-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H3OYINk55sMUdYOv/1KMLY2RLSV6YzeVYAUxU96QHk29wf8VOWWUBMnj2utftmvn 6eNNvCgTNVH8Ak8TF/MQpg== /in/edgar/work/20000526/0000070502-00-000162/0000070502-00-000162.txt : 20000919 0000070502-00-000162.hdr.sgml : 20000919 ACCESSION NUMBER: 0000070502-00-000162 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20000525 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/ CENTRAL INDEX KEY: 0000070502 STANDARD INDUSTRIAL CLASSIFICATION: [6159 ] IRS NUMBER: 520891669 STATE OF INCORPORATION: DC FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-37940 FILM NUMBER: 644647 BUSINESS ADDRESS: STREET 1: 2201 COOPERATIVE WY STREET 2: C/O WOODLAND PARK CITY: HERNDON STATE: VA ZIP: 20171-3025 BUSINESS PHONE: 7037096700 MAIL ADDRESS: STREET 1: 2201 COOPERATIVE WAY CITY: HERNDON STATE: VA ZIP: 20171-3025 S-3 1 REGISTRATION STATEMENT NO. 333-_____ - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 --------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) DISTRICT OF COLUMBIA (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) 52-089-1669 (I.R.S. EMPLOYER IDENTIFICATION NO.) 2201 COOPERATIVE WAY HERNDON, VIRGINIA 20171-3025 (703) 709-6700 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) JOHN JAY LIST, GENERAL COUNSEL NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION 2201 COOPERATIVE WAY HERNDON, VIRGINIA 20171-3025 (703) 709-6700 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) Copies to: MARK L. WEISSLER MILBANK, TWEED, HADLEY & MCCLOY LLP 1 CHASE MANHATTAN PLAZA NEW YORK, NEW YORK 10005 --------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this registration statement as determined by market conditions. IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED PURSUANT TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX. [ ] IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF 1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX. [X] IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF EARLIER EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ] IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ] IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434, PLEASE CHECK THE FOLLOWING BOX. [ ] CALCULATION OF REGISTRATION FEE ============================================================================= PROPOSED PROPOSED AMOUNT TITLE OF EACH MAXIMUM MAXIMUM OF CLASS OF SECURITIES AMOUNT TO BE AGGREGATE PRICE AGGREGATE REGISTRATION TO BE REGISTERED REGISTERED (1) PER UNIT (2) OFFERING PRICE FEE - ----------------------------------------------------------------------------- Floating rate demand notes $300,000,000 100% $300,000,000 $79,200 - ----------------------------------------------------------------------------- ============================================================================= (1) Expressed as the principal amount of securities, or in the case of Original Issue Discount Securities, the offering price thereof. (2) Estimated solely for purposes of calculating the registration fee. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. SUBJECT TO COMPLETION DATED MAY 25, 2000 National Rural Utilities Cooperative Finance Corporation $300,000,000 VARIABLE DENOMINATION FLOATING RATE DEMAND NOTES OFFERED AS SET FORTH HEREIN PURSUANT TO CFC DAILY LIQUIDITY PROGRAM _____________________ Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these debt securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. _______________________ The date of this prospectus is , 2000 1 TABLE OF CONTENTS PAGE Where You Can Find More Information About National Rural Utilities Cooperative Finance Corporation 3 CFC 3 CFC Daily Liquidity Program Summary: Interest Rate Information 5 Program Enrollment 5 How to Make a Purchase 5 Purchases By Wire 6 How To Make Investment Withdrawals/Liquidations 6 The Indenture 7 Termination, Suspension or Modification of Program 8 Rights Not Transferable 8 Use of Proceeds 8 Plan of Distribution 9 Legal Opinions 9 Experts 9 You should rely only on the information contained or incorporated by reference in this prospectus supplement, the attached prospectus or any attached pricing supplement. We have authorized no one to provide you with different information. You should not assume that the information contained in this prospectus supplement, the attached prospectus or any attached pricing supplement is accurate as of any date other than the date on the front cover of the document. We are not making an offer of these notes in any state where the offer is not permitted. 2 WHERE YOU CAN FIND MORE INFORMATION ABOUT NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION National Rural Utilities Cooperative Finance Corporation ("CFC") files annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document CFC files at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. CFC's SEC filings are also available to the public at the SEC's web site at http://www.sec.gov. The SEC allows the incorporation by reference of information filed in other documents into this prospectus, which means that CFC can disclose information important to you by referring you to those documents. The information incorporated by reference is considered to be a part of this prospectus, and CFC incorporates by reference the documents listed below and any future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until this offering is completed: (a) Annual Report on Form 10-K for the year ended May 31, 1999; (b) Quarterly Reports on Form 10-Q for the quarters ended August 31, 1999, November 30, 1999 and February 29, 2000; (c) Current Report on Form 8-K dated June 10, 1999, October 13, 1999, February 10, 2000 and May 8, 2000. You may request a copy of these filings, at no cost, by writing to or telephoning us at the following address: Steven L. Lilly Senior Vice President and Chief Financial Officer National Rural Utilities Cooperative Finance Corporation Woodland Park, 2201 Cooperative Way Herndon, VA 20171-3025 1-800-424-2954 - ------------------------------ CFC CFC was incorporated as a private, not-for-profit cooperative association under the laws of the District of Columbia in 1969. CFC's principal purpose is to provide its members with a source of financing to supplement the loan program of the Rural Utilities Service ("RUS") (formerly the Rural Electrification Administration) of the United States Department of Agriculture. CFC makes loans primarily to its rural utility system members to enable them to acquire, construct and operate electric distribution, generation, transmission and related facilities. CFC also makes loans to service organization members to finance office buildings, equipment, related facilities and services provided by them to the rural utility systems. CFC has also provided guarantees for tax-exempt financing of pollution control facilities and other properties constructed or acquired by its members, and in addition has provided loans or guarantees through National Cooperative Services Corporation in connection with certain lease transactions of its members. Also, through Rural Telephone Finance Cooperative, a controlled affiliate of CFC established in 1987, CFC provides financing to rural telephone and telecommunications companies and their affiliates. In addition, through Guaranty Funding Cooperative, a controlled affiliate of CFC established in 1991, CFC provides financing for members to refinance their debt to the Federal Financing Bank of the United States Treasury. CFC's offices are located at Woodland Park, 2201 Cooperative Way, Herndon, VA 20171-3025, and its telephone number is (703) 709-6700. CFC's 1,057 members as of May 31, 1999 include 908 rural utility system members, virtually all of which are consumer-owned cooperatives, 76 service organization members and 73 associate members. The rural utility system 3 members included 838 distribution systems and 70 generation and transmission ("power supply") systems operating in 46 states and U.S. territories. CFC's long-term loans to rural utility system members generally have 35-year maturities. Loans are made directly to members or in conjunction with concurrent RUS loans. Loans made to members that do not also have RUS loans are generally secured by a mortgage or substantially all the rural utility system member's property, including revenues. Loans made to members that also have RUS loans are generally secured ratably with RUS's loans by a common mortgage on substantially all the rural utility system member's property, including revenues. Interest rates on these loans are either fixed or variable. Fixed rates are offered weekly based on the overall cost of long-term funds and may be obtained for any period from one to 35 years. Variable rates are adjusted monthly in line with changes in the cost of short-term funds. CFC makes short-term line-of-credit loans and intermediate-term loans with up to five-year maturities. These loans are made on either a secured or an unsecured basis. Rates on these loans may be adjusted semi-monthly in line with changes in the short-term cost of funds. The intermediate- term loans are generally made to power supply systems in connection with the planning and construction of new generating plants and transmission facilities. CFC also makes loans to telecommunication systems through Rural Telephone Finance Cooperative. These loans are long-term fixed or variable rate loans with maturities generally not exceeding 15 years and short-term loans. At May 31, 1999, CFC had a total of $13,703.4 million of loans outstanding and $1,684.5 million of guarantees outstanding. CFC's guarantees are senior obligations ranking on a par with its other senior debt. Even if the system defaults in payment of the guaranteed obligations, the debt cannot be accelerated as long as CFC pays the debt service under its guarantee as due. The system is generally required to reimburse CFC on demand for amounts paid on the guarantee, and this obligation is usually secured by a mortgage, often joint with RUS, on the system's property or, in the case of a lease transaction, on the leased property. Holders of $947.3 million of the guaranteed pollution control debt at May 31, 1999 had the right at certain times to tender their bonds for remarketing, and, if they cannot otherwise be remarketed, CFC has committed to purchase bonds so tendered. By policy, CFC maintains an allowance for loan losses at a level believed to be adequate in relation to the quality and size of its loans and guarantees outstanding. At May 31, 1999, the allowance was $212.2 million. At May 31, 1999, CFC's ten largest borrowers had outstanding loans totaling $2,241.5 million, which represented approximately 16.4% of CFC's total loans outstanding. As of May 31, 1999, outstanding guarantees for these same ten borrowers totaled $702.7 million, which represented 41.7% of CFC's total guarantees outstanding, including guarantees of the maximum amounts of lease obligations at such date. On that date, no member had loans and guarantees outstanding in excess of 10% of the aggregate amount of CFC's outstanding loans and guarantees. However, one of the ten largest borrowers, Deseret Generation & Transmission Co-operative, was operating under a restructuring agreement. At May 31, 1999, loans outstanding to Deseret accounted for 4.2% of total loans outstanding. Guarantees outstanding for Deseret accounted for 4.0% of total guarantees outstanding. CFC's fixed charge coverage ratio was as follows for the periods indicated: Nine months ended Years ended May 31, February 29, February 28, 2000 1999 1999 1998 1997 1996 1995 1.13 1.12 1.12 1.12 1.12 1.12 1.13 Margins used to compute the fixed charge ratio represent net margins before extraordinary loss resulting from redemption premiums on bonds plus fixed charges. The fixed charges used in the computation of the fixed charge coverage ratio consist of interest and amortization of bond discount and bond issuance expenses. 4 CFC DAILY LIQUIDITY PROGRAM SUMMARY Rights of participants under the program, the limitations on those rights, and the principal provisions of the program are described in the next few pages. Written or telephone requests for a copy of the program should be directed to National Rural Utilities Cooperative Finance Corporation, 2201 Cooperative Way, Herndon, Virginia 20171-3025, Attention: Treasury (telephone 1-800-424-2954). All purchases under the program will be evidenced under a master note. Confirmations of purchases will be issued to each participant upon purchase. The principal amount of the purchase, plus interest accrued and unpaid thereon, is recorded on a register maintained by CFC as the participant's program account. Current account information can be obtained by calling 1-800-424-2954. Further information about the program and assistance in making purchases can be obtained by calling the above number or writing to the above address. The program is not equivalent to a bank account and is not subject to the protection of the Federal Deposit Insurance Corporation or other insurance. Since all funds under the program will be received by CFC, participants will not have the advantage of diversification offered by money market funds and will not have the protection provided by the Investment Company Act of 1940. The deposits are not and will not be listed on any securities exchange and there is no secondary market for them. Interest Rate Information The interest rate on the program will be set by CFC on a daily basis. Interest will be calculated on the actual days divided by a 365-day year. The interest rate will not be less than the interest rate set on CFC's directly issued commercial paper for maturities between one and seven days. Information on current interest rates can be obtained by calling CFC's Money Desk at 1-800-424-2954 or through CFC's website at http://www.nrucfc.org. Interest on an account will accrue on a daily basis. Interest will be automatically credited to the account monthly, on the second business day following the end of the month. Participants cannot elect to have interest paid to them monthly. However, amounts may be withdrawn from the account at any time subject to the $50,000 minimum. Interest earned for any given past period under the program is not an indication or representation of future results. For purposes of the program, a "business day" is a day on which both the Federal Reserve Bank of New York and CFC are fully open for business. Program Enrollment CFC members and non-members who are currently enrolled as participants in the CFC member commercial paper ("CP") program are automatically enrolled to participate in the program. Members and non-members who are not already established as CFC member CP investors may register to invest in the daily fund program by completing a "CFC Commercial Paper Investor Background Data" form. This form may be obtained by contacting the CFC Money Desk at 1-800-424-2954. How to Make a Purchase Purchases under the program may be made at any time, without charge to members, by wire transfer or by such other means as CFC shall from time to time determine. The minimum initial amount which members may purchase under the program is $50,000. The minimum amount for subsequent purchases is $50,000. A minimum balance of $50,000 must be maintained in each program account at all times. All purchases must be made in U.S. dollars. Program accounts may be opened only by CFC member or affiliate entities. 5 Purchases By Wire Participants may purchase under the program by wiring funds to the program. The wire transfer routing code for CFC's daily fund account at Bank One (Chicago, IL) is 071000013. For all wire purchases, the wire must include the name of the program, the member's name, and the member's alphanumeric identification number (for example, NM013). Funds received by the agent bank on a business day prior to 5:00 pm Eastern time will be credited to the member's account on that day. Funds received after 5:00 pm on a business day Eastern time are credited to the purchaser's account on the next business day. Interest will begin to accrue on the business day the purchase is credited to the participant's account. Attempts to make a purchase through methods other than wire transfer may result in a delay in crediting the purchase to the participant's account. Neither the agent bank nor CFC is responsible for delays in the transfer and wiring of funds. How to Make Withdrawals/Liquidations A participant may make a withdrawal at any time, without fees or penalties, subject to a $50,000 minimum. A participant may liquidate their account at any time, without fees or penalties. Requests for withdrawals by wire transfer may be initiated by telephoning the CFC Money Desk (1-800- 424-2954) or making an on-line request via the CFC Member's Extranet. Requests for account liquidation by wire transfer must be initiated by telephoning the CFC Money Desk (1-800-424-2954). Participants liquidating their holdings and closing their program account will receive all accrued and unpaid interest. Withdrawals/Liquidations by Wire Transfer Participants may arrange to have withdrawal or liquidation proceeds of $50,000 or more wire transferred to a pre-designated bank account. If the withdrawal or liquidation request, in proper form, is received by CFC before 11 am Eastern time on a business day, proceeds will normally be wired to the predesignated bank account on that business day. Withdrawal or liquidation proceeds will normally be wired to the pre-designated bank account on the next business day if the withdrawal or liquidation request, in proper form, was received by CFC after 11 am Eastern time. Interest accrues to, but does not include, the business day the proceeds are wired. Withdrawal or liquidation instructions must include the name of the program (CFC Daily Fund), the participant's name, the participant's alphanumeric ID number (for example, NM023), the routing code of the pre- designated bank, and the participant's account number at the pre-designated bank. Withdrawal or liquidation instructions may be given by telephoning CFC at 1-800-424-2954. The pre-designated bank may be changed only on written request to CFC with the signature of the participant guaranteed. Neither the agent bank nor CFC is responsible for delays resulting in problems in the Fedwire system or problems with the funds transfer systems of member banks. CFC will not be responsible for the authenticity of withdrawal or liquidation instructions. Withdrawals or liquidations will be sent to a pre-designated account at a bank that is a member of the Federal Reserve Fedwire System, or to a correspondent bank or the pre- designated bank if the pre-designated bank is not a member of the Federal Reserve Fedwire system. If the correspondent bank fails to notify the pre- designated bank immediately, there may be a delay in crediting the funds to the pre-designated bank account. The procedures permitting withdrawals or liquidations by wire may be modified, terminated, or suspended at any time by CFC. 6 The Indenture The notes will be issued under an indenture dated as of May 15, 2000, between CFC and Bank One Trust Company, National Association, as Trustee. A copy of the indenture is filed as an exhibit to the registration statement, filed with the Commission covering the offering under the program. Statements herein relating to the program are subject to the detailed provisions of the indenture. The notes will be unsecured obligations of CFC. The notes will not be subject to any sinking fund and will be redeemable at the option of the holder thereof as described below. The notes will rank equal in priority to CFC commercial paper and other unsecured debt. Optional Redemptions by CFC The indenture provides that the notes are subject to partial or full redemption at the option of CFC. Notice of redemption will be given by CFC to holders at least thirty 30 days, but not more than 90 days, prior to the redemption date. The full or partial redemption of the notes, plus accrued and unpaid interest, will be paid by wire transfer to participants whose notes are being redeemed. Merger, Consolidation and Sale of Assets The indenture provides that CFC will not merge or consolidate with another corporation or transfer its assets substantially as an entity to any person unless: -the successor is a corporation organized under the laws of any domestic jurisdiction, -the successor corporation assumes CFC's obligations under the indenture and the notes issued under the indenture, and -immediately after giving effect to the transaction, no event of default and no event that, after notice or lapse of time, or both, would become an event of default, has occurred and is continuing. Events of Default The following events are defined in the indenture as events of default: -CFC's failure to pay all or any part of the principal or interest when due, -CFC's failure to perform or observe any other covenants or agreements in the indenture or the program for 90 days after notice, and -events of bankruptcy, insolvency or reorganization of CFC. The indenture provides that the trustee shall, within 90 days after the occurrence of an event of default, give notice of all uncured defaults known to it (the term default to include the events specified above without grace periods). However, except in the case of default in the payment of principal or interest on any of the notes, the trustee may withhold such notice if it in good faith determines that the withholding of notice is in the interests of the noteholders. 7 CFC is required to furnish to the trustee annually a statement of officers of CFC stating whether or not to their knowledge CFC is in default in the performance of the terms of the indenture and, if CFC is in default, specifying each such default. The holders of a majority in aggregate principal amount of all outstanding notes have the right to waive certain defaults and, subject to limitations, to direct the time, method and place of conducting any proceedings for any remedy available to the trustee or exercising any trust or power conferred on the trustee. If an event of default will occurs, the trustee must exercise those rights and powers, and use the degree of care and skill in their exercise, that a prudent person would exercise or use in the conduct of his or her own affairs, but otherwise need only perform the duties specifically set forth in the indenture. The trustee is under no obligation to exercise any of its rights or powers at the request of the noteholders unless they have offered to the trustee reasonable security or indemnity. Modification of the Indenture Under the indenture, CFC's rights and obligations and the rights and obligations of the holders may be modified by CFC with the consent of the holders of at least a majority in principal amount of the notes then outstanding. No such modifications may be made which would: -diminish the principal amount of any note, or accrued and unpaid interest thereon, or -reduce the stated percentage of notes, the consent of the holders of which is required to modify or alter the indenture, without the consent of the holders of all notes then outstanding. Concerning the Trustee Affiliates of Bank One Trust Company, National Association, the Trustee under the indenture, which are depositaries of CFC, have from time to time agreed to make loans to CFC and have performed other services for CFC in the normal course of their business. Termination, Suspension or Modification of Program CFC expects that the daily liquidity program will continue for the foreseeable future, but reserves the right at any time to terminate, suspend or modify the program. CFC may, in its discretion, temporarily suspend the acceptance of new balances without the suspension constituting a suspension or termination of the program. Any modification that affects the rights or duties of the Trustee may be made only with the consent of the trustee. No termination, modification or suspension may affect the right of a member to redeem amounts credited to the account or diminish the amounts credited thereto as of the effective date of the action. Rights Not Transferable No right or interest in or to a note is assignable or transferable and no attempted assignment or transfer will be effective. Except for redemptions, and except for the right of CFC to debit amounts credited in error to a member, no right or interest of any member in a note or under the program may be made liable for, or subject to, any obligation or liability of the member. USE OF PROCEEDS Unless otherwise specified in a prospectus supplement, CFC will add the net proceeds from the sale of the notes to the general funds which will be making loans to members, the repayment of short-term borrowings for other corporate purposes. 8 CFC expects to incur additional indebtedness from time to time, the amount and terms of which will depend upon the volume of its business, general market conditions and other factors. PLAN OF DISTRIBUTION The notes are being offered on a continuous basis for sale by CFC and no commissions will be paid. CFC may from time to time designate offered agents in certain jurisdictions through whom notes may be offered. These agents will receive no commissions but may be reimbursed for expenses incurred in connection with their efforts. CFC has the sole right to accept offers to purchase notes and may reject any proposed purchase of notes in whole or in part. LEGAL OPINIONS The validity of the notes offered hereby will be passed upon for CFC by Milbank, Tweed, Hadley & McCloy LLP, New York, New York. EXPERTS The audited financial statements included in CFC's Annual Report on Form 10-K for the year ended May 31, 1999 incorporated by reference in this prospectus have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are incorporated herein by reference in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. PART II. INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the estimated expenses in connection with the offering described in this registration statement: Registration statement filing fee $ 79,200 Printing 50,000 Legal fees and expenses 50,000 Accountants' fees 1,500 Blue sky fees and expenses 10,000 Fees of trustee 25,000 Miscellaneous 25,000 TOTAL $240,700 ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 29-1104(9) of the District of Columbia Cooperative Association Act provides that an association such as the Registrant shall have the capacity "to exercise . . . any power granted to ordinary business corporations, save those powers inconsistent with this chapter." Section 29-304(16) of the District of Columbia Business Corporation Act permits any corporation: "To indemnify any and all of its directors or officers or former directors or officers or any person who may have served at its request as a director or officer of another corporation in which it owns shares of capital stock or of which it is a creditor against expenses actually and necessarily incurred by them in connection with the defense of any action, suit, or proceeding in which they, or any of them, are made parties, or a party, by reason of being of having been directors or officers or a director or officer of the corporation, or of such other corporation, except in relation to matters as to which any such director or officer or former director or officer or person shall be adjusted in such action, suit, or proceeding to be liable for negligence or misconduct in the performance of duty. Such indemnification shall not be deemed exclusive of any rights to which those indemnified may be entitled, under any bylaw, agreement, vote of stockholders, or otherwise." The board of directors of CFC has resolved to indemnify all CFC directors, officers and employees in accordance with the terms of the first sentence of the above section. The bylaws of CFC also provide for indemnification of all CFC directors, officers and employees as set forth above. ITEM 16. EXHIBITS. Exhibit 4.1 Form of Indenture dated as of May 15, 2000 between CFC and Bank One Trust Company, National Association, Trustee. Exhibit 4.2 Form of Note (included in Exhibit 4-A at pages 1 through 6). Exhibit 4.3 CFC Daily Liquidity Program. Exhibit 5 Opinion and consent of Milbank, Tweed, Hadley & McCloy LLP, as to the legality of the notes. Exhibit 12 Calculation of ratio of margins to fixed charges of CFC. II-1 Exhibit 23.1 Consent of Arthur Andersen LLP. Exhibit 23.2 Consent of Milbank, Tweed, Hadley & McCloy LLP. Included as part of Exhibit 5. Exhibit 24 Powers of Attorney (included on signature pages). Exhibit 25 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Bank One Trust Company, National Association, as Trustee. ITEM 17. UNDERTAKINGS. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: -to include any prospectus required by section 10(a)(3) of the Securities Act of 1933; -to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and -to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the notes offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of CFC pursuant to the provisions described under Item 15 above, or otherwise, CFC has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by CFC of expenses incurred or paid by a director, officer or controlling person of CFC in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, CFC, as the case may be, will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-2 The registrant and each person whose signature appears below hereby authorizes each of Sheldon C. Petersen, Steven L. Lilly and John Jay List (the "Agents") to file one or more amendments (including post-effective amendments) to the registration statement which amendments may make changes in the registration statement as the Agent deems appropriate and the registrant and each person hereby appoints each Agent as attorney-in-fact to execute in the name and on behalf of the registrant and each person, individually and in each capacity stated below, any amendments to the registration statement. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement or amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in the County of Fairfax, Commonwealth of Virginia, on the 25th day of May, 2000. NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION By: /s/ Sheldon C. Petersen Governor and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this report has been signed below by the following persons in the capacities and on the dates indicated. Signature Title Date /s/ Sheldon C. Petersen Sheldon C. Petersen Governor and Chief Executive Officer /s/ Steven L. Lilly Steven L. Lilly Senior Vice President and Chief Financial Officer (Principal Financial Officer) /s/ Steven L. Slepian Steven L. Slepian Controller (Principal Accounting Officer) /s/ Benson Ham Benson Ham President and Director May 25, 2000 /s/ R. B. Sloan, Jr. R. B. Sloan, Jr. Vice President and Director /s/ Wade R. Hensel Wade R. Hensel Secretary-Treasurer and Director /s/ James M. Andrew James M. Andrew Director /s/ Robert A. Caudle Robert A. Caudle Director II-3 /s/ James Duncan James Duncan Director /s/ Glenn English Glenn English Director /s/ Alden J. Flakoll Alden J. Flakoll Director /s/ James A. Hudelson James A. Hudelson Director /s/ Kenneth Krueger Kenneth Krueger Director /s/ Stephen R. Louder Stephen R. Louder Director /s/ Eugene Meier Eugene Meier Director /s/ R. Layne Morrill R. Layne Morrill Director /s/ Robert J. Occhi May 25, 2000 Robert J. Occhi Director /s/ Clifton M. Pigott Clifton M. Pigott Director /s/ Timothy Reeves Timothy Reeves Director /s/ Brian D. Schlagel Brian D. Schlagel Director /s/ Thomas W. Stevenson Thomas W. Stevenson Director /s/ Clifford G. Stewart Clifford G. Stewart Director /s/ Robert Stroup Robert Stroup Director /s/ Robert C. Wade Robert C. Wade Director /s/ Eldwin A. Wixson Eldwin A. Wixson Director II-4 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION Exhibit 4.1 Form of Indenture dated as of May 15, 2000 between CFC and Bank One Trust Company, National Association, Trustee. Exhibit 4.2 Form of Note (included in Exhibit 4.1 at pages 1 through 6). Exhibit 4.3 CFC Daily Liquidity Program. Exhibit 5 Opinion and consent of Milbank, Tweed, Hadley & McCloy LLP, as to the legality of the notes. Exhibit 12 Calculation of ratio of margins to fixed charges of CFC. Exhibit 23.1 Consent of Arthur Andersen LLP. Exhibit 23.2 Consent of Milbank, Tweed, Hadley & McCloy LLP. Included as part of Exhibit 5. Exhibit 24 Powers of Attorney (included on signature pages of the Registration Statement). Exhibit 25 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Bank One Trust Company, National Association, as Trustee. II-5 EXHIBIT 5 May 24, 2000 National Rural Utilities Cooperative Finance Corporation 2201 Cooperative Way Herndon, Virginia 20171-3025 Dear Sirs: We have acted as special counsel for National Rural Utilities Cooperative Finance Corporation ("CFC") in connection with the proposed public offering from time to time, directly to purchasers or through agents or underwriters to be designated from time to time, of the notes of CFC, such notes to be issued under an indenture dated as of May 15, 2000, between CFC and Bank One Trust Company, National Association, as Trustee, as contemplated in CFC's Registration Statement filed on Form S-3 on the date hereof pursuant to Rule 415 under the Securities Act of 1933 (the "Registration Statement"). We submit this opinion for use as Exhibit 5 to the Registration Statement and to the use of our name under the caption "Legal Opinions" in the prospectus. We have investigated the corporate status of CFC and have examined the corporate proceedings authorizing the creation and issuance of the Debt Securities. Based upon the foregoing, and having regard to legal considerations that we deem relevant, we are of the opinion that the notes, when duly authorized and executed by CFC and authenticated by or on behalf of the Trustee pursuant to the terms of the indenture, and issued for value in accordance with the terms of the indenture and applicable resolutions of the Board of Directors of CFC, will be the validly issued, binding obligations of CFC. Very truly yours, Milbank, Tweed, Hadley & McCloy LLP II-6
EXHIBIT 12 NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION COMPUTATION OF RATIO OF MARGINS TO FIXED CHARGES (Dollar amounts in thousands) FOR THE NINE MONTHS ENDED February 29, February 28, FOR THE YEARS ENDED MAY 31, 2000 1999 1999 1998 1997 1996 1995 Net margins before extraordinary loss $ 81,207 $ 56,714 $ 76,439 $ 62,216 $ 54,736 $ 50,621 $ 45,212 Add: Fixed charges 620,146 483,200 664,109 540,535 475,729 426,079 361,338 Margins available for fixed charges $701,353 $539,914 $740,548 $602,751 $530,465 $476,700 $406,550 Fixed charges: Interest on all debt (including amortization of discount and issuance costs) $620,146 $483,200 $664,109 $540,535 $475,729 $426,079 $361,338 Total fixed charges $620,146 $483,200 $664,109 $540,535 $475,729 $426,079 $361,338 Ratio of margins to fixed charges 1.13 1.12 1.12 1.12 1.12 1.12 1.13
II-7 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement of our report dated July 16, 1999 included in National Rural Utilities Cooperative Finance Corporation's Form 10-K for the year ended May 31, 1999 and to all references to our Firm included in this Registration Statement. ARTHUR ANDERSEN LLP Vienna, VA May 24, 2000 II-8 EX-25 2 EXHIBIT 25 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) __ BANK ONE TRUST COMPANY, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) A National Banking Association 31-0838515 (I.R.S. employer identification number) 100 East Broad Street, Columbus, Ohio 43271-0181 (Address of principal executive offices) (Zip Code) Bank One Trust Company, National Association 100 East Broad Street Columbus, Ohio 43271-0181 Attn: Steven M. Wagner, Director, (312) 407-1819 (Name, address and telephone number of agent for service) National Rural Utilities Cooperative Finance Corporation (Exact name of obligor as specified in its charter) District of Columbia 52-089-1669 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 2201 Cooperative Way Herndon, Virginia 20171-3025 (Address of principal executive offices) (Zip Code) Variable Denomination Floating Rate Demand Notes (Title of Indenture Securities) Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of Currency, Washington, D.C.; Federal Deposit Insurance Corporation, Washington, D.C.; The Board of Governors of the Federal Reserve System, Washington D.C. (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. Item 2. Affiliations With the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. No such affiliation exists with the trustee. Item 16. List of exhibits. List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificate of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Bank One Trust Company, National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and State of Illinois, on the 11th day of May, 2000. Bank One Trust Company, National Association, Trustee By /s/ Steven M. Wagner Steven M. Wagner Director *Exhibits 1, 2, 3, and 4 are herein incorporated by reference to Exhibits bearing identical numbers in Item 16 of the Form T-1 of Bank One Trust Company, National Association, filed as Exhibit 25 to the Registration Statement on Form S-4 of U S WEST Communications, Inc., filed with the Securities and Exchange Commission on March 24, 2000 (Registration No. 333-32124). EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT May 11, 2000 Securities and Exchange Commission Washington, D.C. 20549 Ladies and Gentlemen: In connection with the qualification of an indenture between National Rural Cooperative Finance Corporation and Bank One Trust Company, National Association, as Trustee, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, Bank One Trust Company, National Association, By /s/ Steven M. Wagner Steven M. Wagner Director
EXHIBIT 7 Legal Title of Bank: Bank One Trust Company, N.A. Call Date: 03/31/00 State #: 391581 FFIEC 032 Address: 100 Broad Street Vendor ID: D Cert #: 21377 Page RC-1 City, State Zip: Columbus, OH 43271 Transit #: 04400003 Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for March 31, 2000 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. Schedule RC--Balance Sheet Dollar Amounts in thousands C300 RCON BIL MIL THOU ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): RCON a. Noninterest-bearing balances and currency and coin(1) 0081 48,450 1.a b. Interest-bearing balances(2) 0071 17,750 1.b 2. Securities a. Held-to-maturity securities(from Schedule RC-B, column A) 1754 0 2.a b. Available-for-sale securities (from Schedule RC-B, column D) 1773 5,714 2.b 3. Federal funds sold and securities purchased under agreements to resell 1350 396,644 3. 4. Loans and lease financing receivables: RCON a. Loans and leases, net of unearned income (from Schedule RC-C) 2122 87,817 4.a b. LESS: Allowance for loan and lease losses 3123 10 4.b c. LESS: Allocated transfer risk reserve 3128 0 4.c d. Loans and leases, net of unearned RCON income, allowance, and reserve (item 4.a minus 4.b and 4.c) 2125 87,807 4.d 5. Trading assets (from Schedule RD-D) 3545 0 5. 6. Premises and fixed assets (including capitalized leases) 2145 25,200 6. 7. Other real estate owned (from Schedule RC-M) 2150 0 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 0 8. 9. Customers' liability to this bank on acceptances outstanding 2155 0 9. 10. Intangible assets (from Schedule RC-M) 2143 26,345 10. 11. Other assets (from Schedule RC-F) 2160 176,297 11. 12. Total assets (sum of items 1 through 11) 2170 784,207 12. (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading.
Legal Title of Bank: Bank One Trust Company, N.A. Call Date: 03/31/00 State #: 391581 FFIEC 032 Address: 100 Broad Street Vendor ID: D Cert #: 21377 Page RC-1 City, State Zip: Columbus, OH 43271 Transit #: 04400003 Schedule RC-Continued Dollar Amounts in Thousands LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part 1) 2200 567,764 13.a (1) Noninterest-bearing(1) 6631 506,455 13.a1 (2) Interest-bearing 6636 61,309 13.a2 b. In foreign offices, Edge and Agreement subsidiaries, andIBFs (from Schedule RC-E, part II) (1) Noninterest bearing (2) Interest-bearing 14. Federal funds purchased and securities sold under agreements to repurchase: RCFD 2800 0 14 15. a. Demand notes issued to the U.S. Treasury RCON 2840 0 15.a b. Trading Liabilities(from Schedule RC-D)..................................RCFD 3548 0 15.b 16. Other borrowed money: RCON a. With original maturity of one year or less 2332 0 16.a b. With original maturity of more than one year A547 0 16.b c. With original maturity of more than three years .............. A548 0 16.c 17. Not applicable 18. Bank's liability on acceptance executed and outstanding 2920 0 18. 19. Subordinated notes and debentures 3200 0 19. 20. Other liabilities (from Schedule RC-G) 2930 83,885 20. 21. Total liabilities (sum of items 13 through 20) 2948 651,649 21. 22. Not applicable EQUITY CAPITAL 23. Perpetual preferred stock and related surplus 3838 0 23. 24. Common stock 3230 800 24. 25. Surplus (exclude all surplus related to preferred stock) 3839 45,157 25. 26. a. Undivided profits and capital reserves 3632 86,585 26.a b. Net unrealized holding gains (losses) on available-for-sale securities 8434 16 26.b c. Accumulated net gains (losses) on cash flow hedges 4336 0 26.C 27. Cumulative foreign currency translation adjustments 28. Total equity capital (sum of items 23 through 27) 3210 132,558 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, and 28) 3300 784,207 29. Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external Number auditors as of any date during 1996 RCFD 6724 N/A M.1. 1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank authority) 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4 = Director's examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work (1) Includes total demand deposits and noninterest-bearing time and savings deposits.
EX-4.1 3 EXHIBIT 4.1 NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION Issuer and BANK ONE TRUST COMPANY, N.A. Trustee Indenture Dated as of May 15, 2000 Variable Denomination Floating Rate Demand Notes Reconciliation and Tie between Trust Indenture Act of 1939 and Indenture Trust Indenture Indenture Section Trust Indenture Indenture Section Act Section Act Section Section 310(a)(l) 6.08 Section 316(a) 1.01 (a)(2) 6.08 (a)(1)(A) 5.12 (a)(3) Not Applicable (a)(l)(B) 5.13 (a)(4) Not Applicable (a)(2) Not Applicable (a)(5) 6.08 (b) 5.08 (b) 6.07 and 6.09 (c) 1.04(5) Section 311(a) 6.12 Section 317(a)(1) 5.03 (b) 6.12 (a)(2) 5.04 (b)(2) 6.12, 7.03(2) (b) 9.03 Section 312(a) 7.01, 7.02(1) Section 318(a) 1.07 (b) 7.02(2) (c) 7.02(2)(c) Section 313(a) 7.03(1) (b) 7.03(2) (c) 7.03(1), 703(2) (d) 7.03(3) Section 314(a)(l) 7.04 (a)(2) 7.04 (a)(3) 7.04 (a)(4) 9.04 (b) Not Applicable (c)(1) 1.02 (c)(2) 1.02 (c)(3) Not Applicable (d) Not Applicable (e) 1.02 Section 315(a) 6.01(1) (b) 6.02, 7.03(1)(g) (c) 6.01(2) (d) 6.01(3) (d)(l) 6.01(1)(a) (d)(2) 6.01(3)(b) (d)(3) 6.01(3)(c) (e) 5.14 Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. i TABLE OF CONTENTS PAGE ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 1 Section 1.01 Definitions 1 Section 1.02 Compliance Certificates and Opinions 5 Section 1.03 Form of Documents Delivered to Trustee 6 Section 1.04 Acts of Holders 6 Section 1.05 Notices, Etc., to Trustee and Company 7 Section 1.06 Notice to Holders; Waiver 8 Section 1.07 Conflict with Trust Indenture Act 8 Section 1.08 Effect of Headings, Table of Contents, and Reconciliation and Tie 8 Section 1.09 Successors and Assigns 9 Section 1.10 Separability Clause 9 Section 1.11 Benefits of Indenture 9 Section 1.12 Governing Law 9 Section 1.13 Legal Holidays 9 Section 1.14 Persons Deemed Owners 9 Section 1.15 Offset 10 ARTICLE TWO AMOUNT, PAYMENT AND RESTRICTION ON TRANSFER OF SECURITIES 10 Section 2.01 Amount Unlimited 10 Section 2.02 Payment 10 Section 2.03 Restriction on Transfer of Securities 10 ARTICLE THREE REDEMPTION OF SECURITIES 10 Section 3.01 Redemption at Option of the Company 10 Section 3.02 Notice of Redemption 11 Section 3.03 Payment of Redemption Price 11 Section 3.04 Redemption at Option of the Holder 11 ARTICLE FOUR SATISFACTION AND DISCHARGE OF INDENTURE 11 Section 4.01 Satisfaction and Discharge of Indenture 11 Section 4.02 Application of Trust Money 12 ii Section 4.03 Repayment by Paying Agents 12 ARTICLE FIVE REMEDIES 12 Section 5.01 Events of Default 13 Section 5.02 Acceleration of Maturity; Rescission and Annulment 14 Section 5.03 Collection of Indebtedness and Suits for Enforcement by Trustee 15 Section 5.04 Trustee May File Proofs of Claim 15 Section 5.05 Trustee May Enforce Claim Without Possession of Securities 16 Section 5.06 Application of Money Collected 16 Section 5.07 Limitation on Suits 17 Section 5.08 Unconditional Right of Holders to Receive Principal and Interest 17 Section 5.09 Restoration of Rights and Remedies 18 Section 5.10 Rights and Remedies Cumulative 18 Section 5.11 Delay or Omission Not Waiver 18 Section 5.12 Control by Holders 18 Section 5.13 Waiver of Past Defaults 19 Section 5.14 Undertaking for Costs 19 Section 5.15 Waiver of Stay or Extension Laws 20 ARTICLE SIX THE TRUSTEE 20 Section 6.01 Certain Duties and Responsibilities 20 Section 6.02 Notice of Defaults 21 Section 6.03 Certain Rights of Trustee 22 Section 6.04 Not Responsible for Recitals or Issuance of Securities 23 Section 6.05 Money Held in Trust 24 Section 6.06 Compensation and Reimbursement 24 Section 6.07 Disqualification; Conflicting Interests 24 Section 6.08 Corporate Trustee Required; Eligibility 25 Section 6.09 Resignation and Removal; Appointment of Successor 25 Section 6.10 Acceptance of Appointment by Successor 27 Section 6.11 Merger, Conversion, Consolidation or Succession to Business 27 Section 6.12 Preferential Collection of Claims Against Company 27 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY 28 Section 7.01 Company to Furnish Trustee Names and Addresses of Holders 28 Section 7.02 Preservation of Information; Communications to Holders 28 iii Section 7.03 Reports by Trustee 29 Section 7.04 Reports by Company 31 ARTICLE EIGHT SUPPLEMENTAL INDENTURES 32 Section 8.01 Supplemental Indentures Without Consent of Holders 32 Section 8.02 Supplemental Indentures with Consent of Holders 32 Section 8.03 Execution of Supplemental Indentures 33 Section 8.04 Effect of Supplemental Indentures 34 Section 8.05 Conformity with Trust Indenture Act 34 ARTICLE NINE COVENANTS 34 Section 9.01 Administration of Program; Payment of Principal and Interest 34 Section 9.02 Maintenance of Security Register, Maintenance of Office or Agency 34 Section 9.03 Money for Securities Payments to Be Held in Trust 35 Section 9.04 Certificate of Officers of the Company 36 Section 9.05 Waiver of Certain Covenants 37 ARTICLE TEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE 37 Section 10.01 Company May Consolidate, etc., Only on Certain Terms 37 Section 10.02 Successor Corporation Substituted 38 Section 10.03 Limitation on Lease of Properties as Entirety 38 iv INDENTURE, dated as of May 15, 2000, between National Rural Utilities Cooperative Finance Corporation, a corporation duly organized and existing under the laws of the District of Columbia (herein called the "Company"), having its principal office at 2201 Cooperative Way, Herndon, Virginia, 20171-3025 and Bank One Trust Company, N.A., having its Corporate Trust Office at 1 Bank One Plaza, Suite IL1-0126, Chicago, Illinois 60670-0126, a national banking association duly organized and existing under the laws of the United States of America, as Trustee (herein called the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured variable denomination floating rate demand notes (herein called the Securities") pursuant to the Program (as defined below). All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: ARTICLE One DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01 Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act or by Commission rule under the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United States of America at the date of such computation; and (4) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. Certain terms, used principally in Article Six, are defined in that Article. "Act", when used with respect to any Holder, has the meaning specified in Section 1.04. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banks in New York or Chicago are authorized or obligated by law to close. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor corporation. Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Governor, Chief Executive Officer, Chairman of the Board, Vice Chairman of the Board, its President, Finance Officer or a Vice President and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. 2 "Corporate Trust Office" means an office of the Trustee at which at any particular time its corporate trust business shall be administered. "Corporation" includes corporations, associations, companies, limited liability companies and business trusts. "Event of Default" has the meaning specified in Section 5.01. "Holder" means, with respect to a Security, a Person in whose name at the time a particular beneficial ownership interest in a Security is registered in the Security Register. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof. "Officers' Certificate" means a certificate signed by the Governor, Chief Executive Officer, Chairman of the Board, Vice Chairman of the Board, the President, Finance Officer or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for or an employee of the Company or other counsel satisfactory to the Trustee, which is delivered to the Trustee. "Outstanding", when used with respect to Securities, means, as of the date of determination, all Securities in which Holders have made investments as shown on the Securities Register, except: (1) Securities or portions thereof theretofore redeemed by the Holders pursuant to the provisions of the Program and this Indenture; (2) Securities or portions thereof theretofore redeemed by the Company pursuant to the provisions of this Indenture; (3) Securities or portions thereof for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent), for the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; 3 provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. "Paying Agent" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Securities on behalf of the Company. "Person" means any individual, Corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Principal Amount", when used with reference to a Security, means, as of a particular time, the sum of the funds invested in a Security, plus the sum of interest accrued, paid and reinvested in a Security, less the sum of redemptions from time to time. "Program" means the CFC Money Market Program established by the Company and in effect on the date hereof, as the same may be amended or supplemented by the Company from time to time. "Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Responsible Officer", when used with respect to the Trustee, means the chairman or any vice-chairman of the board of directors, the chairman or any vice-chairman of the executive committee of the board of directors, the chairman of the trust committee, the president, any vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee assigned to its Corporate Trust Office customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Secured Debt" means indebtedness for money borrowed which is secured by a mortgage, pledge, lien, security interest or encumbrance on any property of any character of the Company. "Security'' or "Securities" means any Variable Denomination Floating Rate Demand Note or Notes, as the case may be, issued pursuant to the Program and under this Indenture, beneficial ownership interests in which are evidenced by an individual record or entries in the name of the particular Holder established on the Security Register. 4 "Security Register" has the meaning specified in Section 9.02. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, as in force at the date as of which this instrument was executed, except as provided in Section 8.05. "United States" means the United States of America (including the States and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction. "Vice President", when used with respect to the Company, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". Section 1.02 Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than annual certificates provided pursuant to Section 9.04) shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he/she has made such examination or investigation as is necessary to enable him/her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. 5 Section 1.03 Form of Documents Delivered to Trustee . In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his/her certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Section 1.04 Acts of Holders. (1) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (2) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual 6 capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (3) The ownership of Securities shall be proved by reference to the Security Register. (4) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. (5) The Company may set a record date for purposes of determining the identity of Holders entitled to give any request, demand, authorization, direction, notice, consent, waiver or other Act which record date shall be the later of ten (10) days prior to the first solicitation of such action or the date of the most recent list of Holders furnished to the Trustee pursuant to Section 7.01 of this Indenture prior to such solicitation. If a record date is fixed, those persons who were Holders of Securities at such record date (or their duly designated proxies), and only those persons, shall be entitled to take such action or to revoke any such previous action, whether or not such persons continue to be Holders after such record date. No such request, demand, authorization, direction, notice, consent, waiver or other Act shall be valid or effective for more than one hundred and twenty (120) days after such record date. Section 1.05 Notices, Etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Global Corporate Trust Services, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing, to the Trustee or Holders by the Company. 8 Section 1.06 Notice to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his/her address, as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case There notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. Section 1.07 Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of the Trust Indenture Act through operation of Section 318(c) thereof, such imposed duties shall control. Section 1.08 Effect of Headings, Table of Contents, and Reconciliation and Tie. The Article and Section headings herein and the Table of Contents and Reconciliation and Tie are for convenience only and shall not affect the construction hereof. Section 1.09 Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. Section 1.10 Separability Clause. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 1.11 Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 1.12 Governing Law. This Indenture and the Securities shall be governed by and construed in accordance with Federal law and with the laws of the State of New York. Section 1.13 Legal Holiday. In any case where any payment date shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Securities) payment of the principal of or interest on the Securities need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the payment date, provided that no interest hall accrue for the period from and after such payment date. Section 1.14 Persons Deemed Owners. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of or interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. Section 1.15 Offset. The Company may offset against amounts payable on the Securities amounts due and owing by beneficial owners of such Security. The Company shall notify the Trustee of any such offset. ARTICLE Two AMOUNT, PAYMENT AND RESTRICTION ON TRANSFER OF SECURITIES Section 2.01 Amount Unlimited. The amount of Securities issued and outstanding pursuant to the Program and under this Indenture shall not be limited. Section 2.02 Payment. The Securities shall be payable at the office or agency of the Company as may from time to time be designated in writing maintained for such purpose in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Section 2.03 Restriction on Transfer of Securities. The Securities may not be transferred, in whole or in part, either directly or by operation of law or otherwise. ARTICLE Three REDEMPTION OF SECURITIES Section 3.01 Redemption at Option of the Company. The Company may redeem, at any time in its discretion, all or any portion of the Securities issued pursuant to the Program and under this Indenture. Any partial redemption of the entirety of the Securities will be effected by lot or pro rata or by any other method that is deemed fair and appropriate by the Board Resolution of the Company. Section 3.02 Notice of Redemption . The Company will give prior written notice of at least thirty (30) days but not more than ninety (90) days to Holders whose Securities are subject to full or partial redemption. Such notice from the Company will specify the Redemption Date, the Principal Amount being redeemed and the effective date the redeemed amount shall become due and payable and that interest shall cease to accrue as of that date. All partial redemption notices will list the remaining Principal Amount of the Security. Section 3.03 Payment of Redemption Price. The full or partial Security being redeemed, plus accrued and unpaid interest therein to the Redemption Date, shall be paid by wire transfer to the Holder. The Company covenants that it will pay or cause to be paid to the Trustee or to the Paying Agent cash in an amount sufficient to pay the Principal Amount of the Security or portion thereof to be redeemed on such date, together with accrued and unpaid interest to the Redemption Date. Interest on the redeemed amount shall cease to accrue on and after the effective date the redeemed amount shall have become due and payable and paid by the Company. 10 Section 3.04 Redemption at Option of the Holder. Subject to the terms and conditions of the Program, a Security may be redeemed in full or in part at any time at the option of, and upon demand by, the Holder. Subject to the terms and conditions of the Program, demand may be made for full or partial redemption of a Security by demand to the Company pursuant to the Program in such manner as the Company deems appropriate. The Company covenants that it will pay or cause to be paid to the Trustee or to the Paying Agent funds in an amount sufficient to pay the Principal Amount plus accrued and unpaid interest of the Security to be redeemed. ARTICLE Four SATISFACTION AND DISCHARGE OF INDENTURE Section 4.01 Satisfaction and Discharge of Indenture. If at any time: (1) the Company shall have terminated the Program pursuant to its provisions, (2) all the Securities shall have become due and payable, (3) the Company shall have deposited or caused to be deposited with the Trustee as trust funds the entire amount (other than moneys repaid by any Paying Agent to the Trustee in accordance with Section 4.03) sufficient to pay all the Securities, including principal and interest due or to become due to such date of payment, and (4) the Company shall have paid or caused to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect, and the Trustee, on demand of and at the cost and expense of the Company shall execute proper instruments acknowledging satisfaction of and discharge of this Indenture. The Company agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred by the Trustee in connection with this Indenture, the Program or the Securities. Section 4.02 Application of Trust Money. All moneys deposited with the Trustee pursuant to Section 4.01 shall be held in trust and applied by it to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent), to the Holders of the Securities for the payment of which such moneys have been deposited with the Trustee of all sums due and to become due thereon for principal and interest. The Trustee shall be under no obligation to invest or pay interest on any moneys so held in trust. 11 Section 4.03 Repayment by Paying Agents. In connection with the satisfaction and discharge of this Indenture, all moneys then held by any Paying Agent under the provisions of this Indenture shall, upon demand of the Company, be repaid to it or paid to the Trustee and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. ARTICLE Five REMEDIES Section 5.01 Events of Default. "Events of Default", means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any part of or all the principal of or interest on any Security as and when the same shall be due and payable, in accordance with the then current provisions and rules and regulations of the Program and this Indenture, and continuance of such default for a period of twenty (20) days; or (2) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of ninety (90) days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least twenty-five per cent (25%) in principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (3) the entry by a court having jurisdiction in the premises of: (a) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (b) a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the 12 Company under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of sixty (60) consecutive days; or (4) the commencement by the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action; or (5) in connection with any proceeding under any law relating to bankruptcy, insolvency or reorganization or relief of debtors involving the Company, an order for relief shall be entered by a court of competent jurisdiction which affects any significant part of the assets of the Company. Section 5.02 Acceleration of Maturity; Rescission and Annulment. If an Event of Default with respect to the Securities occurs and is continuing, then in every such case the Trustee or the Holders of not less than fifty percent (50%) in the Principal Amount of the Outstanding Securities may declare all of the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount shall become immediately due and payable. At any time after such a declaration of acceleration with respect to the Securities has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in Principal Amount of the Outstanding Securities, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: 13 (1) the Company has paid or deposited with the Trustee a sum sufficient to pay (a) the Principal Amount of any Securities which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Securities; (b) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Securities, and (c) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to the Securities, other than the non-payment of the principal of Securities which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 5.13. No such rescission shall affect any subsequent default or impair any right consequent thereon. Section 5.03 Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that, if default is made in the payment of the principal of or interest on any Security when the same shall have become due and payable, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and on any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated. If an Event of Default with respect to the Securities occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of the Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to 14 protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Section 5.04 Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise: (1) to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee and any predecessor Trustee, their agents and counsel) and of the Holders allowed in such judicial proceeding, and (2) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee and any predecessor Trustee, their agents and counsel, and any other amounts due the Trustee and any predecessor Trustee under Section 6.06. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 5.05 Trustee May Enforce Claim Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities. 15 Section 5.06 Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee: FIRST: To the payment of all amounts due the Trustee and any predecessor Trustee under Section 6.06; and SECOND: To the payment of the amounts then due and unpaid for principal of and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and interest, respectively. Section 5.07 Limitation on Suits. No Holder of any Security shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities; (2) the Holders of not less than fifty percent (50%) in principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for ninety (90) days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such ninety (90) day period by the Holders of a majority in principal amount of the Outstanding Securities; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders. Section 5.08 Unconditional Right of Holders to Receive Principal and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest on such Security on the applicable due date provided therefor pursuant to the Program 16 (or, in the case of redemption, on the redemption date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. Section 5.09 Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 5.10 Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 5.11 Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy acting upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. Section 5.12 Control by Holders. The Holders of a majority in principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to the Securities, provided that such direction shall not be in conflict with any rule of law or with this Indenture, subject to Section 6.01, the Trustee shall have the right to decline to follow any such direction if the Trustee shall reasonably determine, in good faith, that the action or proceeding so directed would be unjustly prejudicial to any Holders not joining in such direction or would involve 17 the Trustee in any personal liability unless indemnified to its reasonable satisfaction, and the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Section 5.13 Waiver of Past Defaults. The Holders of not less than a majority in Principal Amount of the Outstanding Securities may on behalf of the Holders of all the Securities waive any past default hereunder and its consequences, except a default: (1) in the payment of the principal of or interest on any Security, or (2) in respect of a covenant or provision hereof which under Article Eight cannot be amended without the consent of the Holders of each Outstanding Security affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Section 5.14 Undertaking for Costs. All Parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than ten percent (10%) in principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or interest on the Security on or after the applicable due date therefor provided pursuant to the Program (or, in the case of redemption, on or after, the Redemption Date). Section 5.15 Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. 18 ARTICLE Six THE TRUSTEE Section 6.01 Certain Duties and Responsibilities. (1) Except during the continuance of an Event of Default, (a) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (b) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of the Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (2) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his/her own affairs. (3) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (a) this Subsection shall not be construed to limit the effect of Subsection (1) of this Section; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in Principal Amount of the Outstanding Securities, determined as provided in Section 5.12, relating to the time, method and place of conducting any 19 proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities; and (d) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (4) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. Section 6.02 Notice of Defaults. Within ninety (90) days after the occurrence of any default hereunder with respect to the Securities, the Trustee shall transmit by mail to all Holders of Securities, as their names and addresses appear in the Security Register, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of or interest on any Security, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders of Securities; and provided, further, that in the case of any default of the character specified in Section 5.01(3) with respect to the Securities, no such notice to Holders shall be given until at least thirty (30) days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default. Section 6.03 Certain Rights of Trustee. Subject to the provisions of Section 6.01: (1) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed to be genuine and to have been signed or presented by the proper party or parties; (2) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; 20 (3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (4) (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; the Trustee may consult with counsel and the written advice, or oral advice subsequently confirmed in writing, of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (8) the Trustee shall not be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by the Indenture. Section 6.04 Not Responsible for Recitals or Issuance of Securities. The recitals contained herein shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture, the Program or of the Securities. The Trustee shall not be accountable for the use or application by the Company of the Securities or the proceeds thereof. 21 Section 6.05 Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company Section 6.06 Compensation and Reimbursement. The Company agrees: (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith or willful misconduct; and (3) to indemnify each of the Trustee and any predecessor Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence, bad faith or willful misconduct, on the Trustee's or any predecessor Trustee's part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder or the performance of their duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. Section 6.07 Disqualification; Conflicting Interests. The Trustee shall be subject to the provisions of Section 310(b) of the Trust Indenture Act during the period of time provided for therein. Nothing herein shall prevent the Trustee from filing with the Commission the application referred to in the second-to-last paragraph of Section 310(b) of the Trust Indenture Act. Section 6.08 Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or 22 State authority; provided, however, that if Section 310(a) of the Trust Indenture Act or the rules and regulations of the Commission under the Trust Indenture Act at any time permit a corporation organized and doing business under the laws of any other jurisdiction to serve as trustee of an indenture qualified under the Trust Indenture Act, this Section 6.08 shall be automatically amended to permit a corporation organized and doing business under the laws of any such other jurisdiction to serve as Trustee hereunder. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Neither the Company nor any person directly or indirectly controlling, controlled by or under common control with the Company may serve as Trustee. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Section 6.09 Resignation and Removal; Appointment of Successor. (1) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 6.10. (2) The Trustee may resign at any time with respect to the Securities by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 6.10 shall not have been delivered to the Trustee within thirty (30) days after the giving of such notice of resignation, the resigning Trustee may appoint or petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (3) The Trustee may be removed at any time with respect to the Securities by Act of the Holders of a majority in Principal Amount of the Outstanding Securities, delivered to the Trustee and to the Company or, so long as no Event of Default has occurred and is continuing, by the Company with notice to the Trustee. (4) If at any time: (a) the Trustee shall fail to comply with Section 6.07 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six (6) months, unless the Trustee's duty to resign has been stayed as provided in Section 310(b) of the Trust Indenture Act, or (b) the Trustee shall cease to be eligible under Section 6.08 and shall fail to resign after written request therefor by the Company or by any such Holder, or 23 (c) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any case, (i) the Company by a Board Resolution may remove the Trustee with respect to all Securities, or (ii) subject to Section 5.14, any Holder who has been a bona fide Holder of a Security for at least six (6) months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees. (5) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee and shall comply with the applicable requirements of Section 6.10. If, within one (1) year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 6.10, become the successor Trustee and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 6.10, any Holder who has been a bona fide Holder of a Security for at least six (6) months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (6) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to all Holders of Securities as their names and addresses appear in the Security Register. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. Section 6.10 Acceptance of Appointment by Successor. (1) In case of the appointment hereunder of a successor Trustee, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any 24 (2) further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (1) of this Section. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 6.11 Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. Section 6.12 Preferential Collection of Claims Against Company. The Trustee shall be subject to Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) thereof. ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 7.01 Company to Furnish Trustee Names and Addresses of Holder. The Company will furnish or cause to be furnished to the Trustee: (1) semi-annually, not later than March 1 and September 1 in each year, a list in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of the preceding February 15 or August 15, as the case may be plus the interest rates on the Securities in effect from time to time, and (2) at such other times as the Trustee may request in writing, within thirty (30) days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than fifteen (15) days prior to 25 the time such list is furnished; excluding from any such list names and addresses received by the Trustee in its capacity as Security Registrar. Section 7.02 Preservation of Information; Communications to Holders. (1) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.01 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 7.01 upon receipt of a new list so furnished. (2) If three (3) or more Holders (herein referred to as "applicants") apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six (6) months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders with respect to their rights under this Indenture or under the Securities and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five (5) business days after the receipt of such application, at its election, either (a) afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 7.02(1), or (b) inform such applicants as to the approximate number of Holders whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 7.02(1), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon written request of such applicants, mail to each Holder whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 7.02(1) a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five (5) days after such tender the Trustee shall mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interest of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon 26 the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (3) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 7.02(2), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 7.02. Section 7.03 Reports by Trustee. (1) Within sixty (60) days after May 15 of each year beginning with the year 2001, the Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Security Register, a brief report dated as of such May 15 with respect to any of the following events which may have occurred within the previous twelve (12) months (but if no such event has occurred within such period, no report need be transmitted): (a) any change to its eligibility under Section 6.08 and its qualifications under Section 6.07; (b) The creation of or any material change to a relationship specified in Section 3.10(b)(1) through Section 3.10(b) (10) of the Trust Indenture Act; (c) the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities, on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than one-half of one percent (1/2 of 1%) of the principal amount of the Securities Outstanding on the date of such report; 27 (d) the amount, interest rate and maturity date of all other indebtedness owing by the Company (or by any other obligor on the Securities) to the Trustee in its individual capacity, on the date of such report, with a brief description of any property held as collateral security therefor, except an indebtedness based upon a creditor relationship arising in any manner described in Section 6.12(2)(b), (c), (d) or (f); (e) the property and funds, if any, physically in the possession of the Trustee as such on the date of such report; (f) any additional issue of Securities which the Trustee has not previously reported; and (g) any action taken by the Trustee in the performance of its duties hereunder which it has not previously reported and which in its opinion materially affects the Securities, except action in respect of a default, notice of which has been or is to be withheld by the Trustee in accordance with Section 6.02. (2) The Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Security Register, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) since the date of the last report transmitted pursuant to Subsection (1) of this Section (or if no such report has yet been so transmitted, since the date of execution of this instrument) for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities, on property or funds held or collected by it as Trustee and which it has not previously reported pursuant to this Subsection, except that the Trustee shall not be required (but may elect) to report such advances if such advances remaining unpaid at any time aggregate ten percent (10%) or less of the principal amount of the Securities Outstanding at such time, such report to be transmitted within ninety (90) days after such time. (3) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed, with the Commission and with the Company. The Company will notify the Trustee when any Securities are listed on any stock exchange. 28 Section 7.04 Reports by Company. The Company shall: (1) file with the Trustee, within fifteen (15) days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it shall file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (3) transmit by mail to all Holders, as their names and addresses appear in the Security Register, within thirty (30) days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. ARTICLE EIGHT SUPPLEMENTAL INDENTURES Section 8.01 Supplemental Indentures Without Consent of Holders. Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities; or 29 > (2) to add to the covenants of the Company for the benefit of the Holders of the Securities or to surrender any right or power herein conferred upon the Company; or (3) to add any additional Events of Default; or (4) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 6.10(2); or (5) to cure any ambiguity, or correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided that such action shall not adversely affect the interests of the Holders of Securities in any material respect. Section 8.02 Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) change the character of the Securities from being payable on demand or reduce the principal amount of any Security or impair the right to institute suit for the enforcement of any such payment on or after the applicable due date thereof (or, in the case of redemption, on or after the Redemption Date), or (2) reduce the percentage in principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or (3) Change any obligation of the Company, with respect to Outstanding Securities, to maintain an office or agency in the places and for the purposes specified in Section 9.02, or (4) modify any of the provisions of this Section, Section 5.13 or Section 9.04, except to increase any such percentage or to provide that certain other 30 provisions of this Indenture cannot be modified or waived without the consent of the Holder of each outstanding Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section and Section 9.04, or the deletion of this proviso, in accordance with the requirements of Sections 6.10(2) and 8.01(5). It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. Section 8.03 Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 6.01) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 8.04 Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 8.05 Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. ARTICLE NINE COVENANTS Section 9.01 Administration of Program; Payment of Principal and Interest. (1) The Company covenants and agrees to maintain and administer the Program and the Securities issued pursuant thereto in accordance with the provisions of the Program, as the same may from time to time be in force and effect, and this Indenture; provided, however, that nothing herein shall prevent the Company from exercising any of its rights to amend, modify or terminate the Program, or to adopt, amend or rescind the rules established under the Program, as provided therein. 31 (2) The Company covenants and agrees for the benefit of Holders of Securities that it will duly and punctually pay or credit the principal of and interest on the Securities in accordance with the terms of the Program and this Indenture. Interest will accrue on the Principal Amount of the Securities in accordance with the provisions of the Program. The interest rate on the Securities shall be determined in accordance with the provisions of the Program. Interest rates will vary from time to time. There are no minimum or maximum interest rates. Section 9.02 Maintenance of Security Register, Maintenance of Office or Agency. (1) The Company will keep at an office or agency proper books of record and account (which books may be in written form or in any other form capable of being converted into written form) in which full and correct entries shall be made of all funds invested in the Securities, together with interest accrued or credited thereon, and all redemptions thereof, in accordance with sound accounting practice and which shall contain the names and addresses of all Holders and the Principal Amounts of their respective Securities (collectively, the "Security Register"). (2) The Company will maintain in Herndon, Virginia or such other city where the Company maintains its corporate headquarters an office or agency where notices and demands hereunder may be given to or made upon the Company in respect of the Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee and the Holders of the location, and any change in the location, of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such notices and demands may be made or served at the Corporate Trust Office of the Trustee. Section 9.03 Money for Securities Payments to Be Held in Trust. Whenever the Company shall have one or more Paying Agents, it will, prior to each due date of the principal of, or interest on any Securities, deposit with a Paying Agent a sum sufficient to pay the principal or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act. The Company hereby agrees, and will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject, to the provisions of this Section, that such Paying Agent will: (1) hold all sums held by it for the payment of the principal of or interest on Securities in trust for the benefit of the Persons entitled thereto until such 32 sums shall be paid to such Persons or otherwise disposed of as herein provided; give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment of principal or interest on the Securities; and (2) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of or interest on any Security and remaining unclaimed for three years after such principal or interest has become due and payable shall be paid to the Company upon delivery of a Company Request and an Opinion of Counsel; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in Washington, D.C., notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. Section 9.04 Certificate of the Company. On or before the last day of August of each year beginning with the year 2000, the Company will file with the Trustee a certificate of the principal executive officer, principal financial officer or principal accounting officer stating whether or not the signer has obtained knowledge of any action or failure to act on the part of the Company during the preceding calendar year in violation of any covenant, agreement, provision or condition contained in this Indenture and, if so, specifying, each such default of which the signers may have knowledge and the nature thereof. For purposes of this Section 9.04, compliance shall be determined without regard to any period of grace or requirement of notice provided pursuant to the terms of this Indenture. 33 Section 9.05 Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any term, provision or condition set forth in Section 9.02 or 9.03, if before the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities shall, by Act of such Holders, either waive such compliance in such instance or general waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect. ARTICLE TEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 10.01 Company May Consolidate, etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other corporation or convey or transfer its properties and assets substantially as an entirety to any Person, unless: (1) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer the properties and assets of the Company substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America or any state or the District of Columbia, and shall expressly assume, by a supplemental indenture hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and interest on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing; and (3) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance or transfer and if a supplemental indenture is required in connection with such a transaction, such supplemental indenture complies with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. 34 Section 10.02 Successor Corporation Substituted. Upon any consolidation or merger, or any conveyance or transfer of the properties and assets of the Company substantially as an entirety in accordance with Section 10.2, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company herein, and thereafter, the predecessor corporation shall be relieved of all obligation and covenants under this Indenture and the Securities and may be liquidated and dissolved. Section 10.03 Limitation on Lease of Properties as Entirety. The Company shall not lease its properties and assets substantially as an entirety to any Person. 35 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION By:___________________________________ [Title] BANK ONE TRUST COMPANY, N.A. By:___________________________________ 36 STATE OF _____________ COUNTY OF ___________ On ______________, before me personally came _______________, to me known, who, being by me duly sworn, did depose and save that he is a _____________________ of National Rural Utilities Cooperative Finance Corporation, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation, that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. ______________________________________ Notary Public STATE OF _________________ COUNTY OF _______________ On ________________, before me personally came ____________________, to me known, who, being by me duly sworn, did depose and say that he is a ______________ of Bank One Trust Company, N.A., one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. ______________________________________ Notary Public EX-4.2 4 EXHIBIT 4.2 Variable Denomination Floating Rate Demand Note (Face of Note) No. $ NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION promises to pay Bank One Trust Company, N.A., not personally but solely for the benefit of the Holders of the Securities described in the Indenture or registered assigns, the Principal Amount of the Securities Outstanding from time to time, on demand, plus any accrued and unpaid interest thereon. Dated: Authenticated: BANK ONE TRUST COMPANY, NA, NATIONAL RURAL UTILITIES COOPERATIVE as Trustee FINANCE CORPORATION By By Authorized Officer (SEAL) (Back of Note) NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION Variable Denomination Floating Rate Demand Note 1. Interest. National Rural Utilities Cooperative Finance Corporation("Company"), a District of Columbia cooperative association, promises to pay interest on the Principal Amount of this Security at a per annum rate determined by the Company on a daily basis, which rate shall not be less than the interest rate set for that date on CFC's directly issued commercial paper for maturities between one and seven days. The Company will credit interest on the Securities on the second business day of the month. Interest so credited will be added to the principal balance of the Security until redeemed. Interest on the Securities will accrue on a daily basis. Interest will be computed on the basis of a 365-day year. 2. Method of Payment. The Company will pay accrued and unpaid interest on the Securities only on redemption of the Principal Amount of the Security in whole or in part. Payment on all sums due on the Securities shall be deemed satisfied by payments remitted or offset by the Company to the beneficial owners of the Securities. 3. Paying Agent. Initially, the Company will act as Paying Agent. The Company may change any Paying Agent or without notice. 4. Indenture. The Company issued the Securities under an Indenture dated as of May 15, 2000 ("Indenture") between the Company and Bank One Trust Company, N.A. (the "Trustee"). The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code 77aaa-77bbbb) as in effect on the date of the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of such terms. The Securities are unsecured general obligations of the Company and are not limited in aggregate Principal Amount. 5. Redemption at Option of Company. The Company may redeem all the Securities at any time or some of them from time to time at their Principal Amounts, plus accrued interest to the redemption date. 6. Redemption at Option of Holder. The Company will redeem Securities at the option of the holder in minimum amounts of at least $50,000 at any time and from time to time on demand at a redemption price equal to the Principal Amount, plus accrued interest to the redemption date. 7. Notice of Redemption. Notice of redemption at the Company's option will be mailed at least 30 days but not more than 90 days before the redemption date to each holder of Securities to be redeemed at his registered address. On and after the redemption date interest ceases to accrue on Securities or portions of them called for redemption. > 8. Denominations, Transfer [____]. The Securities are in registered form without coupons in denominations of $50,000 and whole multiples of $50,000. The Securities may not be transferred. 9. Persons Deemed Owners. The registered holder of a Security may be treated as its owner for all purposes. 10. Amendments and Waivers. Subject to certain exceptions, the Indenture or the Securities may be amended with the consent of the holders of a least a majority in Principal Amount of the Securities, and any existing default may be waived with the consent of the holders of a majority in principal amount of the Securities. Without the consent of any Securityholder, the Indenture or the Securities may be amended to cure any ambiguity, defect or inconsistency, to provide for assumption of Company obligations to Securityholders or to make any change that does not adversely affect the rights of any Securityholder in any material respect. 11. Defaults and Remedies. An Event of Default is: default for 20 days in payment of interest on the Securities or in payment of Principal Amount on them; failure by the Company for 90 days after notice to it to comply with any of its other agreements in the Indenture or the Securities; and certain events of bankruptcy or insolvency. If an Event of Default occurs and is continuing, the Trustee or the holders of at least 50% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, holders of a majority in Principal Amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing default (except a default in payment of Principal Amount or interest) if it determines that withholding notice is in their interests. The Company must furnish an annual compliance certificate to the Trustee. 12. Trustee Dealings with Company. Bank One Trust Company, N.A., the Trustee under the Indenture, in its individual or any other capacity, and its affiliates, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not Trustee, subject to the terms of the Indenture and the Act. 13. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Securityholder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 14. Authentication. This Security shall not be valid until authenticated by the manual signature of the Trustee. The Company will furnish to any Securityholder upon written request and without charge a copy of the Indenture, which has in it the text of this Security in larger type. Requests may be made to: Steven L. Lilly, Senior Vice President and Chief Financial Officer, National Rural Utilities Cooperative Finance Corporation, 2201 Cooperative Way, Herndon, VA 20171-3025. EX-4.3 5 EXHIBIT 4.3 CFC DAILY LIQUIDITY PROGRAM How to Make a Purchase Minimum Investment $50,000 Minimum Transaction $50,000 Minimum Balance $50,000 Interest Rate Information Interest Payment Calculation Simple Interest (Actual/365) Rate Posting Daily Rate Level Not less than CFC's 1 to 7 day CP rate Rate Sources CFC's Money Desk @ 1-800-424-2954 CFC's Website http://www.nrucfc.org Interest Accrual Daily Interest Credited Monthly, on the 2nd business day of the following month, directly into the account Program Enrollment A "CFC Commercial Paper Investor Background Data" form must be on file. The form may be obtained by contacting the CFC Money Desk @ 1-800-424-2954 Purchases By Wire Participants may purchase under the program by wiring funds to the program Wire Transfer Routing Code for CFC's Daily 071000013 Fund Account at Bank One (Chicago, IL) The wire must include The name of the program CFC Daily Fund The member's name The member's alphanumeric ID number Funds received by 5:00pm ET will be credited on that day. Funds received after 5:00ET will be credited the next business day. How To Make Investment Withdrawals/Liquidations Minimum Withdrawal $50,000 Contacts for Withdrawal CFC's Money Desk @ 1-800-424-2954 On-line request via the CFC Member's Extranet Contact for Liquidation CFC's Money Desk @ 1-800-424-2954 Requests received by CFC before 11:00am ET, will be wired that business day. Requests received after 11:00am ET, will be wired the next business day. Instructions must include The name of the program CFC Daily Fund The member's name The member's alphanumeric ID number The routing code of the participant's bank The participant's account number at the bank -----END PRIVACY-ENHANCED MESSAGE-----