Document:

exhibit10_6.htm

 

	
 

 

 

 

    FOR FFB USE ONLY:

 

 Bond Identifier:

 

 ____________

  Purchase Date:

 

 ____________

	
         Bond

         Date           December 1, 2011 

 

         Place                        

         of 

         Issue          Washington, DC

 

         Last Day

         for an

         Advance (¶3)   October 15, 2014

 

         Maximum

         Principal

         Amount (¶4)    $499,000,000.00

 

         Final

         Maturity

         Date (¶5)      October 15, 2034

 

FUTURE ADVANCE BOND

SERIES E

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 E 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 

  

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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 E 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 sections 7.3.1(c) and 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 

 

  

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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 

 

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RUS

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

 

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RUS

 

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

 

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

 

10.           Business Days.

 

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

 

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

 

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

 

11.  Late Payments.

 

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

 

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

 

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RUS

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.

  

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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.

 

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RUS

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

 

  

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(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 

 

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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 

 

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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 

 

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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.

 

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(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 as provided in article 11 of the Bond Purchase Agreement;

 

(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.

  

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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

  

 

RUS

(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 as provided in article 11 of the Bond Purchase Agreement.

 

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.

 

BOND - page 15

  

 

RUS

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

 

(g) In the event that a Refinancing Election Notice (and, if required under subparagraph (d) of this paragraph 17, written notification of RUS's approval thereof) is received by FFB on or before the fifth Business Day before the Intended Refinancing Date specified therein, then the refinancing of the respective Advance shall become effective on such Intended Refinancing Date (in such event, the Intended Refinancing Date being the "Refinancing Effective Date").  In the event that a Refinancing Election Notice (and, if required under subparagraph (d) of this paragraph 17, written notification of RUS's approval thereof) is received by FFB after the fifth Business Day before the Intended 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 

 

BOND - page 16

  

 

RUS

Effective Date, then the prepayment/refinancing privilege described in section 11.2 of the Bond Purchase Agreement shall apply automatically to such Advance.

 

(k) In the event that (1) the Borrower makes a Refinancing Election with respect to any Advance, and (2) the Borrower selects as the Maturity Date for such refinanced Advance either (A) the Maturity Date that is in effect for such Advance immediately before such refinancing, and such Maturity Date will occur on or after the fifth anniversary of the respective Refinancing Effective Date, or (B) a new Maturity Date that will occur on or after the fifth anniversary of the respective Refinancing Effective Date, then the Borrower must elect a prepayment/refinancing privilege for such refinanced Advance from between the options described in sections 11.2 and 11.3 of the 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:

 

BOND - page 17

  

 

RUS

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

 

(2) the RUS account number for such Advance.

 

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

 

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

 

(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

  

 

RUS

 

 

	
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 

 

BOND - page 19

  

 

RUS

shall become, due and payable to RUS, under the circumstances described, and in the manner and with the effect provided, in the Bond Guarantee Agreement.

 

 

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

 

 

     NATIONAL RURAL UTILITIES

             COOPERATIVE FINANCE CORPORATION

                             (the "Borrower")

 

BY:

 

Signature:   _________________________

 

Print Name:  Sheldon C. Petersen

 

Title:       Governor and

                        Chief Executive Officer

 

ATTEST:

 

 

Signature:   _________________________

(SEAL)

 

Print Name:  John J. List

 

Title:       Assistant Secretary-Treasurer

 

 

BOND - page 20

  

 

RUS

 

 

ANNEX 1-A

TO

FUTURE ADVANCE BOND

 

FORM

OF

MATURITY EXTENSION ELECTION NOTICE

  

  

  

  

RUS

 

MATURITY EXTENSION ELECTION NOTICE

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

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

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

Chief

Policy Analysis and Loan Management Staff

Telephone:  (202) 720-0424

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

Manager

Federal Financing Bank

Main Treasury Building

1500 Pennsylvania Avenue, NW

Washington, DC  20220

Telephone:  (202) 622-2470

Facsimile:   (202) 622-0707

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

 

 

Chief

Policy Analysis and Loan Management Staff

Rural Utilities Service

U.S. Department of Agriculture

Mail Stop 1560

1400 Independence Avenue, SW

Washington, DC  20250-1560

Reference:  Section 313A Loan Guarantee

Telephone:  (202) 720-0424

Facsimile:   (202) 690-0717

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

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

 

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

 

  

MATURITY EXTENSION ELECTION NOTICE - page 1

  

  

RUS

 

MATURITY EXTENSION ELECTION NOTICE

Manager

Federal Financing Bank

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

Name of Borrower (the "Borrower"):

National Rural Utilities Cooperative Finance Corporation

FFB Bond Identifier: _____________________

RUS Bond Number: _____________________

 

Part 1 (To be completed by RUS):

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

 

	
FFB

ADVANCE

IDENTIFIER

	  	
RUS 

ACCOUNT

NUMBER

	  	
ORIGINAL

ADVANCE

 DATE

	  	
ORIGINAL

ADVANCE

 AMOUNT

	  	
OUTSTANDING

PRINCIPAL

 AMOUNT

	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  	  	  

  

 

  

MATURITY EXTENSION ELECTION NOTICE - page 2

  

  

RUS

 

Part 2:

 

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

 

	
FFB

ADVANCE

IDENTIFIER1

	  	
OPTIONAL

PRINCIPAL

PAYMENT2

	  	
AMOUNT OF PRINCIPAL

TO BE

EXTENDED3

	  	
NEW

MATURITY

 DATE4

	  	
TYPE OF PREPAYMENT/

REFINANCING

PRIVILEGE5

	  	
5-YEAR

NO-CALL

PERIOD6

	  	
PREMIUM

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 EXTENSION ELECTION NOTICE - page 3

  

  

RUS

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

 

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

(the "Borrower")

By:     _______________________

Name:   _______________________

Title:  _______________________

 

Date:   _______________________

 

  

MATURITY EXTENSION ELECTION NOTICE - page 4

  

  

RUS

 

ANNEX 1-B

TO

FUTURE ADVANCE BOND

FORM

OF

MATURITY EXTENSION ELECTION NOTICE

(RUS APPROVAL REQUIRED)

  

  

  

  

RUS

 

MATURITY EXTENSION ELECTION NOTICE

(RUS APPROVAL REQUIRED)

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

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

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

Chief

Policy Analysis and Loan Management Staff

Telephone:  (202) 720-0424

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

Chief

Policy Analysis and Loan Management Staff

Rural Utilities Service

U.S. Department of Agriculture

Mail Stop 1560

1400 Independence Avenue, SW

Washington, DC  20250-1560

Reference:  Section 313A Loan Guarantee

Telephone:  (202) 720-0424

Facsimile:   (202) 690-0717

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

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

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

 

  

MATURITY EXTENSION ELECTION NOTICE (RUS APPROVAL REQ ' D) - page 1

  

  

RUS

MATURITY EXTENSION ELECTION NOTICE

Manager

Federal Financing Bank

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

Name of Borrower (the "Borrower"):

National Rural Utilities Cooperative Finance Corporation

FFB Bond Identifier: _____________________

RUS Bond Number: _____________________

Part 1 (To be completed by RUS):

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

 

	
FFB

ADVANCE

IDENTIFIER

	  	
RUS ACCOUNT

NUMBER

	  	
ORIGINAL

ADVANCE

 DATE

	  	
ORIGINAL

ADVANCE

 AMOUNT

	  	
OUTSTANDING

PRINCIPAL

 AMOUNT

	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  	  	  

 

 

  

MATURITY EXTENSION ELECTION NOTICE (RUS APPROVAL REQ ' D) - page 2

  

  

RUS

Part 2:

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

 

	
FFB

ADVANCE

IDENTIFIER1

	  	
OPTIONAL

PRINCIPAL

PAYMENT2

	  	
AMOUNT OF PRINCIPAL

TO BE

EXTENDED3

	  	
NEW

MATURITY

DATE4

	  	
TYPE OF PREPAYMENT/

REFINANCING

PRIVILEGE5

	  	
5-YEAR

NO-CALL

PERIOD6

	  	
PREMIUM

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 EXTENSION ELECTION NOTICE (RUS APPROVAL REQ ' D) - page 3

  

  

RUS

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

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

(the "Borrower")

By:     _______________________

Name:   _______________________

Title:  _______________________

 

Date:   _______________________

NOTICE OF RUS APPROVAL OF

MATURITY EXTENSION ELECTION NOTICE

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

	
  

	
ADMINISTRATOR of the

RURAL UTILITIES SERVICE,

acting through his or her

duly authorized designee

 

By:     _______________________

Name:   _______________________

Title:  _______________________

 

Date:   _______________________

  

MATURITY EXTENSION ELECTION NOTICE (RUS APPROVAL REQ ' D) - page 4

  

  

RUS

 

ANNEX 2-A

TO

FUTURE ADVANCE BOND

FORM

OF

PREPAYMENT ELECTION NOTICE

SPECIFIED PRINCIPAL AMOUNT(S)

(RUS APPROVAL REQUIRED)

  

  

  

  

RUS

PREPAYMENT ELECTION NOTICE

SPECIFIED PRINCIPAL AMOUNT(S)

(RUS APPROVAL REQUIRED)

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

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

Chief

Policy Analysis and Loan Management Staff

Telephone:  (202) 720-0424

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

Chief

Policy Analysis and Loan Management Staff

Rural Utilities Service

U.S. Department of Agriculture

Mail Stop 1560

1400 Independence Avenue, SW

Washington, DC  20250-1560

Reference:  Section 313A Loan Guarantee

Telephone:  (202) 720-0424

Facsimile:   (202) 690-0717

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

PREPAYMENT ELECTION NOTICE

SPECIFIED PRINCIPAL AMOUNT(S)

Manager

Federal Financing Bank

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

 

Name of Borrower (the "Borrower"):

National Rural Utilities Cooperative Finance Corporation

 

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 NOTICE - SP PRN (RUS APPROVAL REQ ' D) - 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

ADVANCE

IDENTIFIER2

	  	
RUS ACCOUNT

NUMBER3

	  	
ORIGINAL

ADVANCE

 DATE4

	  	
ORIGINAL

ADVANCE

 AMOUNT5

	  	
OUTSTANDING

PRINCIPAL

 AMOUNT6

	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  	  	  

Part 2:

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

 

____________________________________7

 

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

 

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

 

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

 

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

 

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

 

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

 

  

PREPAYMENT ELECTION NOTICE - SP PRN (RUS APPROVAL REQ ' D) - page 2

  

  

RUS

Part 3:

 

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

 

         FFB                             AMOUNT OF

       ADVANCE                    PRINCIPAL TO

     IDENTIFIER8                    BE 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 NOTICE - SP PRN (RUS APPROVAL REQ ' D) - page 3

  

  

RUS

NOTICE OF RUS APPROVAL OF

PREPAYMENT ELECTION NOTICE

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

	
  

	
ADMINISTRATOR of the

RURAL UTILITIES SERVICE,

acting through his or her

duly authorized designee

By:     _______________________

Name:   ______________________

Title:  _______________________

 

Date:   _______________________

  

PREPAYMENT ELECTION NOTICE - SP PRN (RUS APPROVAL REQ ' D) - page 4

  

  

RUS

ANNEX 2-B

TO

FUTURE ADVANCE BOND

FORM

OF

PREPAYMENT ELECTION NOTICE

FIXED SUM TO BE APPLIED

(RUS APPROVAL REQUIRED)

 

  

  

  

  

RUS

PREPAYMENT ELECTION NOTICE

FIXED SUM TO BE APPLIED

(RUS APPROVAL REQUIRED)

 

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

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

Chief

Policy Analysis and Loan Management Staff

Telephone:  (202) 720-0424

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

Chief

Policy Analysis and Loan Management Staff

Rural Utilities Service

U.S. Department of Agriculture

Mail Stop 1560

1400 Independence Avenue, SW

Washington, DC  20250-1560

Reference:  Section 313A Loan Guarantee

Telephone:  (202) 720-0424

Facsimile:   (202) 690-0717

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

 

PREPAYMENT ELECTION NOTICE

FIXED SUM TO BE APPLIED

Manager

Federal Financing Bank

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

Name of Borrower (the "Borrower"):

National Rural Utilities Cooperative Finance Corporation

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 NOTICE - FX SUM (RUS APPROVAL REQ ' D) - 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

ADVANCE

IDENTIFIER2

	  	
RUS 

ACCOUNT

NUMBER3

	  	
ORIGINAL

ADVANCE

 DATE4

	  	
ORIGINAL

ADVANCE

 AMOUNT5

	  	
OUTSTANDING

PRINCIPAL

 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.

  

PREPAYMENT ELECTION NOTICE - FX SUM (RUS APPROVAL REQ ' D) - page 2

  

  

RUS

Part 3:

 

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

 

____________________________________8

 

 

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

 

NATIONAL RURAL UTILITIES COOPERATIVE

FINANCE CORPORATION

(the "Borrower")

By:     _______________________

Name:   ______________________

Title:  _______________________

Date:   _______________________

  

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

 

  

PREPAYMENT ELECTION NOTICE - FX SUM (RUS APPROVAL REQ ' D) - page 3

  

  

NOTICE OF RUS APPROVAL OF

PREPAYMENT ELECTION NOTICE

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

	
  

	
ADMINISTRATOR of the

RURAL UTILITIES SERVICE,

acting through his or her

duly authorized designee

By:     _______________________

Name:   ______________________

Title:  _______________________

 

Date:   _______________________

 

  

PREPAYMENT ELECTION NOTICE - FX SUM (RUS APPROVAL REQ ' D) - page 4

  

  

RUS

ANNEX 3-A

TO

FUTURE ADVANCE BOND

FORM

OF

REFINANCING ELECTION NOTICE

  

  

  

  

RUS

REFINANCING ELECTION NOTICE

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

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

Chief

Policy Analysis and Loan Management Staff

Telephone:  (202) 720-0424

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

Manager

Federal Financing Bank

Main Treasury Building

1500 Pennsylvania Avenue, NW

Washington, DC  20220

Telephone:  (202) 622-2470

Facsimile:   (202) 622-0707

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

 

 

Chief

Policy Analysis and Loan Management Staff

Rural Utilities Service

U.S. Department of Agriculture

Mail Stop 1560

1400 Independence Avenue, SW

Washington, DC  20250-1560

Reference:  Section 313A Loan Guarantee

Telephone:  (202) 720-0424

Facsimile:   (202) 690-0717

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

REFINANCING ELECTION NOTICE

Manager

Federal Financing Bank

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

Name of Borrower (the "Borrower"):

National Rural Utilities Cooperative Corporation

 

  

REFINANCING ELECTION NOTICE - page 1

  

  

RUS

FFB Bond Identifier: ______________________1

Part 1:

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

	
FFB

ADVANCE

IDENTIFIER2

	  	
RUS ACCOUNT

NUMBER3

	  	
ORIGINAL

ADVANCE

 DATE4

	  	
ORIGINAL

ADVANCE

 AMOUNT5

	  	
OUTSTANDING

PRINCIPAL

 AMOUNT6

	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  	  	  

Part 2:

 

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

 

____________________________________7

  

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

 

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

 

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

 

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

 

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

 

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

 

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

  

REFINANCING ELECTION NOTICE - page 2

  

  

RUS

Part 3:

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

 

	
FFB

ADVANCE

IDENTIFIER8

	  	
AMOUNT OF 

PRINCIPAL

TO BE

REFINANCED9

	  	
NEW

MATURITY

 DATE10

	  	
TYPE OF PREPAYMENT/

REFINANCING

PRIVILEGE11

	  	
5-YEAR

NO-CALL

PERIOD12

	  	
PREMIUM

 

	
OPTION13

	  	  	  	  	  	  	  	  	  	  
	  	
$

	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  
	  	
$

	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  
	  	
$

	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  
	  	
$

	  	  	  	  	  	  	  	  	  

      

 

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

 

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

 

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

 

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

 

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

 

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

  

REFINANCING ELECTION NOTICE - page 3

  

  

RUS

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

 

NATIONAL RURAL UTILITIES COOPERATIVE

FINANCE CORPORATION

(the "Borrower")

By:     _______________________

Name:   ______________________

Title:  _______________________

 

Date:   _______________________

 

  

REFINANCING ELECTION NOTICE - page 4

  

  

RUS

ANNEX 3-B

TO

FUTURE ADVANCE BOND

FORM

OF

REFINANCING ELECTION NOTICE

(RUS APPROVAL REQUIRED)

  

  

  

  

RUS

 

REFINANCING ELECTION NOTICE

(RUS APPROVAL REQUIRED)

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

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

Chief

Policy Analysis and Loan Management Staff

Telephone:  (202) 720-0424

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

Chief

Policy Analysis and Loan Management Staff

Rural Utilities Service

U.S. Department of Agriculture

Mail Stop 1560

1400 Independence Avenue, SW

Washington, DC  20250-1560

Reference:  Section 313A Loan Guarantee

Telephone:  (202) 720-0424

Facsimile:   (202) 690-0717

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

REFINANCING ELECTION NOTICE

Manager

Federal Financing Bank

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

 

Name of Borrower (the "Borrower"):

National Rural Utilities Cooperative Corporation

FFB Bond Identifier: ______________________1

  

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

 

  

REFINANCING ELECTION NOTICE (RUS APPROVAL REQ ' D) - page 1

  

  

RUS

Part 1:

 

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

 

	
FFB

ADVANCE

IDENTIFIER2

	  	
RUS ACCOUNT

NUMBER3

	  	
ORIGINAL

ADVANCE

 DATE4

	  	
ORIGINAL

ADVANCE

 AMOUNT5

	  	
OUTSTANDING

PRINCIPAL

 AMOUNT6

	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	
$

	  	
$

	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  	  	  

 

Part 2:

 

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

 

____________________________________7

 

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

 

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

 

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

 

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

 

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

 

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

 

  

REFINANCING ELECTION NOTICE (RUS APPROVAL REQ ' D) - page 2

  

  

RUS

Part 3:

 

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

 

	
FFB

ADVANCE

IDENTIFIER8

	  	
AMOUNT OF PRINCIPAL

TO BE

REFINANCED9

	  	
NEW

MATURITY

 DATE10

	  	
TYPE OF PREPAYMENT/

REFINANCING

PRIVILEGE11

	  	
5-YEAR

NO-CALL

PERIOD12

	  	
PREMIUM

 

	
OPTION13

	  	  	  	  	  	  	  	  	  	  
	  	
$

	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  
	  	
$

	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  
	  	
$

	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  
	  	
$

	  	  	  	  	  	  	  	  	  

 

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

 

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

 

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

 

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

 

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

 

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

  

REFINANCING ELECTION NOTICE (RUS APPROVAL REQ ' D) - page 3

  

  

RUS

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

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

(the "Borrower")

By:     _______________________

Name:   ______________________

Title:  _______________________

 

Date:   _______________________

NOTICE OF RUS APPROVAL OF

REFINANCING ELECTION NOTICE

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

	
  

	
ADMINISTRATOR of the

RURAL UTILITIES SERVICE,

acting through his or her

duly authorized designee

 

By:     _______________________

Name:   ______________________

Title:  _______________________

 

Date:   _______________________

  

REFINANCING ELECTION NOTICE (RUS APPROVAL REQ ' D) - page 4exhibit10_1.htm

 

 

 

EXECUTIVE EMPLOYMENT AGREEMENT

Employment Agreement, effective as of _April 20_, 2012 (this “Agreement”), by and between KEITH G. LARSEN (the “Executive”), and U.S. ENERGY CORP., a Wyoming corporation (the “Company” or “USE”).

R E C I T A L S:

The Company deems it desirable and prudent to enter into an employment agreement with the Executive in order to assure itself of the ongoing services of the Executive in the future, which services are deemed to be integral to the success of the Company.  The Executive desires to be employed by the Company, upon the terms and provisions, and subject to the conditions, set forth in this Agreement;

The Company and the Executive previously entered into an “Executive Severance and Non-Compete Agreement”, a copy of which is attached hereto as Schedule B, providing for the payment of certain amounts to the Executive (i) upon a termination of his employment within a 3 year period following a change in control of the Company, except in the case of a termination by the Company for cause, or by the Executive without good reason (each as defined therein), and (ii) as consideration for the promise of the Executive not to compete with the Company.

The Company has previously adopted an Executive Officer Retirement Plan, a copy of which is attached hereto as Schedule C, which provides for the payment of certain retirement benefits to the Executive upon his continued employment with the Company until he reaches the  age 60 and serves for a minimum of 15 years  as CEO, Chairman or President.

It is intended by the parties that this Executive Employment Agreement shall supplement, and shall not supersede, such Executive Severance and Non-Compete Agreement and Executive Officer Retirement Plan, and the terms of this Executive Employment Agreement shall be interpreted accordingly.  Notwithstanding anything contained herein, in the event that any provision of this Employment Agreement directly conflicts with the terms of the Executive Severance and Non-Compete Agreement, the terms of the Executive Severance and Non-Compete Agreement shall apply.

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.           Employment; Term

The Company shall employ the Executive, and the Executive shall accept employment by the Company, upon the terms and provisions, and subject to the conditions, of this Agreement.  The term of the Executive’s employment hereunder shall commence on and as of the effective date hereof (the “Employment Date”) and terminate on the first (1st) anniversary of the Employment Date (the “Employment Term”).

 

  

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2.           Position and Duties

The Company shall employ the Executive as its Chief Executive Officer. The Executive shall be subject to the ultimate authority of the Board of Directors of the Company. The Executive shall have the duties set forth in the Position Description, attached hereto and incorporated herein by reference as Schedule D, and such additional responsibilities or duties with respect to the Company and its subsidiaries, and their respective operations, as may be determined and assigned to the Executive by the Board of Directors of the Company.

The Executive owes absolute loyalty to the Company on all business opportunities he may become aware of.  During the Employment Term, the Executive shall not, without the advance written consent of the Board, provide services to or be employed by any other person, firm, or business, regardless of its form of organization, it being the intent of the parties that the Executive shall devote all of his working time, attention and energy to the business and affairs of the Company.

The Executive agrees to vote all shares of the Company’s stock he owns in the affirmative of all proposals put forth by the Board of Directors to the shareholders of the Company during the Term of this Agreement.

3.           Base Salary

During the Employment Term, the Compensation Committee shall review the  Executive’s base salary on an annual basis and make any recommended changes to the full board of directors. The initial Base Salary and any subsequent changes shall be reflected on a Schedule attached to and incorporated herein by reference.  The Base Salary shall be payable in accordance with the normal payroll practices of the Company; provided, however, that such payments shall be subject to withholding for applicable taxes and any other amounts generally withheld from compensation paid to salaried senior executives of the Company.

In addition to the Base Salary, the Executive will continue to be eligible to participate in the following established Programs and Plans in accordance with their terms as they have been or may be amended from time to time,:

	
1.  

	
The June 1, 1989 U.S. Energy Corp. Employee Stock Ownership Plan (“ESOP”)

	
2.  

	
The November 15, 2001 U.S. Energy Corp. Incentive Stock Option Plan (“ISOP”).

	
3.  

	
The December 7, 2001 U.S. Energy Corp. Stock Compensation Plan, (“Stock Compensation Plan”).

	
4.  

	
Annual Christmas Bonuses as granted by the Executive Committee of the Company.  Any Christmas Bonus paid to the Executive will be calculated on the same basis as all Company employees.

 

 

  

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5.  

	
Any additional compensation plans adopted by the Board of Directors and or the Company’s shareholders for the benefit of all the Company’s employees.

4.           Performance Compensation Plan

Following the end of each fiscal year of the Company during the Employment Term, the Executive may be eligible to receive a fiscal year end bonus in an amount not exceeding 100% of the Executive’s Base Salary (the “Performance Bonus”).  Criteria for determining the bonus amount will be linked to the achievement of the annual operating plan and budget, as outlined in the Performance Compensation Plan and as approved by the Board of Directors. See Exhibit A.  Upon each anniversary of this contract, the Compensation Committee will make recommendations to the full board and the Executive as to a new matrix for bonus compensation no later than April 15th of each year.)

The Performance Bonus, if earned, shall be paid by the Company to the Executive within thirty (30) days following the filing of the audited financial statements of the Company for the prior fiscal year in its annual Form 10K.

5.           Business Expenses

The Company shall reimburse the Executive for all necessary and reasonable expenses incurred or paid by the Executive during the Employment Term in connection with the performance of the Executive’s duties and obligations to the Company, subject to providing the proper documentation of such expenses.  The Company will reimburse the Executive for the use of his personal vehicle at the established Company rates but will not provide Executive with a Company owned vehicle.

6.           Benefits - Indemnification

During the Employment Term, the Executive will be eligible to (subject to applicable eligibility requirements) participate in such insurance and life, health, medical and disability benefits as are made available to the senior executives of the Company pursuant to such plans as are from time to time maintained by the Company.

The Company shall provide health insurance coverage to the Executive and his spouse, or shall reimburse the Executive for such health insurance coverage from and after the Executive’s attainment of age 60, until the Executive becomes eligible for Medicare benefits. This obligation will continue despite any termination of the Executive’s employment with the Company, unless such termination is for cause as defined in paragraph 12(b), and shall in all cases be limited to the amount paid by the Company for its executives as determined from time to time.  In the event that the Executive becomes eligible for health insurance from another source, the obligation of the Company hereunder shall cease.

 

  

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The Company shall indemnify and hold Executive harmless to the maximum extent permitted by law and by the bylaws of the Company, and shall purchase indemnity insurance, including directors’ and officers’ liability insurance, if available, to protect the Executive from and against any and all claims, damages, judgments, settlements, reasonable attorneys fees, and other expenses reasonably incurred by the Executive in connection with any proceeding arising out of or in connection with the Executive’s employment by the Company.

7.           Vacation

During each full year of the Employment Term, the Executive shall be entitled to the number of days of vacation as outlined in the U.S. Energy Employee Handbook.  The Executive shall take vacation at such time or times as the Executive desires based upon the then current business needs and activities of the Company.  The Executive is however required to take five consecutive days of vacation during each twelve month period of the Employment Contract to satisfy the controls established pursuant to Sarbanes Oxley.

8.           Covenant Not to Solicit

The Executive shall not, during the Employment Term and the three (3) year period following the end of the Employment Term (the “Restriction Period”), directly or indirectly solicit, entice, persuade, induce or cause any employee, officer, manager, director, consultant, agent or independent contractor of the Company to terminate his, her or its employment, consultancy or other engagement by the Company to become employed by or engaged by any individual, entity, corporation, partnership, association, or other organization (collectively, “Person”) other than the Company, or approach any such employee, officer, manager, director, consultant, agent or independent contractor for any of the foregoing purposes, or authorize or assist in the taking of any of such actions by any Person.

The Executive shall not, during the Restriction Period, directly or indirectly, solicit, entice, persuade, induce or cause (i) any Person who is a customer of the Company at any time during the Restriction Period; or (ii) any lessee, vendor or supplier to, or any other Person who had or has a business relationship with, the Company at any time during the Restriction Period (the Persons referred to in items (i) and (ii) above, collectively, the “Prohibited Persons”) to enter into a business relationship with any other Person for the same or similar services, activities or goods that any such Prohibited Person purchased from, was engaged in or provided to, the Company or to reduce or terminate such Prohibited Person’s business relationship with the Company; and the Executive shall not, directly or indirectly, approach any such Prohibited Person for any such purpose, or authorize or assist in the taking of any of such actions by any Person.

For purposes of this Section 7, the terms “employee”, “consultant”, “agent”, and “independent contractor” shall include any Persons with such status at any time during the one (1) month preceding any solicitation in question.

 

  

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9.           Non-Compete

Except as otherwise provided in this Agreement, during the Employment Term and during the Restriction Period, the Executive shall not directly or indirectly, alone or in association with any other Person, manage, operate, join, control, be employed by, or participate in the partnership, management, operation or control of, or be connected in any manner with, including but not limited to as a director, officer, partner, member, lender, vendor, consultant, employee, advisor, agent, independent contractor or a controlling shareholder of an entity that engages in the exploration or development activities for oil and gas, molybdenum or renewable resource development (the “Business”).  For purposes of this Section 8, the Executive covenants not to compete with the Company in its established or anticipated businesses.  To remedy the competition provision of this contract the Executive must bring in writing any prospective opportunities he learns of and desires to participate in to the Board of Directors and make such opportunity available to the Company.  In the event that the Company advises the Executive in writing that it has no interest in the prospect, or business opportunity the Executive is free to move forward however he chooses.  Such written notice will not be unreasonably withheld.

10.           Protection of Confidential Information

The Executive acknowledges that prior to the date hereof the Executive has had access to, and during the course of the Executive’s employment hereunder will have access to, significant Confidential Information (as hereinafter defined). During the Restriction Period, (i) the Executive shall maintain all Confidential Information in strict confidence and shall not disclose any Confidential Information to any other Person, except as necessary in connection with the performance of the Executive’s duties and obligations under this Agreement, and (ii) the Executive shall not use any Confidential Information for any purpose whatsoever except in connection with the performance of the Executive’s duties and obligations under this Agreement.

“Confidential Information” shall mean any and all information pertaining to the Company and the Business, whether such information is in written form or communicated orally, visually or otherwise, that is proprietary, non-public or relates to any trade secret, including, but not limited to, customer data, sales and marketing information, business and marketing strategies, loan data, loan and deposit account information, files, business secrets, computer programs or files, and business techniques. Notwithstanding the foregoing, “Confidential Information” shall not include information that (i) is or becomes generally available to, or known by, the public through no fault of the Executive, or (ii) is independently acquired or developed by the Executive outside the scope of his employment.

11.           Certain Additional Agreements

The Executive agrees that it is a legitimate interest of the Company and reasonable and necessary for the protection of the goodwill and business of the Company, which are valuable to the Company, that the Executive make the covenants contained in Sections 7, 8 and 9 of this Agreement.

 

 

  

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The parties acknowledge that (i) the type and periods of restriction imposed in the provisions of Sections 7, 8 and 9 of this Agreement are fair and reasonable and are reasonably required to protect and maintain the proprietary and other legitimate business interests of the Company, as well as the goodwill associated with the Business conducted by the Company, (ii) the Business conducted by the Company extends throughout the Restricted Territory, and (iii) the time, scope, geographic area and other provisions of Sections 7, 8 and 9 of this Agreement have been specifically negotiated by sophisticated commercial parties represented by experienced legal counsel.

In the event that any covenant contained in this Agreement, including, without limitation, any covenant contained in Sections 7, 8 and 9 of this Agreement shall be determined by any court of competent jurisdiction to be illegal, invalid or unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, (i) such covenant shall be interpreted to extend over the maximum period of time for which it may be legal, valid and enforceable, as applicable, and/or over the maximum geographical area as to which it may be legal, valid and enforceable, as applicable, and/or to the maximum extent in all other respects as to which it may be legal, valid and enforceable, as applicable, all as determined by such court making such determination, and (ii) in its reduced form, such covenant shall then be legal, valid and enforceable, as applicable, but such reduced form of covenant shall only apply with respect to the operation of such covenant in the particular jurisdiction in or for which such adjudication is made. It is the intention of the parties that such covenants shall be enforceable to the maximum extent permitted by applicable law.

It is acknowledged and agreed that the covenants contained in Sections 7, 8 and 9 of this Agreement are in additional to, and do not supersede, the covenants contained in the “Executive Severance and Non-Compete Agreement” previously entered into by and between the parties.

12.           Specific Performance

The Executive acknowledges that any breach or threatened breach of the covenants contained in Sections 7, 8, 9 and 10 of this Agreement will cause the Company material and irreparable damage, the exact amount of which will be difficult to ascertain and that the remedies at law for any such breach or threatened breach will be inadequate. Accordingly, the Executive agrees that the Company shall, in addition to all other available rights and remedies (including, but not limited to, seeking such damages as it

can show it has sustained by reason of such breach), be entitled to specific performance and injunctive relief in respect of any breach or threatened breach of any of Sections 7, 8, 9 and 10 of this Agreement, without being required to post bond or other security and without having to prove the inadequacy of the available remedies at law or irreparable harm.

 

  

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13.           Termination

(a)           Except as set forth in Section 12(b), in the event of the termination of the Executive’s employment during the Employment Term the Executive shall be entitled to receive, and the Company shall pay the Executive (i) the Base Salary owing to the Executive hereunder through the date of termination, (ii) accrued vacation, and (iii) any business expenses which were properly reimbursable to the Executive pursuant to Section 4 hereof through the date of termination. Such amounts shall be paid to the Executive in a lump-sum not later than seventy-five (75) days after the date of termination.  The Executive shall be entitled to no further payment upon such termination with the exception of the health insurance benefit described in paragraph 5.

(b)           In the event of the termination of the Executive’s employment during the Employment Term (i) by the Company without Cause (as defined below) or (ii) by the Executive for Good Reason (as defined below), and contingent upon Executive first executing the Separation Agreement that is attached hereto as Exhibit E and that Separation Agreement becoming fully effective pursuant to its terms, then the Executive shall be entitled to receive, and the Company shall pay the Executive, in addition to the amounts described in 12(a) above, (i) severance equal to the Executive’s annual Base Salary at the date of termination multiplied by three (3), and (ii) cash equal to the excess of the Market Value of securities underlying the vested options held by the Executive immediately prior to termination, less the exercise price of such options, multiplied by the number of shares underlying the corresponding options.  Such amounts shall be paid to the Executive in a lump-sum not later than seventy-five (75) days after the date of termination, and shall be reduced by any amounts payable to the Executive under paragraphs 2(a), (b) and (d) of the Executive Severance and Non-Compete Agreement.

For purposes of this Agreement, “Cause” shall mean:

	
(i)  

	
failure to accomplish the goals established in the Company’s operating plans as determined by the Board  of Directors;(ii)  that the Executive shall have committed an intentional act of fraud, embezzlement or theft in connection with his duties with, or in the course of his employment with, the Company, or been convicted of a felony or other crime involving moral turpitude;

	
(ii)  

	
intentional wrongful damage to or misappropriation of property of the Company;

	
(iii)  

	
an intentional or grossly negligent refusal or failure to perform Executive’s duties, or to carry out the reasonable directions of the Company’s Board of Directors (other than on account of illness or other physical or mental disability), which refusal or failure is not remedied within the 10 calendar days after receipt by the Executive of written notice from the Company thereof, or insubordination;

 

 

 

  

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(iv) 

	
a material breach of any of the provisions of this Agreement applicable to Executive, which breach is not remedied within the 10 calendar days after receipt by the Executive of written notice from the Company of such breach; and in any case any such act or failure to act shall be determined by the Board of Directors of the Company to have been materially harmful to the Company. For purposes of this Agreement, no act, or failure to act, on the part of the Executive shall be deemed “intentional” unless done, or omitted to be done, by the Executive not in good faith and without a reasonable belief that his action or omission was in the best interests of the Company, as determined by the Board of Directors of the Company in its sole but reasonable discretion; or

For purposes of this Agreement, “Good Reason” shall mean a termination occurring within one hundred and twenty (120) days after the occurrence of any of the following events:

(i) a significant and material adverse change in the nature or scope of Employee’s duties and responsibilities or other working conditions with Company including job classification change from that of an Executive,

(ii) a failure by the Company to make timely payment to the Employee of any amounts to which he is entitled hereunder or to otherwise provide Employee with any of the benefits to which he is entitled hereunder on the terms provided herein or any other breach of the covenants contained herein, any of which is not remedied within 10 calendar days after receipt by the Company of written notice from the Employee of Employee’s objection to such change, failure, reduction or breach, as the case may be; or

(iii) the liquidation, dissolution, merger, consolidation or reorganization of the Company or transfer of a significant amount of the business and/or assets of the Company to another party, unless the successor or successors (by liquidation, dissolution, merger, consolidation, reorganization or otherwise) or other transferee or transferees to which all or substantially all of such business and/or assets have been transferred (directly or by operation of law) shall have assumed all duties and obligations of the Company to Employee hereunder by an instrument in writing reasonably satisfactory in form and in substance to the Employee.

 

 

  

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(c)           Notwithstanding the foregoing, if the Executive is a “specified employee” (within the meaning of Section 409A(a)(2)(B) of the Internal Revenue Code of 1986, as amended) and if Section 409A is applicable to any amounts payable hereunder, all such amounts that would have been paid to the Executive under this Section 12 during the 6 month period following the termination of his employment shall instead be paid in a lump sum on the first day of the 7th month after the month of such termination of employment.

(d)           The amounts payable to the Executive under this paragraph 12 shall be in addition to and not in lieu of any benefit payable to the Executive pursuant to the Company’s Executive Officer Retirement Plan.

(e)           In the event that the Executive dies while employed as CEO or Chairman and this Agreement has not been terminated, the benefits under Section 12(b) will inure to the benefit of the Executive’s designated beneficiary or his estate.

14.           Annual Medical Examination        Executive agrees to make himself available for an annual physical examination at a location to be selected by the Board of Directors and at the expense of the Company and that such medical examination will be completed no later than April 30th of each year.

15.           Miscellaneous

All notices, demands, consents, requests, instructions and other communications to be given or delivered or permitted under or by reason of the provisions of this Agreement or in connection with the transactions contemplated hereby shall be in writing and shall be deemed to be delivered and received by the intended recipient as follows:  (i) if personally delivered, on the business day of such delivery (as evidenced by the receipt of the personal delivery service), (ii) if mailed certified or registered mail return receipt requested, four (4) business days after being mailed, (iii) if delivered by overnight courier (with all charges having been prepaid), on the business day of such delivery (as evidenced by the receipt of the overnight courier service of recognized standing), or (iv) if delivered by facsimile transmission or email, on the business day of such delivery if sent by 5:00 p.m. in the time zone of the recipient, or if sent after that time, on the next succeeding business day (as evidenced by the printed confirmation of delivery generated by the sending party’s facsimile machine). If any notice, demand, consent, request, instruction or other communication cannot be delivered because of a changed address of which no notice was given (in accordance with this Section 14), or the refusal to accept same, the notice, demand, consent, request, instruction or other communication shall be deemed received on the second business day the notice is sent (as evidenced by a sworn affidavit of the sender). All such notices, demands, consents, requests, instructions and other communications will be sent to the following addresses or facsimile numbers as applicable:

 

  

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If to the Company, to:

U.S. Energy Corp.

Attn: Steven R. Youngbauer, General Counsel

877 North 8th West

Riverton, WY 82501

(307) 856-9271

youngbauert@usnrg.com

with a copy to:

Stephen P. Rickles, Esq.

Berenbaum, Weinshienk & Eason, P.C.

370 17th Street, Suite 4800

Denver, CO 80202

(303) 592-8308

srickles@bw-legal.com

If to the Executive, to:

Keith Larsen

877 North 8th West

Riverton, WY  82501

16.           Amendment

This Agreement may not be modified, amended, altered or supplemented, except by a written agreement executed by each of the parties hereto.

17.           Entire Agreement

This Agreement contains the entire understanding and agreement of the parties relating to the subject matter hereof and, except as otherwise stated herein, supersedes all prior and/or contemporaneous understandings and agreements of any kind and nature (whether written or oral) among the parties with respect to such subject matter, all of which are merged herein.

18.           Waiver

Any waiver by a party hereto of any breach of or failure to comply with any provision or condition of this Agreement by any other party hereto shall not be construed as, or constitute, a continuing waiver of such provision or condition, or a waiver of any other breach of, or failure to comply with, any other provision or condition of this Agreement, any such waiver to be limited to the specific matter and instance for which it is given. No waiver of any such breach or failure or of any provision or condition of this Agreement shall be effective unless in a written instrument signed by the party granting the waiver and delivered to the other party hereto in the manner provided for hereunder in Section 14. No failure or delay by any party to enforce or exercise its rights hereunder 

 

 

  

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shall be deemed a waiver hereof, nor shall any single or partial exercise of any such right or any abandonment or discontinuance of steps to enforce such rights, preclude any other or further exercise thereof or the exercise of any other right.

 

19.           Governing Law; Jurisdiction

This Agreement shall be governed by and construed in accordance with the laws of the State of Wyoming applicable to agreements made and to be performed in that state, without regard to any of its principles of conflicts of laws or other laws that would result in the application of the laws of another jurisdiction.

Each of the parties unconditionally and irrevocably consents to the exclusive jurisdiction of the courts of the State of Wyoming and the federal district court for the District of Wyoming with respect to any suit, action or proceeding arising out of or relating to this Agreement, and each of the parties hereby unconditionally and irrevocably waives any objection to venue in any such court or to assert that any such court is an inconvenient forum, and agrees that service of any summons, complaint, notice or other process relating to such suit, action or other proceeding may be effected in the manner provided in Section 14 hereof. Each of the parties hereby unconditionally and irrevocably waives the right to a trial by jury in any such action, suit or other proceeding

20.           Binding Effect, No Assignment, etc

This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, heirs, estate, successors and permitted assigns. Neither this Agreement nor any right, interest or obligation hereunder may be assigned by any party hereto without the prior written consent of the other party, and any attempt to do so shall be void and of no force and effect, except (i) assignments and transfers by operation of law and (ii) that the Company may assign any or all of its respective rights, interests and obligations hereunder to any purchaser of a majority of the issued and outstanding capital stock of the Company or a substantial part of the assets of the Company.

21.           Third Parties

Nothing herein is intended or shall be construed to confer upon or give to any Person, other than the parties hereto (or persons set forth in Section 14), any rights, privileges or remedies under or by reason of this Agreement.

22.           Headings

The section headings contained in this Agreement  are inserted for reference purposes only and shall not affect in any way the meaning, construction or interpretation of this Agreement. Any reference to the masculine, feminine, or neuter gender shall be a reference to such other gender as is appropriate. References to the singular shall include the plural and vice versa.

 

  

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23.           Counterparts.

This Agreement may be executed in two (2) or more counterparts (including by facsimile or electronic signature, which shall constitute a legal and valid signature), and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, and all of which, when taken together, shall constitute one and the same document. This Agreement shall become effective when one or more counterparts, taken together, shall have been executed and delivered by all of the parties.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date noted below.

	  	
U.S. ENERGY CORP.

	  	  	  
	  	
By:

	  /s/ Jerry W. Danni
	  	  	
Jerry W. Danni

U.S. Energy Corp. Board Member

Chairman Compensation Committee

	  	
Date:

	  1-16-12
	  	  	  
	  	
EXECUTIVE

	  	  	  
	  	  	  /s/  Keith G. Larsen
	  	  	
Keith G. Larsen

Chairman, CEO

	  	
Date:

	  1-16-12

 

 

  

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SEPARATION AGREEMENT

[form to be completed at and tendered to Executive within 5 days after separation]

THIS SEPARATION AGREEMENT is entered into by and between U.S. ENERGY CORP. ("Company") and Keith G. Larsen ("Executive") for good and valuable consideration, the sufficiency of which is hereby acknowledged.

1.           Executive and Company agree that Executive’s retirement from employment with Company is effective as of  [insert date]    (the “Separation Date”).  Company agrees to consult with Executive regarding the wording of appropriate press releases and/or inter-company announcements to be issued by Company.

2.           Regardless of whether he signs this Separation Agreement, Executive will be paid all compensation as provided in paragraph 12 (a) of the Employment Agreement, a copy of which is attached hereto and incorporated herein by reference (the “Employment Agreement”).

3.           In exchange for Executive's agreement to this Separation Agreement, Company agrees to provide Executive with the additional severance benefits described in paragraph 12(b) of the Employment Agreement.  Executive acknowledges that he would not be entitled to receive the severance benefits described in paragraph 12(b) of the Employment Agreement if he did not agree to all of the terms of this Separation Agreement.

 

4.           Upon full payment by the Company to the Executive of all compensation and benefits specified in Section 12(b) of the Employment Agreement and as provided by this Agreement, the Executive, for himself and his affiliates, successors, heirs, subrogees, assigns, principals, agents, partners, employees, associates, attorneys and representatives, voluntarily, knowingly and intentionally releases and discharges the Company and its predecessors, successors, parents, subsidiaries, affiliates and assigns and each of their respective officers, directors, principals, shareholders, agents, attorneys, board members, and employees from any and all claims, actions, liabilities, demands, rights, damages, costs, expenses, and attorney fees (including but not limited to any claim of entitlement for attorney fees under any contract, statute, or rule of law allowing a prevailing party or plaintiff to recover attorney fees), of every kind and description, whether accrued or unaccrued, known or unknown at this time (the “Released Claims”).

 

(i)           Subject to the last sentence of this subsection (i), the Released Claims include, but are not limited to, those which arise out of, relate to, or are based upon: (i) the Executive’s employment with, or separation from, the Company or its subsidiaries and any related officer or director positions; (ii) statements, acts or omissions by the Parties whether in their individual or representative capacities, (iii) express or implied agreements between the Parties (except as provided herein) and claims under any severance plan, (iv) all federal, state, and municipal statutes, ordinances, and regulations, including, but not limited to, claims of discrimination based on race, national origin, age, sex, 

 

 

  

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disability, whistleblower status, public policy, or any other characteristic of the Executive under the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Americans with Disabilities Act, the Equal Pay Act, Title VII of the Civil Rights Act of 1964 (as amended), the Employee Retirement Income Security Act of 1974, the Rehabilitation Act of 1973, the Worker Adjustment and Retraining Notification Act, or any other federal, state, or municipal law prohibiting discrimination or termination for any reason, (v) state and federal common law, and (vi) any claim which was or could have been raised by the Executive; provided, however, that the Released Claims shall not include stock in the Company currently held by the Executive or the Executive’s outstanding options to purchase stock from the Company, and any such options shall vest pursuant to the terms of the relevant stock option grants and stock option plan.  Provided, that Released Claims shall not include any claims against the Company which the Executive may have before or after the date of this Separation Agreement, which claims are covered by the indemnification provisions of the Company’s articles of incorporation, bylaws, or Wyoming corporate law and which may not be legally released.

(ii)           The Company voluntarily, knowingly and intentionally releases and discharges the Executive from any and all claims, actions, liabilities, demands, rights, damages, costs, expenses, and attorney fees (including but not limited to any claim of entitlement for attorney fees under any contract, statute, or rule of law allowing a prevailing party or plaintiff to recover attorney fees), of every kind and description.  Provided, that the foregoing Company release shall not include claims which the Company may have against the Executive before or after the date of this Separation Agreement, which claims are covered by the indemnification provisions of the Company’s articles of incorporation, bylaws, or Wyoming corporate law and which may not be legally released.

5.           Executive agrees that he will not file, cause to be filed, or prosecute any civil suit in any court for any claims which are released in Paragraph 4.  In the event that Executive breaches this paragraph, all Released Persons shall be entitled to recover from Executive all reasonable attorney fees and costs incurred as a result of such breach, provided, however, that Executive's obligation to pay attorney fees and costs shall apply to claims asserted under the Age Discrimination in Employment Act or the Older Workers Benefit Protection Act only as specifically authorized by federal law.

6.           This Separation Agreement constitutes the entire agreement between Executive and Employer concerning his separation from employment with Employer and supersedes all prior agreements relating thereto, and there are no other promises, understandings, or agreements relating thereto except as may be provided herein.   Both parties agree and acknowledge that they have not relied upon any representation, whether written or oral, of the other party in connection with entering into this Separation Agreement.  Nothing in this Agreement shall be construed as an admission of liability or wrongdoing by either party.  The purpose of this Agreement is solely to amicably resolve all issues relating to Executive's employment and separation from employment with 

 

 

  

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Employer and to provide transitional assistance to Executive.  No rules of construction based upon which party drafted any portion of this Agreement shall be applicable in the event of any dispute over its meaning or interpretation.  This Agreement shall be construed and enforced in accordance with the law of the State of Wyoming.  If any provision of this Agreement is found to be invalid or unenforceable by a court of competent jurisdiction, the remaining terms of this Agreement will remain in full force and effect, and any Court having jurisdiction shall modify any such invalid or unenforceable provision to the extent necessary for it to be valid and enforceable.

7.           Executive understands that this is an important legal document.  Executive is advised to consult with an attorney before signing this Separation Agreement.  Executive has 21 days after receiving this Separation Agreement to consider it, and if Executive chooses to agree to the terms of this Separation Agreement, Executive understands that he must sign and return this Separation Agreement to Employer within that 21-day period.  If Executive signs this Separation Agreement, he will then have the right to revoke this Separation Agreement by delivering written notice of revocation, but such notice must be received by Employer within seven (7) days after the date that Executive signed this Separation Agreement.  If this Separation Agreement is not signed and delivered within 21 days, or if it is revoked within the seven day period, neither Executive nor Employer will have any rights or obligations under this Separation Agreement.  The Effective Date of this Separation Agreement is the eighth day after Executive signs it, unless Executive revokes it as described above.

8.           It is expressly understood that Executive has read and reviewed this Separation Agreement and every word of it, that Executive has had an opportunity to discuss this Separation Agreement with an attorney if he chose to do so, and that Executive understands this Separation Agreement.  By signing below, Executive represents that this Separation Agreement has been entered into voluntarily and knowingly and is binding upon him, his heirs, and personal representatives, and shall inure to the benefit of Employer, its successors and assigns.

U.S. Energy Corp.

 

By: ______________________________

__________________________________

Keith G. Larsen

 

 

  

Page 3of 3

  

 

Schedule for Base Salary

The base salary for Keith G. Larsen for 2012 is $257,300, thereafter changed annually upon recommendation of the Compensation Committee and approval of the full Board.

 

 

  

  

  

 

 

EXHIBIT A to Employment Agreement

 

 

  

  

  

 

 

2012 Performance Compensation Plan

Financial Factors

Stock Price: The 200 day moving average stock price ending December 31, 2012 must exceed the same 200 day moving average ending December 31, 2011 by 15% or greater to earn the 20% assigned award.  No award will be earned for less than the targeted 15% increase in the 200 day moving day average stock price.

Earnings Per Share:  During the year ending December 31, 2012 earnings per share must increase at least $0.05 per share to attain the 20% assigned award.

Cash Flow:  2012 cash flow from operations must be at least $21 million to trigger the award.  To qualify for the full 20% award, cash flow must be $30 million or greater.  Cash flow between $21 million and $30 million will be awarded in 2% increments up to the full 20% allocated award amount.

Operational Factors

Reserves:  Increase oil and gas proved reserves by 30% at December 31, 2012 from the stated reserves at December 31, 2011.

Production:  Increase average daily oil and gas production for the year ending 2012 by 40%, from the 2011 average daily production. No award will be earned for less than a 40% increase for the year ending December 31, 2012.

2012 BONUS AWARD MATRIX SUMMARY

	
Description

	
Tier 1

	
Tier 2

	
Tier 3

	
Tier 4

	
Tier 5

	
Salary Range

	
$0-$49,999

	
$50,000-$99,999

	
$100,000-$149,999

	
$150,000 + Non-executive

	
Executive Officers

	
Bonus % of Base Salary

	
10%

	
20%

	
35%

	
50%

	
100%

 

 

 

	
2012 BONUS AWARD MATRIX CRITERIA

	
Metric

	
% Allocated

	
Criteria

	
Stock price

	
20%

	
15% increase in the 200 MDA

	
Earnings per share

	
20%

	
Greater than $0.05/share

	
Cash flow from operations

	
20%

	
$21 - $30 million, allocated in 2% increments

	
Reserves (BOE)

	
20%

	
Increase by 30%

	
Production (BOE/day)

	
20%

	
Increase by 40%

Exhibit A

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