Maturity Extension Election
Notice delivered by the Borrower in connection with each such Maturity Extension
Election must also specify the particular prepayment/refinancing privilege that
the Borrower elects for the respective extended Advance.  In the event
that the Borrower elects for any such extended Advance a prepayment/refinancing
privilege described in section 11.3 of the Bond Purchase Agreement, then the
interest rate for such extended Advance, from and after the respective Maturity
Extension Effective Date, shall include a price (expressed in terms of a basis
point increment to the applicable basic interest rate) for the particular
prepayment/refinancing privilege that the Borrower elects, which price shall be
established by FFB, as of such Maturity Extension Effective Date, in accordance
with the principles of paragraph 6(d) of this Bond.  

                

                (g) The maturity of each Advance may be
extended more than once as provided in this paragraph 15, but upon the twentieth
anniversary of the Requested Advance Date specified in the original Advance
Request (if such twentieth anniversary date is a Payment Date) or upon the
Payment Date immediately preceding such twentieth anniversary date (if such
twentieth anniversary date is not a Payment Date), no further Maturity
Extensions may occur.

                

                16.    Prepayments.

                

                (a) The Borrower may elect to prepay
all or any portion of the outstanding principal amount of any Advance made under
this Bond, or to prepay this Bond in its entirety, in the manner, at the price,
and subject to the limitations specified in this paragraph 16 (each such
election being a "Prepayment
Election").

                

                (b) For each Prepayment Election in
which the Borrower elects to prepay a particular amount of the outstanding
principal of an Advance, the Borrower shall deliver to RUS written notification
of the respective Prepayment Election, in the form of notification attached to
this Bond as Annex
2-A (each such notification being a "Prepayment Election
Notice"), making reference to the Advance Identifier that FFB assigned to
the respective Advance (as provided in the Bond Purchase Agreement) and
specifying, among other things, the following: 

                

                (1) the particular date on which the
Borrower intends to make the prepayment on such Advance (such date being the
"Intended Prepayment
Date" for such Advance), which date: 

                

                (A) must be a Business Day;
and

                

                (B) for any Advance for which the
Borrower has selected a fixed premium prepayment/refinancing 

                 

                
                  
                    
                    

                  

                  
                    Bond
- page 11

                    
                      

                    

                  

                  
                    
                    

                  

                

                privilege
that includes a 5-year period during which such Advance shall not be eligible for
any prepayment or refinancing (such time period being a "No-Call Period"), may
not be a date that will occur before the applicable "First Call Date" determined
as provided in section 11.3.2 of the Bond Purchase Agreement (such date being
the "First Call
Date"); and

                

                (2) the amount of principal of the
respective Advance that the Borrower intends to prepay, which amount may be
either:

                

                (A) the total outstanding principal
amount of such Advance; or

                

                (B) an amount less than the total
outstanding principal amount of such Advance (subject to subparagraph (g) of
this paragraph 16) (any such amount being a "Portion").

                

                (c) For each Prepayment Election in
which the Borrower elects to have a particular amount of funds applied by FFB
toward the prepayment of the outstanding principal of an Advance, the Borrower
shall deliver to RUS written notification of the respective Prepayment Election,
in the form of notification attached to this Bond as Annex 2-B (each such
notification also being a "Prepayment Election
Notice"), making reference to the Advance Identifier that FFB assigned to
the respective Advance (as provided in the Bond Purchase Agreement) and
specifying, among other things, the following: 

                

                (1) the particular date on which the
Borrower intends to make the prepayment on such Advance (such date being the
"Intended Prepayment
Date" for such Advance), which date: 

                

                (A) must be a Business Day;
and

                

                (B) for any Advance for which the
Borrower has selected a fixed premium prepayment/refinancing privilege that
includes a 5-year No-Call Period, may not be a date that will occur before the
applicable First Call Date; and

                

                (2) the particular amount of funds that
the Borrower elects to be applied by FFB toward a prepayment of the outstanding
principal amount of such Advance.

                

                (d) To be effective, a Prepayment
Election Notice must be approved by RUS in writing, and such Prepayment Election
Notice, together with written notification of RUS's approval thereof, must be
received by FFB on or before the fifth Business Day before the date specified
therein as the Intended Prepayment Date for the respective Advance or
Portion.

                

                
                  
                    
                    

                  

                  
                    Bond
- page 12

                    
                      

                    

                  

                  
                    
                    

                  

                

                (e) The Borrower shall pay to FFB a
price for the prepayment of any Advance, any Portion of any Advance, or this
Bond in its entirety (such price being the "Prepayment Price" for
such Advance or Portion or this Bond, as the case may be) determined as
follows:

                

                (1) in the event that the Borrower
elects to prepay the entire outstanding principal amount of any Advance, then
the Borrower shall pay to FFB a Prepayment Price for such Advance equal to the
sum of:

                

                (A) the entire outstanding principal
amount of such Advance on the Intended Prepayment Date;

                

                (B) all unpaid interest (and Late
Charges, if any) accrued on such Advance through the Intended Prepayment Date;
and

                

                (C) the amount of the premium or
discount credit (if any) that is required under the particular
prepayment/refinancing privilege that applies to such Advance;

                

                (2) in the event that the Borrower
elects to prepay a Portion of any Advance, then the Borrower shall pay to FFB a
Prepayment Price for such Portion that would equal such Portion's pro rata share
of the Prepayment Price that would be required for a prepayment of the entire
outstanding principal amount of such Advance (determined in accordance with the
principles of clause (1) of this subparagraph (e)); and

                

                (3) in the event that the Borrower
elects to prepay this Bond in its entirety, then the Borrower shall pay to FFB
an amount equal to the sum of the Prepayment Prices for all outstanding Advances
(determined in accordance with the principles of clause (1) of this subparagraph
(e)).

                

                (f) Payment of the Prepayment Price for
any Advance, any Portion of any Advance, or this Bond in its entirety shall be
due to FFB before 3:00 p.m. (Washington, DC, time) on the Intended Prepayment
Date for such Advance or Portion or this Bond, as the case may be.

                

                (g) Each prepayment of a Portion shall,
as to the principal amount of such Portion, be subject to a minimum amount equal
to $100,000.00 of principal.

                

                (h) The Borrower may make more than one
Prepayment Election with respect to an Advance, each such Prepayment Election
being made with respect to a different Portion of such Advance, until such time
as the entire principal amount of such Advance is repaid in full.

                

                
                  
                    
                    

                  

                  
                    Bond
- page 13

                    
                      

                    

                  

                  
                    
                    

                  

                

                17.    Refinancings.

                

                (a) The Borrower may elect to refinance
the outstanding principal amount of any Advance (but not any Portion) in the
manner, at the price, and subject to the limitations specified in this paragraph
17 (each such election being a "Refinancing
Election").

                

                (b) Except under the circumstances
described in subparagraph (d) of this paragraph 17, the Borrower shall
deliver to FFB (with a copy to RUS) written notification of each Refinancing
Election, in the form of notification attached to this Bond as Annex 3-A (each such
notification being a "Refinancing Election
Notice"), making reference to the Advance Identifier that FFB assigned to
the respective Advance (as provided in the Bond Purchase Agreement) and
specifying, among other things, the following: 

                

                (1) the particular date on which the
Borrower intends to refinance the respective Advance (such date being the "Intended Refinancing
Date" for the respective Advance), which date:

                

                (A) must be a Payment Date;
and

                

                (B) for any Advance for which the
Borrower has selected a prepayment/refinancing privilege that includes a 5-year
No-Call Period, may not be a date that will occur before the applicable First
Call Date;

                

                (2) the amount of the outstanding
principal of the respective Advance that the Borrower elects to refinance (which
may not be a Portion); and

                

                (3) the Maturity Date that the Borrower
selects to be in effect for such principal amount after such refinancing, which
date may be:

                

                (A) the Maturity Date that is in effect
for such Advance immediately before such refinancing; or

                

                (B) a new Maturity Date that the
Borrower selects in connection with such Refinancing Election, provided that
such new Maturity Date meets the criteria for Maturity Dates prescribed in
section 7.3.1(a)(5) of the Bond Purchase Agreement (provided, however, that for
purposes of selecting a new Maturity Date in connection with a Refinancing
Election, each of the references to the "Requested Advance Date" for the
respective Advance in section 7.3.1(a)(5)(D) of the Bond Purchase Agreement
shall be deemed to be a reference to the "respective Refinancing Effective
Date").

                

                
                  
                    
                    

                  

                  
                    Bond
- page 14

                    
                      

                    

                  

                  
                    
                    

                  

                

                (c) To be effective, a Refinancing
Election Notice must be received by FFB on or before the fifth Business Day
before the date specified therein as the Intended Refinancing Date.

                

                (d) In the event that either of the
circumstances described in clause (1) or (2) of the next sentence shall have
occurred, then a Refinancing Election Notice (in the form of notice attached to
this Bond as Annex
3-B), to be effective, must first be delivered to RUS for approval and be
approved by RUS in writing, and such Refinancing Election Notice, together with
written notification of RUS's approval thereof, must be received by FFB on or
before the fifth Business Day before the date specified therein to be the
Intended Refinancing Date.  RUS approval of a Refinancing Election
Notice will be required under either of the following
circumstances:

                

                (1) (A) payment of any amount owing
under this Bond is not made by the Borrower when and as due; (B) payment is made
by RUS in accordance with the guarantee set forth at the end of this Bond; and
(C) RUS delivers notice to both the Borrower and FFB advising each of them that
each Refinancing Election Notice delivered by the Borrower after the date of
such notice shall require the approval of RUS; or

                

                (2) FFB at any time delivers written
notice to both the Borrower and RUS advising each of them that each Refinancing
Election Notice delivered by the Borrower after the date of such notice shall
require the approval of RUS.

                

                (e) The Borrower shall pay to FFB a
price for the refinancing of any Advance (such price being the "Refinancing Price"
for such Advance) equal to the sum of:  

                

                (1) all unpaid interest (and Late
Charges, if any) accrued on such Advance through the Intended Refinancing Date;
and

                

                (2) the amount of the premium (if any)
that is required under the particular prepayment/refinancing privilege that
applies to such Advance.

                

                In the
event that (A) the prepayment/refinancing privilege that applies to the
particular Advance being refinanced is the privilege described in section 11.2
of the Bond Purchase Agreement, and (B) the Market Value Premium (or Discount)
that is to be included in the Refinancing Price for such Advance is a discount
on such Advance, then such discount shall be applied by FFB in the manner
requested by the Borrower in a written notice delivered by the Borrower to FFB
and approved by RUS in writing.

                

                (f) Payment of the Refinancing Price
for any Advance shall be due to FFB before 3:00 p.m. (Washington, DC, time) on
the Intended Refinancing Date for such Advance.

                

                
                  
                    
                    

                  

                  
                    Bond
- page 15

                    
                      

                    

                  

                  
                    
                    

                  

                

                (g) In the event that a Refinancing
Election Notice (and, if required under subparagraph (d) of this paragraph 17,
written notification of RUS's approval thereof) is received by FFB on or before
the fifth Business Day before the Intended Refinancing Date specified therein,
then the refinancing of the respective Advance shall become effective on such
Intended Refinancing Date (in such event, the Intended Refinancing Date being
the "Refinancing
Effective Date").  In the event that a Refinancing Election
Notice (and, if required under subparagraph (d) of this paragraph 17, written
notification of RUS's approval thereof) is received by FFB after the fifth
Business Day before the Intended Refinancing Date specified therein, then the
refinancing of the respective Advance shall become effective on the fifth
Business Day to occur after the day on which such Refinancing Election Notice
(and, if required under subparagraph (d) of this paragraph 17, written
notification of RUS's approval thereof) is received by FFB (in such event, the
fifth Business Day to occur after the day on which such Refinancing Election
Notice (and, if required under subparagraph (d) of this paragraph 17, written
notification of RUS's approval thereof) is received by FFB being the "Refinancing Effective
Date"), provided that the Borrower shall have paid to FFB, in addition to
the Refinancing Price required under subparagraph (e) of this paragraph 17, the
interest accrued from the Intended Refinancing Date through such Refinancing
Effective Date.

                

                (h) In the event that the Borrower
makes a Refinancing Election with respect to any Advance, the basic interest
rate for such Advance, from and after the respective Refinancing Effective Date,
shall be the particular rate that is established by FFB, as of such Refinancing
Effective Date, in accordance with the principles of paragraph 6(c) of this
Bond.

                

                (i) In
the event that the Borrower makes a Refinancing Election with respect to any
Advance, then the fee for such Advance, from and after the respective
Refinancing Effective Date, shall be the particular fee that is assessed by FFB,
as of such Refinancing Effective Date, with the new Advance Period being the
period from the Refinancing Effective Date through the new Maturity Date, in
accordance with the principles of paragraphs 9(b) and (c) of this
Bond.

                

                (j) In the event that (1) the Borrower
makes a Refinancing Election with respect to any Advance, and (2) the Borrower
selects as the Maturity Date for such refinanced Advance either (A) the Maturity
Date that is in effect for such Advance immediately before such refinancing, and
such Maturity Date will occur before the fifth
anniversary of the respective Refinancing Effective Date, or (B) a new Maturity
Date that will occur before the fifth
anniversary of the respective Refinancing Effective Date, then the
prepayment/refinancing privilege described in section 11.2 of the Bond Purchase
Agreement shall apply automatically to such Advance. 

                

                
                  
                    
                    

                  

                  
                    Bond
- page 16

                    
                      

                    

                  

                  
                    
                    

                  

                

                (k) In the event that (1) the Borrower
makes a Refinancing Election with respect to any Advance, and (2) the Borrower
selects as the Maturity Date for such refinanced Advance either (A) the Maturity
Date that is in effect for such Advance immediately before such refinancing, and
such Maturity Date will occur on or after the fifth
anniversary of the respective Refinancing Effective Date, or (B) a new Maturity
Date that will occur on or after the fifth
anniversary of the respective Refinancing Effective Date, then the Borrower must
elect a prepayment/refinancing privilege for such refinanced Advance from
between the options described in sections 11.2 and 11.3 of the Bond Purchase
Agreement (provided, however, that each of
the references to the "Requested Advance Date for such Advance" in section 11.3
of the Bond Purchase Agreement shall be deemed to be a reference to the
"respective Refinancing Effective Date").  The Refinancing Election
Notice delivered by the Borrower in connection with each such Refinancing
Election must also specify the particular prepayment/refinancing privilege that
the Borrower elects for the respective refinanced Advance.  In the
event that the Borrower elects for any such refinanced Advance a
prepayment/refinancing privilege described in section 11.3 of the Bond
Purchase Agreement, then the interest rate for such refinanced Advance, from and
after the respective Refinancing Effective Date, shall include a price
(expressed in terms of a basis point increment to the applicable basic interest
rate) for the particular prepayment/refinancing privilege that the Borrower
elects, which increment shall be established by FFB, as of such Refinancing
Effective Date, in accordance with the principles of paragraph 6(d) of this
Bond. 

                

                (l) The Borrower may make more than one
Refinancing Election with respect to any Advance.

                 

                
                  18.    Rescission
of Prepayment Elections and Refinancing Elections; Late Charges for Late
Payments.

                

                (a) The Borrower may rescind any
Prepayment Election made in accordance with paragraph 16 of this Bond or any
Refinancing Election made in accordance with paragraph 17 of this Bond, but only
in accordance with this paragraph 18.

                

                (b) The Borrower shall deliver to both
FFB and RUS written notification of each rescission of a Prepayment Election or
a Refinancing Election (each such notification being an "Election Rescission
Notice") specifying the particular Advance for which the Borrower wishes
to rescind such Prepayment Election or Refinancing Election, as the case may be,
which specification must make reference to both: 

                

                (1) the particular Advance Identifier
that FFB assigned to such Advance (as provided in the Bond Purchase Agreement);
and

                

                
                  
                    
                    

                  

                  
                    Bond
- page 17

                    
                      

                    

                  

                  
                    
                    

                  

                

                (2) the RUS account number for such
Advance.

                

                The
Election Rescission Notice may be delivered by facsimile transmission to FFB at
(202) 622-0707 and to RUS at (202) 720-1401, or at such other facsimile number
or numbers as either FFB or RUS may from time to time communicate to the
Borrower.

                

                (c) To be effective, an Election
Rescission Notice must be received by both FFB and RUS not later than 3:30 p.m.
(Washington, DC, time) on the second Business Day before the Intended Prepayment
Date or the Intended Refinancing Date, as the case may be.

                

                (d) In the event that the Borrower (1)
makes a Prepayment Election in accordance with paragraph 16 of this Bond or a
Refinancing Election in accordance with paragraph 17 of this Bond; (2) does not
rescind such Prepayment Election or Refinancing Election, as the case may be, in
accordance with this paragraph 18; and (3) does not, before 3:00 p.m.
(Washington, DC, time) on the Intended Prepayment Date or Intended Refinancing
Date, as the case may be, pay to FFB the Prepayment Price described in paragraph
16(e) of this Bond or Refinancing Price described in paragraph 17(e) of
this Bond, as the case may be, then a Late Charge shall accrue on any such
unpaid amount from the Intended Prepayment Date or Intended Refinancing Date, as
the case may be, to the date on which payment is made, computed in accordance
with the principles of paragraph 11 of this Bond.

                

                19.    Amendments to
Bond.

                

                To the extent not inconsistent with
applicable law, this Bond, for so long as FFB or its agent is the holder
thereof, shall be subject to modification by such amendments, extensions, and
renewals as may be agreed upon from time to time by FFB and the Borrower, with
the approval of RUS.

                

                20.    Certain
Waivers.

                

                The Borrower hereby waives any
requirement for presentment, protest, or other demand or notice with respect to
this Bond.

                

                21.    Bond Effective Until
Paid.

                

                This Bond shall continue in full force
and effect until all principal outstanding hereunder, all interest accrued
hereunder, all premiums (if any) payable under paragraphs 16 and 17 of this
Bond, all Late Charges (if any) payable under paragraphs 11 and 18 of this Bond,
and all fees (if any) payable under paragraph 9 of this Bond have been paid in
full.

                 

                
                  
                    
                    

                  

                  
                    Bond
- page 18

                    
                      

                    

                  

                  
                    
                    

                  

                

                

                  22.    RUS Guarantee of
Bond.

                   

                

                Upon execution of the guarantee set
forth at the end of this Bond (the "RUS Guarantee"), the
payment by the Borrower of all amounts due and payable under this Bond, when and
as due, shall be guaranteed by the United States of America, acting through RUS,
pursuant to the Rural Electrification Act of 1936, as amended (codified at 7
U.S.C. § 901 et
seq.).  In
consideration of the RUS Guarantee, the Borrower promises to RUS to make all
payments due under this Bond when and as due. 

                 

                
                  23.    Pledge
Agreement.

                   

                

                This Bond is one of several Bonds
referred to in the Pledge Agreement, wherein the Borrower made provision for the
pledge and grant of a security interest in, under certain circumstances
described therein, certain property of the Borrower, described therein, to
secure the payment of and performance of certain obligations owed to RUS, as set
forth in the Pledge Agreement.

                

                24.    Guarantee Payments;
Reimbursement.

                

                If RUS makes any payment, pursuant to
the RUS Guarantee, of any amount due and payable under this Bond, when and as
due, each and every such payment so made shall be deemed to be a payment
hereunder; provided, however, that no
payment by RUS pursuant to the RUS Guarantee shall be considered a payment for
purposes of determining the existence of a failure by the Borrower to perform
its obligation to RUS to make all payments under this Bond when and as
due.  RUS shall have any rights by way of subrogation, agreement or
otherwise which arise as a result of such payment pursuant to the RUS
Guarantee.

                 

                
                  25.    Default and
Enforcement.

                

                 

                In case of a default by the Borrower
under this Bond or the occurrence of an event of default under the Bond
Guarantee Agreement, then, in consideration of the obligation of RUS under the
RUS Guarantee, in that event, to make payments to FFB as provided in this Bond,
RUS, in its own name, shall have all rights, powers, privileges, and remedies of
the holder of this Bond, in accordance with the terms of this Bond, the Bond
Guarantee Agreement, and the Pledge Agreement, including, without limitation,
the right to enforce or collect all or any part of the obligation of the
Borrower under this Bond or arising as a result of the RUS Guarantee, to file
proofs of claim or any other document in any bankruptcy, insolvency, or other
judicial proceeding, and to vote such proofs of claim.

                

                26.    Acceleration.

                

                The entire unpaid principal amount of
this Bond, and all interest thereon, may be declared, and upon such declaration
shall become, due and payable to RUS, under the circumstances 

                 

                
                  
                    
                    

                  

                  
                    Bond
- page 19

                    
                      

                    

                  

                  
                    
                    

                  

                

                described,
and in the manner and with the effect provided, in the Bond Guarantee
Agreement.

                

                

                IN WITNESS WHEREOF, the
Borrower has caused this Bond to be signed in its corporate name and its
corporate seal to be hereunder affixed and attested by its officers thereunto
duly authorized, all as of the day and year first above written.

                

                

                

                     NATIONAL RURAL UTILITIES

                             COOPERATIVE
FINANCE CORPORATION

                                    (the
"Borrower")

                
 

                BY:

                 

                

                Signature:   /s/ SHELDON C. PETERSEN

                

                

                Print Name:  Sheldon C.
Petersen

                

                

                Title:       Governor
and

                                        Chief
Executive Officer

                 

                

                ATTEST:

                
 

                

                Signature:   /s/ JOHN J. LIST

                (SEAL)

                

                Print Name:  John J.
List

                

                

                Title:       Assistant
Secretary-Treasurer

                

                
                  
                    
                      

                       

                    

                     

                  

                  
                    Bond
- page 20

                    
                      

                    

                  

                  
                     

                    RUS

                  

                

              

               

               

               

               

              ANNEX
1-A

              

              TO

              

              FUTURE
ADVANCE BOND

              

               

              

              

              FORM

              

              OF

              

              MATURITY
EXTENSION ELECTION NOTICE

               

               

              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                  RUS

                

              

            

            
              
                

                MATURITY
EXTENSION ELECTION NOTICE

                

                ****************************************************************

                

                PART
1 OF THIS FORM HAS BEEN COMPLETED BY RUS.  THE BORROWER SHOULD
COMPLETE PART 2 OF THIS FORM ONLY FOR THOSE
PARTICULAR ADVANCES IDENTIFIED IN PART 1 OF THIS FORM WITH RESPECT TO WHICH THE
BORROWER ELECTS TO HAVE THE MATURITY EXTENDED TO A NEW MATURITY DATE OTHER THAN THE
IMMEDIATELY FOLLOWING QUARTERLY PAYMENT DATE.

                

                DIRECT
ALL QUESTIONS
ON HOW TO COMPLETE THIS FORM TO THE ASSIGNED CONTACT OFFICE FOR THE
BORROWER:  

                

                Chief

                Policy
Analysis and Loan Management Staff

                Telephone:  (202)
720-0424

                

                WHEN
COMPLETED, DELIVER THIS ORIGINAL FORM TO FFB AT THE
FOLLOWING ADDRESS:

                

                Manager

                Federal Financing Bank

                Main Treasury Building

                1500 Pennsylvania Avenue,
NW

                Washington,
DC  20220

                

                Telephone:  (202)
622-2470

                Facsimile:   (202)
622-0707

                

                 DELIVER
A COPY OF THIS
FORM TO RUS AT
THE ADDRESS OF THE CONTACT OFFICE INDICATED BELOW:

                

                Chief

                Policy
Analysis and Loan Management Staff

                Rural
Utilities Service

                U.S.
Department of Agriculture

                Mail
Stop 1560

                1400
Independence Avenue, SW

                Washington,
DC  20250-1560

                

                Reference:  Section
313A Loan Guarantee

                

                Telephone:  (202)
720-0424

                Facsimile:   (202)
690-0717

                

                THE
BORROWER SHOULD NOT COMPLETE THIS
FORM OR DELIVER
IT TO FFB  IF THE BORROWER DESIRES TO HAVE THE MATURITY OF ALL OF THE
ADVANCES IDENTIFIED IN PART 1 OF THIS FORM EXTENDED AUTOMATICALLY TO THE
IMMEDIATELY FOLLOWING QUARTERLY PAYMENT DATE.

                

                IF
THE BORROWER DOES NOT RETURN THIS FORM
TO FFB, THE MATURITY OF ALL OF THE ADVANCES IDENTIFIED IN PART 1 OF THIS FORM
WILL BE EXTENDED AUTOMATICALLY TO THE IMMEDIATELY FOLLOWING QUARTERLY PAYMENT
DATE.

                 

                ****************************************************************

                
                  
                    
                    

                  

                  
                    MATURITY
EXT. ELECTION - page1

                    
                      

                    

                  

                  
                    
                    

                    RUS

                  

                

                 

                
                  MATURITY
EXTENSION ELECTION NOTICE

                  

                  Manager

                  Federal
Financing Bank

                  

                  Reference is made to the
following-described Future Advance Bond (the "Bond") payable to the Federal
Financing Bank ("FFB"), which is guaranteed by the Rural Utilities Service
("RUS"):

                   

                  Name of
Borrower (the "Borrower"):

                  

                  National Rural Utilities
Cooperative Finance Corporation

                  

                  FFB Bond
Identifier: _____________________

                  

                  RUS Bond
Number: _____________________

                   

                  Part 1 (To be completed by
RUS):

                  

                  

                  Each of the advances of funds
("Advances") identified in this Part 1 will mature on _______________ (the
"Maturity Date").

                   

                       
  FFB             RUS         ORIGINAL     ORIGINAL     OUTSTANDING

                    ADVANCE        
ACCOUNT    ADVANCE      ADVANCE      
PRINCIPAL

                   IDENTIFIER      
 NUMBER        DATE           
AMOUNT         
AMOUNT

                  

                  

                   ___________    
_______    
 _________    $___________  $___________

                  

                   ___________    
_______      _________    $___________  $___________

                  

                   ___________    
_______      _________    $___________  $___________

                  

                   ___________    
_______      _________    $___________  $___________

                  

                  

                  
                    
                      
                      

                    

                    
                      MATURITY
EXT. ELECTION - 2

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                  

                  Part 2:

                   

                  Notice is hereby given to FFB (and RUS)
of the Borrower's election that the maturity of each of the Advances identified
in this Part 2 be extended as follows:

                  

                  

                                                              AMOUNT
OF                          TYPE
OF

                      FFB            OPTIONAL             
  PRINCIPAL         NEW           
PREPAYMENT/    
 5-YEAR

                    ADVANCE         PRINCIPAL            TO
BE         MATURITY     REFINANCING       
 NO-CALL     PREMIUM

                   IDENTIFIER1      PAYMENT2          EXTENDED3       DATE4           PRIVILAGE         PERIOD6      OPTION7

                  

                  

                   __________      $________          _________       _________     _________       _________    _________

                  

                   __________      $________          _________       _________   
 _________          
_________    _________

                  

                   __________      $________          _________       _________        
_________          
_________    _________

                  

                   __________      $________          _________       _________        
_________         
 _________    _________                    

                  

                   

                  ____________________

                  
                    1Complete 1 line in Part 2 for each
Advance identified in Part 1 with respect to which the Borrower elects to have
the maturity extended to a new Maturity Date other
than the next Payment
Date.  Insert the FFB Advance Identifier that FFB assigned to the
respective Advance for each Advance identified in Part 1 with respect to which
the Borrower elects to have the maturity so extended. 

                  

                          2The
Borrower has the option of making a payment of principal on the Maturity Date
without any premium being charged.  For each Advance, insert the
amount of any such optional principal payment that will be paid on the Maturity
Date.

                                 
3For each
Advance, insert the amount of principal for which the maturity is to be
extended.  That amount must equal the difference between
the outstanding principal amount for the respective Advance, as specified in
Part 1, and the optional principal payment (if any) for such Advance inserted by
the Borrower in Part 2.

                          4For each
Advance, insert the particular calendar date that the Borrower selects to be the
new Maturity
Date" to be in effect for the respective Advance after the Maturity Extension,
which new Maturity Date must meet all the criteria for Maturity Dates specified
in section 7.3.1(a)(5) of the Bond Purchase Agreement referred to in the
Bond.

                       5Elect 1
of the following 2 types of prepayment/refinancing privilege for an Advance
only if the new
Maturity Date selected for such Advance will occur on or after the fifth
anniversary of the effective date of this Maturity Extension.  The 2
types of prepayment/refinancing privilege are: the market value premium (or
discount) privilege ("M") and a fixed premium privilege ("F").  Insert
in the box the letter-symbol for the particular type of prepayment/refinancing
privilege elected.

                          
6Elect 1
of the following 2 no-call period options for an Advance only if a fixed
premium privilege is elected as the prepayment/refinancing privilege for such
Advance.  The 2 no-call period options are: yes ("Y"), if the Borrower
elects to have the fixed premium prepayment/refinancing privilege include a
5-year period during which the Advance will not be eligible for prepayment or
refinancing, and no ("N"), if the Borrower elects to have the fixed premium
prepayment/refinancing privilege not include any such
a 5-year no-call period.  Insert in the box the letter-symbol for the
particular no-call period option elected. 

                  
                    7Select 1
of the following 3 premium options for an Advance only if a fixed
premium privilege is elected as the prepayment/refinancing privilege for such
Advance.  The 3 premium options are: a 10% premium declining over 10
years ("X"), a 5% premium declining over 5 years ("V"), and par (no premium)
("P").  Insert in the box the letter-symbol for the particular premium
option selected. 

                  

                  

                  
                    
                      
                      

                    

                    
                      MATURITY
EXT. ELECTION - 3

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                

                 

                The undersigned hereby certifies that
the authority of the undersigned to execute and deliver this Maturity Extension
Election Notice on behalf of the Borrower is valid and in full force and effect
on the date hereof.

                

                

                

                NATIONAL
RURAL UTILITIES COOPERATIVE 

                FINANCE
CORPORATION

                (the "Borrower")

                

                

                By:     _______________________

                

                Name:   _______________________

                

                Title: 
_______________________

                

                Date:   _______________________

                

                

                 

              

               

              
                
                  
                  

                

                
                  MATURITY
EXT. ELECTION - page4

                  
                    

                  

                

                
                  
                  

                  RUS

                

              

              
                 

                ANNEX
1-B

                

                TO

                

                FUTURE
ADVANCE BOND

                

                

                

                FORM

                

                OF

                

                MATURITY
EXTENSION ELECTION NOTICE

                

                (RUS
APPROVAL REQUIRED)

                

              

              MATURITY
EXTENSION ELECTION NOTICE

              (RUS
APPROVAL REQUIRED)

              

              ****************************************************************

              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

              

              PART
1 OF THIS FORM HAS BEEN COMPLETED BY RUS.  THE BORROWER SHOULD
COMPLETE PART 2 OF THIS FORM ONLY FOR THOSE
PARTICULAR ADVANCES IDENTIFIED IN PART 1 OF THIS FORM WITH RESPECT TO WHICH THE
BORROWER ELECTS TO HAVE THE MATURITY EXTENDED TO A NEW MATURITY DATE OTHER THAN THE
IMMEDIATELY FOLLOWING QUARTERLY PAYMENT DATE.

              

              DIRECT
ALL QUESTIONS
ON HOW TO COMPLETE THIS FORM TO THE ASSIGNED CONTACT OFFICE FOR THE BORROWER:

              

              Chief

              Policy
Analysis and Loan Management Staff

              Telephone:  (202)
720-0424

              

              WHEN
COMPLETED, DELIVER THIS ORIGINAL FORM TO RUS AT THE ADDRESS
OF THE CONTACT OFFICE INDICATED BELOW:

              

              Chief

              Policy
Analysis and Loan Management Staff

              Rural
Utilities Service

              U.S.
Department of Agriculture

              Mail
Stop 1560

              1400
Independence Avenue, SW

              Washington,
DC  20250-1560

              

              Reference:  Section
313A Loan Guarantee

              

              Telephone:  (202)
720-0424

              Facsimile:   (202)
690-0717

              

              THE
BORROWER SHOULD NOT COMPLETE THIS
FORM OR DELIVER
IT TO RUS  IF THE BORROWER DESIRES TO HAVE THE MATURITY OF ALL OF THE
ADVANCES IDENTIFIED IN PART 1 OF THIS FORM EXTENDED AUTOMATICALLY TO THE
IMMEDIATELY FOLLOWING QUARTERLY PAYMENT DATE.

              

              IF
THE BORROWER DOES NOT RETURN THIS FORM
TO RUS, THE MATURITY OF ALL OF THE ADVANCES IDENTIFIED IN PART 1 OF THIS FORM
WILL BE EXTENDED AUTOMATICALLY TO THE IMMEDIATELY FOLLOWING QUARTERLY PAYMENT
DATE.

              ****************************************************************

               

              
                
                  
                  

                

                
                  MATURITY
EXT. ELECTION - 1

                  
                    

                  

                

                
                  
                  

                  RUS

                

              

              MATURITY
EXTENSION ELECTION NOTICE

              

              Manager

              Federal
Financing Bank

              

              Reference is made to the
following-described Future Advance Bond (the "Bond") payable to the Federal
Financing Bank ("FFB"), which is guaranteed by the Rural Utilities Service
("RUS"):

               

              Name of
Borrower (the "Borrower"):

              

              National Rural Utilities
Cooperative Finance Corporation

              

              FFB Bond
Identifier: _____________________

              

              RUS Bond
Number: _____________________

               

              Part 1 (To be completed by
RUS):

              

              

              Each of the advances of funds
("Advances") identified in this Part 1 will mature on _______________ (the
"Maturity Date").

               

                   
  FFB             RUS         ORIGINAL     ORIGINAL     OUTSTANDING

                ADVANCE        
ACCOUNT    ADVANCE      ADVANCE      
PRINCIPAL

               IDENTIFIER      
 NUMBER        DATE           
AMOUNT         
AMOUNT

              

              

               ___________    
_______    
 _________    $___________  $___________

              

               ___________    
_______      _________    $___________  $___________

              

               ___________    
_______      _________    $___________  $___________

              

               ___________    
_______      _________    $___________  $___________

              

              

              
                
                  
                  

                

                
                  MATURITY
EXT. ELECTION - 2

                  
                    

                  

                

                
                  
                  

                  RUS

                

              

              

              Part 2:

               

              Notice is hereby given to FFB (and RUS)
of the Borrower's election that the maturity of each of the Advances identified
in this Part 2 be extended as follows:

              

              

                                                          AMOUNT
OF                          TYPE
OF

                  FFB            OPTIONAL             
  PRINCIPAL         NEW           
PREPAYMENT/    
 5-YEAR

                ADVANCE         PRINCIPAL            TO
BE         MATURITY     REFINANCING       
 NO-CALL     PREMIUM

               IDENTIFIER1      PAYMENT2          EXTENDED3       DATE4           PRIVILAGE         PERIOD6      OPTION7

              

              

               __________      $________          _________       _________     _________       _________    _________

              

               __________      $________          _________       _________   
 _________          
_________    _________

              

               __________      $________          _________       _________        
_________          
_________    _________

              

               __________      $________          _________       _________        
_________         
 _________    _________                    

              

               

              ____________________

              
                1Complete 1 line in Part 2 for each
Advance identified in Part 1 with respect to which the Borrower elects to have
the maturity extended to a new Maturity Date other
than the next Payment
Date.  Insert the FFB Advance Identifier that FFB assigned to the
respective Advance for each Advance identified in Part 1 with respect to which
the Borrower elects to have the maturity so extended. 

              

                      2The
Borrower has the option of making a payment of principal on the Maturity Date
without any premium being charged.  For each Advance, insert the
amount of any such optional principal payment that will be paid on the Maturity
Date.

                             
3For each
Advance, insert the amount of principal for which the maturity is to be
extended.  That amount must equal the difference between
the outstanding principal amount for the respective Advance, as specified in
Part 1, and the optional principal payment (if any) for such Advance inserted by
the Borrower in Part 2.

                      4For each
Advance, insert the particular calendar date that the Borrower selects to be the
new Maturity
Date" to be in effect for the respective Advance after the Maturity Extension,
which new Maturity Date must meet all the criteria for Maturity Dates specified
in section 7.3.1(a)(5) of the Bond Purchase Agreement referred to in the
Bond.

                   5Elect 1
of the following 2 types of prepayment/refinancing privilege for an Advance
only if the new
Maturity Date selected for such Advance will occur on or after the fifth
anniversary of the effective date of this Maturity Extension.  The 2
types of prepayment/refinancing privilege are: the market value premium (or
discount) privilege ("M") and a fixed premium privilege ("F").  Insert
in the box the letter-symbol for the particular type of prepayment/refinancing
privilege elected.

                      
6Elect 1
of the following 2 no-call period options for an Advance only if a fixed
premium privilege is elected as the prepayment/refinancing privilege for such
Advance.  The 2 no-call period options are: yes ("Y"), if the Borrower
elects to have the fixed premium prepayment/refinancing privilege include a
5-year period during which the Advance will not be eligible for prepayment or
refinancing, and no ("N"), if the Borrower elects to have the fixed premium
prepayment/refinancing privilege not include any such
a 5-year no-call period.  Insert in the box the letter-symbol for the
particular no-call period option elected. 

              
                7Select 1
of the following 3 premium options for an Advance only if a fixed
premium privilege is elected as the prepayment/refinancing privilege for such
Advance.  The 3 premium options are: a 10% premium declining over 10
years ("X"), a 5% premium declining over 5 years ("V"), and par (no premium)
("P").  Insert in the box the letter-symbol for the particular premium
option selected. 

              

              

              
                
                  
                  

                

                
                  MATURITY
EXT. ELECTION - 3

                  
                    

                  

                

                
                  
                  

                  RUS

                

              

              The undersigned hereby certifies that
the authority of the undersigned to execute and deliver this Maturity Extension
Election Notice on behalf of the Borrower is valid and in full force and effect
on the date hereof.

              

              

              NATIONAL
RURAL UTILITIES COOPERATIVE 

              FINANCE
CORPORATION

              (the "Borrower")

              

              

              By:     _______________________

              

              Name:   _______________________

              

              Title: 
_______________________

              

              Date:   _______________________

              

              
                
                  
                  

                

                
                  MATURITY
EXT. ELECTION - 4

                  
                    

                  

                

                
                  
                  

                  RUS

                

              

              
                 

                
                  

                  

                   

                  

                  

                  

                  

                  ANNEX
2-A

                  

                  TO

                  

                  FUTURE
ADVANCE BOND

                  

                   

                  

                  FORM

                  

                  OF

                  

                  PREPAYMENT
ELECTION NOTICE

                  

                  SPECIFIED
PRINCIPAL AMOUNT(S)

                  

                  (RUS
APPROVAL REQUIRED)

                   

                  
                    
                      
                      

                    

                    
                      
                      

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                   

                  
                    PREPAYMENT
ELECTION NOTICE

                    SPECIFIED
PRINCIPAL AMOUNT(S)

                    (RUS
APPROVAL REQUIRED)

                     

                    ****************************************************************

                    

                    DIRECT
ALL QUESTIONS
ON HOW TO COMPLETE THIS FORM TO THE ASSIGNED CONTACT OFFICE FOR THE BORROWER:

                    

                    Chief

                    Policy
Analysis and Loan Management Staff

                    Telephone:  (202)
720-0424

                    

                    WHEN
COMPLETED, DELIVER THIS ORIGINAL FORM TO RUS AT THE ADDRESS
OF THE CONTACT OFFICE INDICATED BELOW:

                    

                    Chief

                    Policy
Analysis and Loan Management Staff

                    Rural
Utilities Service

                    U.S.
Department of Agriculture

                    Mail
Stop 1560

                    1400
Independence Avenue, SW

                    Washington,
DC  20250-1560

                    

                    Reference:  Section
313A Loan Guarantee

                    

                    Telephone:  (202)
720-0424

                    Facsimile:   (202)
690-0717

                    ****************************************************************

                     

                    PREPAYMENT
ELECTION NOTICE

                    SPECIFIED
PRINCIPAL AMOUNT(S)

                    Manager

                    Federal
Financing Bank

                    

                    Reference is made to the
following-described Future Advance Bond (the "Bond") payable to the Federal
Financing Bank ("FFB"), which is guaranteed by the Rural Utilities Service
("RUS"):

                     

                    Name of
Borrower (the "Borrower"):

                    

                    National Rural Utilities
Cooperative Finance Corporation

                     

                    FFB Bond
Identifier:_____________________1

                    ______________________

                    
                      1Insert
the FFB Bond Identifier that FFB assigned to the Bond (as provided in the Bond
Purchase Agreement referred to in the Bond).

                      
                        
                          
                          

                        

                        
                          PREPAYMENT
ELECTION - page 1

                          
                            

                          

                        

                        
                          
                          

                          RUS

                        

                      

                    

                    Part 1:

                     

                    Notice is hereby given to FFB (and RUS)
of the Borrower's election to prepay all or a portion of the outstanding
principal amount of the advances of funds ("Advances") identified in this Part
1:

                     

                    
                             
FFB             RUS         ORIGINAL     ORIGINAL     OUTSTANDING

                        ADVANCE        
ACCOUNT    ADVANCE      ADVANCE      
PRINCIPAL

                       IDENTIFIER      
 NUMBER        DATE           
AMOUNT         
AMOUNT

                      

                      

                       ___________    
_______    
 _________    $___________  $___________

                      

                       ___________    
_______      _________    $___________  $___________

                      

                       ___________    
_______      _________    $___________  $___________

                      

                       ___________    
_______      _________    $___________  $___________

                     

                    Part 2:

                     

                    The Borrower intends to prepay all or a
portion of the outstanding principal amount of each of the Advances identified
in Part 1 on the following date (such date being the "Intended Prepayment
Date"):

                    

                    

                    ____________________________________7

                    

                    __________________________

                    
                      2Complete
1 line in Part 1 for each Advance that the Borrower intends to prepay in whole
or in part.  For each Advance, insert the FFB Advance Identifier for
the respective Advance as specified in the most recent billing notice delivered
by RUS to the Borrower.

                    

                    
                      3For each
Advance, insert the RUS Account Number for the respective Advance as specified
in the most recent billing notice delivered by RUS to the Borrower.

                    

                    
                      4For each
Advance, insert the date on which FFB made the respective Advance to the
Borrower.

                    

                    
                      5For each
Advance, insert the original principal amount of the respective Advance that FFB
made to the Borrower.

                    

                    
                      6Insert
the outstanding principal amount of each Advance specified in Part 1 as of the
day before the
date on which the Borrower intends to make a prepayment on the respective
Advances.

                    

                    
                      7Insert
the particular calendar date that the Borrower selects to be the date on which
the Borrower intends to prepay the Advances specified in Part 1, which date must
meet the criteria for Intended Prepayment Date prescribed in paragraph 16(b)(1)
of the Bond.

                    

                    

                    
                      
                        
                        

                      

                      
                        PREPAYMENT
ELECTION - page 2

                        
                          

                        

                      

                      
                        
                        

                        RUS

                      

                    

                    Part 3:

                     

                    For each of the Advances identified in
Part 1, the respective amount of principal that the Borrower intends to prepay
on the Intended Prepayment Date is as follows:

                    

                                 FFB                          AMOUNT OF

                           ADVANCE                    PRINCIPAL
TO

                         IDENTIFIER8                    BE PREPAID9     

                    

                    

                         __________                   $____________

                    

                         __________                   $____________

                    

                         __________                   $____________

                    

                     

                    The undersigned hereby certifies that
the authority of the undersigned to execute and deliver this Prepayment Election
Notice on behalf of the Borrower is valid and in full force and effect on the
date hereof.

                     

                     

                    NATIONAL
RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

                    (the "Borrower")

                    

                    

                    By:     _______________________

                    

                    Name:   _______________________

                    

                    Title: 
_______________________

                    

                    Date:   _______________________

                     

                    _____________________________

                    
                      8Complete
1 line in Part 3 for each Advance identified in Part 1.

                      9For each
Advance, insert the amount of principal that will be prepaid on the Intended
Prepayment Date.

                    

                     

                    
                      
                        
                        

                      

                      
                        PREPAYMENT
ELECTION - page 3

                        
                          

                        

                      

                      
                        
                        

                        RUS

                      

                    

                    

                    NOTICE
OF RUS APPROVAL OF

                    PREPAYMENT
ELECTION NOTICE

                    

                     

                    Notice is hereby given to FFB that the
preceding Prepayment Election Notice made by the Borrower identified therein has
been approved by RUS for purposes of the Bond identified therein.

                    

                    

                    
                      	
                               
      

                            	
                              ADMINISTRATOR
      of the

                            

                    

                    RURAL
UTILITIES SERVICE,

                    acting
through his or her

                    duly
authorized designee

                    

                     

                    
 

                    By:     _______________________

                    

                    Name:   _______________________

                    

                    Title: 
_______________________

                    

                    Date:   _______________________

                     

                    
                      
                        
                        

                      

                      
                        PREPAYMENT
ELECTION - page 4

                        
                          

                        

                      

                      
                        
                        

                        RUS

                      

                    

                  

                  

                   

                   

                   

                   

                   

                   

                   

                  ANNEX
2-B

                  

                  TO

                  

                  FUTURE
ADVANCE BOND

                  

                  

                  

                  

                  

                  FORM

                  

                  OF

                  

                  PREPAYMENT
ELECTION NOTICE

                  

                  FIXED
SUM TO BE APPLIED

                  

                  (RUS
APPROVAL REQUIRED)

                  

                  
                    
                      
                      

                    

                    
                      
                      

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                  

                  PREPAYMENT
ELECTION NOTICE

                  FIXED
SUM TO BE APPLIED

                  (RUS
APPROVAL REQUIRED)

                  

                  ****************************************************************

                  

                  DIRECT
ALL QUESTIONS
ON HOW TO COMPLETE THIS FORM TO THE ASSIGNED CONTACT OFFICE FOR THE BORROWER:

                  

                  Chief

                  Policy
Analysis and Loan Management Staff

                  Telephone:  (202)
720-0424

                  

                  WHEN
COMPLETED, DELIVER THIS ORIGINAL FORM TO RUS AT THE ADDRESS
OF THE CONTACT OFFICE INDICATED BELOW:

                  

                  Chief

                  Policy
Analysis and Loan Management Staff

                  Rural
Utilities Service

                  U.S.
Department of Agriculture

                  Mail
Stop 1560

                  1400
Independence Avenue, SW

                  Washington,
DC  20250-1560

                  

                  Reference:  Section
313A Loan Guarantee

                  

                  Telephone:  (202)
720-0424

                  Facsimile:   (202)
690-0717

                   

                  ****************************************************************

                  

                  PREPAYMENT
ELECTION NOTICE

                  FIXED
SUM TO BE APPLIED

                  Manager

                  Federal
Financing Bank

                  

                  Reference is made to the
following-described Future Advance Bond (the "Bond") payable to the Federal
Financing Bank ("FFB"), which is guaranteed by the Rural Utilities Service
("RUS"):

                   

                  Name of
Borrower (the "Borrower"):

                  

                  National Rural Utilities
Cooperative Finance Corporation

                   

                  FFB Bond
Identifier:_____________________1

                  _______________________

                  
                    1Insert
the FFB Bond Identifier that FFB assigned to the Bond (as provided in the Bond
Purchase Agreement referred to in the Bond).

                    
                      
                        
                        

                      

                      
                        FX SUM -
page 1

                        
                          

                        

                      

                      
                        
                        

                        RUS

                      

                    

                  

                  Part 1:

                  

                  

                  Notice is hereby given to FFB (and RUS)
of the Borrower's election to prepay all or a portion of the outstanding
principal amount of the advances of funds ("Advances") identified in this Part
1:

                   

                    FFB             RUS         ORIGINAL     
ORIGINAL     OUTSTANDING

                      ADVANCE        
ACCOUNT    ADVANCE      ADVANCE      
PRINCIPAL

                     IDENTIFIER2      NUMBER3      
 DATE4          
AMOUNT5         AMOUNT6   

                  

                  

                  

                  ___________   _______   _________   $___________   $___________

                  

                  ___________   _______   _________   $___________   $___________

                  

                  ___________   _______   _________   $___________   $___________

                  

                  

                  Part 2:

                   

                  The Borrower intends to prepay all or a
portion of the outstanding principal amount of the Advances identified in
Part 1 on the following date (such date being the "Intended Prepayment
Date"):

                   

                  ____________________________________7

                  

                  
____________________________

                  
                    2Complete
1 line in Part 1 for each Advance that the Borrower intends to prepay in whole
or in part.  For each Advance, insert the FFB Advance Identifier for
the respective Advance as specified in the most recent billing notice delivered
by RUS to the Borrower.

                  

                  
                    3For each
Advance, insert the RUS Account Number for the respective Advance as specified
in the most recent billing notice delivered by RUS to the Borrower.

                  

                  
                    4For each
Advance, insert the date on which FFB made the respective Advance to the
Borrower.

                  

                  
                    5For each
Advance, insert the original principal amount of the respective Advance that FFB
made to the Borrower.

                  

                  
                    6Insert
the outstanding principal amount of each Advance specified in Part 1 as of the
day before the
date on which the Borrower intends to make a prepayment on the respective
Advances.

                  

                  
                    7Insert
the particular calendar date that the Borrower selects to be the date on which
the Borrower intends to prepay the Advances specified in Part 1, which date must
meet the criteria for Intended Prepayment Date prescribed in paragraph 16(b)(1)
of the Bond. 

                  

                   

                  
                    
                      
                      

                    

                    
                      FX SUM -
page 2

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                  Part 3:

                   

                  The Borrower elects to have the
following amount of funds applied by FFB toward a prepayment of the outstanding
principal amount of the Advances identified in Part 1, in the order in which
they appear in Part 1:

                   

                  ____________________________________8

                   

                  The undersigned hereby certifies that
the authority of the undersigned to execute and deliver this Prepayment Election
Notice on behalf of the Borrower is valid and in full force and effect on the
date hereof.

                  

                   

                  NATIONAL
RURAL UTILITIES COOPERATIVE 

                  FINANCE
CORPORATION

                  (the "Borrower")

                  

                   

                  By:     _______________________

                  

                  Name:   _______________________

                  

                  Title: 
_______________________

                  

                  Date:   _______________________

                  
                    ______________________________

                    
                      8Insert
the particular amount of funds that the Borrower elects to be applied by FFB
toward a prepayment of the outstanding principal amount of the Advances
identified in Part 1, in the order in which they appear in Part 1.

                    

                  

                   

                  
                    
                      
                      

                    

                    
                      FX SUM -
page 3

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                  NOTICE
OF RUS APPROVAL OF

                  PREPAYMENT
ELECTION NOTICE

                   

                  Notice is hereby given to FFB that the
preceding Prepayment Election Notice made by the Borrower identified therein has
been approved by RUS for purposes of the Bond identified therein.

                  

                  

                  
                    	
                             
      

                          	
                            ADMINISTRATOR
      of the

                          

                  

                  RURAL
UTILITIES SERVICE,

                  acting
through his or her

                  duly
authorized designee

                  

                   

                  By:     _______________________

                  

                  Name:   _______________________

                  

                  Title: 
_______________________

                  

                  Date:   _______________________

                  

                

                
                  
                    
                    

                  

                  
                    FX SUM -
page 4

                    
                      

                    

                  

                  
                    
                    

                    RUS

                  

                

                
                  

                  

                  

                  

                  

                  

                  ANNEX
3-A

                  

                  TO

                  

                  FUTURE
ADVANCE BOND

                  

                  

                  

                  

                  

                  FORM

                  

                  OF

                  

                  REFINANCING
ELECTION NOTICE

                  

                  
                    
                      
                      

                    

                    
                      
                      

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                  

                  REFINANCING
ELECTION NOTICE

                  

                  ****************************************************************

                  

                  DIRECT
ALL QUESTIONS
ON HOW TO COMPLETE THIS FORM TO THE ASSIGNED CONTACT OFFICE FOR THE
BORROWER:  

                  

                  Chief

                  Policy
Analysis and Loan Management Staff

                  Telephone:  (202)
720-0424

                  

                  WHEN
COMPLETED, DELIVER THIS ORIGINAL FORM TO FFB AT THE
FOLLOWING ADDRESS:

                  

                  Manager

                  Federal Financing Bank

                  Main Treasury Building

                  1500 Pennsylvania Avenue,
NW

                  Washington,
DC  20220

                  

                  Telephone:  (202)
622-2470

                  Facsimile:   (202)
622-0707

                  

                   DELIVER
A COPY OF THIS
FORM TO RUS AT
THE ADDRESS OF THE CONTACT OFFICE INDICATED BELOW:

                  

                  Chief

                  Policy
Analysis and Loan Management Staff

                  Rural
Utilities Service

                  U.S.
Department of Agriculture

                  Mail
Stop 1560

                  1400
Independence Avenue, SW

                  Washington,
DC  20250-1560

                  

                  Reference:  Section
313A Loan Guarantee

                  

                  Telephone:  (202)
720-0424

                  Facsimile:   (202)
690-0717

                   

                  ******************************************************************************

                  

                  REFINANCING ELECTION
NOTICE

                  Manager

                  Federal
Financing Bank

                  

                  

                  Reference is made to the
following-described Future Advance Bond (the "Bond") payable to the Federal
Financing Bank ("FFB"), which is guaranteed by the Rural Utilities Service
("RUS"):

                  

                  

                  Name of
Borrower (the "Borrower"):

                  

                  National Rural Utilities
Cooperative Corporation

                  

                  
                    
                      
                      

                    

                    
                      REFIN.
ELECTN NOTICE - page 1

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                  FFB Bond
Identifier: ______________________1

                   

                  Part 1:

                   

                  Notice is hereby given to FFB (and RUS)
of the Borrower's election to refinance the outstanding principal amount of each
of the advances of funds ("Advances") identified in this Part 1:

                  

                     FFB             RUS           
ORIGINAL     
ORIGINAL      OUTSTANDING

                   ADVANCE      ACCOUNT    ADVANCE      ADVANCE        PRINCIPAL

                  IDENTIFIER2    NUMBER3     DATE4            
AMOUNT5         AMOUNT6

                  

                  ___________   _______   _________   $___________   $___________

                  

                  ___________   _______   _________   $___________   $___________

                  

                  ___________   _______   _________   $___________   $___________

                  

                  

                  Part 2:

                   

                  The Borrower intends to refinance the
outstanding principal amount of each of the Advances identified in Part 1 on the
following date (such date being the "Intended Refinancing Date"):

                   

                  

                  ____________________________________7

                  ___________________

                  
                    1Insert
the FFB Bond Identifier that FFB assigned to the Bond (as provided in the Bond
Purchase Agreement referred to in the Bond).

                    
                      2Complete
1 line in Part 1 for each Advance that the Borrower intends to
refinance.  For each Advance, insert the FFB Advance Identifier for
the respective Advance as specified in the most recent billing notice delivered
by RUS to the Borrower.

                    

                    
                      3For each
Advance, insert the RUS Account Number for the respective Advance as specified
in the most recent billing notice delivered by RUS to the Borrower.

                    

                    
                      4For each
Advance, insert the date on which FFB made the respective Advance to the
Borrower.

                    

                    
                      5For each
Advance, insert the original principal amount of the respective Advance that FFB
made to the Borrower.

                    

                    
                      6For each
Advance, insert the outstanding principal amount of the respective Advance as of
the day before
the intended refinancing.

                    

                    
                      7Insert
the particular calendar date that the Borrower selects to be the date on which
the Borrower intends to refinance the Advances specified in Part 1, which date
must meet the criteria for Intended Refinancing Date prescribed in paragraph
17(b)(1) of the Bond.  

                    

                     

                    
                      
                        
                        

                      

                      
                        REFIN.
ELECTN NOTICE - page 2

                        
                          

                        

                      

                      
                        
                        

                        RUS

                      

                    

                  

                  

                  Part 3:

                  

                  

                  Notice is hereby given to FFB (and RUS)
of the Borrower's election that each of the Advances identified in Part 1 is to
be refinanced as follows:

                  
 

                                               AMOUNT
OF                           TYPE OF

                         FFB                  PRINCIPAL          NEW          PREPAYMENT/        5-YEAR

                       ADVANCE              TO
BE            MATURITY      REFINANCING        NO-CALL     PREMIUM

                      IDENTIFIER8     REFINANCED9      DATE10         PRIVILEGE11                  PERIOD12     OPTION13

                  

                  

                      __________        $___________      _________     _________         _________     
_________

                  

                      __________        $___________         
_________     _________         _________  
   _________              

                  

                      __________        $___________         
_________     _________         _________     
_________

                  
 

                      __________        $___________          _________    
_________         _________   _________

                  

                  ________________________

                  
                    8Complete
1 line in Part 3 for each Advance identified in Part 1 as being an Advance the
Borrower elects to refinance.  Insert the FFB Advance Identifier that
FFB assigned to the respective Advance. 

                  

                  
                    9For each
Advance, insert the amount of principal that is to be
refinanced.  This will be the same amount as the outstanding principal
amount of the respective Advance inserted in Part 1. 

                  

                  
                    10For each
Advance, insert the particular calendar date that the Borrower selects to be the
new Maturity
Date to be in effect for the respective Advance after the refinancing, which new
Maturity Date must meet all the criteria for Maturity Dates specified in section
7.3.1(a)(5) of the Bond Purchase Agreement referred to in the Bond.

                  

                  
                    11Elect 1
of the following 2 types of prepayment/refinancing privilege for an Advance
only if the new
Maturity Date selected for such Advance will occur on or after the fifth
anniversary of the effective date of this Maturity Extension.  The 2
types of prepayment/refinancing privilege are: the market value premium (or
discount) privilege ("M") and a fixed premium privilege ("F").  Insert
in the box the letter-symbol for the particular type of prepayment/refinancing
privilege elected.

                  

                  
                    12Elect 1
of the following 2 no-call period options for an Advance only if a fixed
premium privilege is elected as the prepayment/refinancing privilege for such
Advance.  The 2 no-call period options are: yes ("Y"), if the Borrower
elects to have the fixed premium prepayment/refinancing privilege include a
5-year period during which the Advance will not be eligible for prepayment or
refinancing, and no ("N"), if the Borrower elects to have the fixed premium
prepayment/refinancing privilege not include any such
a 5-year no-call period.  Insert in the box the letter-symbol for the
particular no-call period option elected. 

                  

                  
                    13Select 1
of the following 3 premium options for an Advance only if a fixed
premium privilege is elected as the prepayment/refinancing privilege for such
Advance.  The 3 premium options are: a 10% premium declining over 10
years ("X"), a 5% premium declining over 5 years ("V"), and par (no premium)
("P").  Insert in the box the letter-symbol for the particular premium
option selected. 

                  

                  

                  
                    
                      
                      

                    

                    
                      REFIN.
ELECTN NOTICE - page 3

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                  The undersigned hereby certifies that
the authority of the undersigned to execute and deliver this Refinancing
Election Notice on behalf of the Borrower is valid and in full force and effect
on the date hereof.

                  

                  

                  

                  NATIONAL
RURAL UTILITIES COOPERATIVE 

                  FINANCE
CORPORATION

                  (the "Borrower")

                  

                  

                  By:     _______________________

                  

                  Name:   _______________________

                  

                  Title: 
_______________________

                  

                  Date:   _______________________

                  

                  

                  
                    
                      
                      

                    

                    
                      REFIN.
ELECTN NOTICE - page 4

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                  
                    

                    

                     

                    

                    

                    

                    ANNEX
3-B

                    

                    TO

                    

                    FUTURE
ADVANCE BOND

                    

                    

                     

                    

                    FORM

                    

                    OF

                    

                    REFINANCING
ELECTION NOTICE

                    

                    (RUS
APPROVAL REQUIRED)

                    

                    
                      
                        
                        

                      

                      
                        
                        

                        
                          

                        

                      

                      
                        
                        

                        RUS

                      

                    

                  

                  REFINANCING
ELECTION NOTICE

                  (RUS
APPROVAL REQUIRED)

                  

                  

                  ****************************************************************

                  

                  DIRECT
ALL QUESTIONS
ON HOW TO COMPLETE THIS FORM TO THE ASSIGNED CONTACT OFFICE FOR THE BORROWER:

                  

                  Chief

                  Policy
Analysis and Loan Management Staff

                  Telephone:  (202)
720-0424

                  

                  WHEN
COMPLETED, DELIVER THIS ORIGINAL FORM TO RUS AT THE ADDRESS
OF THE CONTACT OFFICE INDICATED BELOW:

                  

                  Chief

                  Policy
Analysis and Loan Management Staff

                  Rural
Utilities Service

                  U.S.
Department of Agriculture

                  Mail
Stop 1560

                  1400
Independence Avenue, SW

                  Washington,
DC  20250-1560

                  

                  Reference:  Section
313A Loan Guarantee

                  

                  Telephone:  (202)
720-0424

                  Facsimile:   (202)
690-0717

                  ******************************************************************************

                  

                  REFINANCING ELECTION
NOTICE

                  Manager

                  Federal
Financing Bank

                   

                  Reference is made to the
following-described Future Advance Bond (the "Bond") payable to the Federal
Financing Bank ("FFB"), which is guaranteed by the Rural Utilities Service
("RUS"):

                   

                  Name of
Borrower (the "Borrower"):

                  

                  National Rural Utilities
Cooperative Corporation

                   

                  FFB Bond
Identifier: ______________________1

                  __________________

                  
                    1Insert the FFB Bond Identifier that FFB
assigned to the Bond (as provided in the Bond Purchase Agreement referred to in
the Bond).

                    
                      
                        
                        

                      

                      
                        REFIN.
ELECTION NOTICE - page 1

                        
                          

                        

                      

                      
                        
                        

                        RUS

                      

                    

                  

                  Part 1:

                   

                  Notice is hereby given to FFB (and RUS)
of the Borrower's election to refinance the outstanding principal amount of each
of the advances of funds ("Advances") identified in this Part 1:

                  

                  

                     FFB             RUS       
    ORIGINAL     ORIGINAL      OUTSTANDING

                   ADVANCE      ACCOUNT    ADVANCE      ADVANCE        PRINCIPAL

                  IDENTIFIER2    NUMBER3       DATE4            AMOUNT5         AMOUNT6

                  

                  

                  ___________   _______   _________   $___________   $___________

                  

                  ___________   _______   _________   $___________   $___________

                  

                  ___________   _______   _________   $___________   $___________

                  

                  

                  Part 2:

                   

                  The Borrower intends to refinance the
outstanding principal amount of each of the Advances identified in Part 1 on the
following date (such date being the "Intended Refinancing Date"):

                  

                  

                  ____________________________________7

                   

                  ___________________

                  
                    2Complete
1 line in Part 1 for each Advance that the Borrower intends to
refinance.  For each Advance, insert the FFB Advance Identifier for
the respective Advance as specified in the most recent billing notice delivered
by RUS to the Borrower.

                  

                  
                    3For each
Advance, insert the RUS Account Number for the respective Advance as specified
in the most recent billing notice delivered by RUS to the Borrower.

                  

                  
                    4For each
Advance, insert the date on which FFB made the respective Advance to the
Borrower.

                  

                  
                    5For each
Advance, insert the original principal amount of the respective Advance that FFB
made to the Borrower.

                  

                  
                    6For each
Advance, insert the outstanding principal amount of the respective Advance as of
the day before
the intended refinancing.

                  

                  
                    7Insert the particular calendar date
that the Borrower selects to be the date on which the Borrower intends to
refinance the Advances specified in Part 1, which date must meet the criteria
for Intended Refinancing Date prescribed in paragraph 17(b)(1) of the
Bond.  

                     

                    
                      
                        
                        

                      

                      
                        REFIN.
ELECTION NOTICE - page 2

                        
                          

                        

                      

                      
                        
                        

                        RUS

                      

                    

                  

                  Part 3:

                   

                  Notice is hereby given to FFB (and RUS)
of the Borrower's election that each of the Advances identified in Part 1 is to
be refinanced as follows:

                  

                   

                                           AMOUNT
OF                             TYPE OF

                         FFB              PRINCIPAL             
NEW           PREPAYMENT/      5-YEAR

                       ADVANCE          TO
BE             MATURITY       REFINANCING     NO-CALL      PREMIUM

                      IDENTIFIER8   REFINANCED9       DATE10         PRIVILEGE11               
 PERIOD12     OPTION13

                  

                  

                      __________    $___________        _________       ___________    ___________    _________

                  

                      __________    $___________        _________       ___________    ___________    _________

                  

                      __________    $___________        _________       ___________    ___________    _________

                  

                      __________    $___________        _________       ___________    ___________    _________

                  

                  ___________________

                  
                    8Complete 1 line in Part 3 for each
Advance identified in Part 1 as being an Advance the Borrower elects to
refinance.  Insert the FFB Advance Identifier that FFB assigned to the
respective Advance. 

                  

                  
                    9For each
Advance, insert the amount of principal that is to be
refinanced.  This will be the same amount as the outstanding principal
amount of the respective Advance inserted in Part 1. 

                  

                  
                    10For each
Advance, insert the particular calendar date that the Borrower selects to be the
new Maturity
Date" to be in effect for the respective Advance after the refinancing, which
new Maturity Date must meet all the criteria for Maturity Dates specified in
section 7.3.1(a)(5) of the Bond Purchase Agreement referred to in the
Bond.

                  

                  
                    11Elect 1
of the following 2 types of prepayment/refinancing privilege for an Advance
only if the new
Maturity Date selected for such Advance will occur on or after the fifth
anniversary of the effective date of this Maturity Extension.  The 2
types of prepayment/refinancing privilege are: the market value premium (or
discount) privilege ("M") and a fixed premium privilege ("F").  Insert
in the box the letter-symbol for the particular type of prepayment/refinancing
privilege elected.

                  

                  
                    12Elect 1
of the following 2 no-call period options for an Advance only if a fixed
premium privilege is elected as the prepayment/refinancing privilege for such
Advance.  The 2 no-call period options are: yes ("Y"), if the Borrower
elects to have the fixed premium prepayment/refinancing privilege include a
5-year period during which the Advance will not be eligible for prepayment or
refinancing, and no ("N"), if the Borrower elects to have the fixed premium
prepayment/refinancing privilege not include any such
a 5-year no-call period.  Insert in the box the letter-symbol for the
particular no-call period option elected. 

                  

                  
                    13Select 1 of the following 3 premium
options for an Advance only if a fixed premium privilege is
elected as the prepayment/refinancing privilege for such Advance.  The
3 premium options are: a 10% premium declining over 10 years ("X"), a 5% premium
declining over 5 years ("V"), and par (no premium) ("P").  Insert in
the box the letter-symbol for the particular premium option selected.

                  

                  

                  
                    
                      
                      

                    

                    
                      REFIN.
ELECTION NOTICE - page 3

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                  The undersigned hereby certifies that
the authority of the undersigned to execute and deliver this Refinancing
Election Notice on behalf of the Borrower is valid and in full force and effect
on the date hereof.

                  

                  

                  NATIONAL
RURAL UTILITIES COOPERATIVE 

                  FINANCE
CORPORATION

                  (the "Borrower")

                  

                  

                  By:     _______________________

                  

                  Name:   _______________________

                  

                  Title: 
_______________________

                  

                  Date:   _______________________

                  NOTICE
OF RUS APPROVAL OF 

                  REFINANCING
ELECTION NOTICE

                  

                  

                  Notice is hereby given to FFB that the
preceding Refinancing Election Notice made by the Borrower identified therein
has been approved by RUS for purposes of the Bond identified
therein.

                  

                  

                  
                    	
                             
      

                          	
                            ADMINISTRATOR
      of the

                          

                  

                  RURAL
UTILITIES SERVICE,

                  acting
through his or her

                  duly
authorized designee

                  
 

                  By:     _______________________

                  

                  Name:   _______________________

                  

                  Title: 
_______________________

                  

                  Date:   _______________________

                  

                  
                    
                      
                      

                    

                    
                      REFIN.
ELECTION NOTICE - page 4

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

 

                  EXHIBIT
C

                  

                  TO

                  

                  BOND
PURCHASE AGREEMENT

                  

                  

                  

                  

                  FORM

                  

                  OF

                  

                  CERTIFICATE
SPECIFYING AUTHORIZED BORROWER OFFICIALS

                  

                  

                  
                    
                      
                      

                    

                    
                      
                      

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                

                 

                
                  CERTIFICATE
SPECIFYING

                  AUTHORIZED
BORROWER OFFICIALS

                  Federal
Financing Bank

                  Main
Treasury Building

                  1500
Pennsylvania Avenue, NW

                  Washington,
DC  20220

                  

                  

                  Reference is made to the Series C Bond
Purchase Agreement dated as of September 19, 2008 (the "Bond Purchase
Agreement"), by and among the Federal Financing Bank ("FFB"), National Rural
Utilities Cooperative Finance Corporation (the "Borrower"), and the
Administrator of the Rural Utilities Service ("RUS").  Capitalized
terms used herein and not defined herein shall have the respective meanings
ascribed to them in the Bond Purchase Agreement.

                  

                  This Certificate Specifying Authorized
Borrower Officials is delivered to FFB pursuant to section 4.1(c) of the Bond
Purchase Agreement.

                  

                  The undersigned, on behalf of the
Borrower, hereby certifies that:

                  

                  a.each of the individuals named below
is the duly qualified and incumbent official of the Borrower holding the
position title set out opposite the respective individual’s name;

                  

                  b.each of the individuals named below
is authorized to execute and deliver Advance Requests from time to time on
behalf of the Borrower; and

                  

                  c.the signature of each such individual
set out opposite the respective individual's name and title is the genuine
signature of such individual:

                  

                         Name               Title                 Signature

                  

                  

                   Sheldon
C. Petersen    Governor
and

                   Chief Executive
Officer         ____________________

                  

                   Steven
L. Lilly        Senior Vice President
and

                                    Chief Financial
Officer          ____________________

                  

                   John
J. ListSenior       Vice President, Assistant

                                      Secretary-Treasurer

                              and
General
Counsel             ____________________

                  
                    
                      
                      

                    

                    
                      page
1

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                   

                  The undersigned certifies that the
undersigned has been given the authority to execute this Certificate Specifying
Authorized Borrower Officials on behalf of the Borrower and to deliver it to
FFB, and that this authority is valid and in full force and effect on the date
hereof.

                  

                  IN WITNESS WHEREOF, the undersigned has
executed this Certificate Specifying Authorized Borrower Officials and caused it
to be delivered to FFB.

                  

                  

                  

                  NATIONAL
RURAL UTILITIES COOPERATIVE 

                  FINANCE
CORPORATION

                  (the "Borrower")

                  

                  

                  By:     _______________________

                  

                  Name:   John
J. List

                  

                  Title: 
Assistant Secretary-Treasurer

                  

                  Date:   September
19, 2008

                

                
                  
                    
                    

                  

                  
                    page
2

                    
                      

                    

                  

                  
                    
                    

                    RUS

                  

                

                
                   

                  
 

                  

                  EXHIBIT
D

                  

                  TO

                  

                  BOND
PURCHASE AGREEMENT

                  

                  

                  

                  

                  FORM

                  

                  OF

                  

                  CERTIFICATE
SPECIFYING AUTHORIZED RUS OFFICIALS

                   

                  
                    
                      
                      

                    

                    
                      
                      

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                

                
                  

                  CERTIFICATE
SPECIFYING

                  AUTHORIZED
RUS OFFICIALS

                  

                  Federal
Financing Bank

                  Main
Treasury Building

                  1500
Pennsylvania Avenue, NW

                  Washington,
DC  20220

                   

                  Reference is made to the Series C Bond
Purchase Agreement dated as of September 19, 2008 (the "Bond Purchase
Agreement"), by and among the Federal Financing Bank ("FFB"), National Rural
Utilities Cooperative Finance Corporation (the "Borrower"), and the
Administrator of the Rural Utilities Service ("RUS").  Capitalized
terms used herein and not defined herein shall have the respective meanings
ascribed to them in the Bond Purchase Agreement.

                  

                  This Certificate Specifying Authorized
RUS Officials is delivered to FFB pursuant to section 4.2 or 13.1 of the Bond
Purchase Agreement.

                  

                  1.The
undersigned, on behalf of RUS, hereby certifies that:

                  

                  a.each of the individuals named below
is the duly qualified and incumbent official of RUS holding the position title
set out opposite the respective individual's name;

                  

                  b.each of the individuals named below
is authorized to execute and deliver Advance Request Approval Notices from time
to time on behalf of RUS; and

                  

                  c.the signature of each such individual
set out opposite the respective individual's name and title is the genuine
signature of such individual:

                   

                       Name          Title                     Signature

                  

                  

                   James R. Newby    Assistant
Administrator--

                  Electric
Program           
     _____________________

                  

                   Doris
A. Nolte       Chief 

                                    Policy
Analysis and

                                           
Loan Management
Staff          _____________________

                  

                   William
E. Railey    Chief

                            Financial
Operations Branch

                                    Power
Supply Division          
  ___________________

                  

                  
                    
                      
                      

                    

                    
                      page
1

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                  

                  2.The
undersigned, on behalf of RUS, hereby certifies that:

                  

                  a.each of the individuals named below
is the duly qualified and incumbent official of RUS holding the position title
set out opposite the respective individual’s name;

                  

                  b.each of the individuals named below
is authorized to confirm telephonically the authenticity of Advance Request
Approval Notices from time to time on behalf of RUS; and

                  

                  c.the telephone number of each such
individual is set out opposite the respective individual's name and
title:

                  

                  

                    Name           Title             Telephone
Number

                  

                  

                     James
R. Newby    Assistant
Administrator--          (202)
720-9545

                             
        Electric
Program

                  

                     Doris
A. Nolte       
Chief                     
                (202)
720-0424

                                                              
Policy Analysis and

                                              
Loan Management Staff

                  

                     William
E. Railey    Chief                                   (202)
720-1968

                                              
Financial Operations Branch

                                              
Power Supply Division

                  
                    
                      
                      

                    

                    
                      page
2

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                   

                  IN WITNESS WHEREOF, the undersigned has
executed this Certificate Specifying Authorized RUS Officials and caused it to
be delivered to FFB.

                  

                  

                  

                  
                    	
                             
      

                          	
                            ADMINISTRATOR
      of the

                          

                  

                  RURAL
UTILITIES SERVICE,

                  

                  

                  

                  

                  By:     _______________________

                  

                  Name:   James
M. Andrew

                  

                  Title: 
Administrator

                  

                  Date:   September
19, 2008

                  

                  
                    
                      
                      

                    

                    
                      page
3

                      
                        

                      

                    

                    
                      
                      

                      RUS

                    

                  

                  

                  

                  

                  EXHIBIT
E

                  

                  TO

                  

                  BOND
PURCHASE AGREEMENT

                  

                  

                  

                  

                  FORM

                  

                  OF

                  

                  OPINION
OF BORROWER'S COUNSEL

                  

                  re:

                  

                  BORROWER'S
INSTRUMENTS

                
                  
                    
                    

                  

                  
                    
                    

                    
                      

                    

                  

                  
                    
                    

                    RUS

                  

                

                
                  

                  

                  

                  EXHIBIT
F

                  

                  TO

                  

                  BOND
PURCHASE AGREEMENT

                  

                  

                  

                  

                  FORM

                  

                  OF

                  

                  OPINION
OF RUS'S COUNSEL

                  

                  re:

                  

                  RUS
GUARANTEE

                   

                  
                    
                      
                      

                    

                    
                      
                      

                      
                        

                      

                    

                    
                      
                      

                    

                  

                

              

            

          

        

      

    

    September
19, 2008

     

    MEMORANDUM
FOR JAMES M. ANDREW

        ADMINISTRATOR

        RURAL
UTILITIES SERVICE

    

    FROM:                                    
  Marc L. Kesselman

        General
Counsel

    

    SUBJECT:                                 Section
313A Legal Opinion

    

    This is
in response to a letter from Curtis M. Anderson, Acting Administrator of the
Rural Utilities Service (“RUS”), a Rural Development agency of the United States
Department of Agriculture, dated September 15, 2008, in which Mr. Anderson
requested an opinion from this office concerning your authority as Administrator
to execute and deliver a certain guarantee (the “Guarantee”) pursuant to the
Rural Electrification Act of 1936, as amended,1 and whether the Guarantee when executed by you
will be an incontestable obligation of the United States of America, acting
through RUS, supported by the full faith and credit of the United
States.

    

    More
particularly, the Guarantee is endorsed on a Future Advance Bond (the “Bond”)
dated September 19, 2008, being issued by the National Rural Utilities
Cooperative Finance Corporation (the “Borrower”), a District of Columbia
cooperative association, to the Federal Financing Bank (the “FFB”), a body
corporate and instrumentality of the United States of America.  We
understand that the Borrower is using the proceeds of the Bond for purposes
specified in section 313A of the RE Act (defined herein).

    

    We have
examined the following:

    

    1.           The
Rural Electrification Act of 1936, 7 U.S.C. §§ 901-950bb-1 (2008) (the “RE
Act”);

    

    2.           The
Food, Conservation, and Energy Act of 2008, Pub. L. No. 110-246, 122 Stat.
1651,  1958-59 (§ 6106) (2008) (the “Food, Conservation, and Energy
Act”);

    ________________

    
      1 We bring
to your attention the 2008 amendment to Section 313A(b)(1) of the Rural
Electrification Act of 1936, which removed the prohibition against a lender
receiving a guarantee under such section if, at the time of the guarantee, the
total principal amount of such guaranteed bond of the lender would exceed the
principal amount of outstanding loans of the lender for electrification or
telephone purposes that have been made concurrently with loans approved for such
purposes under the Rural Electrification Act of 1936.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    3.           The
Agriculture, Rural Development, Food and Drug Administration, and Related
Agencies Appropriations Act, 2008, Pub. L. No. 110-161, 121 Stat. 1844, 1867-68
(2007) (the “Appropriations Act”);

    

    4.           Delegations
of authority from the Secretary of Agriculture to the Under Secretary for Rural
Development, 7 C.F.R. § 2.17 (2008), and redelegations from the Under Secretary
for Rural Development to the Administrator, Rural Utilities Service, 7 C.F.R. §
2.47 (2008);

    

    5.           The
executed Bond of the Borrower in the maximum principal amount of five hundred
million dollars ($500,000,000.00), having a final maturity date of October 15,
2031, and payable to FFB and any successor or assign of FFB; and

    

    6.           The
Guarantee endorsed by the Administrator of RUS which is attached to the
Bond.

    

    Based
upon the foregoing, having regard to legal considerations which we deem
relevant, we are of the opinion that:

    

    1.           You
are authorized under the RE Act, the Food, Conservation and Energy Act and the
Appropriations Act to execute and deliver the Guarantee;

    

    2.           The
Guarantee has been executed by you pursuant to section 313A of the RE Act;
and

    

    3.           The
Guarantee is an enforceable obligation of RUS supported by the full faith and
credit of the United States and incontestable except for fraud or
misrepresentation of which the holder of the Guarantee had actual knowledge at
the time it became a holder.

    

    Based on
the foregoing and upon such further investigation as we have deemed necessary,
we are of the opinion that:

    

    1.           The
execution and delivery of the RUS Guarantee by the Administrator is authorized
by applicable law.

    

    2.           The
RUS Guarantee has been executed and delivered by an official of RUS who is duly
authorized to execute and deliver such document on behalf of the
Administrator.

    

    3.           The
RUS Guarantee is a valid obligation of the United States of America for which
the full faith and credit of the United States of America are
pledged.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

        RUS

      

    

     

      

      

      EXHIBIT
G

      

      TO

      

      BOND
PURCHASE AGREEMENT

      

      

      

      

      FORM

      

      OF

      

      RUS
CERTIFICATE

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

          RUS

        

      

    

    

    RUS
CERTIFICATE

    

    Federal
Financing Bank

    Main
Treasury Building

    1500
Pennsylvania Avenue, NW

    Washington,
DC  20220

     

    Reference is made to:

    

    
      	
               
      

            	
              (a)the
      Series C Bond Purchase Agreement dated as of September 19, 2008 (the "Bond
      Purchase Agreement"), by and among the Federal Financing Bank ("FFB"),
      National Rural Utilities Cooperative Finance Corporation (the "Borrower"),
      and the Administrator of the Rural Utilities Service ("RUS"), a Rural
      Development agency of the United States Department of
      Agriculture;

            

    

    

    
      	
               
      

            	
              (b)the
      Series C Bond dated as of September 19, 2008 (the "Bond"), issued by the
      Borrower payable to FFB in the maximum principal amount of
      $500,000,000.00; and

            

    

    

    
      	
               
      

            	
              (c)the
      RUS Guarantee dated as of September 19, 2008 (the "RUS
      Guarantee").

            

    

    

    Pursuant to sections 3.3.1(c) and
4.2(b) of the Bond Purchase Agreement, the undersigned hereby certifies the
following:

    

    
      	
               
      

            	
              1.I
      am the Administrator of RUS.

            

    

    

    
      	
               
      

            	
              2.I
      am furnishing this RUS Certificate to FFB with the intent that it be
      relied upon by FFB as a basis for taking or withholding action pursuant to
      the Bond Purchase Agreement.

            

    

    

    
      	
               
      

            	
              3.As
      the Administrator of RUS, I have executed the RUS Guarantee and caused it
      to be attached to the Bond.

            

    

    

    
      	
               
      

            	
              4.The
      executed RUS Guarantee conforms exactly to the form of "RUS Guarantee"
      prescribed in the Bond Purchase
Agreement.

            

    

    

    
      	
               
      

            	
              5.RUS
      retains custody of the executed original Bond as agent for FFB under the
      terms of the Bond Purchase Agreement, subject to delivery of actual
      possession of the original Bond to FFB upon request by
  FFB.

            

    

    

    
      	
               
      

            	
              6.RUS,
      as agent for FFB, has received from the Borrower the certification
      regarding lobbying that is required to be filed by recipients of federal
      loans, in the form 

            

    

     

    
      
        
        

      

      
        RUS CERT.
- page 1

        
          

        

      

      
        
        

        RUS

      

    

    
      
 

      
        	
                 
      

              	
                of
      certificate set forth in Appendix A to 31 C.F.R. Part 21, and, if
      required under 31 C.F.R. Part 21, the disclosure form to report
      lobbying, in the form of disclosure form set forth in Appendix B to 31
      C.F.R. Part 21.  RUS retains custody of the executed original
      certificate (and, if applicable, disclosure form) as agent for FFB under
      the terms of the Bond Purchase Agreement, subject to delivery of actual
      possession of the original certificate (and, if applicable, disclosure
      form) to FFB or its designate upon request by FFB or its
      designate.

              

      

       

    

    
      	
               
      

            	
              7.The
      Borrower does not have a judgment lien against any of the Borrower's
      property for a debt owed to the United States of
  America.

            

    

    

    

    IN WITNESS WHEREOF, the undersigned has
executed this RUS Certificate and caused it to be delivered to FFB.

    

     

    
      	
               
      

            	
              ADMINISTRATOR
      of the

            

    

    RURAL
UTILITIES SERVICE,

    

    

    

    By:     _______________________

    

    Name:   James
M. Andrew

    

    Title: 
Administrator

    

    Date:   September
19, 2008

    
      
        
        

      

      
        RUS CERT.
- page 2

        
          

        

      

      
        
        

        RUS

      

    

    

    

    

    EXHIBIT
H

    

    TO

    

    BOND
PURCHASE AGREEMENT

    

    

    

    

    FORM

    

    OF

    

    RUS
GUARANTEE

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        RUS

      

    

    
      

      RUS
GUARANTEE

      

       

      The United States of America, acting
through the Administrator of the Rural Utilities Service ("RUS"), a Rural
Development agency of the United States Department of Agriculture, hereby
guarantees to the Federal Financing Bank, its successors and assigns ("FFB"),
all payments of principal, interest, premium (if any), and late charges (if
any), when and as due in accordance with the terms of the Series C Bond dated
September 19, 2008, issued by National Rural Utilities Cooperative Finance
Corporation (the "Borrower") payable to FFB in the maximum principal amount of
$500,000,000.00, to which this RUS Guarantee is attached (such bond being the
"Bond"), with interest on the principal until paid, irrespective of
(i) acceleration of such payments under the terms of the Bond, or (ii)
receipt by RUS of any sums or property from its enforcement of its remedies for
the Borrower's default.

      

      This RUS Guarantee is issued pursuant
to section 313A of the Rural Electrification Act of 1936, as amended (7 U.S.C.
§ 940c-1), section 6 of the Federal Financing Bank Act of 1973
(12 U.S.C. § 2285), and the Series C Bond Purchase Agreement dated as
of September 19, 2008, among FFB, the Borrower, and RUS.

      

      

      UNITED STATES OF AMERICA

       

      

      By:     _______________________________

      

      Name:   James M.
Andrew

      

      Title:  Administrator
of

         the Rural Utilities
Service

      

      Date:   September 19,
2008

      
        
          
          

        

        
          RUS
GUARANTEE

          
            

          

        

        
          
          

          RUSseries-c_bondagrmt.htm

    

     

    SERIES C
BOND GUARANTEE AGREEMENT

     

    dated as
of September 19, 2008

     

    between

     

    UNITED
STATES OF AMERICA

     

    acting
through the

    Rural
Utilities Service

    as
guarantor,

     

    and

     

    NATIONAL
RURAL UTILITIES

    COOPERATIVE
FINANCE CORPORATION,

    as the
Borrower.

     

    

     

    
      
        
          

           

           

        

         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        	
                TABLE
      OF CONTENTS

              
	 
      	 
      
	 
      	
                Page

              
	 
      
	
                RECITALS

              	 
      	
                1

              
	 
      
	
                ARTICLE
      I

              
	 
      
	
                DEFINITIONS

              
	
                Section
      1.1.

              	
                Definitions

              	
                2

              
	 
      	 
      	 
      
	
                Section
      1.2.

              	
                Principles
      of Construction

              	
                6

              
	 
      
	 
      
	
                ARTICLE
      II

              
	 
      
	
                THE
      GUARANTEE

              
	 
      	 
      	 
      
	
                Section
      2.1.

              	
                Execution
      of Guarantee

              	
                6

              
	 
      	 
      	 
      
	
                Section
      2.2.

              	
                Coverage
      of Guarantee

              	
                6

              
	 
      	 
      	 
      
	
                Section
      2.3.

              	
                Payment
      on the Guarantee

              	
                6

              
	 
      
	 
      
	
                ARTICLE
      III

              
	 
      
	
                CONDITIONS
      PRECEDENT

              
	 
      
	
                Section
      3.1.

              	
                Conditions
      Precedent to Issuance of the Guarantee

              	
                7

              
	 
      	 
      	 
      
	
                Section
      3.2.

              	
                Conditions
      Precedent to each Advance

              	
                8

              
	 
      
	 
      
	
                ARTICLE
      IV

              
	 
      
	
                GUARANTEE
      FEE

              
	 
      
	
                Section
      4.1.

              	
                Guarantee
      Fee

              	
                9

              
	 
      	 
      	 
      
	
                Section
      4.2.

              	
                Amount
      of Gurantee Fee; Dates of Payment

              	
                9

              

      

      
         

        
          
            
            
i

          
            

          

        

        
          
          

        

      

      
 

      
        	 
      	
                Page

              
	
                ARTICLE
      V

              
	 
      
	
                SERVICING
      OF THE GUARANTEE BOND

              
	 
      	 
      	 
      
	
                Section
      5.1.

              	
                SERVICING

              	
                9

              
	 
      
	 
      
	
                ARTICLE
      VI

              
	 
      
	
                REPORTING
      REQUIREMENTS

              
	 
      
	
                Section
      6.1.

              	
                Annual
      Reporting Requirements

              	
                10

              
	 
      	 
      	 
      
	
                Section
      6.2.

              	
                Trigger
      Event Notices

              	
                10

              
	 
      
	
                Section
      6.3.

              	
                Default
      Notices

              	
                11

              
	 
      
	 
      
	
                ARTICLE
      VII

              
	 
      
	
                LIMITATIONS
      ON AMENDMENS TO THE GUARANTEED BOND

              
	 
      	 
      	 
      
	
                Section
      7.1.

              	
                Limitations
      on Amendments to the Guaranteed Bond

              	
                11

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                ARTICLE
      VIII

              
	 
      	 
      	 
      
	
                REPRESENTATIONS
      OF THE PARTIES

              
	 
      	 
      	 
      
	
                Section
      8.1.

              	
                Representation
      of RUS

              	
                11

              
	 
      	 
      	 
      
	
                Section
      8.2.

              	
                Representations
      of the Borrower

              	
                11

              
	 
      
	 
      
	
                ARTICLE
      IX

              
	 
      
	
                AGREEMENTS
      OF THE BORROWER

              
	 
      
	
                Section
      9.1.

              	
                Patronage
      Refunds

              	
                13

              
	 
      	 
      	 
      
	
                Section
      9.2.

              	
                Security
      and Collateral

              	
                13

              
	 
      	 
      	 
      
	
                Section
      9.3.

              	
                Use
      of Savings

              	
                14

              
	 
      	 
      	 
      
	
                Section
      9.4.

              	
                Subrogation

              	
                14

              
	 
      	 
      	 
      
	
                Section
      9.5.

              	
                Use
      of Proceeds

              	
                14

              

      

      

      
         

        
          ii

          
            

          

        

        
        

      

      
 

      
        	 
      	 
      	 
      
	
                Section
      9.6.

              	
                Compliance
      with Covenants in Other Agreements

              	
                14

              
	 
      	 
      	 
      
	
                Section
      9.7.

              	
                Ratings

              	
                15

              
	 
      	 
      	 
      
	
                Section
      9.8.

              	
                Acknowledgement
      of Borrower

              	
                15

              
	 
      	 
      	 
      
	
                Section
      9.9.

              	
                Financial
      Expert

              	
                 
      15

              
	 
      
	 
      
	
                ARTICLE
      X

              
	 
      
	
                EVENTS
      OF DEFAULT

              
	 
      
	
                Section
      10.1.

              	
                Events
      of Default

              	
                15

              
	 
      	 
      	 
      
	
                Section
      10.2.

              	
                Compulsory
      Redemption

              	
                16

              
	 
      	 
      	 
      
	
                Section
      10.3.

              	
                Acceleration
      by RUS’s Purchase of the Bond

              	
                16

              
	 
      	 
      	 
      
	
                Section
      10.4.

              	
                Effect
      of Payments by RUS Pursuant to the RUS Guarantee

              	
                16

              
	 
      	 
      	 
      
	
                Section
      10.5.

              	
                Remedies
      Not Exclusive

              	
                16

              
	 
      
	 
      
	
                ARTICLE
      XI

              
	 
      
	
                MISCELLANEOUS

              
	 
      
	
                Section
      11.1

              	
                GOVERNING
      LAW

              	
                16

              
	 
      	 
      	 
      
	
                Section11.2.

              	
                WAIVER
      OF JURY TRIAL

              	
                16

              
	 
      	 
      	 
      
	
                Section11.3.

              	
                Method
      of Payment

              	
                17

              
	 
      	 
      	 
      
	
                Section
      11.4

              	
                Notices

              	
                17

              
	 
      	 
      	 
      
	
                Section
      11.5

              	
                Benefit
      of Agreement

              	
                17

              
	 
      	 
      	 
      
	
                Section
      11.6

              	
                Entire
      Agreement

              	
                17

              
	 
      	 
      	 
      
	
                Section
      11.7

              	
                Amendments
      and Waivers

              	
                17

              
	 
      	 
      	 
      
	
                Section
      11.8

              	
                Counterparts

              	
                18

              
	 
      	 
      	 
      
	
                Section
      11.9

              	
                Termination
      of Agreement

              	
                18

              
	 
      	 
      	 
      
	
                Section
      11.10

              	
                Survival

              	
                18

              
	 
      	 
      	 
      
	
                Section
      11.11

              	
                Severability

              	
                18

              
	 
      

      

      

      
         

        
          iii

          
            

          

        

        
        

      

      
 

    

    Schedule
I – Addresses for Notices

    Annex A –
Form of Bond Purchase Agreement

    Annex B –
Form of Pledge Agreement

    Annex C –
Form of Reimbursement Note

    Annex D –
Opinion of Counsel to the Borrower

    Annex E –
Officers’ Closing Certificate

    Annex F –
Officers’ Advance Certificate

    Annex G –
Auditors’ Letter

    
      
        
           

           

           

        

         

      

      
        iv 

        
          

        

      

      
         

      

    

    Series
C Bond Guarantee Agreement

    
 

    SERIES C
BOND GUARANTEE AGREEMENT dated as of September 19, 2008, between the UNITED
STATES OF AMERICA (the “Government”), acting
through the Rural Utilities Service, a Rural Development agency of the United
States Department of Agriculture, and its successors and assigns (“RUS”); and NATIONAL
RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, a cooperative association
existing under the laws of the District of Columbia (the “Borrower”).

     

    RECITALS

     

    1. On May
28, 2008, the Borrower applied to RUS (the “Application”), in
accordance with Section 313A of the Rural Electrification Act of 1936, as
amended (the “RE
Act”) and the regulations promulgated thereunder (as set forth in Section
1720 of Part 7 of the Code of Federal Regulations (the “Regulations”)), for
RUS to guarantee a third loan from the Federal Financing Bank, a body corporate
and instrumentality of the Government under the general supervision of the
Secretary of the Treasury, and its permitted successors and assigns, (“FFB”), to the
Borrower, the proceeds of which would be used by the Borrower to fund new
Eligible Loans (as defined herein) or to refinance existing debt instruments of
the Borrower used to fund Eligible Loans.

     

    2. RUS has
determined that the Borrower is eligible for guarantees under Section 313A
of the RE Act.

     

    3. FFB is
willing to make a loan to the Borrower in the aggregate principal amount of up
to $500,000,000 upon the terms and subject to the conditions set out in the
Series C Bond Purchase Agreement among FFB, the Borrower and the Government
dated as of the date hereof (such agreement being in the form of Annex A
attached hereto, as the same may be amended, supplemented, consolidated or
restated from time to time in accordance with the terms thereof and hereof being
hereinafter called the “Bond Purchase
Agreement”), and upon the terms and subject to the conditions set out in
the Series C Future Advance Bond issued by the Borrower to FFB and dated as of
the date hereof (such bond being in the form attached to the Bond Purchase
Agreement, as the same may be amended, supplemented, consolidated or restated
from time to time in accordance with the terms thereof and hereof being
hereinafter called the “Bond”).

     

    4. RUS is
willing to issue its guarantee of the Bond, as contemplated by Section 313A
of the RE Act, upon the terms and subject to the conditions hereinafter
provided.

     

    NOW,
THEREFORE, in consideration of the mutual agreements herein contained, RUS and
the Borrower agree as follows:

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

       

    

    Series
C Bond Guarantee Agreement

     

    ARTICLE
I

     

    DEFINITIONS

     

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

     

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

     

    “Administrator” shall
mean the Administrator of RUS.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

      Series
C Bond Guarantee Agreement

    

     

     statutes
relating to pay and leave of employees by Federal statute or Federal Executive
Order.

     

    “Certificate of Available
Securities” shall have the meaning given to that term in the Pledge
Agreement.

     

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

     

    “Closing Date” shall
mean September 19, 2008.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    “Guaranteed Bond”
shall mean the Bond with the executed Guarantee attached thereto.

     

    “Indebtedness” with
respect to any Person shall mean without duplication:

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    “Person” means an
individual, a corporation, a partnership, an association, a trust or any other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.

     

    “Pledge Agreement”
shall mean the Pledge Agreement dated as of September 19, 2008, entered into by
the Borrower, RUS and U.S. Bank Trust National Association, in the form of Annex
B attached hereto, as the same may be amended, supplemented, consolidated or
restated from time to time in accordance with the terms thereof and
hereof.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Secretary” shall mean
the Secretary of Agriculture acting through the Administrator.

     

    “Senior Secured Debt”
of the Borrower means non-subordinated secured bonds or notes of the Borrower
having an aggregate principal amount of at least $100,000,000 which, at the date
hereof, means the Borrower’s collateral trust bonds, provided, however, that “Senior
Secured Debt” shall not include (i) any bonds issued by the Borrower to FFB that
are guaranteed by RUS under the Program; (ii) up to $500,000,000 of debt
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    and
(iii) any other debt of the Borrower that RUS agrees shall not be “Senior
Secured Debt”.

     

    “Subrogation Claim”
shall have the meaning given to that term in Section 9.4(a).

     

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

     

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

     

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

     

     

    ARTICLE
II

     

    THE
GUARANTEE

     

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

     

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

     

    SECTION
2.3. Payment on the
Guarantee.  RUS guarantees the full repayment of the principal,
interest, late payment charges, Bond Fees and discount or prepayment premiums,
if any, when and as due on the Guaranteed Bond in accordance with the terms of
the Guarantee, provided, however, that any
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    Guarantee
does not relieve the Borrower of any of its obligations or liabilities under or
in respect of this Agreement or any of the Bond Documents.

     

     

    ARTICLE
III

     

    CONDITIONS
PRECEDENT

     

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

     

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

     

    (b) Amount of RE Act
Loans. The Borrower shall have provided RUS a certification by its
Governor and its Chief Financial Officer (or other senior management acceptable
to the Secretary) certifying that as of the Closing Date the outstanding
principal amount of Loans made for electrification and telephone purposes
eligible under the RE Act is equal to or greater than the amount of the
Borrower’s guaranteed bonds under the Program, including the Bond.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    ARTICLE
IV

     

    GUARANTEE
FEE

     

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

     

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

     

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

     

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

     

     

    ARTICLE
V

     

    SERVICING
OF THE GUARANTEED BOND

     

    SECTION
5.1. Servicing.  The
Secretary, or other agent of the Secretary on his or her behalf, shall have the
right to service the Guaranteed Bond, and periodically inspect the books and
accounts of the Borrower to ascertain compliance with the provisions of the RE
Act with respect to the guarantees under Section 313A thereof and the Bond
Documents.  The Secretary, or agent thereof, shall endeavor to give
the Borrower at least five Business Days’ notice of any intention to inspect the
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    Borrower
or at any time the Borrower and Secretary, or agent thereof, find mutually
convenient.

     

     

    ARTICLE
VI

     

    REPORTING
REQUIREMENTS

     

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

     

    (a) the
Financial Statements for such Fiscal Year;

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    SECTION
6.2. Trigger Event
Notices.  If the Borrower becomes aware that a Rating Trigger
Event or a Financial Expert Trigger Event has occurred, the Borrower shall
deliver a Borrower Notice of such event to RUS and to the Collateral

     

    
      
        
        

      

      
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    Agent (as
defined in the Pledge Agreement) before 4:00 p.m. District of Columbia time on
the Business Day following the date the Borrower has become aware of such event,
specifying the existence of such event.

     

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

     

     

    ARTICLE
VII

     

    LIMITATIONS
ON AMENDMENTS TO THE GUARANTEED BOND

     

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

     

     

    ARTICLE
VIII

     

    REPRESENTATIONS
OF THE PARTIES

     

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

     

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

     

    (a) the
Borrower has been duly organized and is validly existing and in good standing as
a cooperative association under the laws of the District of
Columbia;

     

    
      
        
        

      

      
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    (b) the
Borrower has the corporate power and authority to execute and deliver this
Agreement and each of the other Bond Documents to which the Borrower is a party,
to consummate the transactions contemplated hereby and thereby and to perform
its obligations hereunder and thereunder;

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    (i) the total
principal amount of the Guaranteed Bond plus the outstanding amount of any other
guaranteed bonds issued by the Borrower under the Program does not exceed the
total principal amount of outstanding Loans, made for electrification and
telephone purposes eligible under the RE Act, as of the Closing Date;
and

     

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

     

     

    ARTICLE
IX

     

    AGREEMENTS
OF THE BORROWER

     

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

     

    SECTION
9.2. Security and
Collateral.  (a)  If a Rating Trigger Event or
Financial Expert Trigger Event exists, the Pledged Securities (as such term is
defined in the Pledge Agreement) shall be pledged in accordance with the terms
and conditions of the Pledge Agreement to secure the payment obligations of the
Borrower under this Agreement and any other bond guarantee agreement under the
Program (in the case of a Financial Expert Trigger Event, if that bond guarantee
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    effect of
Section 9.9 hereof) and under the Reimbursement Note and any other reimbursement
note issued under the Program.

     

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

     

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

     

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

     

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

     

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

     

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

     

    SECTION
9.6. Compliance with Covenants in
Other Agreements.  The Borrower and each of its Subsidiaries
will observe and perform within any applicable grace period all covenants and
agreements (as the same may be from time to time amended or waived) contained in
any agreement or instrument relating to any Indebtedness of the Borrower or any
of its Subsidiaries, aggregating for the Borrower and its Subsidiaries in excess
of $50,000,000, if the effect of the failure to observe or perform 

     

    
      
        
        

      

      
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C Bond Guarantee Agreement

        
 

      

    

    such
covenant or agreement is to accelerate, or to permit the holder of such
Indebtedness or any other Person to accelerate, the maturity of such
Indebtedness.

     

    SECTION
9.7. Ratings.  For
the term of the Bond, the Borrower shall request, and do all things reasonably
within its power to obtain (including paying all fees incidental thereto),
credit ratings on its Senior Secured Debt from at least two Rating Agencies on
at least an annual basis.

     

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

     

    SECTION
9.9. Financial
Expert.  The Borrower will cause a financial expert (within the
meaning of Section 407 of the Sarbanes-Oxley Act of 2002) to serve on the
audit committee of its board of directors until the Termination Date; and shall
not allow the financial expert position on the audit committee to remain vacant
for more than 90 consecutive days.

     

     

    ARTICLE
X

     

    EVENTS OF
DEFAULT

     

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

     

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

     

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

     

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

     

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

     

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

     

    (f) A failure
by the Borrower to comply with any other material covenant or provision
contained in this Agreement or any of the other Bond Documents, 

     

    
      
        
        

      

      
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        Series
C Bond Guarantee Agreement

        
 

      

    

    except
that the failure of the Borrower to comply with Section 9.9 hereof shall not
constitute such an Event of Default.

     

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

     

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

     

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

     

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

     

     

    ARTICLE
XI

     

    MISCELLANEOUS

     

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

     

    SECTION
11.2. WAIVER OF JURY
TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR 

     

    
      
        
        

      

      
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        Series
C Bond Guarantee Agreement

        
 

      

    

    ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 11.2.

     

    SECTION
11.3. Method of
Payment.  All payments to be made by the Borrower to RUS
hereunder, shall be made in the manner notified to the Borrower by RUS from time
to time in accordance with Section 11.4.  

     

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

     

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

     

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

     

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

     

    (b) No
provision of this Agreement may be amended or modified except pursuant to an
agreement in writing entered into by RUS and the 

     

    
      
        
        

      

      
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        Series
C Bond Guarantee Agreement

        
 

      

    

    Borrower.  No
provision of this Agreement may be waived except in writing by the party or
parties receiving the benefit of and under such provision.

     

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

     

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

     

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

     

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

     

    
      
        
           

           

           

        

         

      

      
        18

        
          

        

      

      
         

      

    

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

     

    
      	
              UNITED
      STATES OF AMERICA,

              acting
      through the Administrator of the Rural 

              Utilities
      Service

            
	 	 
	
              By:

            	/s/
      JAMES M. ANDREW  
	
              Title:

            	
              Administrator
      of the Rural Utilities Service

            

    

    

    

    
      	
              NATIONAL
      RURAL UTILITIES 

              COOPERATIVE
      FINANCE CORPORATION, 

              as
      the Borrower

            
	 	 
	
              By:

            	/s/
      SHELDON C. PETERSEN  
	
              Title:

            	Governor and CEO 
      

    

    

    
      
        
          [Signature
Page to Series C Bond Guarantee Agreement]

           

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
I

    TO

    SERIES C
BOND GUARANTEE AGREEMENT

     

    Addresses
for Notices

     

    
      	
              1.  

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

            

    

     

    If to
RUS:

     

    Rural
Utilities Service

    United
States Department of Agriculture

    1400
Independence Avenue, SW

    Washington,
DC 20250

    Fax:  202-720-1725

    Attention
of: The Administrator

    Subject:
REDLG Program

     

    If to the
Borrower:

     

    National
Rural Utilities Cooperative Finance Corporation

    2201
Cooperative Way

    Herndon,
VA 20171-3025

    Telephone:  703-709-6718

    Fax:  703-709-6819

    Attention
of: Steven L. Lilly, Chief Financial Officer

     

    With a
copy to:

     

    National
Rural Utilities Cooperative Finance Corporation

    2201
Cooperative Way

    Herndon,
VA 20171-3025

    Telephone:  703-709-6712

    Fax:  703-709-6811

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

     

    

     

    
      
        
           

           

           

        

         

      

      
        1

        
          

        

      

      
         

      

    

    ANNEX
A

     

    Form of Bond Purchase
Agreement

     

    

     

    
      
        
          A-1

          ·

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    ANNEX
B

     

    Form of Pledge
Agreement

     

    
      	
               

              THE
      UNITED STATES OF AMERICA

               

              acting
      through the Rural Utilities Service

               

               

              NATIONAL
      RURAL UTILITIES

              COOPERATIVE
      FINANCE CORPORATION

               

               

               

              U.S.
      BANK TRUST NATIONAL ASSOCIATION

               

               

              _______________________________

               

               

              PLEDGE
      AGREEMENT

               

              _______________________________

               

               

               

              Dated
      as of

              September
      19, 2008

               

               

               

            

    

    

     

    
      
        
          B-1

          

           

        

         

      

      
         

        
          

        

      

      
         

        
        

      

    

    

 

    
      
        	
                TABLE
      OF CONTENTS

              
	 
      	
                Page

              
	 
      
	
                ARTICLE
      I

              
	 
      
	
                Definitions
      and Other Provisions of General Application

              
	 
      	 
      	 
      
	
                Section
      1.01.

              	
                Definitions

              	
                2

              
	 
      
	
                ARTICLE
      II

              
	 
      
	
                Application
      of this Pledge Agreement

              
	 
      	 
      	 
      
	
                Section
      2.01.

              	
                Application
      of the Lien of this Pledge Agreement

              	
                5

              
	
                Section
      2.02.

              	
                Delivery
      of Certificates of Available Securities

              	
                5

              
	
                Section
      2.03.

              	
                Maintenance
      of Available Securities

              	
                6

              
	
                Section
      2.04.

              	
                Existence
      of Trigger Event

              	
                6

              
	
                Section
      2.05.

              	
                UCC
      Filings

              	
                6

              
	
                Section
      2.06.

              	
                APPLICATION
      OF ARTICLES III, IV AND V OF THIS PLEDGE

              	 
      
	 
      	
                AGREEMENT

              	
                6

              
	 
      
	 
      
	
                ARTICLE
      III

              
	 
      
	
                Provisions
      as to Pledged Collateral

              
	 
      
	
                Section
      3.01.

              	
                Pledged
      Securities

              	
                7

              
	
                Section
      3.02.

              	
                Holding
      of Pledged Securities

              	
                7

              
	
                Section
      3.03.

              	
                Withdrawal
      and Substitution of Pledged Collateral

              	
                7

              
	
                Section
      3.04.

              	
                Reassignment
      of Pledged Securities upon Payment

              	
                8

              
	
                Section
      3.05.

              	
                Addition
      of Pledged Collateral

              	
                8

              
	
                Section
      3.06.

              	
                Accompanying
      Documentation

              	
                8

              
	
                Section
      3.07.

              	
                Renewal;
      Extension; Substitution

              	
                9

              
	
                Section
      3.08.

              	
                Voting
      Rights; Interest and Principal

              	
                9

              
	
                Section
      3.09.

              	
                Protection
      of Title; Payment of Taxes; Liens, etc

              	
                10

              
	
                Section
      3.10.

              	
                Maintenance
      of Pledged Collateral

              	
                11

              
	
                Section
      3.11.

              	
                Representations,
      Warranties and Covenants

              	
                11

              
	
                Section
      3.12.

              	
                Further
      Assurances

              	
                12

              
	 
      
	 
      
	
                ARTICLE
      IV

              
	 
      
	
                Application
      of Moneys Included in Pledged Collateral

              
	 
      
	
                Section
      4.01.

              	
                Investment
      of Moneys by Collateral Agent

              	
                12

              
	
                Section
      4.02.

              	
                Collateral
      Agent To Retain Moneys during Event of Default

              	
                13

              

      

      
        
           

        

        
          -i-

          
            

          

        

        
           

        

      

      

      
        	 
      	 
      	 
      
	
                TABLE
      OF CONTENTS

                (continued)

              
	 
      	
                Page

              
	
                ARTICLE
      V

              
	 
      
	
                Remedies

              
	 
      	 
      	 
      
	
                Section
      5.01.

              	
                Events
      of Default

              	
                14

              
	
                Section
      5.02.

              	
                Remedies
      Upon Default

              	
                14

              
	
                Section
      5.03.

              	
                Application
      of Proceeds

              	
                16

              
	
                Section
      5.04.

              	
                Securities
      Act

              	
                16

              
	 
      
	 
      
	
                ARTICLE
      VI

              
	 
      
	
                The
      Collateral Agent

              
	 
      
	
                Section
      6.01.

              	
                Certain
      Duties and Responsibilities

              	
                17

              
	
                Section
      6.02.

              	
                Certain
      Rights of Collateral Agent

              	
                18

              
	
                Section
      6.03.

              	
                Money
      Held by Collateral Agent

              	
                20

              
	
                Section
      6.04.

              	
                Compensation
      and Reimbursement

              	
                20

              
	
                Section
      6.05.

              	
                Corporate
      Collateral Agent Required; Eligibility

              	
                20

              
	
                Section
      6.06.

              	
                Resignation
      and Removal; Appointment of Successor

              	
                21

              
	
                Section
      6.07.

              	
                Acceptance
      of Appointment by Successor

              	
                21

              
	
                Section
      6.08.

              	
                Merger,
      Conversion, Consolidation or Succession to Business

              	
                22

              
	 
      
	 
      
	
                ARTICLE
      VII

              
	 
      
	
                Miscellaneous

              
	 
      	 
      	 
      
	
                Section
      7.01.

              	
                Notices

              	
                22

              
	
                Section
      7.02.

              	
                Waivers;
      Amendment

              	
                23

              
	
                Section
      7.03.

              	
                Successors
      and Assigns

              	
                23

              
	
                Section
      7.04.

              	
                Counterparts;
      Effectiveness

              	
                23

              
	
                Section
      7.05.

              	
                Severability

              	
                23

              
	
                Section
      7.06.

              	
                GOVERNING
      LAW

              	
                23

              
	
                Section
      7.07.

              	
                WAIVER
      OF JURY TRIAL

              	
                24

              
	
                Section
      7.08.

              	
                Headings

              	
                24

              
	
                Section
      7.09

              	
                Security
      Interest Absolute

              	
                24

              
	
                Section
      7.10

              	
                Termination
      or Release

              	
                24

              
	
                Section
      7.11

              	
                Collateral
      Agent Appointed Attorney-in-Fact

              	
                25

              
	 
      
	
                Schedule
      I – Form of Certificate of Available Securities

              
	
                Schedule
      II – Form of Certificate of Pledged Collateral

              
	
                Schedule
      III – Addresses for Notices

              	 
      

      

      

      
        
           

        

        
          -ii-

          
            

          

        

        
           

        

      

    

    PLEDGE
AGREEMENT, dated as of September 19, 2008, among NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION, a District of Columbia cooperative association
and its successors and assigns (hereinafter called the “Borrower”), having
its principal executive office and mailing address at 2201 Cooperative Way,
Herndon, VA 20171-3025, the UNITED STATES OF AMERICA, acting through the Rural
Utilities Service, a Rural Development agency of the United States Department of
Agriculture and its successors and assigns (“RUS”), and U.S. BANK
TRUST NATIONAL ASSOCIATION, a national association and its successors and
assigns (hereinafter called the “Collateral Agent”),
having its corporate office at 100 Wall Street, Suite 1600, New York,
NY 10005-3701.

     

    RECITALS
OF THE BORROWER

     

    WHEREAS
the Borrower has issued a bond to the Federal Financing Bank to represent a loan
therefrom in the aggregate principal amount of up to $500,000,000, hereinafter
called the “Series C Bond”);
and the Series C Bond has been guaranteed by RUS pursuant to the
Series C Bond Guarantee Agreement dated as of September 19, 2008, between
the Borrower and RUS (the “Series C Bond Guarantee
Agreement”; and

     

    WHEREAS,
the Borrower is required pursuant to the terms of the Series C Bond Guarantee
Agreement to pledge certain property to the Collateral Agent for the benefit of
RUS if a Rating Trigger Event or a Financial Expert Trigger Event
exists.

     

    NOW,
THEREFORE, THIS PLEDGE AGREEMENT WITNESSETH that, to secure the performance of
the certain Obligations contained in the Series C Bond Guarantee Agreement, the
Reimbursement Note and herein, for the
duration of any Trigger Event, the Borrower assigns and pledges to the
Collateral Agent, its successors and assigns, for the benefit of RUS, and grants
to the Collateral Agent, its successors and assigns, for the benefit of RUS, a
security interest in the following (collectively referred to as the “Pledged Collateral”)
in each case with effect from and after the occurrence of a Trigger Event and as
otherwise provided in Article II: (a)(i) the Pledged Securities and the
certificates representing the Pledged Securities; (ii) subject to Section
3.08, all payments of principal or interest, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of, in exchange for, and all other Proceeds received in respect of, the
Pledged Securities pledged hereunder; (iii) subject to Section 3.08, all
rights and privileges of the Borrower with respect to the Pledged Securities
pledged hereunder; (iv) all Proceeds of any of the foregoing above; and
(b) any property, including cash and Permitted Investments, that may, on
the date hereof or from time to time hereafter, be subject to the Lien hereof by
the Borrower by delivery, assignment or pledge thereof to the Collateral Agent
hereunder and the Collateral Agent is authorized to receive the same as
additional security hereunder (subject to any 

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    reservations,
limitations or conditions agreed to in writing by the Borrower and RUS
respecting the scope or priority of such security or the use and disposition of
such property or the Proceeds thereof).

     

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

     

    ARTICLE
I

     

     

    Definitions
and Other Provisions of General Application

     

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

     

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

     

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

     

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

     

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

     

    “Allowable Amount” on
any date, means:

     

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

     

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

     

    (c) with respect to
Permitted Investments, the cost to the Borrower thereof (exclusive of accrued
interest or brokerage commissions) except that with respect to any Permitted
Investments which are traded on any national securities exchange or
over-the-counter market, Allowable Amount on any date shall mean the fair market
value thereof (as determined by the Borrower).

     

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Financial Expert Trigger
Event” has the meaning given to that term in the Series C Bond Guarantee
Agreement.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    “Pledged Collateral”
has the meaning set forth in the Granting Clause.

     

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

     

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

     

    “Rating Trigger Event”
has the meaning given to that term in the Series C Bond Guarantee
Agreement.

     

    “Reimbursement Note”
has the meaning given to that term in the Series C Bond Guarantee
Agreement.

     

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

     

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

     

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

     

    “Secretary” shall mean
the Secretary of Agriculture acting through the Administrator of
RUS.

     

    “Series C Bond” has
the meaning given to that term in the recitals.

     

    “Series C Bond Guarantee
Agreement” has the meaning given that term in the recitals.

     

    “Trigger Event” means
a Rating Trigger Event or a Financial Expert Trigger Event.

     

    
      
        
        

      

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

     

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

     

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

     

     

    ARTICLE
II

     

     

    Application
of this Pledge Agreement

     

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

     

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

     

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

     

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

     

    SECTION
2.02. Delivery of
Certificates of Available Securities.  Each
time money is advanced under the Series C Bond prior to the existence of a
Trigger Event, the Borrower shall deliver, and from time to time prior to the
existence of a Trigger Event the Borrower may deliver, a Certificate of
Available Securities to the Collateral Agent and RUS, showing that the aggregate
principal amount of Eligible Securities specified in Schedule A thereto that
have been delivered to the Collateral Agent as of the last day of the most
recent month ended more than 10 business days before the date thereof shall
at least equal the aggregate principal amount of the Series C Bond outstanding,
or to be outstanding after any such advance, at the date thereof.  At
the time of delivery of a Certificate of Available Securities, the Borrower
shall deliver to the Collateral Agent all Available Securities specified in such
certificate that are not already deposited with the Collateral Agent accompanied
by the appropriate instruments of transfer executed in blank and in a form
satisfactory to the Collateral Agent and by such other instruments and documents
as the Collateral Agent may reasonably request.  All 

     

    
      
        
        

      

      
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    Eligible
Securities deposited with the Collateral Agent that were previously Available
Securities, but are no longer specified in the Certificate of Available
Securities most recently delivered, shall, at the Borrower’s expense and
pursuant to a Borrower Order, be returned by the Collateral Agent to the
Borrower.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    SECTION
2.06. APPLICATION OF
ARTICLES III, IV AND V OF THIS PLEDGE AGREEMENT.  THE PARTIES
SHALL HAVE NO RIGHTS OR OBLIGATIONS UNDER ARTICLES III, IV OR V HEREOF, AND THE
PROVISIONS OF SUCH ARTICLES SHALL NOT APPLY, EXCEPT DURING THE CONTINUANCE OF A
TRIGGER EVENT.

     

    
      
        
        

      

      
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    ARTICLE
III

     

    Provisions
as to Pledged Collateral

     

    SECTION
3.01. Pledged
Securities.  The “Pledged Securities”
shall mean:

     

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

     

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

     

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

     

    SECTION
3.03. Withdrawal and
Substitution of Pledged Collateral.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    (ii) cash in the
amount (if any) so specified fully to discharge said Pledged
Securities,

     

    the
Collateral Agent shall deliver to the Borrower upon Borrower Order said Pledged
Securities, together with any other documents or instruments of transfer or
assignment necessary to reassign to the Borrower said Pledged Securities and the
interest of the Borrower specified in such Borrower Order.

     

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

     

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

     

    
      
        
        

      

      
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    executed
by the Borrower and such other instruments or documents as the Collateral Agent
may reasonably request.

     

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

     

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

     

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

     

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

     

    (iii) The Borrower
shall be entitled to receive and retain any and all interest, principal and
other distributions paid on or distributed in respect of the Pledged Securities;
provided that
any non-cash interest, principal or other distributions that would constitute
Pledged Securities if pledged hereunder, and received in exchange for Pledged
Securities or any part thereof pledged hereunder, or in redemption thereof, or
as a result of any merger, consolidation, acquisition or other exchange of
assets to which such issuer of Pledged Securities may be a party or otherwise,
shall be and become part of the Pledged Collateral, and, if received by the
Borrower, shall not be commingled by the Borrower with any of its other funds or
property but shall be held separate and 

     

    
      
        
        

      

      
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    apart
therefrom, shall be held in trust for the benefit of the Collateral Agent and
shall be forthwith delivered to the Collateral Agent in the same form as so
received (with any necessary endorsement).

     

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

     

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

     

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

     

    (i) duly and
promptly pay and discharge, or cause to be paid and discharged, before they
become delinquent, all taxes, assessments, governmental and other charges
lawfully levied, assessed or imposed upon or against any of the Pledged
Collateral, including the income or profits therefrom and the interests of the
Collateral Agent in such Pledged Collateral;

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    ARTICLE
IV

     

    Application of Moneys
Included in Pledged Collateral

     

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

     

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

     

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

     

    (iii) certificates
of deposit issued by, or time deposits of, any bank or trust company (including
the Collateral Agent) organized under the laws of the United States of America
or any State thereof having capital and surplus of not 

     

    
      
        
        

      

      
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    less than
$500,000,000 (determined from its most recent report of condition, if it
publishes such reports at least annually pursuant to law or the requirements of
Federal or State examining or supervisory authority); and

     

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

     

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

     

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

     

    
      
        
        

      

      
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    ARTICLE
V

     

    Remedies

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    
      
        
        

      

      
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after the
Collateral Agent shall have entered into such an agreement all Events of Default
shall have been remedied and the Obligations paid in full.  As an
alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to foreclose
this Pledge Agreement and to sell the Collateral or any portion thereof pursuant
to a judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver.  Any sale
pursuant to the provisions of this Section 5.02 shall be deemed to conform to
the commercially reasonable standards as provided in Section 9-610(b) of
the Uniform Commercial Code or its equivalent in other
jurisdictions.

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

    

     

    ARTICLE
VI

     

    The
Collateral Agent

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

    SECTION
6.04. Compensation and
Reimbursement.  (a)  The
Borrower agrees:

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

    

     

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

     

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

     

    (c)  If
at any time:

     

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

     

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

     

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

     

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

     

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

    
      
        
        

      

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

     

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

     

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

     

    ARTICLE
VII

     

    Miscellaneous

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

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

     

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

     

    
      
        
           

          

           

        

         

      

      
        25

        
          

        

      

      
         

      

    

    Pledge
Agreement

     

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

     

    
      
        	
                NATIONAL
      RURAL UTILITIES 

                COOPERATIVE
      FINANCE CORPORATION,

              
	 
	
                by

              
	 
      	 
      
	 
      	
                Name:

              
	 
      	
                Title:

              

      

    

     

    
      
        	
                UNITED
      STATES OF AMERICA, acting 

                through
      the Administrator of the Rural Utilities 

                Service,

              
	 
	
                by

              
	 
      	 
      
	 
      	
                Name:

              
	 
      	
                Administrator
      of the Rural Utilities Service

              

      

       

      
        
          	
                  U.S.
      BANK TRUST NATIONAL ASSOCIATION

                
	 
	
                  by

                
	 
      	 
      
	 
      	
                  Name:

                
	 
      	
                  Title:

                

        

      

       

      

      
        
          
            
              [Signature
Page to Pledge Agreement]

               

               

            

             

          

          
             

            
              

            

          

          
             

            
              SCHEDULE I

              TO

              PLEDGE
AGREEMENT

              

               

            

          

        

      

      

    

    NATIONAL
RURAL UTILITIES

    COOPERATIVE
FINANCE CORPORATION

     

    PLEDGE
AGREEMENT DATED AS OF SEPTEMBER 19, 2008

     

    CERTIFICATE
OF AVAILABLE SECURITIES FILED WITH

    U.S. BANK
TRUST NATIONAL ASSOCIATION, Collateral Agent

     

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

     

    
      	
              1.

            	
              The
      Allowable Amount of Available Securities certified 

              hereby,
      all as shown on Schedule A hereto, is

            	
              $

            
	 	 	 
	2.
      	
              The
      aggregate principal amount of the Series C Bond

              outstanding at the date hereof is

            	$
	 	 	 
	
              3.

            	
              The
      aggregate amount, if any, of the Advance to be made 

              on
      the basis of this Certificate is

            	
              $

            
	 	 	 
	
              4.

            	
              The
      sum of the amounts in items 2 and 3 is

            	
              $

            
	 	 	 
	
              5.

            	
              The
      aggregate amount by which the Allowable Amount of 

              Available
      Securities exceeds the aggregate principal 

              amount
      of the Series C Bond outstanding plus the amount 

              of
      any Advance in item 3 (item 1 minus item 4) is

            	
              $

            
	 	 	 
	
              6.

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

            	 
      

    

    

     

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

     

    Dated:

     

    
      	 
      
	 
      
	
              OF
      NATIONAL RURAL UTILITIES

              COOPERATIVE
      FINANCE CORPORATION

            

    

    
      
         

      

      
         

        
          

        

      

      
         

        
          SCHEDULE I

          TO

          PLEDGE
AGREEMENT

          

           

        

      

    

    AVAILABLE
SECURITIES

    SCHEDULE
A TO OFFICERS’ CERTIFICATE

    DATED

    

     

    
      	
              Eligible
      Securities

            	
              Name
      of Issuer

            	
              Current
      Allowable Amount (Item 1)

            
	
              Available
      Securities

              (Here
      List Securities)

            	 
      	 
      

    

    

     

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

        
          SCHEDULE II

          TO

          PLEDGE
AGREEMENT

           

        

      

    

    NATIONAL
RURAL UTILITIES

    COOPERATIVE
FINANCE CORPORATION

     

    PLEDGE
AGREEMENT DATED AS OF SEPTEMBER 19, 2008

     

    CERTIFICATE
OF PLEDGED COLLATERAL FILED WITH

    U.S. BANK
TRUST NATIONAL ASSOCIATION, COLLATERAL AGENT

     

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

     

    
      	
              1.

            	
              The
      Allowable Amount of Pledged Collateral shown in 

              item 8
      in the most recent Certificate of Pledged Collateral 

              dated
      ______________ delivered to the Collateral Agent is

            	
              $

            
	 	 	 
	
              2.

            	
              The
      increase (or decrease) in the Allowable Amount of 

              such
      Pledged Collateral and the Allowable Amount of any 

              Eligible
      Securities substituted for other Pledged Securities 

              pursuant
      to Section 3.07 of the Pledge Agreement, 

              remaining
      on deposit with the Collateral Agent, as shown 

              on
      Schedule A hereto, is

            	
              $

            
	 	 	 
	
              3.

            	
              The
      Allowable Amount, as at the date of such most recent 

              Certificate
      of Pledged Collateral, of Pledged Collateral 

              which
      has, since such date, been withdrawn or substituted 

              for
      pursuant to Section 3.07 (including Pledged Securities 

              fully
      paid) by the Borrower or ceased to be Pledged 

              Collateral,
      as shown on Schedule A hereto, is

            	
              $

            
	 	 	 
	
              4.

            	
              The
      present Allowable Amount of Pledged Collateral 

              certified
      to the Collateral Agent in the most recent 

              Certificate
      of Pledged Collateral (item 1 plus (or minus, if 

              decrease)
      item 2, and minus item 3) is

            	
              $

            
	 	 	 
	
              5.

            	
              The
      Allowable Amount of Pledged Collateral certified h

              ereby,
      including the Pledged Collateral deposited 

              herewith,
      which were not certified in the most recent 

              Certificate
      of Pledged Collateral, all as shown on 

              Schedule B
      hereto, is

            	
              $

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	 	 	 
	
              6.

            	
              The
      Allowable Amount of Pledged Collateral held by the 

              Collateral
      Agent on the date hereof and included in this 
Certificate before any
      withdrawals (item 4 plus item 5) is

            	
              $

            
	 	 	 
	
              7.

            	
              The
      Allowable Amount of Pledged Collateral the 

              withdrawal
      of which is hereby requested, if any, as shown 

              on
      Schedule C hereto (the Pledged Collateral made the 

              basis
      of such withdrawal being designated on Schedule A 

              and/or
      Schedule B hereto) is

            	
              $

            
	 	 	 
	
              8.

            	
              The
      Allowable Amount of Pledged Collateral held by the 

              Collateral
      Agent on the date hereof and included in this 

              Certificate
      after any withdrawals (item 6 minus item 7) is

            	
              $

            
	 	 	 
	
              9.

            	
              The
      aggregate principal amount of the Series C Bond 

              outstanding
      at the date hereof is

            	
              $

            
	 	 	 
	
              10.

            	
              The
      aggregate amount by which such Allowable Amount 

              of
      Pledged Securities exceeds the aggregate principal 

              amount
      of the Series C Bond outstanding (item 8 minus 

              item
      9) is

            	
              $

            

    

     

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

     

    Dated:

     

    
      	 
      
	 
      
	
              OF
      NATIONAL RURAL UTILITIES

              COOPERATIVE
      FINANCE CORPORATION

            

    

    
      
         

      

      
        2

        
          

        

      

      
         

        
          SCHEDULE II

          TO

          PLEDGE
AGREEMENT

           

        

      

    

    PLEDGED
COLLATERAL ON DEPOSIT

    SCHEDULE
A TO OFFICERS’ CERTIFICATE

    DATED

     

     

    
      	
              Pledged
      Collateral

            	
              Name
      of Issuer

            	
              Allowable

               Amount

               included
      in 

              Certificate
      last 

              previously
      filed (Item 1)

            	
              Increase
      

              (Decrease)

              in
      such 

              Allowable
      

              Amount
      (Items 2 

              and
      3)

            	
              Current
      Allowable 

              Amount
      (Item 4)

            
	
              Cash

            	 
      	 
      	 
      	 
      
	
              Permitted
      Investments

                
      (Here List)

            	 
      	 
      	 
      	 
      
	
              Pledged
      Securities

                
      (Here List Securities)

            	 
      	 
      	 
      	 
      

    

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

        
          SCHEDULE II

          TO

          PLEDGE
AGREEMENT

           

        

      

    

    PLEDGED
COLLATERAL BEING DEPOSITED

    SCHEDULE B
TO OFFICERS’ CERTIFICATE

    DATED

     

    

     

    
      	
              Pledged
      Collateral

            	
              Name
      of Issuer

            	
              Allowable
      Amount

              (Item
      5)

            
	
              Cash

            	 
      	 
      
	
              Permitted
      Investments

                
      (Here List)

            	 
      	 
      
	
              Pledged
      Securities

                
      (Here List Securities)

            	 
      	 
      

    

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

        
          SCHEDULE II

          TO

          PLEDGE
AGREEMENT

           

        

      

    

    PLEDGED
COLLATERAL BEING WITHDRAWN

    SCHEDULE C
TO OFFICERS’ CERTIFICATE

    DATED

     

     

    
      	
              Pledged
      Collateral

            	
              Name
      of Issuer

            	
              Allowable
      Amount

              (Item
      7)

            
	
              Cash

            	 
      	 
      
	
              Permitted
      Investments

                
      (Here List)

            	 
      	 
      
	
              Pledged
      Securities

                
      (Here List Securities)

            	 
      	 
      

    

    

     

    
      
         

      

      
        5

        
          

        

      

      
         

        
          SCHEDULE III

          TO

          PLEDGE
AGREEMENT

           

        

      

    

    Addresses for
Notices

     

    
      	
              1.

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

            

    

     

    If to
RUS:

     

     

    Rural
Utilities Service

    United
States Department of Agriculture

    1400
Independence Avenue, SW

    Washington,
DC 20250

    Fax:  202-720-1725

    Attention
of: The Administrator

    Subject:  REDLG
Program

     

     

    If to the
Borrower:

     

    National
Rural Utilities Cooperative Finance Corporation

    2201
Cooperative Way

    Herndon,
VA 20171-3025

    Telephone:  703-709-6718

    Fax:  703-709-6819

    Attention
of: Steven L. Lilly, Chief Financial Officer

     

     

    With a
copy to:

     

    National
Rural Utilities Cooperative Finance Corporation

    2201
Cooperative Way

    Herndon,
VA 20171-3025

    Telephone:  703-709-6712

    Fax:  703-709-6811

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

     

     

    If to the
Collateral Agent:

     

     

    U.S. Bank
Trust National Association

    100 Wall
Street

    Suite
1600

    New York,
NY 10005-3701

    Fax:  212-509-3384

    Attention
of: Beverly A. Freeney

     

    
      
        
           

           

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    ANNEX
C

     

    Form of Reimbursement
Note

     

    
      
        
          C-1

           

           

        

         

      

      
         

        
          

        

      

      
         

      

    

     

    
      SERIES C REIMBURSEMENT NOTE

       

      

      THIS
SERIES C REIMBURSEMENT NOTE (the "Note"), dated September 19, 2008, is made by
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION (the "Borrower"), a District of Columbia
cooperative association, and its successors and assigns, to the UNITED STATES OF AMERICA (the
"Government"), acting through the Rural Utilities Service ("RUS"), a Rural
Development agency of the United States Department of
Agriculture.  For value received, the Borrower promises to pay on
demand to the order of the Government, at the United States Treasury,
Washington, D.C., pursuant to a certain Series C Bond Guarantee Agreement, dated
as of September 19, 2008 (the “Bond Guarantee Agreement"), made by and between
the Borrower and the Government, acting through RUS, and remaining unpaid from
time to time, in the time and manner herein provided:

      

      
        	
                1.

              	
                Amount.
      (a) All amounts, including, without limitation, principal, interest, late
      payment charges, Bond Fees (as defined in the Bond Guarantee Agreement)
      less discount or plus prepayment premiums  paid by RUS to the
      Federal Financing Bank (the “FFB”) from time to time pursuant to the
      Guarantee (as defined in the Bond Guarantee Agreement), pursuant to which
      RUS has guaranteed the full repayment of the principal, interest, late
      payment charges, Bond Fees and discount or prepayment premiums, if any,
      when and as due on that certain Series C Future Advance Bond (the “Bond”)
      issued by the Borrower to FFB pursuant to the Series C Bond Purchase
      Agreement, dated as of September 19, 2008, by and among FFB, RUS and the
      Borrower.

              

      

      

      (b) All
other obligations owed by the Borrower to RUS under the Bond Guarantee
Agreement.

      

      (c)  Less
all amounts (i) paid by the Borrower to FFB on the Bond, whether directly or to
RUS as servicer for the Bond, (ii) otherwise paid to RUS by the Borrower
pursuant to this Note, (iii) received by RUS as a result of its exercise of its
subrogation rights under the Bond and (iv) received by RUS under the Pledge
Agreement (as defined hereinafter) with respect to its payments under the
Guarantee.

      

      (d) The
amounts referred to in subparagraph (a) and the other obligations referred to in
subparagraph (b) less the payments referred to in subparagraph (c) are
hereinafter collectively called the "Principal Amount".

      

      
        	
                2.

              	
                Interest
      Rate.  Interest on the Principal Amount shall accrue from
      the date of payment by RUS under the Guarantee until the date such claim
      is satisfied and in the case of other obligations owed to RUS under the
      Bond Guarantee Agreement, from the date they are due to be paid thereunder
      until payment as described in subparagraph (c) above. Interest shall
      accrue at an annual rate equal to the greater of (i) 1.5 times the 91-day
      Treasury-Bill Rate or (ii) 200 basis points (2.00%) above the interest
      rate on the Bond.

              

      

      

      
        
           

        

        
          Page
1

          
            

          

        

        
           

        

      

      
        	
                3.

              	
                Security.  This
      Note is secured by a security interest in the “Pledged Collateral” as
      defined and described in the Pledge Agreement, dated as of September 19,
      2008, made by and among the Borrower, the Government, acting through RUS,
      and U.S. Bank Trust National Association, as it may be amended (the
      "Pledge Agreement"). Rights and obligations with respect to the Pledged
      Collateral are set forth in the Pledge
  Agreement.

              

      

      

      
        	
                4.

              	
                Default.  If
      an Event of Default (as defined in the Bond Guarantee Agreement) occurs,
      the Government may  (a) continue to make payments to FFB
      pursuant to the RUS Guarantee;  provided, however, that no
      payment by RUS pursuant to the Guarantee shall (i) be considered a payment
      for purposes of determining the existence of a failure of the Borrower to
      perform its obligations to RUS under the Bond Documents (as defined in the
      Bond Guarantee Agreement), or (ii) relieve the Borrower of its obligations
      to reimburse RUS for payments made by RUS pursuant to the Guarantee; or
      (b) accelerate the Bond in its entirety in the manner and with the effect
      provided in Section 10.3 of the Bond Guarantee
  Agreement.

              

      

      

      
        	
                5.

              	
                Costs.  The
      Borrower shall pay any and all costs and expenses incurred in connection
      with the exercise of rights or the enforcement of remedies, as set forth
      in the Bond Guarantee Agreement, including any administrative costs and
      penalty charges assessed in accordance with 7 CFR
  3.34.

              

      

      

      
        	
                6.

              	
                Demand
      Waived.  The Borrower waives demand, presentment for
      payment, notice of non-payment, notice of dishonor, protest, and notice of
      non-payment of this Note.

              

      

      

      
        	
                7.

              	
                Obligations.  The
      obligations of the Borrower hereunder are absolute and unconditional,
      irrespective of any defense, other than payment, or any right to set-off,
      recoupment, or counterclaim it might otherwise have against the Government
      or FFB.

              

      

      

      
        	
                8.

              	
                Subrogation.  The
      Borrower agrees to pay all amounts due on this Note directly to
      RUS.  Nothing herein shall limit the Government’s rights of
      subrogation which may arise as a result of payments made by RUS pursuant
      to the RUS Guarantee; provided, however, that there shall be no
      subrogation claim of RUS against the Borrower for any late charge under
      the  Bond paid by RUS to FFB under the Guarantee on account of a
      payment not having been received by FFB when and as due under
      the  Bond if the Borrower paid to RUS, as servicer of
      the  Bond, the full amount of the payment when and as due under
      the  Bond, and the payment was received late by FFB through no
      fault of the Borrower.

              

      

      

      
        	
                9.

              	
                Rights,
      Privileges and Remedies Reserved. Neither the execution and
      delivery of this Note by the Borrower to the Government nor the failure of
      the Government to exercise any of its rights, powers, privileges or
      remedies under the Bond Guarantee Agreement with respect to this Note,
      shall be deemed to be a waiver of any right, power, privilege or remedy of
      the Government under the Bond
Documents.

              

      

      

      
        
           

        

        
          Page
2

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, the Borrower has caused this Note to be signed in its corporate
name by its officers thereunto duly authorized, all as of the day and year first
above written.

      

      

      BORROWER:

      

      NATIONAL RURAL UTILITIES

      COOPERATIVE FINANCE
CORPORATION

      

      By:  __________________________________

      Name:
________________________________

      Title:
_________________________________

      

      

      (SEAL)

      

      Attested
to by:______________________

      Secretary

      
        
          
             

            

            

          

           

        

        
          Page
3

          
            

          

        

        
           

        

      

     

     

    ANNEX
D

     

    Opinion of Counsel to the
Borrower

     

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

     

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

     

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

     

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

     

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

     

    
      
        
          D-1

           

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    ANNEX
E

     

    Officers’ Closing
Certificate

     

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

     

    We,
[                           ],
Governor, and
[                           ],
Chief Financial Officer, of National Rural Utilities Cooperative Finance
Corporation (the “Borrower”), pursuant
to the Series C Bond Guarantee Agreement dated as of September 19, 2008,
between the Borrower and the United States of America acting through Rural
Utilities Service (the “Bond Guarantee
Agreement”), hereby certify on behalf of the Borrower that as at the date
hereof:

     

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

     

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

     

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

     

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

     

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

     

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

     

    DATED as
of this 19th day of
September, 2008.

     

                                NATIONAL RURAL
UTILITIES 

                                COOPERATIVE FINANCE

                                CORPORATION

    
 

                                ______________________________

                                Governor

    

    

                                ______________________________

                                Chief Financial
Officer

    
      
        
          E-1

           

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    ANNEX
F

     

    Officers’ Advance
Certificate

     

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

     

    We,
[                           ],
Governor, and
[                           ],
Chief Financial Officer, of National Rural Utilities Cooperative Finance
Corporation (the “Borrower”), pursuant
to the Series C Bond Guarantee Agreement dated as of September 19, 2008, between
the Borrower and the United States of America acting through Rural Utilities
Service (the “Bond
Guarantee Agreement”), hereby certify on behalf of the Borrower
that:

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
          F-1

        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    

    DATED as
of this         day of
                     ,
20     .

     

                                NATIONAL RURAL
UTILITIES 

                                COOPERATIVE FINANCE

                                CORPORATION

    

     

                                ______________________________

                                                                          

                                                                       Governor

     

     

                                ______________________________

                                                                 

                                            Chief
Financial Officer

    
      
        
          F-2

           

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    ANNEX
G

     

    Auditors’
Letter

     

    To the
Board of Directors of

    National
Rural Utilities Cooperative Finance Corporation

    Herndon,
Virginia

     

    We have
performed the procedures enumerated below, which were agreed to by National
Rural Utilities Cooperative Finance Corporation (the “Company”) and the Rural
Utilities Service (the “RUS”), solely to assist in evaluating the Company’s
compliance with Section 6.1(b) of the Series C Bond Guarantee Agreement between
the Company and the United States of America, acting through the RUS, dated
September 19, 2008 (the “Bond Guarantee Agreement”), as of [last day of
preceding fiscal year].  The Company’s management is responsible for
the Company’s compliance with those requirements.  This agreed-upon
procedures engagement was conducted in accordance with attestation standards
established by the American Institute of Certified Public
Accountants.  The sufficiency of these procedures is solely the
responsibility of those parties specified in this
report.  Consequently, we make no representation regarding the
sufficiency of the procedures described below either for the purpose for which
this report has been requested or for any other purpose.

     

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

     

    
      	
              1.  

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

            

    

     

    
      	
              2.  

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

            

    

     

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

    
      
        
          G-1

           

           

        

         

      

      
         

        
          

        

      

      
         

      

    

     

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

     

    July    ,
20

     

    

     

    Yours
truly,

     

    _____________________________

     

    DELOITTE
& TOUCHE LLP

     

    

     

    

     

    
      
        
          
            
              G-2

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